Friday, October 24, 2014

Martinez Administration's "Heavily Soiled" Out Sourcing Collapses

In case you haven't voted for Gary King yet.

Arizona firm 
needs money to continue in N.M.

One of the Arizona companies that replaced New Mexico behavioral health agencies accused of Medicaid fraud last year is in financial jeopardy, threatening to further disrupt the state’s system of care for the mentally ill that has been in turmoil for more than a year, according to documents obtained by The New Mexican.

The company, Turquoise Health and Wellness, informed the state in a report this month that it is hemorrhaging money and must be paid more if it is to stay afloat.

“Turquoise is currently not a financially viable organization on its own,” says the company’s Oct. 9 report to the state Human Services Department and managed care organizations that pay it.

Turquoise was one of five Arizona firms hired by Gov. Susana Martinez’s administration last year after the abrupt termination of 15 New Mexico behavioral health providers suspected of Medicaid fraud. The controversial switch, which followed an audit that found $36 million in overbilling by the New Mexico companies, has been challenged by Democratic lawmakers and the ousted providers.

A slow-moving investigation by the New Mexico Attorney General’s Office has contradicted the audit that was cited as the basis for the shake-up. To date, the Attorney General’s Office has cleared two providers, although the investigation into one of them has been reopened. Many of the ousted providers have expressed frustration that they don’t know details of the accusations against them because the audit’s findings remain secret during the attorney general’s investigation.

The Arizona companies received about $24 million in transition costs to take over for the in-state companies. Turquoise received about $2.8 million in transition funds during the second half of 2013, according to state financial records.

Some Arizona firms billed the state between $250 and $300 per hour for time spent going through airport security lines and waiting for flights, among other things. At least one of the replacement companies, Agave Health, billed the state for transition work done before the launch of the audit that the Human Services Department cited as the reason for removal of the New Mexico providers.

Despite the transition fees and a pay increase for services approved by the state this summer, Turquoise’s recent report to the Human Services Department paints a picture of a company in distress. The company, which is providing services in southeastern New Mexico, has endured staff turnover exceeding 50 percent, according to its report. The company decried the “lack of qualified workforce” and lamented that “all areas [it serves] are rural/frontier and widely scattered.”

During the first six months of 2014, the company lost $1.3 million and maxed out a $3 million line of credit from its parent company, Phoenix-based Lifewell Behavioral Wellness Inc., according to the report.

Phone calls and emails to the company seeking comment were not returned.

Expenses outpaced revenues in all three cities where Turquoise operates. Losses totaled nearly $750,000 in Carlsbad and about $500,000 in Roswell. In Clovis, Turquoise operated in the red as well, but nearly broke even.

Trouble reconciling claims, the need to upgrade the computer system it inherited from its in-state predecessors and damage from recent flooding to buildings that housed some of its programs in Carlsbad have compounded the financial problems at Turquoise, according to the report.

More than $500,000 in claims for service the company provided has been denied. Some of the claims were rejected because they were not submitted on time. Another $575,000 in billing hasn’t been completed because supervisors haven’t been available to authorize it due to a staffing shortage.

“This is an internal issue, but illustrates the burden placed upon the organization by requiring a supervisor to sign off on every staff note,” the report said. “As we have struggled with adequate staffing in several areas, this has been an on-going administrative and financial burden.”

Six managed care organizations that receive funding from the state to pay behavioral health providers for services owe Turquoise more than $2.6 million for the fiscal year that ended June 30, according to the report.

It’s these same managed care organizations, and not the state, that Turquoise is asking for a rate increase, according to Human Services Department spokesman Matt Kennicott. He said the department scheduled a meeting with the managed care organizations at Turquoise’s request, and the report was presented there.

The state pays managed care organizations fixed rates per member, per month for clients receiving services. From that pool of funds, the managed care organizations pay providers such as Turquoise a negotiated rate.

“The provider and the managed care organizations must negotiate with each other if they want higher or different rates,” Kennicott said. “Turquoise Health and Wellness presented the rate requests, but we did not discuss it at the meeting.”

Some of the managed care organizations that Turquoise asked for more money beginning Nov. 1 were unprepared to comment last week on whether they’d grant the request.

In July, the Human Services Department announced a 7.5 percent increase in pay to providers for Medicaid-funded behavioral health services, according to an email from the department to providers obtained by The New Mexican.

Without another increase in the rate they’re paid for services, Turquoise painted a bleak picture of its future in New Mexico. At the current pace, the company projects its Carlsbad and Roswell operations will lose more than $1 million each between now and next July.
Contact Patrick Malone at 986-3017 or Follow him on Twitter @pmalonenm.

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