Category Archives: New Mexico
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.
Now exonerated by the state Attorney General’s Office, many organizations are challenging even those much-lower estimates in administrative hearings or in state court.
Consider Teambuilders Counseling Services, one of the accused behavioral health providers.
Last fall it received a new estimate from the New Mexico Human Services Department. Previous numbers had varied from as high as $9.6 million to as low as $2 million. But the new figure deviated sharply from earlier calculations when Chester Boyett, an administrative law judge in the state agency’s Fair Hearings Bureau, ruled Teambuilders owed only $896.35.
Boyett argued his agency had built its $2 million estimate of Medicaid overbilling on faulty analysis, according to his 12-page decision.
Nancy Smith-Leslie, the department’s director of the Medical Assistance Division, ignored Boyett’s recommendation. In a Jan. 6 letter she said the agency’s analysis was sound, even though she seemed to confirm Boyett’s critique in a Nov. 2 memo in which she had noted the inaccuracy of the extrapolated amount. In that memo Teambuilders and its attorney had not “sufficiently disputed” the method of extrapolation, however, she wrote.
In her Jan. 6 letter, Smith-Leslie sought to clear up matters. She amended her previous statement, saying the extrapolation referred to in her Nov. 2 memo indeed was correct.
Teambuilders and its attorney, Knicole Emanuel, appealed HSD’s ruling over whether Teambuilders overbilled Medicaid and by how much to state court, where three other former behavioral health organizations are fighting HSD’s extrapolated overpayments.
Boyett’s finding that Teambuilders owed hundreds rather than millions of dollars — even if it was ignored — represents a compelling data point given where things stand with other providers.
And last September HSD closed the books on another organization — Las Cruces-based Families and Youth Inc. — without demanding any reimbursements for overbilling and releasing $1.4 million in Medicaid dollars the state had suspended. The action represented a reversal after a state-ordered 2013 audit that found $856,745 in potential Medicaid overbilling by FYI.
In fact, a review of state and court documents by New Mexico In Depth reveals a pattern regarding the state agency’s overbilling estimates: In many cases, they are moving targets, usually on a downward trajectory.
Like Southwest’s, some have dropped spectacularly. Setting aside Boyett’s figure of $896, even the $2 million HSD claims Teambuilders owes is far smaller than a high of $12 million.
Hogares Inc., another organization accused of fraud, watched last year as the state revised its overbilling estimates five times over six months, starting at $9.5 million in January and ending with $3.1 million in June, according to state court documents.
Meanwhile, Easter Seals El Mirador, initially accused of $850,000 in potential Medicaid overbilling, now stands accused of $127,000.
Emanuel and Bryan Davis, another attorney representing many of the formerly accused organizations, said the constantly changing estimates are due to HSD.
The state agency is examining a sampling of each organization’s Medicaid claims and asking the organizations for documentation to prove the government program was properly billed, they said.
“In most cases (the overbilling estimates) are dropping precipitously” as organizations submit the documents requested by HSD, Davis said.
To cite one example, HSD’s latest overbilling estimate for Counseling Associates, Inc. is $96,000, said Davis, who represents the organization. That compares to $3 million in potential overbilling a 2013 state-ordered audit found.
It is a perplexing situation, given that the Human Services Department found “‘credible allegations of fraud” against the 15 organizations using that 2013 audit, which was performed by Massachusetts-based Public Consulting Group Inc.
“They threw PCG’s audit in the trash,” Davis said of HSD, noting the cost. HSD agreed to pay PCG up to $3 million for the study in February 2013.
The current situation caused Davis to wonder “why PCG didn’t have these documents in the first place,” he said.
Emanuel offered a pointed answer.
“HSD did not allow PCG to gather all the documents,” she said.
A spokesperson for HSD did not respond multiple requests for comment for this story.
Repercussions of the Medicaid crackdown
The fight over Medicaid overbilling isn’t the only legacy left from the Medicaid crackdown, which happened the last week of June 2013.
The Martinez administration’s decision affected lives. Many lives if you listen to behavioral health advocates and officials in the 15 organizations.
Charging the organizations with fraud and then suspending Medicaid payments to many of them disrupted mental health and addiction services for tens of thousands of New Mexicans. It created chaos for employees. And four years on it has left a number of business failures in its wake, with many of the accused organizations unable to survive long-term without Medicaid dollars.
Teambuilders, which once operated 52 locations in 17 New Mexico counties, is no longer in business, according to Emanuel. Neither is Las Cruces-based Southwest Counseling Center. Or Hogares.
At the same time a gap in care has opened up after three of five Arizona companies the Martinez administration brought in to care for the vulnerable populations have departed the state, leaving New Mexico to pick up the pieces.
