Category Archives: Secretary Squire
By: Ed Roche, founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations
It was published in RACMonitor.
Healthcare providers sometimes can get caught up in a political storm. When this happens, audits can be used as a weapon to help preferred providers muscle into a market. This appears to have happened recently in New Mexico.
Let’s go back in time.
On Sept. 14, 2010, Susana Martinez was in Washington, D.C. She was looking for campaign contributions to run for the governorship of New Mexico. She visited the office of the government lobbying division of UnitedHealth Group and picked up a check for $25,000.
The next day, Martinez published an editorial claiming that Bill Richardson’s administration in New Mexico was tolerating much “waste, fraud and abuse” in its Medicaid program. Eventually, she was elected as the 31st governor of New Mexico and took office Jan. 1, 2011.
According to an email trail, by the fall of 2012, Martinez’s administration was busy exchanging emails with members of the boards of directors of several healthcare companies in Arizona. During this same period, the Arizonans made a number of contributions to a political action committee (PAC) set up to support Martinez. At the same time, officers from New Mexico’s Human Services Department (HSD) made a number of unannounced visits to Arizona.
The lobbying continued in earnest. Hosted in part by UnitedHealth money, the head of HSD visited Utah’s premier ski resort, and the bill was paid for by an organization financed in part by UnitedHealth. The governor’s chief of staff was treated to dinner at an expensive steakhouse in Las Vegas. There is suspicion of other contacts, but these have not been identified. All of these meetings were confidential.
The governor continued to publicly criticize health services in New Mexico. She focused on 15 mental health providers who had been in business for 40 years. They were serving 87 percent of the mental health population in New Mexico and had developed an extensive delivery system that reached all corners of the state.
Martinez honed in on one mental health provider because the CEO used a private aircraft. He was accused of using Medicaid funds to finance a lavish lifestyle. None of this was true. It turned out that the owner had operations all over the state and used the plane for commuting, but it made for good sound bites to feed the press.
The state decided to raise the pressure against the providers. Public Consulting Group (PCG), a Boston-based contractor, was called in to perform an audit of mental health services. In addition to taking samples and performing analyses of claims, PCG was asked to look for “credible allegations of fraud.”
In legal terms, the phrase “credible allegations of fraud” carries much weight. Under the Patient Protection and Affordable Care Act, it can be used to justify punitive actions against a provider. It is surprising that only “allegations” are necessary, not demonstrated proof. The reality is that in practical terms, a provider can be shut down based on allegations alone.
In a letter regarding its work, PCG stated that “there are no credible allegations of fraud.” Evidently, that was the wrong answer. PCG was kicked out of New Mexico and not allowed to complete its audit. HSD took over.
The PCG letter had been supplied to HSD in a Microsoft Word format. In a stunning act, HSD removed the statement concluding that there were “no credible allegations of fraud.” HSD continued to use the PCG letter, but only in this altered form.
HSD continued to insist publicly that there were credible allegations of fraud. Since PCG had been kicked out before completing the audit, a HSD staff attorney took the liberty of performing several statistical extrapolations that generated a repayment demand of more than $36 million. During testimony, the attorney admitted that the extent of his experience with statistics was an introductory course he had taken years earlier in college.
Two years later, statistical experts from Barraclough NY LLC who are elected fellows of the American Statistical Association examined HSD’s work and concluded that it was faulty and unreliable. They concluded there was zero credibility in the extrapolations.
But for the time being, the extrapolations and audits were powerful tools. On June 24, 2013, all of the aforementioned 15 nonprofits were called into a meeting with HSD. All were accused of massive fraud. They were informed that their Medicaid payments were to be impounded. The money needed to service 87 percent of New Mexico’s mental health population was being cut off.
The next day, UnitedHealth announced a $22 million investment in Santa Fe. We have not been able to track down the direct beneficiaries of these investments. However, we do know that the governor’s office immediately issued a press release on their behalf.
The 15 New Mexico providers were being driven out of business. This had been planned well in advance. Shortly thereafter, the government of New Mexico, through HSD, [approved] issued $18 million in no-bid contracts to five Arizona-based providers affiliated with UnitedHealth. These are the same companies that had been contributing to the governor’s PAC.
