- Associated Press - Thursday, February 27, 2014

SANTA FE, N.M. (AP) - A state audit on Thursday concluded Gov. Susana Martinez’s administration poorly managed federal Medicaid money and improperly handled fraud allegations against more than a dozen mental health providers, some of which have gone out of business because of billing disputes with the state.

State Auditor Hector Balderas said he had forwarded the audit of the Human Services Department’s 2013 finances to the federal agency that administers Medicaid, which is a program jointly financed by the state and federal governments to provide health care for the needy. The state spent nearly $4 billion on Medicaid last year, including about $2.6 billion in federal money.

The audit provides fresh ammunition for legislators and others who’ve criticized the Martinez administration for freezing Medicaid payments to nonprofit mental health providers last year after the agency concluded there was possible fraud, mismanagement and overbillings.

The audit also plays out against an election-year backdrop in which Martinez is seeking a second term and Balderas is running for the Democratic nomination for attorney general.

“The department should hold itself to the same high standard of accountability that it demands from organizations that receive federal funds,” Balderas said in a statement in releasing the audit prepared by an outside auditing firm for his office.

Department spokesman Matt Kennicott disputed the audit findings and said the information released by Balderas was “fraught with misstatements and inaccuracies.”

“This is just another sad example of an announced political candidate using his office to make politically motivated statements,” Kennicott said.

The audit concluded that the department:

-Improperly paid $620,000 to Arizona companies brought in last year to take over management of the mental health providers because of the allegations of Medicaid fraud, which were forwarded to the attorney general’s office for investigation. Auditors said the payments violated the agency’s contracts with the companies.

Nearly $413,000 was paid although the agency received invoices for services two weeks after the end of the state’s fiscal year. Kennicott said nothing improper was done and agencies routinely accept late billings. Almost $188,000 was paid based on projected costs rather than reimbursing for actual expenses, auditors said. Kennicott said the payments were necessary for “keeping new Mexicans employed” as the providers were taken over by the Arizona companies.

-Failed to follow its procedures for investigating possible fraud by the mental health providers. Auditors said the department’s “program integrity unit” didn’t handle the initial investigation of the fraud allegations before those were sent to the attorney general’s office. Kennicott said the program integrity staff was involved, but the investigation was so large that others were brought in to deal with the allegations.

-Wrongly paid about $7,000 to Boston-based Public Consulting Group, which did an audit for the agency that identified $36 million in possible billing problems by mental health providers. Auditors said the state improperly reimbursed the company for double billings and $115 for alcoholic drinks. Kennicott said the state paid for no alcohol purchases, and the agency is subtracting about $3,300 from final payments to the consulting firm because of the double billings.

-Failed over several years to collect about $60 million in federal money for Medicaid services. That’s been previously disclosed, and the department pointed out that the reimbursement dispute dated to 2007 during former Democratic Gov. Bill Richardson’s administration. Martinez took office in 2011. The uncollected federal money is part of an ongoing problem with the state failing to properly balance its books and reconcile transactions by agencies.

“Most disturbing is the department’s double standard when it comes to its own stewardship of federal and state funds and payments to favored contractors,” said Senate President Mary Kay Papen, D-Las Cruces.


Follow Barry Massey on Twitter at https://twitter.com/bmasseyAP

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