“It’s a mess. It’s disgusting,” said James Kerlin, executive director of The Counseling Center of Alamogordo, which no longer sees clients. Like Teambuilders, Hogares, Southwest Counseling and others, it was unable to stay in business without the flow of Medicaid dollars the state suspended. “I want the public to know where we’re at and what’s been done to us. I’m going to start making a lot of noise. This is ridiculous.”
Kerlin’s organization was the first of the 15 organizations exonerated by then Attorney General Gary King in early 2014. And it offered the earliest glimpse of the weaknesses in the Martinez administration’s case against the behavioral health providers.
First signs of weakness in the state’s case
HSD hired PCG to audit all 15 organizations and it found $655,000 in potential Medicaid overbilling by the Counseling Center.
PCG reached that conclusion after finding $1,873 in questionable Medicaid claims and then extrapolating from those claims that the center could have overbilled Medicaid by more than $600,000 based on the size of its Medicaid business over several years.
But during its fraud investigation the AG’s office flagged fewer Counseling Center claims than PCG and found a much lower cost of potential overbillings. It resolved some of the issues by reviewing records and interviewing staff.
In many cases, auditors give staff of audited organizations an opportunity to refute findings or address misunderstandings before finalizing their findings. For example, most state and local governmental agencies are audited annually in New Mexico. Staff within those agencies are afforded the chance to see and respond to audit findings within a certain amount of time before audits are made public.
Kerlin did not get that opportunity during the PCG audit.
PCG later confirmed to NMID that it is the firm’s standard procedure to give companies a chance to respond before issuing official audit findings. A PCG spokesperson would not tell NMID why that didn’t happen in New Mexico.
By the time HSD held a hearing for the Counseling Center, the state agency had lowered its Medicaid overbillings estimate to $379,135. And Kerlin finally was able to hear the accusations against his organization.
Counseling Center submitted evidence to rebut the state agency’s claims, but the hearing officer sided with HSD. The Counseling Center appealed to state court.
In late 2015, State District Court Judge Francis Mathew ruled in favor of Kerlin’s organization, calling HSD’s hearing decision “arbitrary, capricious or otherwise not in accordance with law.”
In addition, the judge found the administrative law judge had shifted the burden of proof from HSD to the Counseling Center and then set too high a standard for the organization. Citing portions of the administrative law judge’s ruling, Mathew noted the Counseling Center had “offered certain amount of credible evidence in opposition” to HSD’s findings but not as much as the hearing officer required: a “100 percent audit” of records, which the state district judge found “unreasonable.”
HSD appealed the judge’s decision to the state Court of Appeals.
Examples of rejected claims
The overly stringent standards for documentation — and even a basic lack of understanding by HSD staff of Medicaid billing requirements — can be found in cases involving other organizations that are contesting the department’s charges of overbilling, a review of court documents found.
In a motion appealing the administrative law judge’s ruling that it owed the state $127,240, Easter Seals disputed seven claims, including one HSD had rejected because there was no medication consent form in place, even though the patient and parent had signed a general informed consent form and the patient’s parent was present when the medication was prescribed.
According to the court document, “There was no dispute that the service was medically necessary and was provided to J.A. There is no question as to quality of care provided to the recipient of services.”
Another claim was rejected because there was no doctor’s signature on a psychosocial assessment, however the state could provide no legal requirement for the signature, according to Easter Seals’ appeal. “A signature might be best practice, or advisable, but it is not a requirement,” the filing argued.
Also in the appeal, Easter Seals noted that the Human Service Department’s coding witness not only could not cite rules disallowing two services to be delivered during the same time period, but also appeared to be using a coding manual from Medicare, the insurance for seniors, and not Medicaid. And furthermore, she did not even realize there was a manual for Medicaid.
HSD ignored evidence in 2013 that refuted overbilling claims
Even those organizations that have avoided administrative hearings and court battles have stories to tell about HSD and its actions.
It wasn’t an easy decision, its CEO said this week, and it shouldn’t be construed as agreement with the state’s conclusions.
“We agree to disagree” is how Steven Hansen put it.
Until Presbyterian began negotiating an agreement, in fact, it had not seen the findings of the PCG audit.
During the negotiations PMS officials found documents they thought could refute PCG’s audit findings, Hansen and other PMS officials told state lawmakers in October 2014.
Presbyterian tried to give the files to PCG and the Human Services Department as proof that they had properly billed Medicaid for payment. The consulting firm said it would review the documentation if directed to by HSD, but PCG later told Presbyterian Medical Services the state agency “did not want to accept those records.”
“We believe there is a strong argument that nothing was owed back to HSD,” Presbyterian’s general counsel told lawmakers in 2014.
At that point, Presbyterian had to make a choice: Settle with the state or fight and possibly run out of money.
Presbyterian settled, paying the $4 million.
The decision has worked out for the organization.
“We’re doing more business than we did before” the 2013 crackdown, Hansen said.
