Fiddling and Fighting While Rome Burns

Fiddling and Fighting While Rome Burns

The latest acrimonious round in the sad demise of behavioral health services in New Mexico was fought out last week before the legislature’s Health and Human Services (HHS) Committee, and then, in the courts.  The topic was the Human Services Department’s determination that there were “credible allegations of fraud” against 15 non-profits providing mental health services throughout New Mexico. The determination, made by HSD Secretary Sidonie Squier and her staff, triggered an investigation by the Attorney General and will mean that Medicaid funding will be cut off for those agencies within 30 days while the AG investigates, although three agencies have gotten a reprieve from the department. The 15 agencies in question serve 30,000 of the most complex, costly and fragile patients with mental illness and drug abuse. Whether they will be cut off from services—as the July 4th fireworks between the parties sputter along—is one of the many disputes. 

Secretary Squier says she will bring in five Arizona organizations to manage the private non-profit providers at a potential cost of $17.8 million, replacing the management and the CEOs but not laying off the employees.  “They’re saying that people will go without services but that is not true.  It’s made up by somebody,” she told the committee, in one of many testy exchanges with the committee, which oversees the Human Services Department.   HHS Committee members asked about the Secretary’s legal authority to take over a private business, especially those which also serve private patients.    Diana McWilliams, director of the Behavioral Health Service Division, said that each provider—although paid by the department’s statewide behavioral health organization (Optum Health, a subsidiary of United Healthcare), had a separate contract with Medicaid.

The Medicaid behavioral health contracts have been problematic since 1997 when the Gary Johnson administration decided to deliver both medical and behavioral health services to Medicaid consumers through private managed care organizations (see accompanying chronology). The current contractor, Optum Health, whose contract with the state runs through the end of the year, has had its share of problems.  In 2009 it was sanctioned $1 million by a special master, Alicia Smith, who was brought in to sort out the wreckage stemming from an inadequate IT system used by the company. They were sanctioned again in 2010. When Optum took over the contract from Value Options, the providers (the same ones that Squier told the committee had committed “widespread and egregious fraud”) were simply not being reimbursed for expenses or paid for the invoices they submitted.  At the time many contacted their legislators and some went out of business before the fire was put out.  Part of the short-term fire suppression was that Optum was to pay the providers their invoices in full, with reconciliation of any under and overpayment to come later. 

According to an audit by the Massachusetts-based Public Consulting Group, the 15 providers were overpaid by $36 million during a four-year period from 2009-2012. How much of that was from accidental billing errors, mismanagement or actual fraud is unknown since the audit, which was handed over to the Attorney General, has not been made public. An executive summary of the document was handed out to committee members last week, and it sparked lots of questions, particularly since it is the basis on which all of the providers—in identical letters received at the end of June—are accused of fraud and threatened with defunding.

The  $3 million audit itself and an earlier audit done by a “recovery” contractor for the department in January, were spurred by a new process used by Optum to identify unusual billings and see a broader picture of what Squier called “corruption” over a three year period. Once these records were turned over to HSD, the department began to act according to regulations set down by CMMS—the Center for Medicaid and Medicare Services. Legislators asked why Optum—and the Department-- didn’t use progressive, corrective sanctions on providers during the three year period rather than what some called the “death penalty.”  But they didn’t get the answer they wanted.

“Optum didn’t wait for anything.  All along they were looking into things but they had a new process which allowed them to see a broader picture,” said Squier.  “You have to keep up with the corruption and finally they got out ahead of it.”

But legislators like Senate President Pro Tem Mary Kay Papen of Las Cruces, Rep. Ed Sandoval and Sen. Jerry Ortiz y Pino, both of Albuquerque, who have seen the behavioral health care crisis unfold over the past decade, wonder whether Optum bears a large share of responsibility for the current crisis.

“We have local health providers that are suddenly being branded as criminals and the company that came in and created a chaotic mess is skating on this,” a distraught Ortiz y Pino said just before he was taken to a local emergency room at the mid-point of the three- hour hearing last week.

Ortiz y Pino and Squier had engaged in an angry exchange in which Ortiz y Pino said, “You are destroying the behavioral health system in this state,” and Squier fired back, “No, it’s the providers who have committed widespread and egregious fraud that have destroyed the system, not me.” 

Ortiz y Pino has recovered from the stress caused by the confrontational July 3rd meeting which ended with the Secretary storming out, trailing staff in her wake.  But the system may not.

Over the past eighteen years, the system has been organized and re-organized going from a fee-for-service system where local providers contracted directly with the state to a managed care arrangement.   Scores of different MCOs, subcontractors, regional behavioral health organizations and 1500 providers have been involved. Behavioral health services have been “carved out” of the Salud contracts.  Waivers have been granted and rescinded. An innovative behavioral health collaborative has been organized to “braid” funding from multiple sources.  Once the hope of consumers, the collaborative has been disappointing, and the department is now contemplating disbanding it.  Medicaid expansion to thousands of adults who will need behavioral health services will start in January under Centennial Care, the department’s latest reorganization of the overall Medicaid program. Behavioral health will once more be carved in, but the details are sketchy.  

Meanwhile, New Mexico continues to rank 51st in the nation (including the District of Columbia), with the least amount of money spent on behavioral health, a pervasive problem that many say is dragging us down on other national scorecards that rank us at the bottom when it comes to suicide, prescription drug abuse and gun violence.

As anyone who has tried to get a troubled relative into a treatment program will tell you—it’s almost impossible.  The number of providers has declined dramatically over the years each time the system zigs and zags. There are very few child psychiatrists in New Mexico, almost none in the rural areas. And overburdened psychologists and social workers are demoralized.

