Even in his final days of battling leukemia in early 2016, Jose Frietze was fighting for the youth services agency he founded in 1977. The state Human Services Department had accused the organization — Las Cruces-based Families and Youth Inc. — of potential Medicaid fraud and overbilling by $856,745 in 2013. A stop payment of $1.5 million in Medicaid funding for services already provided crimped FYI’s cash flow, leading to layoffs. And because of the accusations, FYI was forced to hand off part of its business to an Arizona company brought in by Gov. Susana Martinez’s administration. Frietze’s daughters Victoria and Marisa remember how tough the allegations were on Frietze and their family.
The federal government will take a look into New Mexico’s behavioral health services, according to the four Democratic members of the state’s congressional delegation. In a letter last month to Sens. Tom Udall and Martin Heinrich and Reps. Michelle Lujan Grisham and Ben Ray Luján, the federal Department of Health and Human Services Inspector General Daniel Levinson confirmed the upcoming review. “OIG will review the extent to which behavioral health providers are included in the States’ managed care plans and the types of care offered by these providers,” Levinson wrote in the June 28 letter.
There’s no getting around it. Four years after Gov. Susana Martinez’s administration charged 15 behavioral health organizations with potentially defrauding the state’s Medicaid program, its case has experienced a slow-motion unraveling. No Medicaid fraud was ever found. And those eye-popping estimates that added up to $36 million the organizations had overbilled Medicaid? In the summer of 2017, the Human Services Department (HSD) is seeking drastically lower reimbursements for overbilling the public health insurance program for low-income residents, a review of public records and state court documents has found.
Years after the state cut off Medicaid funding to 15 behavioral health providers, citing “credible allegations of fraud,” the Attorney General cleared all providers of the alleged fraud. AG Hector Balderas made finishing the investigation into the providers a key goal when he entered office in 2015. Previously: Top ten stories of 2016: 10-6; #5: NM Dems buck national trend, retake House; #4: Demesia Padilla resigns
In April, Balderas announced the investigation was complete, with no evidence of fraud in the final two companies. Balderas previously cleared ten providers in February, and had already cleared two others in 2015. The allegations of fraud came from a 2013 audit for the state Human Services Department by Boston-based Public Consulting Group.
Another of the behavioral health providers brought in from Arizona to fill the gap made after the state Human Services Department cut off funding to 15 organizations is leaving the state. Valle del Sol is the fourth of five organizations from Arizona that were brought into the state in 2013 to take over behavioral health services to leave the state. The Santa Fe New Mexican reported that an executive with Valle del Sol said the company is working with HSD on the transition to aid patients. A spokesman for HSD said the same thing to the northern New Mexico paper. Valle del Sol had seven locations throughout the state.
New Mexico legislators want the Department of Justice to look into the behavioral health shakeup from 2013 after the state Attorney General found no fraud. Senate President Pro Tem Mary Kay Papen of Las Cruces, Senate Majority Leader Michael Sanchez of Belen, House Minority Leader Brian Egolf of Albuquerque, all Democrats, sent the letter. The three received letters from providers who had Medicaid funding cut by the state, and forwarded these letters to the three members of the U.S. House and two members of the U.S. Senate from New Mexico. “The contents of these letters greatly concern us,” the three legislative leaders wrote. “We have also been contacted by constituents, requesting our assistance with accessing behavioral health services over the past two years.”
All 15 of the behavioral health providers that the state Human Services Department cut Medicaid funding from in a controversial action three years ago have now been cleared of allegations of fraud. Attorney General Hector Balderas told legislators Tuesday his investigation into the final two providers found no allegations of fraud. These final two providers are Pathways and TeamBuilders. HSD cut off Medicaid funding to the state’s 15 behavioral providers in 2013, citing “credible allegations of fraud” after the state department contracted an audit with Boston-based Public Consulting Group. Some of the providers shut their doors after the state halted their federal Medicaid funding, causing a shakeup in the behavioral health system around New Mexico.
Another Arizona-based behavioral health provider is leaving New Mexico, officials announced Friday. In the latest departure, 3,000 patients currently in substance abuse, mental health and other behavioral health programs—mostly in Northern New Mexico—will have to find a new provider in 90 days, according to a report in today’s Santa Fe New Mexican. The newspaper reported that Agave Health, Inc. is leaving the state, the third of five behavioral health providers from Arizona to leave the state since the shakeup in 2013. “Today, Agave is faced with an insurmountable obstacle, and after many months of undue financial hardship and the foreseen rate reductions in Medicaid rates, the board of directors has regretfully decided to close Agave Health,” Dr. Heath Kilgore, chief executive officer of Agave, and Jeff Jorde, president of the firm, said in a statement. Agave Health is the third of the five Arizona firms to leave New Mexico since the state signed contracts with them for more than $17 million.
The company responsible for oversight of the 15 behavioral health providers that lost funding for alleged Medicaid fraud is now itself facing lawsuits over alleged fraud. OptumHealth faces three lawsuits over alleged malfeasance in its contract with the state to oversee the state’s Medicaid program. Of the 15 companies that the state Human Services Department, citing an audit by Public Consulting Group, said had “credible allegations of fraud” already 13 have been exonerated by the state Attorney General after investigations. It was Optum’s efforts to root out alleged fraud and waste that led to the shakeup. The shakeup included the state bringing in Arizona companies to take over for the New Mexico providers that no longer had funding to continue, some of which have went out of business.
—HSD Secretary talks behavioral health shakeup. Here at NM Political Report, we’ve been following the behavioral health shakeup that came after the state Human Services Department decided to cut off Medicaid funding for 15 providers, citing “credible allegations of fraud.”
Since then, several went out of business and the Attorney General exonerated 13 of the groups. While he wasn’t at the helm at the time, legislators on the Legislative Finance Committee still wanted an update on the process from the department’s secretary. HSD Secretary Brent Earnest explained that there was “still some overbilling” with those providers who were cleared and there was an ongoing administrative process to deal with the overbilling. He was less willing to say what that process was, beyond saying it would be “months more than years” before the situations were resolved and that currently OptumHealth is holding the funds.