That’s because as the Arizona providers the Martinez administration brought in have left New Mexico, Presbyterian Medical Services has taken over mental health and addiction services.
Presbyterian has added Carlsbad, Alamogordo, Deming, Espańola, Grants, Artesia, Santa Fe and Rio Rancho to the places it provides behavioral health services, Hansen said, adding it’s “bits and pieces” of areas formerly serviced by three of the five Arizona companies.
“We feel like it’s going in a good direction for us,” Hansen said. “That’s hard for us to say because there were so many great organizations that are no longer in the state. But we’ve had to move on.”
“You’re fired!” President Trump has quite a bit of practice saying this line from The Apprentice. Recently, former AG Sally Yates was on the receiving end of the line. “It’s not personal. It’s just business.”
The Yates Memo created quite a ruckus when it was first disseminated. All of a sudden, executives of health care agencies were warned that they could be held individually accountable for actions of the agency.
What is the Yates Memo?
The Yates Memo is a memorandum written by Sally Quillian Yates, former Deputy Attorney General for the U.S. Dept. of Justice, dated September 9, 2015.
It basically outlines how federal investigations for corporate fraud or misconduct should be conducted and what will be expected from the corporation getting investigated. It was not written specifically about health care providers; it is a general memo outlining the investigations of corporate wrongdoing across the board. But it is germane to health care providers.
January 31, 2017, Sally Yates was fired by Trump. So what happens to her memo?
With Yates terminated, will the memo that has shaken corporate America that bears her name go as well? Newly appointed Attorney General Jeff Sessions wrote his own memo on March 8, 2017, entitled “Memorandum for all Federal Prosecutors.” it directs prosecutors to focus not on corporate crime, but on violent crime. However, investigations into potential fraud cases and scrutiny on providers appear to remain a top priority under the new administration, as President Donald Trump’s proposed budget plan for fiscal year 2018 included a $70 million boost in funding for the Health Care Fraud and Abuse Control program.
Despite Sessions vow to focus on violent crimes, he has been clear that health care fraud remains a high priority. At his confirmation, Sessions said: “Sometimes, it seems to me, Sen. Hirono, that the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn’t know anything about it.” – a quote which definitely demonstrates Sessions aligns with the Yates Memo.
By law, companies, like individuals, are not required to cooperate with the Justice Department during an investigation. The Yates Memo incentivizes executives to cooperate. However, the concept was not novel. Section 9-28.700 of the U.S. Attorneys’ Manual, states: “Cooperation is a potential mitigating factor, by which a corporation – just like any other subject of a criminal investigation – can gain credit in a case that otherwise is appropriate for indictment and prosecution.”
Even though Trump’s proposed budget decreases the Department of Justice’s budget, generally, the increase in the budget for the Health Care Fraud and Abuse Control program is indicative of this administration’s focus on fraud, waste, and abuse.
Providers accused of fraud, waste, or abuse suffer extreme consequences. 42 CFR 455.23 requires states to suspend Medicaid reimbursements upon credible allegations of fraud. The suspension, in many instances, lead to the death of the agency – prior to any allegations being substantiated. Just look at what happened in New Mexico. See blog. And the timeline created by The Santa Fe New Mexican.
When providers are accused of Medicare/caid fraud, they need serious legal representation, but with the suspension in place, many cannot afford to defend themselves.
I am “all for” increasing scrutiny on Medicare/caid fraud, waste, and abuse, but, I believe that due process protection should also be equally ramped up. Even criminals get due process.
The upshot regarding the Yates Memo? Firing Yates did not erase the Yates Memo. Expect Sessions and Trump to continue supporting the Yates Memo and holding executives personally accountable for health care fraud – no more hiding behind the Inc. or LLC. Because firing former AG Yates, did nothing to the Yates Memo…at least not yet.
Knicole Emanuel Interviewed on Recent Success: Behavioral Health Care Service Still Locked in Overbilling Dispute with State
Last Thursday, I was interviewed by a reporter from New Mexico regarding our Teambuilders win, in which an administrative judge has found that Teambuilders owes only $896 for billing errors. Here is a copy of an article published in the Santa Fe New Mexican, written by Justin Horwath:
The true tragedy is that these companies, including Teambuilders, should not have been put out of business based on false allegations of fraud. Not only was Teambuilders cleared of fraud, but, even the ALJ agreed with us that Teambuilders does not owe $12 million – but a small, nominal amount ($896.35). Instead of having the opportunity to pay the $896.35 and without due process of law, Teambuilders was destroyed – because of allegations.
One of our clients in New Mexico had an alleged Medicaid recoupment of over $12 million!! Actually, $12,015,850.00 – to be exact. (See below). After we presented our evidence and testimony, the Judge found that we owe $896.35. I call that a win!
In this case, the Human Services Department (HSD) in New Mexico had reviewed 150 random claims. Initially, HSD claimed that 41 claims out of 150 were noncompliant.
