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Home / Articles / News / Local News /  AG probe raises questions about health audit integrity
easter
The AG cleared Easter Seals of fraud and now its suing for damages
Bryant Furlow

AG probe raises questions about health audit integrity

Easter Seals El Mirador is latest provider cleared by attorney general

May 7, 2014, 8:50 am
Last year, the state’s Human Services Department said an audit had helped find “credible allegations of fraud” against 15 New Mexico health organizations offering services such as drug addiction treatment and suicide counseling. Though HSD kept the audit secret — from the public and the organizations themselves — the department asserted the audit's findings justified suspending Medicaid funding for the organizations.

New information trickling out of the Office of the Attorney General, however, continues to raise questions about the integrity of the audit upon which HSD based its decision to freeze Medicaid funding.

The latest announcement came Tuesday, when Attorney General Gary King cleared Easter Seals El Mirador of fraud, releasing a summary of his office’s investigation and a portion of an audit HSD used last year to find "credible allegations of fraud" against the behavioral health provider.

The differences in the two documents are striking.

For the second time this year, the results of the HSD audit and an investigation by the attorney general produced vastly different outcomes, deepening a mystery as to how and why the state decided to suspend Medicaid payments to 15 health organizations.

A tale of two documents

In January, King’s office cleared The Counseling Center of Alamogordo, saying it had found “insufficient evidence of fraud.” And its investigation of fraud allegations against the Alamogordo organization found much lower rates of potential Medicaid overbilling than the state’s  audit.

As with that case, the documents released Tuesday show that AG investigators found much smaller rates of potential overbilling by Easter Seals than was flagged in the state's 2013 audit.

According to its summary, the attorney general’s investigators examined documents flagged in the 2013 audit and thousands of others. What they found was that Easter Seals had potentially overbilled Medicaid by $34,126 over a three-and-a-half year period, the investigative summary said.

By comparison, the state’s audit, which was performed by Massachusetts-based Public Consulting Group Inc., (PCG) projected that Easter Seals had overbilled the government health insurance program for the low-income by $850,870.

A look at the portion of the 2013 audit related to Easter Seals — which the Attorney General’s Office released Tuesday — reveals that PCG rated Easter Seals as largely compliant with Medicaid rules and regulations and not as a blatant risk for fraud. Within the 2013 audit, PCG recommended training and clinical assistance “to improve processes.”

Why Easter Seals was on the state's radar for potential fraud remains unclear.

According to the AG’s summary, investigators tried to track down complaints of fraud, but could not find any. The summary also shows how investigators arrived at different conclusions about suspicious claims than PCG did in last year’s audit.

The two methodologies

In a random examination of 150 claims, PCG found 20 claims worth $1,990 that were suspicious, according to the portion of the audit released Tuesday.

PCG then used a statistical formula to extrapolate from $1,990 that Easter Seals had overbilled Medicaid by $772,016 over the three-and-a-half-year period based on Easter Seals billing Medicaid for 103,733 claims during that time.

Looking at the same claims, investigators for the Attorney General’s Office found only four claims worth $368 in billings suspicious.

If PCG had been working from $368 instead of $1,990 in flagged claims, its estimate of potential Medicaid overbilling likely would have been much less than the $772,016.

Similarly, in an examination of services that Easter Seals provided to five clients in 2012, the AG’s office found far fewer instances of potential Medicaid overbilling.

The PCG audit flagged $78,854 in claims compared to $4,572 cited by investigators from the Attorney General’s Office, the two documents show.

The AG’s summary noted the disparity, saying that the PCG audit flagged 646 claims for possible improper billing, but investigators determined that only "39 of these 646 claims did not have sufficient documentation to justify billing" $4,752.03.

What explains the difference between the PCG audit and the AG’s investigation? PCG never explained the results of its audit to staff at Easter Seals El Mirador, The Counseling Center or the 13 other organizations. Employees and administrators weren't given the opportunity to refute the findings or provide further explanation on various issues raised by PCG.

It is common for auditors to present their findings to the staff of audited organizations. Doing so gives people the opportunity to refute findings or address misunderstandings.

For example, most state and local governmental agencies are audited annually in New Mexico. Employees within those agencies can see and respond to audit findings within a certain amount of time before audits are made public.

Still in the dark

That hasn’t been the case with the PCG audit contract by the state. “We’re still in the dark,” said Mark Johnson, Easter Seals El Mirador's CEO,  adding that neither he nor Romero had seen the PCG audit or the results of the AG’s investigation.

Johnson and Patsy Romero, Easter Seals' Chief Operating Officer, both said they didn’t know how the Attorney General’s Office had determined their organization had overbilled Medicaid by $34,126 over a three-and-a-half-year period.

The amount is less than 1 percent of what Easter Seals typically billed Medicaid annually prior to last year’s shut off of Medicaid behavioral health dollars, Romero said. Easter Seals typically billed $3.8 million to $4 million a year for services such as drug treatment and suicide counseling.

The AG investigators reviewed additional claims and discovered double and cross billing, which amounted to more than $20,000 in potential overbillings, according to the summary. Investigators also reviewed documents related to six people who received behavioral services from Easter Seals.

“A review of these claims resulted in a finding of additional 58 claims for which documentation was lacking,” the summary said. “Total amount associated to this finding was $5,722.15.”

But investigators in a follow-up review “could discern no pattern of a deliberate attempt to bill Medicaid for services that were not provided.”

The Attorney General’s Office continues to investigate allegations against the other 13 health organizations accused by the state of "credible allegations of fraud."

Find New Mexico In Depth at nmindepth.com.

 

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