Sifting through pieces of the HSD investigation

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By Sherry Robinson

Members of the legislative Behavioral Health Subcommittee last week pried open the circumstances leading the state Human Services Department to accuse 15 of the largest nonprofit providers of fraud and cut off funding.
Information surfacing in chunks like wreckage at sea supports both HSD and the displaced providers.
During the day-long hearing, the big moment belonged to Thomas Aldridge, of the Boston-based Public Consulting Group, whose audit incriminated the nonprofits. Aldridge admitted matter-of-factly that he had accompanied the governor and HSD officials to Arizona, on the taxpayers’ dime, to meet with Arizona service providers before the audit began.
HSD Deputy Secretary Brent Earnest, standing in for Secretary Sidonie Squier, did a far better job at explaining things than his boss, who was last seen by legislators storming out of a committee meeting. Earnest, who is a grownup, said HSD first received whistleblower complaints about a variety of fraudulent activities.
In November, HSD got a warning from Optum Health, which oversees behavioral health services for the state, related to irregularities in provider billings. And here, the story takes a couple of peculiar turns.
Optum had installed new software designed to detect “anomalies.” Providers have said they knew about the new software and assumed that as Optum worked out the bugs, it would talk to them about anomalies. Instead, Optum went straight to HSD, and HSD went to the Attorney General.
It seemed prudent to bring in a third party, Earnest said, and that was Public Consulting Group, which was recommended by a federal agency. The software randomly pulled 150 claims, and PCG asked for documentation, which it audited before feeding the results back through the software. On that basis, PCG concluded that Medicaid made overpayments totaling $36 million. HSD called in providers, told them all that they were crooks, their funding was cut off, and there would be no review, no discussion. Pack your bags.
Let’s hit pause. First, new software. That doesn’t raise red flags? Second, there was urgency to act on whistleblower complaints, but this is usually done through the state auditor. Instead, HSD kept the state auditor at bay and relied on PCG, which itself has become an issue. Lawmakers learned that 72 percent of PCG’s findings in North Carolina were overturned once providers were allowed to submit more data. Rep. Howie Morales, D-Silver City, asked if the same thing could happen here, and Aldridge allowed that it could.
How is that? A North Carolina attorney who represented accused providers in her state explained PCG’s top 10 bloopers and then its “extrapolations.” If its auditors find $100 in errant billings in 10 percent of your samples, then you must have cheated the government of $1,000. You don’t have to be a CPA to see the problems in that.
Earnest said they knew from an episode last year in Carlsbad that they would need outside agencies to assume management of New Mexico’s nonprofits and visited two Arizona providers early this year.
HSD Deputy General Counsel Larry Heyeck indignantly described the intertwining relationships that could indicate conflicts of interest.
“We discovered many nonprofits have relationships that law enforcement should look into,” he said. One onlooker at the meeting said Heyeck showed his ignorance of provider-sponsored networks, administrative service contracts and nonprofit-to-nonprofit purchase contracts, all standard stuff in their line of work.
Roque Garcia, former CEO of Southwest Counseling, said they learned about provider networks at a national conference and formed one on their return. It had saved the state $40,000 a year. He pointed out that La Frontera, one of the new Arizona providers, has 18 related corporations.
When it’s all over, the state will probably find fire in that smoke but not to the extent we’ve been led to believe, and taxpayers will be on the hook for damages to the wrongly accused.