But, prior to the hearing, we saved over $10 million by pointing out HSD’s errors and/or by providing additional documentation.
And then the ALJ’s decision after we presented our evidence and testimony –
Boom! Drop the mike…
…………………………….not so fast…
……………………………………………..picking the mike back up…
You see, in New Mexico, the administrative law judges (ALJs) cannot render decisions. Look in the above picture. You see where it reads, “Recommendation?” That is because the ALJs in New Mexico can only render recommendations.
Because Medicaid has a “single state agency” rule; i.e., that only one agency may render discretionary decisions regarding Medicaid, and HSD is the single state agency in New Mexico charged with managing Medicaid, only HSD may render a discretionary decision. So in NM, the ALJ makes a recommendation and then the Secretary of HSD has the choice to either accept or reject the decision.
Guess whether HSD accepted or rejected the ALJ’s recommendation?
Now we will have to appeal the Agency’s Decision to overturn the ALJ recommendation.
Here, in NC, we obtained a waiver from the Centers of Medicare and Medicaid Services (CMS) to allow our ALJs to render Decisions. See blog.
I still consider this a win.
All Medicare/Caid Health Care Professionals: Start Contracting with Qualified Translators to Comply with Section 1557 of the ACA!!
Being a health care professional who accepts Medicare and/ or Medicaid can sometimes feel like you are Sisyphus pushing the massive boulder up a hill, only to watch it roll down, over and over, with the same sequence continuing for eternity. Similarly, sometimes it can feel as though the government is the princess sleeping on 20 mattresses and you are the pea that is so small and insignificant, yet so annoying and disruptive to her sleep.
Well, effective immediately – that boulder has enlarged. And the princess has become even more sensitive.
On May 18, 2016, the Department of Health and Human Services (HHS) published a Final Rule to implement Section 1557 of the Affordable Care Act (ACA). Section 1557 of the ACA has been on the books since the ACA’s inception in 2010. However, not until 6 years later, did HSD finally implement regulations regarding Section 1557. 81 Fed. Reg. 31376.
The Final Rule became effective July 18, 2016. You are expected to be compliant with the rule’s notice requirements, specifically the posting of a nondiscrimination notice and statement and taglines within 90 days of the Final Rule – October 16, 2016. So you better giddy-up!!
First, what is Section 1557?
Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be
- excluded from participation in,
- denied the benefits of, or
- subjected to discrimination under
all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs.
Section 1557 is extremely broad in scope. Because it is a federal regulation, it applies to all states and health care providers in all specialties, regardless the size of the practice and regardless the percentage of Medicare/caid the agency accepts.
HHS estimates that Section 1557 applies to approximately 900,000 physicians. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes; 445,657 clinical laboratories; 1300 community health centers; 40 health professional training programs; Medicaid agencies in each state; and, at least, 180 insurers that offer qualified health plans.
So now that we understand Section 1557 is already effective and that it applies to almost all health care providers who accept Medicare/caid, what exactly is the burden placed on the providers? Not discriminating does not seem so hard a burden.
Section 1557 requires much more than simply not discriminating against your clients.
Section 1557 mandates that you will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities and that you will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.
In other words, you have to provide written materials to your clients in their spoken language. To ease the burden of translating materials, you can find a sample notice and taglines for 64 languages on HHS’ website. See here. The other requirement is that you provide, for no cost to the client, a translator in a timely manner for your client’s spoken language.
In other words, you must have qualified translators “on call” for the most common 15, non-English languages in your state. You cannot rely on friends, family, or staff. You also cannot allow the child of your client to act as the interpreter. The clients in need of the interpreters are not expected to provide their own translators – the burden is on the provider. The language assistance must be provided in a “timely manner. “Further, these “on call” translators must be “qualified,” as defined by the ACA.
I remember an English teacher in high school telling the class that there were two languages in North Carolina: English and bad English. Even if that were true back in 19XX, it is not true now.
Here is a chart depicting the number of non-English speakers in North Carolina in 1980 versus 2009-2011:
As you can see, North Carolina has become infinitely more diverse in the last three decades.
And translators aren’t free. According to Costhelper Small Business,
It seems likely that telehealth may be the best option for health care providers considering the cost of in-person translations. Of course, you need to calculate the cost of the telehealth equipment and the savings you project over time to determine whether the investment in telehealth equipment is financially smart.
In addition to agencies having access to qualified translators, agencies with over 15 employees must designate a single employee who will be responsible for Section 1557 compliance and to adopt a grievance procedure for clients. Sometimes this may mean hiring a new employee to comply.
The Office of Civil Rights (“OCR”) at HHS is the enforcer of Section 1557. OCR has been enforcing Section 1557 since its inception in 2010 – to an extent.
However, expect a whole new policing of Section 1557 now that we have the Final Rule from HHS.
