Arizona Company Paid Before New Mexico Mental Health Shake-Up

June 30, 2014

SANTA FE, N.M. — The state of New Mexico paid at least one Arizona company tens of thousands of dollars for salaries, travel and legal fees months before it and others were brought in to replace 15 nonprofits that provided behavioral health services to needy New Mexicans, according to documents obtained by The New Mexican.

The newspaper found the state paid Agave Health Inc. more than $172,000 over six months, and half of that was disbursed months before the audit was even complete.

Gov. Susana Martinez's administration stripped the nonprofits of their contracts in June 2013 after it says an audit revealed that the nonprofit groups had overbilled Medicaid by as much as $36 million.

Records show the state proceeded to pay Agave over the next several months at higher rates than the ousted providers had received.

Patsy Romero, chief operating officer of Santa Fe-based Easter Seals El Mirador, one of the providers accused of billing fraud, said the records show there was "no integrity in what the state did."

"They already had a goal and objective in mind," she said, "and it certainly wasn't to protect services for New Mexicans. It wasn't to protect the most vulnerable in New Mexico. It wasn't to protect the businesses in New Mexico, the employees of New Mexico. There was no intention to protect anybody."

Romero's group is one of two nonprofits that have since been cleared of fraud by the state attorney general's office, which is investigating allegations raised in the audit. None of the groups has been criminally charged.

Matt Kennicott, spokesman for the Human Services Department, defended the early payments.

"Bottom line is that the transitional agencies were prepping in case a transition did need to occur," Kennicott said. "Our responsibility is to ensure access to services for those most in need, and the transition agencies had to prepare."

The audit, ordered by the Human Services Department, has come under increasing scrutiny since a slow-moving review of its findings by the attorney general's office cleared Easter Seals El Mirador and one other provider.

Instead of the $850,870 in overbilling that Public Consulting Group's audit of Easter Seals El Mirador identified, the attorney general found only about $34,000 in potentially improper billing over a three-year span that included $30 million in total billing.

Suspicions of fraud by the New Mexico providers were first identified in November 2012 by Optum Health New Mexico, the private contractor that oversees the state's managed-care program for behavioral health. The Human Services Department says it began discussions with Public Consulting Group about conducting an audit in January 2013.

Three days after the audit began in February 2013, the Human Services Department, Optum and Public Consulting Group met with representatives of two of the Arizona companies that later were brought in to replace the New Mexico providers. The companies were La Frontera Center Inc. and Southwest Behavioral Health Services, the parent company of Agave.

A review of state financial records showed that when the Arizona firms took the place of the New Mexico providers, at least one of them, Agave, billed the state for salary reimbursements that far exceeded the rates paid by the ousted New Mexico companies and even some of the other Arizona firms.

Agave, for example, billed the state $75 an hour for a family support worker. Families and Youth Inc., one of the ousted New Mexico providers, paid workers in the same position $14.58 an hour.

Agave officials declined to answer questions about billing during the transition.

All five Arizona firms billed the state between $200 an hour and $300 an hour for the salaries of their management and executive teams.