Editor's note: An update has been added to the end of this piece.
Does this formula sound familiar: A motley crew of conservative legislators, libertarian philosophers and free-market carnival barkers label a public sector entity as inefficient, wasteful, fraudulent, full of ne’er do wells living high on the hog. An orchestrated crisis ensues. Inexplicably, a host of typically for-profit corporations are waiting in the wings with a solution, salivating for the key to those hefty public coffers.
I’m sure that sounds familiar to teachers and public school administrators who’ve bore the brunt of a well-funded smear campaign over the last decade or so. That effort sought to standardize school testing, arbitrarily grade schools, defund low scoring ones and enact legislation whereas public school funding can be transferred wholesale to for-profit corporations. All brought to us by our friends at ALEC.
Are we witnessing the same formula in the state’s behavioral health drama that saw 15 providers defunded over allegations of overbilling and possible fraud by an out of state auditor?
Last night State Senator Linda Lopez, who chairs the Senate Rules Committee, said in a released statement, “The NM Human Service Department’s handling of the audit findings by Public Consulting Group (PCG) are of great concern to me… Questions arise as to when and where the relationships between the State of NM (HSD) and the five Arizona behavioral health companies began.”
Senator Lopez also released an extensive IPRA request she filed with the Human Services Department in regards to prior communication records involving the five Arizona behavioral companies who will collectively receive $17 million to provide replacement services during the ongoing investigation, as well as any records involving Public Consulting Group (PCG), the out of state auditor who claimed to find “credible allegations of fraud.”
A contract with La Frontera Center, Inc., one of the five Arizona behavioral companies chosen for interim services, was also released by Lopez.
The Santa Fe New Mexican recently ran a story that highlighted PCG’s eerily similar audit findings in North Carolina which were labeled as “unreliable” by their state auditor. So unreliable that in one instance a provider who was accused of overbilling $1.34 million was found to be liable for only $22,000 in a second audit done by the Department of Health and Human Services.
What the New Mexican story failed to note was that in the case of North Carolina, PCG was able to negotiate a contract whereas their findings of fraud were monetarily incentivized. According to WRAL out of Raleigh, “The state pays PCG a percentage of any potential Medicaid fraud it identifies, whether or not any actual fraud was committed. [State auditor Beth] Wood says that's an incentive to PCG to inflate its findings.”
PCG was paid over $3 million by New Mexico HSD for the audit. Did PCG have a similar clause with New Mexico? Progressnow New Mexico, has called on state auditor Hector Balderas to investigate HSD’s awarding of the sole-source contract to PCG as well as the contract details.
Yesterday evening an agreement was reached between Balderas and the Attorney General’s office, granting the state auditor access to the PCG’s original audit. It had originally been flagrantly withheld from Balderas by Human Services Secretary Sidonie Squier.
The Attorney General and Balderas should take a look at PCG’s “Business Partners” as nearly every single stateside company they list in that capacity is either a member, or has an ongoing affiliation with ALEC. A coinkidink with a wink.
Update: Bryant Furlough, who's been doing excellent reporting on this subject with New Mexico In Depth informed me that he has obtained both the General Services Department Contract and the Professional Services Contract between HSD and PCG. It looks like percentages were part of the contract only if the state contracted with them for recovery services. It doesn't look like that's been the case and I'm not sure what the state's plan has been for recovery or who has that contract. Furlough also forwarded invoices from PCG, which you can view below. For just the month of March there was billing for: Over $54,000 in travel, over $20,000 in car rental, $41,000 for hotel and $22,000 for meals. To be fair, that is most likely when they flew in nearly 40 people into the state but it begs the question as to whether there was a firm who could have performed the audit instate with a savings to the taxpayer and the reasoning for going with PCG.
Update II: For really good context on the subject check out the following recent pieces: State Senator Jerry Ortiz y Pino's Privatizing Mental Health Sent Me to the ER in NM Compass and Steve Terrell's Behavioral-health probe: A primer in the Santa Fe New Mexican.
Responses to “Behavioral health drama reeks of ALEC (updated)”