The head of an Arizona mental health provider that notified the state Thursday of its plans to pull out of New Mexico in 90 days said the company has struggled since its arrival here in mid-2013 during a tumultuous shake-up in the state’s behavioral health system for low-income residents.
“It was a nightmare from the beginning,” said Dan Ranieri, CEO of La Frontera New Mexico, in a phone interview Friday.
Private contractors hired by the state to administer Medicaid behavioral health services, known as managed care organizations, have been slow to pay millions of dollars to La Frontera for services it has provided to clients in Las Cruces and several other communities throughout Southern New Mexico, Ranieri said. The New Mexico Human Services Department denies that La Frontera is owed money.
La Frontera is one of five firms from Arizona that Gov. Susana Martinez’s administration brought in to replace 15 mental health and substance abuse providers that were terminated over suspicions of Medicaid billing fraud. It’s the second replacement provider from Arizona that has notified the state it is leaving, creating a void that renews uncertainty for the future of care to a vulnerable population for the second time in two years.
The politically fraught circumstances that brought La Frontera to New Mexico and the rushed switch in providers also set up the company to fail, according to Ranieri. He said La Frontera has lost between $8 million and $12 million since it arrived in New Mexico 20 months ago, and the losses are starting to affect its Arizona parent company.
“New Mexico is about 15 percent of our total operation,” he said, “but it’s eaten up all of our cash and taken up 90 percent of our time.”
In some ways, Ranieri said, he regrets that La Frontera expanded into New Mexico.
“We have funded almost as much in services as we’ve been paid. Something’s fundamentally wrong with that. From that perspective, I do regret this for the position it put our company in,” he said. “Having said that, I certainly don’t regret having come in and continued services for the people of New Mexico. But the fact that over a year and a half later the system is still as unstable as it is, that’s problematic.”
Controversy has surrounded the abrupt termination of the original New Mexico providers accused of fraud. The New Mexico Human Services Department cut off the providers’ funding in June 2013 after the department determined there were credible allegations that those providers committed fraud. The department based that determination in part on an audit by Boston-based Public Consulting Group that extrapolated a sample of Medicaid claims and reported about $36 million in overbilling.
Since then, the credibility of the audit and the steps taken by the state have come under great scrutiny. The Human Services Department referred the matter to the state Attorney General’s Office for a criminal investigation. That investigation for a year and a half prevented the public — and the providers suspected of fraud — from seeing the audit that influenced their removal.
Last month, newly elected Attorney General Hector Balderas unsealed the bulk of the long-secret audit. It spotlighted questionable record-keeping, business practices and executive benefit packages for some of the providers, but revealed no overt evidence that the providers billed Medicaid for services they hadn’t provided. So far, the Attorney General’s Office has cleared two of the providers. Investigation into the others continue.
Some of the providers under suspicion have been outspoken about their frustrations that the state denied them due process by refusing to give them a chance to refute the audit’s findings before cutting off their funds and initiating a criminal investigation. Sen. Mary Kay Papen, D-Las Cruces, has introduced legislation inspired by the shake-up that would guarantee Medicaid providers due process.
Senate Bill 55 would afford Medicaid providers accused of fraud a chance to answer the allegations, and it would draw a distinction between isolated billing mistakes and fraud. Late Friday, the Senate Judiciary Committee gave the proposal a “do-pass” recommendation on a 7-3 vote. It now faces a vote in the full Senate.
Some of the ousted providers and their supporters spoke in favor of the measure. Human Services Secretary-designate Brent Earnest spoke in opposition, saying it could impede the department’s ability to investigate fraud.
Lingering bitterness over the controversial removal of the original providers made the transition difficult for their replacements, including La Frontera, Ranieri said. He said the replacement providers were in the uncomfortable position of establishing operations in a state that tended to greet them with suspicion.
“We had some people that didn’t want us here from the start,” Ranieri said. “There’s a strong belief by a group of people that, through some sort of political machination, we went in and stole this from the other providers, which couldn’t be further from the truth. We were approached by somebody to come in.”
The Human Services Department and OptumHealth, the contractor that administered Medicaid behavioral health programs in the state before its consortium of managed care organizations took over that function in 2014, recruited La Frontera to New Mexico, Ranieri said. The transition happened so hastily that La Frontera never established a firm operational foundation, he said.
The state spent $24 million on the transition in providers. La Frontera got $4.75 million of it. Some of that money was billed for Ranieri’s time at a rate of $300 an hour. But he said La Frontera used that money for operational expenses and he received none of it.
That money bought computer systems, vans and other things needed to get its operation started fast, he said. If and when La Frontera leaves the state, Ranieri said, that property will come with it.
“Any of the assets that we purchased, we own,” he said. “The vehicles, computers, those belong to us.”
When the startup money ran out in late 2013, La Frontera’s problems snowballed. Ranieri’s chief complaint involves New Mexico’s fee-for-service approach to Medicaid programs. Providers file claims for services they provide. They get paid after those claims have been processed at the federal level and then are distributed by managed care organizations.
Ranieri said La Frontera is waiting for about $4 million in Medicaid payments for services La Frontera provided long ago. The Human Services Department disagreed.
“We will continue to review this assertion by La Frontera, but to date we have found that [managed care organizations] are current with claims payments,” said department spokesman Matt Kennicott. “The process for claims payments is working as it should.”
That’s likely to be the subject of a discussion that’s scheduled for Monday between La Frontera executives, leaders of the Human Services Department and representatives of the managed care organizations. They’ll talk about whether La Frontera’s planned pullout could be avoided. Ranieri said expediting Medicaid payments La Frontera claims it’s owed will be a crucial part of that conversation.
“When, after a year and a half, you’re still having trouble getting paid,” he said, “you get to a point where things have gone as far as they’re going to go.”
Contact Patrick Malone at 986-3017 or email@example.com. Follow him on Twitter @pmalonenm.