As reported in Behavioral Health Net, 9/3/13
by Dennis Grantham, Editor-in-Chief
New Mexico's top behavioral health official visited potential "replacement" agencies in Arizona before fraud audit began, says PCG impromptu testimony before the Behavioral Health Committee of the New Mexico Legislature, the Public Consulting Group (PCG) principal who led the audit that reported an alleged $36 million in Medicaid overpayments to behavioral health providers said that he accompanied the head of the state's Behavioral Health Collaborative, Diane McWilliams, on a visit to interview a potential replacement agency in Arizona early in 2013, before the controversial provider audit had even begun.
PCG's Thomas Aldridge, whose audit team's findings led New Mexico Human Services Department officials to halt Medicaid payments to 15 major behavioral health providers, testified today that he accompanied McWilliams and two representatives from the state's behavioral health contractor, Optum Health, on a trip to Arizona to offer “another opinion” about the capabilities and compliance practices of at least one Arizona-based agency. In June and July, five of these Arizona agencies were hired at a projected cost of $17.8 million through yearend to replace and transition out the New Mexico-based executives and management teams at 11 of the 15 non-profits that were targeted in the $3 million PCG fraud audit.
Aldridge's surprising statement came in response to questions from state Sen. Mary Kay Papen who, after learning that Aldridge had attended one such trip, asked first whether he had been compensated for it. Yes, replied Aldridge.Papen then asked whether such a trip -- involving prospective replacements for the New Mexico executives and agencies being audited -- represented a conflict of interest with PCG's audit activities, which she presumed to be underway at the time. Aldridge said no, explaining “This [the trip] happened before the audit began.” His reply drew a gasp from audience members, who were admonished by Papen to remain silent.
Aldridge’s statement, which came in the midst of his own testimony defending PCG’s nationwide audit experience and methods, may well embarrass HSD officials and the administration of Governor Susana Martinez. In the weeks since the shutdown, critics of the PCG Medicaid audit, which was performed between February and June, have questioned HSD's motives for the payment suspension in late June — an action tantamount to shutting providers down — and inquired about the timing of HSD contacts with the Arizona based "transitional" agencies.
The unexpected testimony contrasts with statements by HSD officials and the newly-hired "transitional" agencies, who have not mentioned any contact prior to May. It may also call into question statements earlier in the day by HSD Assistant Secretary Brent Earnest, who sought to explain why at least two of the Arizona agencies had to be contracted on an “emergency basis” in June, outside the state’s normal competitive bidding process. One reason for this, he said, was that HSD officials had not, until late in the audit process, foreseen that the audit results would justify replacement of agency leadership.Short of individual criminal indictments by the New Mexico Attorney General, which remain a possibility, replacing agency executives with those of 'transitional' management teams from the Arizona organizations was the most severe organizational sanction mentioned in the executive summary of the audit process that was released by PCG at the time that the audit's findings were announced. Behavioral Health Committee Chair Sen. Benny Shendo characterized Aldridge's remark as disturbing, saying that it contributed to questions in the committee and in public “about what’s been driving this whole audit process along." More than a month before, Sen. Gerry Ortiz y Pino, called HSD’s legal analysis of Medicaid provider pay suspension rules “a blueprint” for replacing the state’s behavioral health nonprofits with for-profit corporate health networks envisioned in the Centennial Care plan that will begin in January.