These five Arizona companies then took over all mental health services for New Mexico. Their first step was to begin cutting back services. To give one example: patients with two hours therapy per week were cut back to 10 fifteen-minute sessions per year.It was the beginning of a mental health crisis in New Mexico.
As of today, two of the Arizona providers have abandoned their work in New Mexico. A third is in the process of leaving. What is the result? Thousands of New Mexico mental health patients have been left with no services. Entire communities have been completely shut [cut] off. The most vulnerable communities have been hit the hardest.
Through litigation, the 15 original providers forced the New Mexico Attorney General to examine the situation. It took a long time. All of the providers now are out of business. The Attorney General reported a few weeks ago that there were never any credible allegations of fraud.
This should mean that the impounded money would be returned to the 15 providers. After all, the legal reason why it was impounded in the first place has been shown to be false. One would think that the situation could return to normal.
The original 15 should be able to continue their business, and hire back the more than 1,500 persons they had been forced to lay off. Once the impounded monies are returned to the providers, they will be able to pay their legal bills, which now add up to hundreds of thousands of dollars.
Unfortunately, that is not happening. HSD still is claiming that the $36 million extrapolation is due, and that actually, the providers owe the state money. The New Mexico government is not budging from its position. The litigation continues.
Meanwhile, New Mexico now is tied with Montana in having the highest suicide rate in the continental United States.
“Gov. Susana Martinez’s controversial Human Services Department Secretary Sidonie Squier resigned on Thursday, sources inside the department confirmed,” according to the Santa Fe New Mexican.
Patsy Romero, COO of Easter Seals El Mirador wrote to me, “post on your blog and say thank God that this woman is out after she falsely accused innocent people of being criminal and specifically targeted individuals without any evidence to support her allegations.”
According to a member of legislature, Squier had stated to the member that she was “after Patsy and Roque.” (Roque is the CEO of the Rio Grande Behavioral Health).
See the documentary about the events in New Mexico leading up to the accusations of fraud against 15 behavioral healthcare providers here.
Obviously, I cannot comment or have an opinion, so here is the rest of the article from the Santa Fe New Mexican:
“In a state that ranks at or near the bottom of the nation in childhood hunger, poverty and unemployment, Squier has been a target of criticisms from groups that advocate for the poor, beginning with a statement in an email last year from her office that no evidence of hunger in the state exists in New Mexico.
Squier later backed off the statement, but came under fire again last year over the sudden removal of 15 behavioral health providers accused of fraud and their replacement with Arizona companies. The Human Services Department’s suspicions have yet to be proven. See my blog: “Because of PCG Audit, New Mexico Freezes Mental Health Services!”
Democrats in the New Mexico Senate this year targeted Squier with a “no confidence” resolution over her remarks about hunger in the state and the behavioral health shakeup.
Since then, a federal judge chided the Human Services Department when he ordered it to immediately eliminate a backlog of thousands of applications for food and health benefits from poor New Mexicans that were months overdue for processing. The department has since satisfied the court that the backlog for those most desperately in need of food assistance has been eliminated, but advocates for impoverished residents of the state say problems in other areas continue to deny eligible applicants much needed benefits.
While working to satisfy the court order over the benefit delays, Squier announced plans to restore a requirement that some food benefit recipients work, receive job training or perform community service in order to keep receiving assistance. A state district judge in Santa Fe delayed the launch of the regulatory change last week in a lawsuit that challenged whether the Human Services Department fully disclosed all the relevant details of the requirement before adopting it.
On Wednesday, the department announced it will start the hearing process for the work requirement anew, further delaying its implementation.
As election results came in Tuesday night and Martinez was swept into office for a second term by a large margin, U.S. Rep. Michelle Lujan Grisham, D-New Mexico, said she planned to apply pressure on the governor to dump Squier based on the volume of complaints Lujan Grisham’s office has received about human services in the state.
“I don’t think that Sidonie Squier is the right leadership for the Human Services Department,” Lujan Grisham told The New Mexican.”