Loyal followers will remember the behavioral health care debacle that happened in New Mexico in June 2013. See blog and blog and blog. Basically, the State of New Mexico accused 15 behavioral health care companies of credible allegations of fraud and immediately froze all the companies’ Medicaid reimbursements. These 15 companies comprised 87.5% of New Mexico’s behavioral health providers. The companies were forced to close their doors. Hundreds of people lost their jobs. Hundreds of thousands of Medicaid recipients no longer received their medically necessary mental health and substance abuse services. It really was and is such a sad tragedy.
Now, more than 3 years later, the consequences of that payment suspension still haunts those providers. Once they were exonerated of fraud by the Attorney General, the single state entity, Human Services Department (HSD), is now accusing them – one by one – of alleged overpayments. These alleged overpayments are extrapolated. So 10 claims for $600 turns into $2 million. See blog.
I will leave Saturday the 30th of July to fly to Albuquerque, NM, to defend one of those behavioral health care providers in administrative court. The trial is scheduled to last two weeks.
Below is a great article from today’s The Santa Fe New Mexican about this:
By: Justin Horwath
ALBUQUERQUE — Executives of three former mental health agencies told state lawmakers Wednesday that they are still fighting the state’s determination that they overbilled Medicaid, and they are expected to repay millions of dollars, even after they have been cleared of criminal wrongdoing.
“Three years after the fact, and we are still plodding through this,” Shannon Freedle, who was an executive with the now-defunct Teambuilders Counseling Services in Santa Fe, told lawmakers on the Health and Human Services Committee during a hearing in Albuquerque. He was referring to allegations in June 2013 against 15 mental health providers that led to a statewide Medicaid service shake-up.
Along with Freedle, executives of the Santa Fe-based Easter Seals El Mirador and Albuquerque-based Hogares Inc. testified about the New Mexico Human Services Department’s continued claims of Medicaid overpayments long after the state Attorney General’s Office announced it found no evidence that any of the providers had committed fraud and many of the firms have shut down.
Some of the providers, meanwhile, say the state’s former Medicaid claims contractor, OptumHealth New Mexico, still owes them millions of dollars in back payments for treating patients before the shake-up. A group of behavioral health providers, including Teambuilders, Easter Seals and Hogares, filed a lawsuit against OptumHealth in state District Court in June. OptumHealth also faces at least three other lawsuits filed this year, accusing it of Medicaid fraud.
State Rep. Bill O’Neill, D-Albuquerque, called the Human Services Department’s actions “outrageous on so many levels.”
Rep. Christine Trujillo, also an Albuquerque Democrat, called for the resignation of Human Services Department Cabinet Secretary Brent Earnest and for “criminal charges to be pressed because this isn’t human error anymore — this is actually criminal behavior.” She is the second member of the committee to call for Earnest to step down.
No Republicans on the bipartisan committee were at the presentation.
Earlier Wednesday — at a news conference in Albuquerque promoting the Martinez administration’s efforts to tackle New Mexico’s drug abuse epidemic — Gov. Susana Martinez made a rare public comment about the decision in June 2013 to freeze Medicaid payments to the 15 mental health providers on allegations they had defrauded Medicaid, the state and federal program that provides health care to low-income residents. The state brought in five Arizona firms to replace the New Mexico providers, but three of them have since left the state, citing financial losses
Martinez said the decision to freeze the Medicaid payments “was recommended by the federal government.”
“But the patients were continued to be serviced and their services were not interrupted,” she said, “unless they decided on their own that they wanted to not continue.”
Asked to clarify Martinez’s statement about the federal government’s role in the Medicaid payment freeze, Michael Lonergan, the governor’s spokesman, said in an email that Martinez was “referencing federal law, which calls for the state to suspend payments and investigate any credible allegations of fraud.”
Federal law gave the state the option to freeze Medicaid payments but didn’t require it.
Kyler Nerison, a spokesman for the Human Services Department, defended the agency’s efforts to pursue the return of funds allegedly overpaid to the former Medicaid providers, saying in an email that the “Attorney General’s limited review of the agencies that had their payments suspended found thousands of cases of billing errors and other regulatory violations.
“Medicaid dollars should be used to help the people who need it most, and if these politicians want to turn a blind-eye to that kind of waste and abuse, that’s solely on them,” Nerison said. “The Human Services Department will continue working to recoup the misspent and overbilled Medicaid dollars as we continue to help more New Mexicans than ever before in both Medicaid and behavioral health services.”
Freedle said he will attend a Human Services Department hearing next week to contest the agency’s claim that Teambuilders owes the state $2.2 million. At issue is the agency’s use of extrapolation to determine the figure of the alleged overbilling. The agency pointed to 12 allegedly errant claims Teambuilders had made to OptumHealth requesting Medicaid reimbursements worth a total of $728.