The ball is now in the court of the Attorney General, who was also present at last week’s legislative meeting.  Gary King says he is not in full agreement with HSD’s handling of the situation and wants to meet with the department quickly to work out a better process to deal with the 15 providers.  For people with mental illness and addiction problems, time is of the essence.

The Zigzag History of New Mexico’s Behavioral Health System

1997: Medicaid Managed Care: Governor Garry Johnson puts the Medicaid program into a new model: managed care, later called Salud.  Private HMOs bid on a contract with the state and receive a per member rate which is used to pay doctors, hospitals and treatment programs which care for both physically and mentally ill Medicaid patients.  Behavioral services are part of the package paid for by the HMOs, which subcontract with specialized Behavioral Health MCOs to provide care for the costly and often chronically ill clients.  These MCOs then work with regional organizations of mental health providers in different parts of the state.  Finally, therapists, treatment facilities and non-profit organizations like Hogares, La Familia or Presbyterian Medical Services see the patients, providing medication, counseling or more intensive treatment. They are paid by the behavioral health MCOs, but reimbursements are meager after each company takes its share for administration and profit.

1998-2000: A litany of complaints pour in to legislators, judges and the New Mexico Congressional delegation from the advocates for the mentally ill and health providers. Desperate patients are not getting treatment they say, because little money is flowing through the hierarchy of insurers to those on the front line.  A number of residential treatment programs close down, and judges become concerned when the only place they can send mentally ill young offenders is jail.

2000: Medicaid Waiver Denied: Congresswoman Heather Wilson, Sen. Jeff Bingaman, district court judges, the Legislative Finance Committee and the NM Health and Human Services Committee hold hearings and town halls on the situation, ultimately asking HCFA, the Health Care Financing Administration, to withhold federal approval for the managed care waiver, which allows the state to receive federal funds.  Responding to the concerns, and an LFC audit, the federal government takes the rare step of withdrawing approval of the entire waiver until the state restores the behavioral health portion of Medicaid services to a fee- for-service system.

2001: Medicaid Waiver Restored—with Conditions: The incoming George W. Bush administration restores the Medicaid waiver on the condition that profits for MCOs be limited to 18% and that intensive monitoring forestall patient complaints.  Unhappy, the legislature passes a bill to “carve out” the services for mentally ill patients and restore them to a fee-for service model, but Gov. Johnson vetoes the bill.

2004: The Behavioral Health Collaborative is created to make services more responsive to clients, coordinate Medicaid and other federal payments made to various agencies, and purchase services jointly. Services are carved out of the main Medicaid program and a statewide MCO, initially Value Options, then Optum Health, is charged with delivering them through traditional treatment programs and core-service agencies.  The reorganization attracts national attention and initial acclaim, but within a few years local consumer collaboratives pull out and professional psychological associations are complaining of declining reimbursements and other problems.  More facilities close down.

2009: Optum Health takes over for Value Options, which had a contract with the state to deliver services to Medicaid patients.  Immediately, providers experience billing and reimbursement problems as a result of the new contractor’s failure to develop an adequate IT system.  Claims are rejected, resubmitted and rejected again and again until the legislature holds hearings and the department finally acts, appointing a special master to oversee implementation of a more adequate system.  One of the key problems is over and under payments.  Optum is fined $1 million in 2009 and further sanctioned in 2010.  

2013: New Mexico selects four MCOs to provide Medicaid services to an enlarged group of Medicaid recipients under a newly modernized system called Centennial Care, due to start in January 2014.  They are Blue Cross/Blue Shield, Presbyterian Health Care, Molina and United Healthcare (whose subsidiary is Optum).  Behavioral health services are to be integrated with medical care. They are once again “carved in.” To prevent administrative waste, the contract does not permit the contractors to subcontract with behavioral health MCOs. Preparations begin for the new system.

June 2013: Department Claims “Corruption” and “Widespread, Egregious Fraud”: Based on the results of an outside audit, whose results were not made public, HSD determines that there is “credible evidence of Medicaid fraud “on the parts of 15 behavioral health providers.  Secretary Sidonie Squier turns the investigation over to the AG and says Medicaid reimbursements for services to some 30,000 behavioral health patients will be temporarily withheld and Arizona companies brought in to manage the companies.

Former Senator Dede Feldman served as the Chair or Co-Chair of the Legislature’s Interim Health and Human Services Committee for 12 years.

This piece was written by:

Dede Feldman's photo

Dede Feldman

Dede Feldman has many professional accomplishments as an award-winning journalist, a public relations expert, a university instructor and a state legislator. The author of the recently published Inside the New Mexico Senate: Boots, Suits and Citizens (UNM Press) She is best known for her public service in the state senate from 1997-2012, representing District 13, in the North Valley of Albuquerque. Her legislative accomplishments include sponsorship and passage of campaign contribution limits(2009), a Health Insurance Transparency and Premium Review Act ( 2011), a Brain Injury Services Fund (1997) a Senior Prescription Drug Program ( 2003), a Nurse Advice LIne ( 2005), A Do-Not-Call Bill limiting telephone solicitations (2003), a Graduated Drivers Licensing Law for teenage drivers, solar and green building tax credits (2006&7), ATM controls (2005), and many more. Dede chaired the Senate Public Affairs Committee and the interim Health and Human Services Committee and won recognition from organizations ranging from the Alb. Chamber of Commerce to the NM Pediatric Society. She is currently a consultant and blogger (

Contact Dede Feldman

Honorary Subscription

Is your time on New Mexico Mercury worth the price of a cup of coffee a week?  Then click on the button below to purchase a recurring monthly subscription.

Payment Options


One-time Payment

If you'd like to pay for the content you've enjoyed on New Mexico Mercury with a payment when it's convenient for you, click on the button below for a one-time purchase.


Responses to “Fiddling and Fighting While Rome Burns”