Bill adds due process to Medicaid fraud claims

Senate legislation would benefit accused providers

Nearly two years after 15 mental health companies and drug treatment clinics were shut down by Gov. Susana Martinez’s administration, the state Senate has approved a bill to provide due process protections in cases in which Medicaid billing fraud is alleged.

The bill passed Tuesday on a bipartisan 32-8 vote, though all the senators who opposed it are Republicans. It now goes to the Republican-controlled House of Representatives.

Sen. Mary Kay Papen, D-Las Cruces, sponsored the bill because of her abiding interest in mental health care.

During floor debate, Papen said her bill would provide a review system on allegations of wrongdoing that is fair and collaborative, rather than punitive and prosecutorial.

Martinez’s former secretary of Human Services, Sidonie Squier, terminated Medicaid funding to the 15 companies based on what she called “credible allegations of fraud.”

The companies protested her decision as heavy-handed and unreasonable. One woman whose company was accused said she had Squier’s confidence only months before when she was assigned by the state to take over a single firm suspected of fraud. Eight of the companies that were stripped of funding sued the state in federal court in the summer of 2013. They sought an order that would allow them to resume business and respond to allegations that they said were so vague it was impossible to mount a defense.

The judge in 2013 ruled for Squier and the state, finding that the companies could not meet their high burden for reinstatement because the Human Services Department had followed federal rules on investigations of Medicaid billing fraud.

Squier resigned from office last fall and has been replaced by Brent Earnest, secretary-designate of the Human Services Department.

Sen. Sue Wilson Beffort, R-Sandia Park, who voted for the bill, criticized Squier without mentioning her name.

“This has been kind of a house of cards calamity,” Beffort said.Had Earnest been

in office, Wilson Beffort said, “This would have been handled much differently and far more professionally, and without some of the glaring errors that occurred.”

Wilson Beffort also said the federal laws had tied the state’s hands in some respects.

Sen. Daniel Ivey-Soto, D-Albuquerque, said Papen’s bill is important to prevent other collapses of health care companies that would leave people without care.

“The disruption has been quite profound,” he said.

Papen’s bill would amend the Medicaid Provider Act to define a “credible allegation of fraud” and outline procedures that the Human Services Department would have to follow to determine the veracity of those charges.

For instance, the department would have to try to verify an allegation based on the totality of evidence and circumstances.

The bill would prohibit the Human Services Department from cutting off payments before a final determination of overbilling. But, Papen said, she made a significant concession to the department by allowing for extrapolation of case numbers when particular fraud allegations are being investigated.

Extrapolation was used by a department contractor that monitored the companies and then made the allegations of fraud in 2013.

An investigation by the state Attorney General’s Office is ongoing, but it has cleared two of the providers. Two also have won subsequent court cases when a judge found that they had been denied due process.