New Mexico State Legislature Santa Fe August 2, 2013 Via FedEx, Kathleen Sebelius, Secretary United States Department of Health & Human Services 200 Independence Avenue, SW Washington, D.C. 20201 Attention: Paul Dioguardi Re: URGENT — Request for written assurance that lifting pay suspension will not jeopardize New Mexico's Medicaid funding Dear Secretary Sebelius: On behalf of the Legislative Health and Human Services Committee (LHHS), the bicameral, bipartisan and statutory oversight committee of the New Mexico Legislature, ‘we write to request your immediate assistance and intervention to prevent the interruption and wholesale revision of the state's existing behavioral health system by the state's Human Services Department (HSD) based upon: 1) Section 6402(h) of the Patient Protection and Affordable Care Act (PPACA)'; 2) 42 CF. R. §455.237, a regulation recently promulgated by the Centers for Medicare & Medicaid Services (CMS) to implement Section 6402(h) of the PPACA; and 3) the HSD's refusal to find "good cause to not suspend" behavioral health payments for 14 of 15 behavioral health providers (“audited providers") who are responsible for approximately 90% of the state's behavioral health service billings. "This section of the PACA amends Section 1903()(2) ofthe Social Security Act to provide thet federal ‘inancfal parteipation inthe Medicaid program wil nat be made for any items or services Furnished by an individual or enity to whom a State has failed to suspend payments" during any period when there is a pending investigation of a Credible allegation of fraud, unles the state determines in accordance with federal regulstions that good cause exists not to suspend such payments 242 CFR. $455.23 provides tat stale Medicaid agencies "must suspend ell Medicaid payments to a provider after the egency determines there isa edible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency hes good cause to not suspend payments or to suspend payments in whole or in parSecretary Sebelius August 2, 2013 Page 2 We fear that, within days or weeks, New Mexico's existing and already fragile statewide behavioral health system will be the casualty of the misapplication by the HSD. of these new PPACA Medicaid fraud and abuse laws and regulations. Section 455.23 of Title 42 of the Code of Federal Regulations gives the state executive Medicaid agency broad discretionary powers to impose sanctions that may put a provider out of business before any adjudication of wrongdoing, and it gives that same agency a powerful tool to intimidate those who provide services to Medicaid recipients and stifle any constructive criticism from this same group. ‘The HSD has apparently determined that the restructuring and regionalization of the state's behavioral health system weighs against finding "good cause to not suspend" payments to behavioral health: providers who have long-standing relationships with the communities they serve, Unfortunately, the HSD's use of new PPACA provisions to favor out-of-state providers over existing and established New Mexico behavioral health providers and to reconfigure the state's behavioral health system is a case study in unintended consequences. The new PPACA laws and regulations giving the HSD complete discretion to determine eredible allegations of fraud and complete discretion to grant or deny applications for good cause to lift payment suspensions, with no corresponding requirement to afford providers with any meaningful or timely hearing rights or rights of appeal, have made it possible for the HSD to create a statewide emergency where none existed. Presumably, the federal government will pay a Medicaid portion of the costs associated with this restructuring of state behavioral health services. The contracts of the Arizona providers provide for hourly pay rates as follows. Executive Director $300 Chief Operations Officer $275 Chief Financial-Officer $215 Manager $200 Associate Manager $200 Business Analyst $200 System Analyst $250 Transition Consultant $250 Clinical Leadership $250 Clinical Trainers $250Secretary Sebelius August 2, 2013 Page 3 With the possible exception of the clinical leadership position, none of these employees will be delivering direct clinical behavioral health services. The HSD has stated that it anticipates spending up to $18 million to "transition" behavioral health services to the Arizona providers.. See Attachment 1. To address the current behavioral health crisis and to prevent a similar situation from reoccurring in the future, the committee respectfully requests that the CMS immediately provide the State of New Mexico with written assurances that the state's Medicaid funding will not be at risk or in peril, under the provisions of Section 6402(h) of the PPACA and 42 C.F. R. §455.23 or any other federal law or regulation, for Medicaid items provided or services rendered by any Medicaid provider that has been referred to the attomey general for investigation based upon a credible allegation of fraud determination during the pendency of the investigation of the provider if all of the following criteria are met: 1, the state restores funding for services rendered after the date upon which the provider that is the subject of a credible allegation of fraud determination is referred to the attomey general for investigation and for services rendered during the pendency of such investigation; 2. claims submitted by the referred provider undergo prepayment claims review; 3. the prepayment claims review is performed by a firm on the state auditor's approved list or approved by the CMS; and 4, clean claims approved for payment through prepayment review shall be paid within 30 days of approval. Background ‘Approximately one month ago, the HSD placed payment holds on 15 behavioral health care core service agency providers based upon: 1) red flags raised by a fraud detection product newly implemented by OptumHealth, the statewide entity for management of behavioral health services; and 2) a follow-on audit conducted by Public Consulting Group (PCG). During her appearance before the LHHS on July 3, Secretary of Human Services Sidonie Squier told the committee that a determination of credible allegation of fraud was made in a matter of days after the HSD's receipt of PCG's audit report as to every one of the 15 audited providers, whereupon the HSD referred all 15 providers to the state's attomey general for investigation On July 3, Attorney General Gary King told the committee that his office had made no determination as to the merits of any allegations of fraud and would investigate the refertals. Chief Deputy Attorney General Albert J. Lama has appeared before both the LHHS and its Behavioral Health Subcommittee to advise that, while the attorney general has directed additional resources to complete the investigations, it could be months or