But Freedle said the Human Services Department used overpayments found in a small sample of claims and multiplied the amount by 3,000 to determine overbilling over a longer period of time, without proving such billing errors occurred. An investigation by the Attorney General’s Office, which found no evidence of criminal fraud, also found a smaller error rate.
Patsy Romero, CEO of Easter Seals El Mirador, and Nancy Jo Archer, who was the CEO of Hogares, broke down in tears as they described the Human Services Department’s “fair hearing process.”
“That’s really and truly an oxymoron,” Archer said.
By: Edward M. Roche, the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.
In the first article in this series, we covered how a new governor of New Mexico recently came into power and shortly thereafter, all 15 of the state’s nonprofit providers for behavioral health services were accused of fraud and replaced with companies owned by UnitedHealthcare.
When a new team is brought in to take over a crisis situation, one might expect that things would improve. The replacement companies might be presumed to transfer to New Mexico newer and more efficient methods of working, and patient services would become better and more efficient. Out with the old, in with the new. The problem in New Mexico is that this didn’t happen – not at all.
The corporate structure in New Mexico is byzantine. UnitedHealth Group, Inc. is a Minnesota corporation that works through subsidiaries, operating companies and joint ventures to provide managed healthcare throughout the United States. In New Mexico, UnitedHealth worked through Optum Behavioral Health Solutions and United Behavioral Health, Inc. OptumHealth New Mexico is a joint venture between UnitedHealthcare Insurance Company and United Behavioral Health, according to the professional services contract signed with the State of New Mexico.
And that’s not all. OptumHealth is not the company providing the services. According to the contract, It was set up to act as a bridge between actual providers of health services and a legal entity called the State of New Mexico Interagency Behavioral Health Purchasing Collaborative. This Collaborative combines together 16 agencies within the state government.
OptumHealth works by using subcontractors to actually deliver healthcare under both Medicaid and Medicare. Its job is to make sure that all claims from the subcontractors are compliant with state and federal law. It takes payment for the claims submitted and then pays out to the subcontractors. But for this service, OptumHealth takes a 28-percent commission, according to court papers.
This is a nice margin. A complaint filed by whistleblower Karen Clark, an internal auditor with OptimumHealth, indicated that from October 2011 until April 2012, OptumHealth paid out about $88.25 million in Medicaid funds and got a commission of $24.7 million. The payments went out to nine subcontractors. Clark claimed that from Oct. 1, 2011 until April 22, 2013, the overall payouts were about $529.5 million, and the 28-percent commission was about $148.3 million.
In spite of the liberal flow of taxpayer money, things did not go well. Clark’s whistleblower suit, filed in the U.S. District Court for the District of New Mexico, claimed that OptumHealth knew of massive fraud but refused to investigate. Clark says she was eventually fired after she uncovered the malfeasance. It appears that even after learning of problems, OptumHealth kept billing away, eager to continue collecting that 28-percent commission.
Clark’s complaint details a number of problems in New Mexico’s behavioral health sector. It is a list of horrors: there were falsified records, services provided by unlicensed providers, use of improper billing codes, claims for services that never were provided, and many other problems. Allegedly, many client files contained no treatment plans or treatment notes, or even records of what treatments had been provided and s services billed for times when offices were closed. The suit also claims that some services were provided by probationers instead of licensed providers, and a number of bills were submitted for a person who was outside the United States at the time.
The complaint further alleges that one provider received $300,000 in payments, but had submitted only $200,000 worth of claims. When Clark discovered this she allegedly was told by her supervisor at OptumHealth that it was “too small to be concerned about”. It also is alleged that a) insight-oriented psychotherapy was billed when actually the client was being taught how to brush their teeth; b) the same services were billed to the same patient several times per month, and files were falsified to satisfy Medicaid rules; c) interactive therapy sessions were billed for patients who were non-verbal and unable to participate; d) individual therapy was claimed when group therapy was given; e) apart from Medicaid, other sources allegedly were billed for exactly the same services; and f) developmentally disabled patients were used to bill for group therapy from which they had no capacity to benefit. Clark also stated that investigations of one provider for false billing were suspended because they were “a big player in the state”.
Other alleged abuse included a provider that submitted claims for 15-20 hours per day of group therapy for 20 to 40 children at a time, and for numerous psychotherapy services never provided. The complaint also describes one individual provider that supposedly worked three days per week, routinely billing Medicaid for twelve 30-minute individual psychotherapy sessions; 12 family psychotherapy sessions; 23 children in group therapy; and 32 children in group interactive psychotherapy each day.
A number of other abuses are detailed in the complaint: a) some providers had secretaries prescribing medication; b) one provider claimed that it saw 30 patients each 90 minutes per day for psychotherapeutic treatment; c) some individuals allegedly submitted claims for 30 hours per day of treatment; and d) some facilities had no credentialed psychotherapist at any of its facilities. Remember that all of these subcontractors are providing behavioral (psychiatric and psychological) services. Clark found that others submitted bills claiming the services were performed by a medical doctor, but there were none at their facility.
