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Contracts Awarded Despite Inquiry

First of two parts

A Roswell, N.M.-based psychiatric services firm landed state Department of Health contracts that allow charges of up to $2,000 a day, even though it was under investigation for alleged Medicaid fraud at another state agency.

The contracts between the Department of Health and New Mexico Psychiatric Services signed last summer permit the company to bill up to $623,900 to provide on-call or temporary services to state-run health facilities.

They include the Sequoyah Adolescent Treatment Center in Albuquerque, a 36-bed residential treatment center for violent and mentally ill youth.


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At the time the contacts were awarded last year, the company was facing allegations of Medicaid billing fraud at the state Human Services Department. Its payments for services for HSD have been suspended pending the outcome of the inquiry.

A top health department official said in an interview last month that he didn’t know New Mexico Psychiatric Services was under investigation at the time he helped evaluate proposals for the so-called “locum tenens” psychiatric services last April.

But in a follow-up response last week, the agency’s spokesman said others in the agency did know and the inquiry by the state Attorney General’s Office wasn’t a “determinative” factor.

DOH spokesman Kenny C. Vigil told the Journal that the president of New Mexico Psychiatric Services, Dr. Babak Mirin, made a “self disclosure” about the investigation before any contracts were signed last year.

Asked whom Mirin had informed at the DOH and when, Vigil responded: “I don’t have that information.”

The Department of Health and the Human Services Department are separate state agencies, albeit with some overlapping missions involving assistance to New Mexicans.

The Human Services Department, which administers behavioral health services, notified New Mexico Psychiatric Services nearly a year ago of the billing fraud inquiry by the AG’s Medicaid Fraud Control Unit.

Mirin’s attorney, David H. Johnson, told the Journal in an email last week that the company has been cooperating with the AG’s investigation “and is committed to the repayment of any overpayments that it may have received.


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“At this point there has only been an allegation of billing fraud,” Johnson’s email stated. “Fraud has not been established.”

The Department of Health selected New Mexico Psychiatric Services, along with six other companies last May, to provide services as needed.

In the rankings, NMPS came out second highest in the cost category, with hourly fees as much as $250 an hour. It was ranked second lowest in experience by DOH evaluators, but was the only company headquartered in New Mexico and tied with two other firms for first place in availability of staff.

All seven firms that submitted proposals were approved to provide services and each state health department facility got to decide which firm to hire.

But New Mexico Psychiatric Services came away with most of the business, signing contracts to serve inpatients at three state health department facilities: Sequoyah; the New Mexico Rehabilitation Center, which provides inpatient and substance abuse treatment in Roswell; and the state psychiatric hospital, New Mexico Behavioral Health Institute in Las Vegas.

Three other psychiatric services firms received smaller contracts from health department facilities, according to the state Sunshine Portal.

Within weeks of his firm being awarded the contract at Sequoyah last July, Mirin was named interim medical director there after a shake-up in the center’s leadership.

Five of the center’s employees have since either left, been reassigned or been terminated. One 14-year-manager dismissed effective Nov. 7 filed a whistle-blower’s lawsuit against the health department last week.

And the Medicaid fraud inquiry? It continues, according to the AG’s Office.

‘Credible allegation’

Mirin is a graduate of the University of Paris who moved to the United States in 1997 and formed his company in Roswell in 2005.

According to his bid proposal to the health department, New Mexico Psychiatric Services furnishes psychiatrists, psychologists and other staff for the Eastern New Mexico Medical Center in Roswell and the Chaves County Detention Center.

Only the company’s bills involving the Human Services Department appear to be on the AG’s radar.

Last Feb. 20, the Medical Assistance Division of the Human Services Department informed Mirin in a letter that “there is a credible allegation of fraud for which an investigation is pending.”

HSD told Mirin it was suspending Medicaid payments to the company “effective immediately.” Court records show Mirin fought back in state District Court, hiring a lawyer to seek more information about the inquiry and demanding an administrative hearing. The court action also contends HSD is violating the Inspection of Public Records Act.

The HSD provided “the vaguest of explanations regarding the allegations,” according to one motion filed by Mirin’s attorney.

The Human Services Department told Mirin in a letter last March that the agency is barred from disclosing the specific nature of the allegations.

However, the letter states, “The allegation involves activities over the past six years (or less) involving Medicaid services (behavioral health- psychological) and improper practices (billing, coding and record keeping) and the possible use of deception to obtain an unauthorized benefit from the Medical program.”

Mirin disclosed to the health department nearly a year ago that the “potential problem with Medicaid billing” involved one of his physicians, according to Vigil, of the DOH.

Asked who that physician was, Mirin told the Journal through his attorney that he didn’t know.

Even though Medicaid payments were suspended in February, an error on the part of the state allowed New Mexico Psychiatric Services to keep receiving payments up until last fall.

In a Sept. 28, 2012, letter, OptumHealth New Mexico, which processes Medicaid payments for HSD, said its staff had just become aware of the problem. But the letter also told Mirin “you did not call to our attention that you were continuing to receive payments.”

Mirin’s attorney told the Journal last week, “Dr. Mirin was not told by either Optum or HSD to stop taking care of patients or to stop billing for the services of his providers. NMPS billed for the services because it provided the services in accordance with its contract. NMPS believes that it will eventually be paid for the services provided.” He said that, since the suspension Oct. 1, the firm is still providing services to central and southern New Mexico Medicaid recipients even though it is not being paid by OptumHealth.

Vigil said the Department of Health’s request for proposals for psychiatric services didn’t ask bidders whether they were under investigation.

But he added that the contract with New Mexico Psychiatric Services “does have provisions that would allow us to terminate it.”

‘Needle in a haystack’

Troy Jones, the administrator at the New Mexico Behavioral Health Institute, was one of three evaluators who considered the qualifications of the companies vying for the state psychiatric services work, according to state records.

Finding psychiatrists to fill in on an as-needed basis is like looking for a “needle in a haystack,” Jones said in an interview Dec. 14. “There’s such a shortage, not only in New Mexico, but throughout the nation.”

Jones told the Journal he wasn’t aware of the Medicaid fraud investigation involving New Mexico Psychiatric Services at the time the company was being evaluated last spring.

Mirin and his attorney told the Journal the disclosure was made “before the RFP process” to “the administration of DOH.”

Vigil’s email said his agency doesn’t have enough information about the Medicaid fraud inquiry to take action on the New Mexico Psychiatric Services contract.

While HSD officials were consulted about the matter, he said, the Department of Health hasn’t talked with the AG’s Office.

Coming Monday: New Mexico Psychiatric Services’ care of residents at the state’s facility for mentally ill and violent adolescents has come under fire in a former employee’s whistle-blower lawsuit.
— This article appeared on page A1 of the Albuquerque Journal