New Mexico toes the thin line between overzealous detection and legitimate fraud prevention

We all have that friend who sees the world through rose-tinted glasses. Every day is a gift and every glass is half full.

But everyone also has the friend who adorns lenses that are a much darker shade. Not only is the glass half empty, but the glass itself is met with a raised eyebrow and a healthy dose of skepticism. "What's the glass hiding from us anyway?" he or she demands, subconsciously pushing the wool away from his or her eyes.

If those two perspectives represent opposite sides of the spectrum, I probably fall closer to the later. As a journalist, I think a healthy dose of cynicism goes a long way. Creep too far off that edge, and you're likely to be the guy interrogating his drinking glass at a dinner party.

That, in a nutshell, might be the best way to describe the state of fraud investigators in New Mexico, which is tiptoeing dangerously close to that precipice.

Last week, the New Mexico attorney general released the full 355-page audit of the state's behavioral health system, conducted by the Boston-based Public Consulting Group (PCG), a document they have kept (mostly) hidden under lock and key since the results were announced more than 19 months ago.

That original announcement sent shockwaves through the state; officials identified 15 healthcare organizations that were responsible for nearly $36 million in false claims and Medicaid fraud over a three-and-a-half year period.  

From there, the situation gradually unraveled. It now resembles the ragged remains of a sweater after a neurotic tug at a loose thread. The New Mexico Human Services Department (HSD) used the announcement of the audit to charge all 15 providers with a "credible allegation of fraud," launched a full investigation based on the audit's findings and immediately froze Medicaid funding for the providers in question. Gradually, nearly every provider was forced to close its doors, throwing patient care into disarray. The state eventually contracted with Arizona-based Turquoise Health and Wellness to provide mental health services. 

However, the long-awaited audit shows that the initial allegations of fraud had more bark than bite. PCG never categorized any providers with a "credible allegation of fraud"--a categorization that could only be levied by the HSD, the firm stated in the report. PCG categorized just seven providers under the next highest tier, indicating "significant findings." The remaining providers were found to have "a significant volume of findings that include missing documents."

That $36 million figure may also be slightly misleading. PCG used a formula to extrapolate data based on 150 randomly sampled claims from providers. Many began to question the accuracy of this extrapolation method after two providers were cleared of wrongdoing in 2014.

Another provider, Presbyterian Medical Services, settled with the state in 2013 for $4 million, but administrators claim they were forced into the settlement based on the prospect of a lengthy legal battle, and maintain the PCG findings are flawed. The hospital also claims the state refused documents that would have refuted fraud allegations, according to New Mexico In Depth.

In December, PCG told New Mexico In Depth that it didn't follow its normal procedures of allowing healthcare organizations to respond to the findings in the audit before it was finalized. Now HSD is dealing with a district judge's ruling that the agency may have violated due process rights by bringing a case against Easter Seals El Mirador back to the Attorney General's Office.

Fraud investigators and public officials have to strike a tenuous balance when it comes to unearthing fraud schemes. It's a difficult task, to be sure, particularly when a constant stream of scrutiny is a part of the job.

It's easy to work yourself into an incredulous lather when you see that 15 providers have cost the state $36 million in overpayments. In this case, though, the New Mexico HSD needed to turn that same level of scrutiny inward. If you're going to freeze funding for providers, the evidence should be overwhelming, or at least visible. 

HSD guarded the secrecy of this audit like it was a prized possession, arguing in lawsuits brought by New Mexico publications that it was crucial to protecting criminal investigations. After its release, I get the impression they were weary of letting the public see they were holding a weak hand.

The investigations have produced no notable proof of fraud, and the audit that shuttered 15 behavioral health providers and stranded thousands of patients doesn't have the legs to support its gregarious claims of fraud and abuse. Now Turquoise has announced it will no longer provide mental health services starting March 31--all while Attorney General Hector Balderas is asking the state for $1 million to complete the investigation.

What started as a rigorous crackdown of potential fraud has devolved into a late-night brawl in a darkened pub, with everyone taking blind, wild swings so that when the lights come on, no one is left standing. By now, we can all agree that fraud is far too pervasive in healthcare, and that state investigators need to review billing claims with an acutely critical eye.

But New Mexcio's approach to behavioral health fraud should also serve as a bright orange "caution" sign. There's a fine line between a fervent witch-hunt and well-balanced scrutiny. When the pendulum swings too far in one direction, everyone loses. - Evan (@HealthPayer)

Suggested Articles

The HHS OIG is asking for an additional $23.7 million to support fraud oversight that has benefited from an emphasis on data analytics.

A New York surgeon was sentenced to 13 years in prison for fraud and more physician practice news from around the web.

A federal judge has ruled that the U.S. government’s remaining fraud case against UnitedHealth can move forward.