Monday, December 2, 2013

The Behavioral Health Audit Scandal 101

    In June, 2013, Governor Susana Martinez's administration announced that a secret audit commissioned by her administration had uncovered "credible allegations of fraud" at 15 non-profit behavioral health providers in the state.   The administration abruptly cut off Medicaid funding to those providers and replaced them with five Arizona-based firms which had been hand-selected months earlier without public knowledge.

    The original audit remains secret while the attorney general reviews the allegations of fraud. However, court documents and a heavily redacted copy provided over the summer by the attorney general's office now tell us that the private auditors commissioned by the administration found no evidence of fraud.  But the administration altered those findings, removing the exculpatory finding, and announced that the audit had in fact found evidence of fraud, requiring them to cancel contracts under their interpretation of federal laws.

    Here is a brief summary of key developments in the ongoing scandal.  For more, visit New Mexico In Depth.

    • Prior to the audit beginning: A PCG staffer travels with Martinez administration officials to Arizona to meet with Arizona providers who were already selected to take over New Mexico providers.  NM Taxpayers paid for that trip.  (testimony of PCG staffer to Legislative committee, September 13, 2013 - audio here)
    • May 29, 2013:  Human Services Department staff are engaged in contract negotiations with Arizona firms to take over NM behavioral health providers, a full month before the PCG audit is finalized.
    • June 21, 2013:  Human Services Department representatives present their audit to representatives from the US Attorney's Office, New Mexico Attorney General and other state agencies.  They claim the audit has found credible allegations of fraud and they are required by federal law to cut off payments to providers.

    • June 24, 2013:  Human Services Department notifies 15 New Mexico providers that Medicaid payments to them for behavioral health services have been frozen because an internal audit found credible allegations of fraud against each.
    • HSD publicly announces the payment freeze.
    • June 25, 2013:  HSD contracts with five hand-selected Arizona providers to replace displaced New Mexico providers.   State purchasing code does not require the use of a bidding (RFP) process for certain urgent health care contracts. 
    • July 25, 2013:  State Auditor Hector Balderas wins a three-way fight with the Governor's Office and Attorney General to obtain a copy of the audit.  An agreement overseen by a district court judge requires HSD to provide the auditor with a full copy of the audit for his review under his duties as the elected state auditor.


    1. I just don't understand why. Why would they target our state's most vulnerable population? I ran into a friend of mine a few weeks ago, she's a social worker, and she said they used to have 650 patients, and after the audit findings were publicized, 300 of them disappeared. They have no idea where those people went. It's terribly sad when put in terms of real human cost. It makes no sense to me. Martinez is supposed to be the steward of our state...she doesn't really act like she has our best interest at heart, and that's a shame. I'm grateful that people like you are keeping us informed, please keep up the good work!

    2. An agency prior to the audit served 4 counties and provided services to over 3,000 consumers. Now since it's closure the agency that took it over serves 300 consumers and will only accept those with insurance or Medicaid. I'm afraid that means 2700 consumers are no longer receiving services. It also means that at least 30 people are no longer working. The state has yet to produce any evidence of fraud and has resorted to falsifying documents when they have been ordered released by the courts. Welcome to the privatization of public health funds.