Investigation of “Purged” Behavioral Health Nonprofits in NM Concludes—No Fraud Found

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April 10, 2016; Albuquerque Journal

NPQ has, for the past three years, been following the case of 15 behavioral health nonprofits whose Medicaid contracts were cut after an audit found the possibility of fraud. The last two of those 15 have now been cleared of intentional wrongdoing—but only after the large majority of them went under. The contracts were transferred to five providers based in Arizona. Two of those Arizona providers have already pulled out, with a third planning to do so in June.

New Mexico’s current attorney general, Hector Balderas, who took office after the audit and withdrawal of funds had been accomplished said his office had found no evidence of fraud and called the whole situation “regrettable.” Where the original audit, performed by Public Consulting Group, a contractor with its own reputational problems, had estimated the losses from overbilling to be $36 million, the AG’s investigations found the real number to be only $1.16 million.

Among all the agencies, “although the investigation identified some regulatory violations, we were unable to substantiate a deliberate or intentional pattern of fraud,” the AG said in a letter to the state legislature. “The department must find a way to fight fraud that does not put services to the most vulnerable at risk or result in hundreds of New Mexicans losing their jobs.”

But the Human Services Department that initiated the probe criticized Balderas, saying his “decision to allow these agencies to get away scot-free reeks of bad politics and shortchanges the people who rely on Medicaid the most.”

Legislators who have been pressing for the findings were not surprised. “The state’s entire mental health system of care was wrecked by these baseless allegations. None of the providers defrauded the government,” said Senate President Pro Tem Mary Kay Papen (D-Las Cruces). Senate Majority Leader Michael Sanchez (D-Belen) called the administration “incredibly reckless” and said the purge was “one of the worst acts of a governor’s administration in New Mexico’s entire history.”

Administration critics say services to the neediest have suffered. The administration contends that the number of New Mexicans receiving behavioral health services actually increased in 2014 over prior years, attributing that to factors including the expansion of Medicaid coverage and a revamp of the Medicaid system.

Meanwhile, ten of the purged providers have filed suit, with some asking for a federal investigation of the whole process. One of the Arizona groups is also suing, alleging that it was lured into the state but was not paid what was promised.

This continues to be one of the more alarming cases of lack of due process for nonprofits that we have ever seen.—Ruth McCambridge