SANTA FE, N.M. (AP) — Behavioral health providers under investigation for possible overbillings, mismanagement and fraud lost an appeal Monday of a ruling that allows New Mexico to continue to withhold Medicaid payments.
The 10th U.S. Circuit Court of Appeals in Denver dismissed the appeal by eight nonprofit providers.
A federal judge in Albuquerque last month denied the providers’ request for an order stopping the state from freezing payments for mental health and substance abuse services.
The appeals court said it didn’t have authority to consider the providers’ case because the judge’s denial of the restraining order couldn’t be appealed.
Patric Hooper, a lawyer for the providers, said the lawsuit by the nonprofit groups against the state remains pending in district court and his clients are studying their next legal move.
Legislators also are mounting a challenge to the payment freeze imposed by the state Human Services Department in June on more than a dozen nonprofit organizations.
A legislative committee last week asked for help from U.S. Health and Human Services Secretary Kathleen Sebelius.
The panel sent a letter seeking assurances that New Mexico wouldn’t lose federal Medicaid funding if payments to providers are restored pending the outcome of the state’s investigation and if provider claims are reviewed by an auditor before being paid.
The state suspended payments to 15 providers after an audit flagged $36 million in possible overbillings. The state contends that federal regulations required it to halt the payments and turn over the allegations to the state attorney general’s office to investigate.
The providers serve about 30,000 patients, or nearly a third of those receiving behavioral health services through Medicaid.
The letter by the legislative Health and Human Services Committee complained that the state had denied requests by all but one of the providers for “good cause” exceptions to the payment freeze.
Leaders of the committee, Rep. James Roger Madalena, D-Jemez Pueblo, and Sen. Gerald Ortiz y Pino, D-Albuquerque, said providers are running out of money and some have started to furlough their workers. They said New Mexico has a shortage of behavioral health workers and the state’s interpretation of federal regulations “has resulted in the destruction, restructuring and disruption of the state’s existing behavioral health system at such a critical time.”
The state contends that it’s taking steps to continue services to New Mexicans, and has contracted with five Arizona firms to take over for New Mexico providers.
Matt Kennicott, a department spokesman, said the agency is following federal law and “we’re not going to turn a blind eye to fraud, waste, and abuse in the Medicaid system.”
“Our top priority throughout this process is to ensure that we are protecting consumers, and that entails requiring that Medicaid dollars are used to support them and nothing else,” Kennicott said in a statement.