“No Credible Evidence of Fraud” in Audits that Sparked Shuttering of 15 Behavioral Health Agencies

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October 21, 2013; Sacramento Bee


In June in New Mexico, 15 mental health agencies had their Medicaid payments suspended after audits were performed. As NPQ reported at the time, fourteen of the agencies soon saw their agency management and 30,000 patients handed over to pre-selected Arizona based firms.

But now it is not clear what the evidence was to justify that extreme action. After questions arose about the quality of the audits and what they contained, the attorney general took on a review of the whole process, and that office released a very heavily redacted report last week.

One statement from it stands out: “PCG’s Case File Audit did not uncover what it would consider to be credible allegations of fraud, nor any significant concerns related to consumer safety,” the document states. “However, PCG’s review revealed a provider system in need of technical assistance, especially considering the seismic shift that the state’s behavioral health system will undergo with the transition to Centennial Care in January 2014.”

Still, the report shows a total of $33 million in overpayments made to the agencies over a three-year period, and a Human Services Department spokesman on Monday stood behind the state’s decision to suspend payments to the agencies and said the investigation was ongoing. Local advocates and media are frustrated by the opaqueness of the reviews and the state’s lack of public accountability.

To begin with, the agency audits themselves have been controversial for any number of reasons, including the fact that the $3 million contract was not put out to bid before being awarded to Public Consulting Group, Inc., a Boston-based company. As we reported in September,

“Questions have arisen about the audits themselves. Apparently, none of the 15 agencies who had bad audits—and who provide treatment to a full 80 percent of the mental health patients in New Mexico—have been able to review the audit results, and the Public Consulting Group (PCG), the audit firm used, is itself is being called to account.

“‘I have found that most if not all of the PCG audits that I have defended were incorrect at the initial stage,’ says Knicole Emanuel, a North Carolina lawyer who has lately been defending healthcare providers subjected to PCG audits. ‘In some of the PCG audits that I have encountered, PCG has said that the Medicaid provider owes $700,000, $800,000, $1.5 million, these exorbitant amounts, and at the end of the day, when they look at all the documents, it goes down to like $200 or $300.’”

A number of advocates have insisted that taxpayers deserved to see what their money purchased. The lack of transparency in the situation has been notable. As we wrote on September 26,

“None of the providers accused of fraud have seen the audit…. And many of those who have seen the audit are questioning it. State auditor Hector Balderas had to subpoena the audit to verify that the state’s Human Services Department (HSD) followed all state and federal regulations in the situation. He comments that the auditor “specified, though, that even as they identified billing errors, they made a determination that credible allegation of fraud could and should only be made by the state of New Mexico. And that’s what we’re actively pursuing information and explanations from HSD.”

The Santa Fe New Mexican writes in an editorial, “It stretches credulity to believe that 15 providers would all deserve what is essentially a death penalty before even determining what, if any, criminal charges they might face. One punishment, we predict, will not fit all agencies involved. The punishment, further, has meant a disruption in mental health and substance abuse care to some of the state’s most vulnerable people. Such an interruption did not have to happen, and answers about why that decision occurred should not have to wait.”

So here we remain, months after providers were suspended in June, waiting to learn more. Blacked-out pages, released only under pressure, did not take us much further in finding answers.—Ruth McCambridge

  • Mitch Bruski

    I thought in business affairs, following our court theory, people/organizations are innocent until proven guilty. The disruption of this kind of audit with no access to specific findings is upsetting on a number of levels: for clients, existing organizations and public trust.