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AG clears last of behavioral health nonprofits

SANTA FE – The attorney general has cleared the last of 15 behavioral health nonprofits of Medicaid fraud, prompting searing criticism of Gov. Susana Martinez’s administration for upending the system that provides services to the mentally ill and addicted.

Attorney General Hector Balderas called the overall situation “regrettable” as he announced Tuesday that his office found “no evidence of fraud” among the providers the Human Services Department referred to the AG for investigation in 2013.

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New Mexico Attorney General Hector Balderas (Susan Montoya Bryan/Associated press)

He also said the AG’s investigations identified $1.16 million in overbilling – rather than the $36 million the administration had alleged when it froze Medicaid funding to the 15 providers, ultimately driving many of them out of business.

“The department must find a way to fight fraud that does not put services to the most vulnerable at risk or result in hundreds of New Mexicans losing their jobs,” Balderas said in a statement.

The Human Services Department criticized the Democratic attorney general.

Spokesman Kyler Nerison said Balderas’ “decision to allow these agencies to get away scot-free reeks of bad politics and shortchanges the people who rely on Medicaid the most.”

The last two providers to be cleared were Santa Fe-based TeamBuilders and Albuquerque-based Pathways.

As with earlier investigations, “although the investigation identified some regulatory violations, we were unable to substantiate a deliberate or intentional pattern of fraud,” the AG said in a letter to members of the Legislature.

Democrats jumped on the findings, accusing the Republican governor of abusing her power.

“The state’s entire mental health system of care was wrecked by these baseless allegations. None of the providers defrauded the government,” said Senate President Pro Tem Mary Kay Papen, D-Las Cruces.

Senate Majority Leader Michael Sanchez, D-Belen, said the administration has been “incredibly reckless” and it was “one of the worst acts of a governor’s administration in New Mexico’s entire history.”

The first three of the investigations were done under former Attorney General Gary King, and the remaining dozen by Balderas, who got the Legislature’s approval to shift $1.8 million within his office accounts to hire an auditing firm to help.

The shutdown of Medicaid funding to longtime behavioral health providers caused disruption that is still rippling through the system.

The Human Services Department brought in five Arizona companies to replace a dozen of the local providers; two of those Arizona firms have since left the state, and a third – Agave, which took over most TeamBuilders operations – plans to pull out by the end of June.

Administration critics say services to the neediest have suffered. The administration contends that the number of New Mexicans receiving behavioral health services actually increased in 2014 over prior years, attributing that to factors including the expansion of Medicaid coverage and a revamp of the Medicaid system.

Martinez issued this statement after Balderas’s announcement:

“Medicaid funds should be used to provide basic health care for those in need, and I will never turn a blind eye to wealthy CEOs who break the public’s trust and do things like funnel public money to family members and squander tax dollars on private planes.”

That was a reference to the operators of TeamBuilders and of Southwest Counseling Center in Las Cruces.

The audit done for the Human Services Department by Boston-based Public Consulting Group said a substantial portion of TeamBuilders funds were being used to benefit the nonprofit’s officials, their families or companies held by them. In the case of Southwest Counseling, former head Roque Garcia bought an airplane with a $200,000 loan from the nonprofit. Garcia said the loan was a board member’s idea and “not one dollar of Medicaid money was used to buy the aircraft.”

TeamBuilders CEO Shannon Freedle said Tuesday that he is saddened by the “catastrophic damage” resulting from the HSD’s actions, including damage to his organization, its more than 600 employees and to thousands of children and families it served.

While the announcement from Balderas likely closes the chapter on criminal charges of fraud against the 15, there is a legacy of lawsuits.

Ten of the providers have sued in federal court alleging their rights were violated. In addition, one of the departed Arizona companies, La Frontera, is suing OptumHealth, the state’s former overseer of behavioral health services, and its parent companies. La Frontera claims it was lured into the state to help out and then not paid what it was promised.

Democratic members of New Mexico’s congressional delegation have asked federal officials to investigate the upheaval in the system and have introduced legislation to guarantee due process to Medicaid providers.

They said Tuesday in a statement that the New Mexico providers were “unjustifiably suspended” and that it was a “manufactured crisis that dangerously left patients without the care they deserved.”

The Martinez administration, meanwhile, is trying to collect money from the providers for their alleged overbilling, while the providers in turn are trying to get the state to pay them for services they provided before their Medicaid funding was halted.

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