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Auditor: Lawsuits likely over Medicaid

ESPAÑOLA – Money squabbles resulting from the overhaul of New Mexico’s behavioral health system will likely end up being decided in court, state Auditor Hector Balderas told legislators Thursday.

Although a state attorney general investigation into possible Medicaid fraud is ongoing, he suggested litigation might be needed to resolve how much of New Mexico behavioral health care providers either owe the state or are due to be paid.

“I think there will be legal actions needed to figure this out,” Balderas, a Democrat who is running for attorney general, told members of the Legislature’s interim Behavioral Health Subcommittee in Española.

The state Human Services Department last year halted Medicaid funding to 15 nonprofits that served the mentally ill and addicted, saying an audit it commissioned showed widespread mismanagement, $36 million in overbilling and possible fraud.


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The agency then brought in five Arizona companies, which took over the operations of a dozen of the New Mexico companies. It also turned over the audit to Attorney General Gary King’s office for further investigation.

A Human Services Department official attended Thursday’s meeting but did not testify. After the hearing, HSD spokesman Matt Kennicott said the department stands ready to pursue recovery of possible overbilling by the scrutinized nonprofits, depending on the results of the attorney general’s investigation.

“… These entities engaged in egregious billing practices that siphoned Medicaid money away from its intended purpose, and those are taxpayer dollars that need to be repaid,” Kennicott said.

Two nonprofit providers – Presbyterian Medical Services and Youth Development Inc. – had their funding restored by the state last year after agreeing to repay more than $4.2 million alleged to have been improperly billed to Medicaid.

There have been rumblings, however, that providers potentially cleared in the ongoing probe could file lawsuits against the state.

In addition, while there has been disagreement over the impact on patients, Senate President Pro Tem Mary Kay Papen, D-Las Cruces, said the state could be financially liable if insufficient care is found to have been provided since the overhaul.

“We’re talking about a huge amount of money for not taking care of business in the proper way,” Papen said Thursday.

Meanwhile, Balderas also said Thursday that the federal Centers for Medicare and Medicaid Services has told his office it does not plan to review the state’s Medicaid fraud allegations while the attorney general’s investigation is continuing.

A team from the federal agency is planning a one-day site visit to New Mexico next month, though an HSD spokesman said Thursday that the agency did not have details about the scope of the visit.