New Mexico Senator Proposes Forefront State Legislation to Provide Due Process to Providers Accused of Fraud (Oh, And Here Are Some NC Election Results)
Whew…the election is over. No more political ads, emails, and other propaganda… Ok, so we have our new elected officials, now our new elected officials need to pass some new legislation protecting providers when it comes to “noncredible allegations of fraud.”
Due Process…It’s such a fundamental part of our society that we rarely think about due process on a day-to-day basis. Not until due process is violated, do we usually contemplate it.
However, when it comes to credible allegations of fraud against a health care provider who accepts Medicaid or Medicare, the federal government, arguably, dropped the ball. The federal regulations instruct the states to “afford due process,” but fail to instruct how. 42 CFR 455.23. Which leaves the due process component in the states’ hands.
To begin with, the standard for a credible allegation of fraud is excruciatingly low. I mean, LOW. The bar has been set so low that an ant would probably climb over the bar rather than walk beneath it. See my past blogs: “New Mexico Affords No Due Process Based on a PCG Audit.”and “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!!” For example, a disgruntled employee or a competitor can draft an anonymous letter without a signature and without a return address, send it to the single state entity, and all your reimbursements could be suspended without any notice to you.
Senator Mary Kay Papen of New Mexico and her team have drafted a fantastic proposed state bill which would provide safeguards for health care providers’ due process while still allowing the state to investigate Medicaid fraud. I mean, let’s face it, we want to catch Medicaid fraud, but we don’t all live in Florida…or New York. 🙂 Fraud is much more infrequent than people imagine compared to the overreaching ability of the single state agencies to suspend innocent providers’ reimbursements.
I had the privilege of flying out to New Mexico a week or so ago to testify before a subcommittee of the legislature about my opinion of Senator Papen’s proposed bill.
Little known fact about New Mexico: The New Mexico legislature is the only unpaid legislature in the country. I had no idea. To which, I said, which I believed was a logical statement, “why doesn’t the legislature pass a bill that creates salaries for members of the legislature?” I was told that no bill providing salaries to members of legislature would ever be signed by the governor (no specific governor, I believe, but, any governor) because the status of governor is so important/powerful in New Mexico due to the less powerful legislature. In other words, supposedly, no governor would sign a bill instituting salaries for members of legislature because the governor would be fearful to lose power. (I do not know the validity of this conjecture, but I do find it interesting).
Going back to the proposed bill…
For starters, the proposed bill re-defines “credible allegation of fraud.” Instead of the current federal statute, which holds an allegation credible if it is merely uttered aloud, the proposed bill states that a credible allegation of fraud is credible only after the single state entity:
1. Considers the totality of the facts and circumstances;
2. Conducts a careful review of the facts, evidence, and facts; and
3. Determines that sufficient indicia of reliability exist to justify a reason to refer the provider to the Attorney General (AG) for further investigation.
The proposed bill also forbids extrapolation as to alleged overpayments.
Further, the proposed bill forbids the state agency from suspending payments until certain safety procedures are met. For example, all appeals and administrative remedies must be exhausted, and the bill allows the provider to post a bond in order to keep receiving reimbursements.
It also allows a provider to receive injunctive relief against the agency in order to continue receiving reimbursements.
And, my favorite part, states that a judge may award attorney’s fees if it shown that the agency substantially prejudiced the provider’s rights and acted arbitrarily and capriciously. Obviously, the attorneys’ fees are not a given; the provider would need to show that the state, somehow, acted, for example, without enough evidence or failed to provide due process.
Senator Papen’s proposed bill is just that…a proposed bill. But, it is a start in the right direction. If, in fact, the federal government placed the burden on the states to implement due process in situations in which there are allegations of fraud, then the states need to act. Because, right now, when there is noncredible allegation of fraud, the state has the ability, and is using this ability in many states, to completely shut down providers. In essence, an allegation of fraud becomes the death of a company…no reimbursements, no income, no payroll, terminate staff, cease paying bills, file for bankruptcy.
I encourage more states to review Senator Papen’s proposed bill and propose similar bills in other states.
