“After this hearing, the budget adjustment will go forward,” HSD Deputy Secretary Brent Earnest told the Legislative Finance Committee.
The LFC voted 15-1 to object to the budget adjustment, but under state law the legislative panel lacks the authority to stop it.
The administration of Gov. Susana Martinez says it may need as much as $17.8 million to fund the transition of mental illness and substance abuse services to Arizona providers after an audit it commissioned of 15 New Mexico providers showed overbilling, mismanagement and possible fraud.
The HSD brought in the Arizona providers after it cut off Medicaid funding to the 15 New Mexico nonprofits serving the mentally ill and addicted.
The LFC had earlier OK’d a shift of $7.5 million within HSD’s budget for the takeover, but it held up approval of the remaining $10.3 million.
The LFC members reiterated their previous complaints that they still didn’t have enough information about the New Mexico providers’ alleged wrongdoings.
“I have a difficult time accepting the fact that all 15 providers meet the level of culpability for fraud charges,” said LFC Vice Chairman John Arthur Smith, D-Deming.
Legislators also complained about interruptions in services to their constituents and said employees of the New Mexico nonprofits that are being taken over were unsure of whether to relocate or stick with the incoming Arizona providers.
Earnest said the HSD has spent about $3.1 million so far on the transition, about $2.8 million of that to meet payroll for the providers, so that their doors remain open and services continue.
He said 88 percent of the employees of the New Mexico providers have been hired by the Arizona companies, and that the Arizona firms are largely operating out of the same buildings as their predecessors.
“By and large, access to services remains intact,” the administration official told the lawmakers.
Twelve of the 15 New Mexico providers are being replaced by Arizona companies, two are under temporary management by Arizona companies, and one is getting on-site assistance from an Arizona company, Earnest said.
Legislators grilled HSD officials about when the Arizona companies were first contacted.
Earnest said the agency contacted the first two of the five providers in the “February-March time frame.” That was after OptumHealth, which oversees behavioral health services for the state, alerted HSD to questionable activity among the 15 providers but before Boston-based Public Consulting Group had completed a follow-up audit at HSD’s request, he said.
Earnest said it was clear from Optum’s initial referral that there might have been widespread problems that warranted outside agencies coming in.