And in one of the most stunning abuses imaginable, one provider allegedly diagnosed all of their patients as having autism. Clark believes this was done because it allowed billing under both medical and mental health billing codes.
These are only a few of the apparent problems we see in New Mexico’s behavioral services.
You would think that once all of this had been brought to light, then public authorities such as the state’s Attorney General’s office would be eager to investigate and begin to root out the abusers. But that isn’t what happened.
James Hallinan, a spokesman for that office, stated that “based on its investigation, the Office of the Attorney General determined it would be in the best interest of the State to decline to intervene in the case.”
While it was making this decision, Clark’s allegations remained under court seal. But now they can be shown.
(*) Hallinan, James, spokesman for Attorney General’s office, quoted by Peters, J. and Lyman, A. Lawsuit: $14 million in new Medicaid fraud ignored in botched behavioral health audits, January 8, 2016, NM Political Report, URL: http://nmpoliticalreport.com/26519/lawsuit-optumhealth-botched-audits-of-nm-providers/ accessed March 22, 2016.
This article is based on US ex rel. Karen Clark and State of New Mexico ex rel. Karen Clark and Karen Clark, individually vs. UnitedHealth Group, Inc., United Healthcare Insurance Company, United Behavioral Health, Inc., and OptumHealth New Mexico, Complaint for Damages and Penalties, United States District Court for the District of New Mexico, No. 13-CV-372, April 22, 2013 held under court seal until a few weeks ago.
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.
In one of the most audacious acts of governmental power, in 2013, New Mexico accused 15 behavioral health care provider agencies of credible allegations of fraud and immediately suspended all Medicaid reimbursements to these agencies. These behavioral health care agencies comprised 87.5% of all New Mexico’s behavioral health care. Hundreds of thousands Medicaid recipients were adversely affected; all of a sudden, their mental health care provider was gone. Most of the companies were devastated. (One company was allowed to stay open because it paid millions to the state). See blog for more. See documentary.
Now, over 2 1/2 years later, three days ago (February 8, 2016), the NM Attorney General cleared 10 of the 15 companies. Oops, sorry, there was never any fraud. Sorry about the devastation of your company.
Imagine losing your job, your reputation, all your money, getting accused of a crime…then let two years pass. You walk into the grocery store (and everywhere else you go) and people stare at you, thinking that you are guilty of the crime for which you are accused. (Ever read “The Count of Monte Cristo?”)
Then you are exonerated. Are you happy or angry?
Here’s the issue: The government has a lot of power. Legally, the government has the authority to accuse you of a crime, seize your home, seize your property, take away your children, to put you in jail, to put you to death, etc.; the only barrier between the government carrying out these drastic measures and you is due process.
So, readers, if you are understanding my logic thus far, you understand the importance of due process.
However, for you who accept Medicare and Medicaid, due process is nonexistent. Since the inception of the Affordable Care Act (ACA), when it comes to accusations of fraud, due process has been suspended.
Hence the situation in New Mexico. Without substantial evidence supporting its decision (remember the Public Consulting Group (PCG) audit in this case actually found no credible allegations of fraud), the State of New Mexico accused 15 companies of fraud, suspended all their reimbursements, and put most of the companies out of business.
With a mere waving of the wand.
And an apology too little too late.
Another Win for Gordon & Rees! Judge Finds NM HSD Arbitrary, Capricious, and Not Otherwise in Accordance of Law! And JUSTICE PREVAILS!
For those of you who have followed my blog for a while, you understand the injustices that occurred in New Mexico against 15 behavioral health care providers in 2013. For those of you who do not recall, for background, see blog, and blog and blog. These 15 agencies comprised 87% of NM behavioral health care services. And they were all shut down by immediate suspensions of reimbursements on June 23, 2013, collectively.
My team (Robert Shaw, Special Counsel, and Todd Yoho, Master Paralegal) and I worked our “behinds off” in these two New Mexico administrative hearings that have so far been held. The first was for The Counseling Center (TCC) headed up by Jim Kerlin (seen below). And our decision was finally rendered this past Friday!
BTW: It is officially Jim Kerlin day in Otero county, NM, on June 11th.
The second hearing, which appeal is still pending, was for Easter Seals El Mirador, headed up by Mark Johnson and Patsy Romero. Both companies are outstanding entities and we have been blessed to work with both. Over the last 20-30 years, both companies have served the New Mexican Medicaid population by providing mental health, developmentally disabled, and substance abuse services to those most in need.
After both companies were accused of committing Medicaid fraud, and, while, subsequently, the Attorney General’s office in NM found no indications of fraud, both companies were told that they owed overpayments to HSD. We filed Petitions for Contested Cases. We disagreed.
