Highlight on New Mexico: Behavioral health care improved following extensive Medicaid audit

Increased accountability has made a significant impact on the quality and amount of care that New Mexico Medicaid beneficiaries receive. The oversight stemmed from the results of a long behavioral health audit and 15 agencies losing Medicaid funding. The audit of behavioral health care providers who served Medicaid beneficiaries began in June 2013 and revealed widespread issues in the system. The audit was triggered by a contractor’s report identifying a large amount of overbilling.

15 organizations audited

In January of this year, New Mexico’s attorney general, Hector Balderas, released the 300-page audit to the public. The report alleged the mishandling of about $36 million from 2009 to 2012. Governor Susana Martinez (R) decided to freeze Medicaid payments during the investigation, which was kept secret for a year and a half. Balderas felt that the minimally-redacted audit release was necessary for the sake of transparency. Balderas stated in January that three out of 15 providers had been investigated, but requested an additional $1 million in funding from the legislature to complete the other 12 investigations.

Among over things, the audit alleged that a web of six nonprofit organizations overbilled the Medicaid program. These organizations had top executives of certain connected companies all on the payroll of a profitable Arizona firm. Another busy Medicaid billing company, Teambuilders, was allegedly involved.

Centennial Care

Following the investigations, some providers have paid settlements without admitting to wrongdoing, while others closed. La Frontera, an Arizona-based behavioral health care provider, was brought in to replace some of the providers terminated following the audit. Unfortunately, La Frontera confirmed in April 2015 that it was pulling out of New Mexico due to losing $12 million since coming to the state. La Frontera’s CEO, Dan Ranieri, attributed the financial losses to the huge investment required while “reinventing the system” and taking over five companies in six weeks. Ranieri had hoped to turn the situation profitable, but said that the company was not willing to damage its Arizona organization due to continued financial losses.

The biggest change comes from the revamping of the state’s Medicaid program. The system replacement, known as Centennial Care, focused on modernizing the program, improving care, and reducing costs. According to the Human Services Department for the Legislative Finance Committee Secretary, Brent Earnest, the push to coordinate care has stemmed from a desire to change the system “to be more patient-centered, to focus on the early identification of health care needs and really treat patients in a more holistic way.” Following the audit, 83.8 percent more New Mexicans have received behavioral care.

Additional transparency efforts

The 2015 New Mexico legislative session resulted in the passing and signing of a new statute (SB 323) updating the Health Information System Act. This update would allow hospital quality and cost information to become public. The old law prevented the Department of Health from identifying specific hospitals when releasing the data, but the new legislation will allow New Mexico residents to better shop around for higher quality or more affordable care.

Public free to make comments on insurance rates

The Office of the Superintendent of Insurance in New Mexico is holding a public comment period on insurance rate increases and service changes. Policy holders are able to speak out on their rates, which include individual and Small Business Health Options Program (SHOP) plans. John Franchini, the state superintendent of insurance, stated that rates might not decrease due to comments, but that the carriers may curb rate increases. Insurers must submit rates to Franchini’s office, and those rates are reviewed by actuaries. Those rates are not immediately approved, but carriers must justify them to the state office.