Posted: Saturday, July 13, 2013 5:00 pm | Updated: 12:58 am, Sun Jul 14, 2013.
The Boston-based company that found $36 million in Medicaid overpayments to 15 New Mexico behavioral health providers — and claimed evidence of fraud by the companies — did a similar study with similar results in North Carolina.
However, the North Carolina state auditor last year found some of the findings against those providers were overstated, and the figures reported by Public Consulting Group were “not proven to be reliable.”
One North Carolina provider that allegedly overcharged the state by more than $1.3 million actually had overcharged by less than 2 percent of that amount, the North Carolina state auditor said.
No spokesman for Public Consulting Group could be reached for comment Friday. But a spokesman for the New Mexico Human Services Department on Friday defended the company’s work in North Carolina.
In New Mexico last month, based on the audit performed by Public Consulting Group, the state Human Services Department froze funding for 15 behavioral health providers and referred the audit to the Attorney General’s Office for possible criminal prosecution.
Three of the 15 providers have had their funding fully or partly restored. But eight of the providers filed a federal lawsuit against Human Services Secretary Sidonie Squier. In the suit, the providers claim the action has been financially devastating. Some of the behavioral health companies have begun furloughing employees and shutting down services.
New Mexico’s Human Services Department is in the process of contracting with five Arizona companies — at a cost of up to $17.8 million — to be “on stand-by” to provide help with behavioral health services.
In addition, the providers’ lawsuit claims Squier’s public statements saying there is evidence of fraud has damaged the reputations of the providers. They have demanded “a meaningful name-clearing hearing, as required by the due process clause of the Constitution.”
State Auditor Hector Balderas said Friday that his office has received complaints about the behavior health provider issue and that his auditors and investigators are currently making “formal inquiries” to decide what course of action to take. Balderas said he’s already reached out to the North Carolina state auditor concerning the PCG Medicaid audit in that state.
The providers’ lawsuit brings up Public Consulting Group’s work in North Carolina, saying the company made auditing errors in New Mexico similar to mistakes made in North Carolina.
The company was hired by that state’s Health and Human Services Department to help identify Medicaid fraud. The contract was based on how much potential overpayments to providers they could identify. PCG reported $38.5 million in Medicaid overpayments and was paid $3.2 million.
However, in a July 2012 report, North Carolina State Auditor Beth Wood found that of the $38.5 million overpayments cited, the Health and Human Services Department had only been able to collect $3.7 million — less than 10 percent.
Wood’s report said “recoupments identified by PCG have not proven to be reliable, so the actual benefit derived from the contract is unclear.”
The report found at least one example in which the initial overpayment claimed by PCB turned out to be drastically less.
According to Wood’s report, her office began receiving a number of complaints about PCG’s review process. They decided to re-review one of the companies, which PCG said had overpayments totaling $1.34 million. “As a result of the providers submitting additional documentation and re-reviews … the recoupment amount was revised downward to only $22,093. It was unclear whether this was the result of the additional documentation provided or PCG’s policy interpretations during the review process.”
Similar to the situation in New Mexico, Wood told WRAL TV in Raleigh, N.C., last year, “We’ve had some complaints from providers that they’re about to be put out of business because of all the time they’ve had to spend to prove that they really haven’t committed fraud.”
Wood told the station that the way the contract was written was an incentive to PCG to inflate its findings.
Matt Kennicott, external affairs director for New Mexico’s Human Services Department, said the company’s New Mexico contract was not based on how much potential overpayments it identified. “There is zero financial incentive for them to produce findings,” he said.
A spokeswoman for the North Carolina Department of Health and Human Services told WRAL last year, “The auditor’s report does not emphasize one crucial piece of information — the value of identifying fraudulent providers and stopping them from ever operating again. Even if we don’t recoup all the money lost, it’s impossible to put a price tag on the deterrent effect of our efforts. We may never know just how many millions we will prevent from ever going out the door.”
Kennicott said North Carolina benefited from PCG’s work there and has seen a 23 percent improvement in provider compliance in the past two years because of the audits.
“The vast majority of PCG’s clinical findings have been upheld by the [North Carolina] Department of Health and Human Services during their due process hearings,” Kennicott said. “More than 85 percent of their audit findings have been upheld during hearings upon appeal” in North Carolina, he said.
Contact Steve Terrell at sterrell@sfnewmexican.com. Read his political blog atroundhouseroundup.com.
North Carolina: Provider auditing firm ‘unreliable’ - The Santa Fe New Mexican: Local News
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