SANTA FE – A New Mexico state agency announced Wednesday that it has entered settlement agreements with the five remaining behavioral health care providers whose Medicaid funding was frozen in 2013 due to alleged fraud and overbilling.
The Human Services Department is paying $10 million to resolve the five mental health providers’ legal claims and put an end to long-running lawsuits that have cost the state millions of dollars.
“I’m really hoping we can close this chapter,” Human Services Secretary David Scrase told the Journal.
The five providers had been seeking more than $27 million in damages but agreed to drop their lawsuits against the state. In return, the Human Services Department agreed to waive its claim to alleged overpayments received by the providers.
An initial settlement agreement made the $10 million for the providers contingent on legislative approval during the coming 30-day session, but an addendum to the settlement clarified that no such approval would be necessary.
The Human Services Department does plan to request a $10 million supplemental appropriation during the session to help cover the settlement costs, Scrase said. He also said the agency is working with the providers to rebuild the state’s system for treating mental illness and drug addiction.
Meanwhile, the latest round of agreements means 10 behavioral health nonprofits have settled with the state since Gov. Michelle Lujan Grisham took office in January.
Those providers were all among 15 nonprofits whose Medicaid funding was cut off by former Gov. Susana Martinez’s administration in 2013, which based the decision on an outside audit that showed more than $36 million in overbilling, as well as mismanagement and possible fraud.
After a lengthy investigation, Attorney General Hector Balderas’ office eventually cleared all 15 providers of any wrongdoing, but many were driven out of the behavioral health business, and several Arizona-based behavioral health providers were brought in by the Martinez administration to fill the void.
Lujan Grisham, a first-term Democrat, has said the disruption to New Mexico’s behavioral health system caused by the shake-up has had ripple effects on many families and businesses, while also causing private health care costs to increase.
And Senate President Pro Tem Mary Kay Papen, D-Las Cruces, described the settlement agreements as bringing long-awaited resolution to the state’s behavioral health system.
“Now, we can get providers back in business to help those individuals who have had to do without needed behavioral health care services,” Papen said in a statement.
The five providers are Southwest Counseling Center, Border Area Mental Health Services, Families and Youth Inc., Southern New Mexico Human Development, and Santa Fe-based Santa Maria El Mirador, which was formerly known as Easter Seals El Mirador.