And for you politicians…the best part? At least, in New Mexico, the bill appeared to be supported by a non-partisan group.
BTW, in case you are interested, here are the changes to our General Assembly and Congress after Tuesday’s election: (brought to you by Tracy Colvard, Vice President of Government Relations and Public Policy for AHHC).
North Carolina Legislature
- Republicans in N.C. House (2015-16): 74
- Number needed for supermajority: 72
- Democrats in N.C. House (2015-16): 46
- Change from 2013-2014: +3 DEM
- New faces in House: 15
- Incumbents defeated: 4
- Republicans in N.C. Senate (2015-16): 34
- Number needed for supermajority: 30
- Democrats in N.C. Senate (2015-16): 16
- Change from 2013-2014: +1 GOP
- New faces in Senate: 6
- Incumbents defeated: 1
N.C. Congressional Delegation
- Republicans in U.S. House: 10
- Democrats in U.S. House: 3
- Change from 2013-2014: +1 GOP
- Republicans in U.S. Senate: 2
- Democrats in U.S. Senate: 0
- Change from 2013-2014: +1 (GOP)
Thanks, Tracy, for those demographics.
Now, let’s get some due process safeguards for health care providers!!!!
All right, peeps, a forewarning…there will, most likely, not be a blog post next week from yours truly.
You have read my blogs in the past regarding the flagrant violations of due process against 15 behavioral health care providers in New Mexico when they were all accused of credible allegations of fraud. If not, see below.
See “New Mexico Affords No Due Process Based on a PCG Audit!;” “NC Medicaid: Are New Mexico and North Carolina Fraternal Twins? At Least, When It Comes to PCG!;” and “Because of PCG Audit, New Mexico Freezes Mental Health Services.”
The first administrative action as to an alleged overpayment is going forward this week, and I am flying to New Mexico early tomorrow morning. Including travel, the administrative action will last all week…hence the probability of no blog.
I tell you what…PCG is PCG is PCG is PCG. New Mexico or North Carolina. The motus operandi is the same. (Public Consulting Group).
Details to follow the trial.
Documentary on New Mexico Behavioral Health: Breaking Bonds: The Shutdown of New Mexico’s Behavioral Health Care Providers
I am finally back home in North Carolina from beautiful New Mexico. If you ever forget how large America is, fly across country for one day and come back. I think I ate 12 packets of Delta peanuts, and I know I spent over $8 for a hamburger at the Atlanta airport during a layover (How do they sleep at night charging that much for a hamburger?!). But…WOW!!…did I learn some eye-opening, Medicaid information.
It is without question that, recently, North Carolina providers that accept Medicaid have undergone serious, over-zealous scrutiny and audits. Even more so than normal. And, even more so, behavioral health care providers are undergoing increased scrutiny with the implementation of the Managed Care Organizations (MCOs).
But what I saw in New Mexico that has happened to 15 behavioral health care providers (BHP) in New Mexico, which served 87% of the NM Medicaid recipients, would make any American cringe.
Let me set the stage:
These BHP have been in business for a very long time without issue. OptumHealth (Optum) is one of the acting MCOs in New Mexico (NM). Analogous to our Alliance, EastPointe, or East Carolina Behavioral Health. From my understanding, sometime in January 2013, Optum contacted the NM single state entity that manages Medicaid. (In NC, the single state entity is the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA); in NM, it is Human Services Department (HSD)). Optum alleged that 15 BHP were committing abhorrent billing practices.
According to the representative for HSD, HSD decided to contract with Public Consulting Group (PCG) to conduct an independent audit to determine whether Optim’s allegations had merit. So, in Jan or Feb. 2013, HSD contracted with PCG to conduct the independent audit on the 15 BHP. The PCG Executive Summary of its audit was published in February 2013.
You can find the entire Executive Summary here.
PCG found, in pertinent part:
I know, hard to read. Anyway, PCG found over $36 million in overpayments to these 15 providers.
