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Editorial: HSD funding cutoff traces to Obamacare

Politicians, activists, providers and patients protesting the temporary suspension by the Human Services Department of Medicaid payments to 15 nonprofits that deliver behavioral health services around New Mexico are targeting the wrong people.

The requirement to suspend payments where fraud is suspected is part of President Obama’s Affordable Care Act. Remember, a portion of Obamacare costs was to be paid for by reducing waste and fraud.

On March 9, 2010, Obama unveiled his plan to crack down on waste and fraud in Medicare, Medicaid and other government programs by expanding the use of payment recapture audits, which are structured to give private auditors financial incentives to uncover improper payments. At the time, Obama predicted the use of such audits could return up to $2 billion in taxpayer money to federal coffers over three years.

In line with this intensified attempt to recover misspent federal funding, the basis for withholding payments as outlined in Title 42 of the Code of Federal Regulations was changed in 2011.

In 2011: “The State Medicaid agency MUST suspend ALL Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.”

So federal regulators lowered the burden from “reliable evidence” to “a credible allegation,” and with the change from “may” to “must” the state agency essentially lost much of its discretionary authority. The New Mexico Human Services Department is required to suspend all payments and to send a fraud referral to an appropriate law enforcement agency – in this case, the Attorney General’s Office.

Providers may be permitted an administrative review, and the state is required to report “general allegations as to the nature of the suspension action, but need not disclose any specific information concerning an ongoing investigation.”

Though it would seem that an audit paid for with public money should be a public record, the AG has refused to make the audit public and asked Human Services not to provide more than the general summary of the allegations, which it did in a six-page report.

HSD reinstated funding to one agency after a hearing, but in a separate action a federal judge denied a temporary restraining order sought by eight of the 15 nonprofits, saying they hadn’t met the legal requirement of showing they likely would prevail on the merits.

In a recent hearing of the Legislative Health and Human Services Committee, Chief Deputy Attorney General Al Lama told lawmakers “the ACA made a significant change in how Medicaid fraud is investigated.”

That is true. And the stricter response to allegations of waste and fraud is being felt elsewhere.

CNN reported this week that California’s Department of Health Care Services has moved to temporarily cut funding to 16 drug rehab clinics under its Drug Medi-Cal program after the Center for Investigative Reporting looked into fraud and mismanagement at those clinics. A Democratic state senator has called for an audit of the entire program.

Federal regulations say suspension of payments must stop after the “agency or the prosecuting authorities” determine there is insufficient evidence of fraud or after legal proceedings are completed.

How quickly that happens would appear to be in the hands of the Attorney General’s Office.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.