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A smoking gun in New Mexico's behavioral fraud case?

September 3, 2013
by Dennis Grantham, Editor-in-Chief
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State's watchdogs began visiting "replacement" agencies in Arizona before fraud audit began, says PCG principal

In testimony before the Behavioral Health Committee of the New Mexico Legislature on September 3, the Public Consulting Group (PCG) principal who led the audit that reported an alleged $36 million in Medicaid overpayments to behavioral health providers said that he accompanied the head of the state's Behavioral Health Collaborative, Diane McWilliams, on a visit to interview a potential replacement agency in Arizona early in 2013, before the controversial provider audit had even begun.   

PCG's Thomas Aldridge, whose audit team's findings led New Mexico Human Services Department officials to halt Medicaid payments to 15 major behavioral health providers, testified today that he accompanied McWilliams and two representatives from the state's behavioral health contractor, OptumHealth, on a trip to Arizona to offer “another opinion” about the capabilities and compliance practices of at least one Arizona-based agency. In June and July, five of these Arizona agencies were hired at a projected cost of $17.8 million through yearend to replace and transition out the New Mexico-based executives and management teams at 12 of the 15 non-profits that were targeted in the $3 million PCG fraud audit.

A sharp exchange 

Aldridge's statement came in response to questions from state Sen. Mary Kay Papen who, after learning that Aldridge had attended one such trip, asked why. Aldridge indicated that he went “because Ms. McWilliams asked me to,” adding that she wanted to hear his assessment of the level of compliance procedures in place within that organization.

In response to her next question, whether others had come along, Aldridge noted that “Two individuals from Optum Health were at the meeting that I attended. I can’t speak to the other meetings.”

Papen continued: “Is this a normal procedure when you’re doing an audit? To go with somebody to another state, to look and decide who is going to come in and take over? To have representatives from Optum, who is supposed to be the oversight for providers in our state, have that kind of knowledge to make that determination? Isn’t that rather unusual? Do you provide this service all the time?”

“I don’t typically do that, but I have,” replied Aldridge. “I’ve seen, audited, and educated thousands of these providers and with multiple state agencies in many states.  I have the experience to do this, and she asked me as a favor to do this, to offer an opinion as an additional party in the meeting.  I don’t think there’s a conflict . . .”

“Mr. Chairman,” interrupted Papen, “I do think there is a conflict of interest. And, were you paid for that trip by the state of New Mexico for this service?”

“Yes, I was paid for that trip by the state as part of our consulting agreement,” he replied.

“Mr. Chairman, this is a personal opinion, but I think there is a conflict of interest,” Papen insisted. Turning to Aldridge, she continued: “I think that you’re here auditing providers in our state, then for you to be going out and picking new providers before the audit is finished and the Attorney General is finished. . . I see that as a conflict. But, I guess we have a disagreement,” she concluded, setting aside the microphone. 

“One last comment, please,” Aldridge interjected. “Senator Papen, I respect that opinion very much. It happened before the audit ever began, so I don’ t know if that in particular . . . We were engaged.  It was an hour long meeting . . .” His reply drew jeers from critics in the Las Cruces meeting center audience. “I find that response even more in conflict,” said Papen.  


'What's driving this process along?'

Aldridge’s comments about PCG's involvement in reviews of the Arizona providers, which came in the midst of his own testimony defending PCG’s nationwide audit experience and methods, was likely an embarassment to HSD officials and the administration of Governor Susana Martinez. For critics of the HSD's handling of the audit and the two-month payment freeze, the surprise admission came as further support for their contention that the state and HSD officials haven't yet told the full story behind the audit and the pay freeze, which stunned providers, disrupted services, and resulted in the "transition" of management teams at 11 or 12 of the 15 agencies targeted in the audit.