At first blush, one would think, “Holy cow! These providers were overpaid $36 million!” But hold on…how many providers here in NC have undergone a PCG audit, only to find that PCG’s audit was erroneous, the extrapolation was inflated, and many noncompliance claims were actually compliant?
See NC Medicaid Extrapolation Audits: How Does $100 Become $100,000? Check for Clusters! Or Overinclusive NC Medicaid Recoupments and the Provider “Without Fault” Defense. Or NC Medicaid RACs Paid to Find Errors By Providers, No Incentive to Find Errors By DMA. Or The Exaggeration of the Tentative Notice of Overpayments.
The reality is that most PCG audits (at least the ones I have reviewed) are erroneous.
At the end of the day, the provider does NOT owe the over-inflated amount PCG claims. So, with the knowledge that many (all that I have seen) of PCG’s audits are erroneous, let me get back to my story.
Based on PCG’s audit, HSD determined that credible allegations of fraud existed and immediately suspended the Medicaid payments for all 15 providers.
But…get this…HSD provided zero appeal rights. The providers were unable to appeal the State’s decision to suspend the Medicaid payments. And even worse, PCG and the State refused to give the providers the data compiled by PCG that, supposedly, demonstrated the credible allegations of fraud. So the providers could not even defend themselves against the audit results because the providers were not allowed to see the audit results. To this day, the providers do not know what documents PCG audited or what the purported noncompliance is.
This would be similar to me accusing you of embezzling money from my company, but never showing you what proof I have. Firing you for embezzlement and calling the police. The police arresting you based on my accusation, but you never get a day in court or even the proof to defend yourself.
In America, really? Where is the due process?
The Fourteenth Amendment of the U.S. Constitution states, in pertinent part:
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
I mean, come on, due process is a benchmark of our country. As American as cheeseburgers and the 4th of July…
Yet, these 15 providers in New Mexico received no due process.
During the Tuesday, September 3, 2013, New Mexico behavioral health subcommittee, Larry Heyek, the HSD Deputy General Counsel, cited the authority for HSD’s preliminary investigation as 42 C.F.R. 455.14, which states that:
“If the agency receives a complaint of Medicaid fraud or abuse from any source or identifies any questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation.”
Interestingly enough, the C.F.R. section preceding 455.14 requires due process.
42 CFR 455.13 states:
The Medicaid agency must have—
Yet, the State of New Mexico, based on PCG’s audit, infringed on the legal rights of all 15 providers and no provider was afforded due process of law.
So what happened to these 15 providers due to the PCG audit? Did HSD attempt a recoupment of the $36 million? Did HSD terminate the 15 providers’ Medicaid contract? A plan of correction?
HSD went to Arizona, hired 3-5 (not sure on the number) large, health care providers to take over the 15 providers’ companies. Literally, these Arizona companies have gone to the 15 providers’ buildings and have either purchased the buildings or leased the buildings and the 15 providers no longer exist (realistically…legally, the companies still exist). Staff was fired. Medicaid recipients were not serviced.
Talk about a hostile takeover!!!
But, here is the kicker….
HSD, supposedly, hired PCG to conduct an independent audit on the 15 providers. Yet, Thomas Aldrich, a manager at PCG, testified at the NM subcommittee’s meeting that Mr. Aldrich (PRIOR to conducting the “independent” audit) flew with Secretary Sidonie Squier, and others, to Arizona to vet health care providers to take over the 15 NM providers.
PRIOR to the audit!!!!
Secretary Squier did not know whether Optum’s allegations of abhorrent billing practices had merit. Yet, she and Mr. Aldrich flew to Arizona, on NM Medicaid dollars, and sought out Arizona companies that could take over the 15 NM providers. BEFORE any proof of truly abhorrent billing.
BEFORE the providers could defend themselves.
Imagine the State of North Carolina coming and taking over your company. Imagine you have no due process. Imagine you don’t even understand the charges with which the State is charging you.
Now imagine that the scenario is reality…in New Mexico.
Oh, BTW, Thomas Aldrich, the manager at PCG, testified in front of the NM behavioral health committee that he is in charge of two major projects: (1) the New Mexico audit; and (2) the North Carolina audits.