NM HSD based its decision that all 15 behavioral health care companies were guilty of credible allegations of fraud based on an audit conducted by Public Consultant Group (PCG). While I have seen the imperfections of PCG’s auditing skills, in this case, PCG found no credible allegations of fraud. HSD, nonetheless, took it upon itself to discard PCG’s audit and find credible allegations of fraud.
These cases were brought in administrative court. For those who do not know, administrative court is a quasi-judicial court, which is specially carved out from our state and federal civil courts. In NC, our Office of Administrative Hearings (OAH) is the administrative court in which health care providers and Medicaid recipients seek relief from adverse agency actions. Similarly, NM also has an administrative court system. The administrative court system is actually a part of the executive branch; the Governor of the State appoints the administrative law judges (ALJs).
However, 42 CFR 431.10 mandates that each state designate a single state entity to manage Medicaid. In NM, that single state agency is Human Services Department (HSD); in NC, it is the Department of Health and Human Services (DHHS) (for now).
42 CFR 431.10 states that if the single state agency delegates authority to another entity, that other entity cannot “have the authority to change or disapprove any administrative decision of that agency, or otherwise substitute their judgment for that of the Medicaid agency with respect to the application of policies, rules, and regulations issued by the Medicaid agency.”
If an ALJ is deciding an issue with Medicaid, then her or she would be substituting his or her judgment for that of the Medicaid agency with respect to the application of policies, rules, and regulations issued by the Medicaid agency.
This is why, in NC, prior to 2013, our ALJs could only make a Recommendation, not an Order or Decision. See blog. In 2013, NC was granted a Waiver to the single state agency mandate allowing ALJs to render decisions on behalf of Medicaid.
In New Mexico, however, there has been no such Waiver. Thus, the ALJ only recommends a decision. In NC, our ALJs are appointed and are independent of DHHS. Juxtapose, in NM, the ALJ answers to the single state entity AND only issues a recommendation, which the agency may accept or reject.
Needless to say, in TCC v. HSD, the ALJ ruled against us. And HSD accepted the recommended decision. We appealed to Superior Court with a Petition for Judicial Review.
Judges in Superior Courts are not employed by their single state agencies. I have found, generally, that Superior Court judges truly try to follow the law. (In my opinion, so do ALJs who do not have to answer to the single state agency, like in NC).
This past Friday, October 23, 2015, Judge Francis Matthew, issued a Decision REVERSING HSD’s decision that TCC owed any money and ordered all funds being withheld to be released. Here are a couple quotes:
Special Counsel, Robert Shaw, our paralegal, Todd Yoho, our local counsel Bryan Davis, and I are beyond ecstatic with the result. Robert and I worked weeks upon weeks of 12-16 hour days for this case.
I remember the night before the 1st day of trial, local counsel encountered an unexpected printing problem. I had just flown into New Mexico and Robert Shaw was on his way, but his flight was delayed. Robert got to the hotel in Santa Fe at approximately 7 pm New Mexico time, which was 10 pm eastern time.
It’s 7:00 pm the evening before the trial…and we have no exhibits.
Robert went to the nearby Kinko’s and printed off all the exhibits and organized the binders until 2:00 am, 5:00 am eastern time. During which time I was preparing opening statement, direct examinations, and cross examinations (although I went to bed way before 2:00 am).
Regardless, Robert was dressed, clean-shaven, and ready to go the next day at 9:00 am with the exhibits (of which there were approximately 10 bankers’ boxes filled).
The trial lasted all week. Every day we would attend trial 9:00-5:00. After each day concluded, our evenings of preparation for the next day began.
I am not telling you all this for admiration, consternation, or any other reason except to shed some light as to our absolutely unbridled joy when, on Friday, October 23, 2015, Bryan Davis emailed us the Order that says that HSD’s decision “is REVERSED in its entirety…”
See the article in The Santa Fe New Mexican.
We hope this sets good precedent for Easter Seals El Mirador and the other 13 behavioral health care agencies harmed by HSD’s allegations of fraud in 2013.
42 CFR 455.23 mandates a state to suspend reimbursements for a provider upon “credible allegations of fraud.” Obviously, this is an extreme measure that will undoubtedly put that accused provider out of business without due process. BTW: the “credible” allegation can be non-credible. It does not matter. See blog. 42 CFR 455.23 is the modern day guillotine for health care providers.
Which leads me to say…It is my sincere hope, that, going forward, state agencies realize the magnitude of implementing measures mandated by 42 CFR 455.23. Instead of wielding the power willy-nilly, it is imperative to conduct a good faith investigation prior to the accusation.
And, certainly, do not conduct an investigation, discard the results, and accuse 87% of your behavioral health care providers in your state. Think of the recipients!! The employees!! And all the families affected!!