New Mexico's Medicaid Woes A Financial Boost For Arizona Mental Health Providers

By Steve Shadley, KJZZ
September 02, 2013
Steve Shadley
Kurt Sheppard is the CEO of the nonprofit health group Valle Del Sol in Phoenix.

PHOENIX — Arizona looks to benefit from disarray in New Mexico's behavioral health system. Five Arizona agencies that work with mental health and substance abuse clients have started treating patients in New Mexico.  

They were hired after New Mexico launched an investigation into health groups accused of overbilling Medicaid in that state. The Arizona providers will be paid millions of dollars for a few months of work.  

New Mexico Department of Human Services spokesman Matt Kennicott said the investigation started after a recent independent audit identified a pattern of irregular billing practices by 15 agencies. 

“Those 15 agencies are currently under investigation by the New Mexico Attorney General’s office for credible allegations of fraud including over $36 million in overpayments over the three years at which the audit looked” Kennicott said.

The 15 groups under investigation treat 80 percent of the mental health patients in New Mexico. To ensure their care continues, New Mexico officials came to Arizona looking for help. 

Kennicott said the state signed contracts with five Arizona clinics. One of them is Valle Del Sol. It has been providing mental health care in the Phoenix area for more than 50 years. 

During a tour of one of the Valle Del Sol clinics in Phoenix, CEO Kurt Sheppard showed off the area where patients receive treatment. 

“We’re looking at a typical medical laboratory, looks like your typical doctor’s office you would see anywhere. We go to great lengths to provide an environment that doesn’t make people feel like they are not getting quality services” Sheppard said. 

Valle Del Sol works with a lot of Latino and Native American patients in Arizona.  Sheppard said that’s one reason New Mexico selected his bilingual clinic. 

“Valle Del Sol puts a lot of emphasis on cultural competence and embracing diversity” he said.  

Sheppard said Arizona clients won’t see any changes in their care. He said health care workers already living in New Mexico were encouraged to join the clinics his organization will take over. 

“Every person who wanted to transition from the previous agency to Valle Del Sol New Mexico was hired in their current, same job at the same salary” Sheppard said.

Sheppard claimed more than 80 percent of the local staff has stayed on. 

Read More: Service Disruptions Mark Transition Of New Mexico Behavioral Health To Arizona Hands

Another provider awarded a contract in New Mexico is La Frontera Arizona in Tucson. CEO Dan Ranieri said his group had to scramble to take over six New Mexico agencies in the past few weeks. 

“The first organization in Las Cruces we essentially completely transitioned operations in about 72 hours. And that involved going in and hiring most of their staff, leasing their buildings, their vehicles, their equipment,”  Ranieri said.

The five Arizona health groups will share almost $18 million New Mexico has agreed to pay them through the end of the year.  Some of the money will come from the state of New Mexico and some from Optum Health, the private company that manages New Mexico’s health care network. The Arizona clinics could be hired permanently next year when New Mexico launches its new Medicaid program called Centennial Care. 

Jim Dunn is executive director of the National Alliance on Mental Illness in Arizona, a grassroots advocacy group.

"These are highly respected, very capable agencies and I think that they were probably recognized for their good work in Arizona” Dunn said.

Steve Shadley
Valle Del Sol's headquarters in central Phoenix.

The Arizona clinics are all nonprofits, but some of their employees who will be managing the New Mexico accounts will be earning supplemental pay for their work, and it could mean a lot of money. 

The $18 million comes at a good time for the Arizona employees and the system as a whole. Dunn explained mental health care in Arizona is already strained — behavioral treatment programs took a big hit when Arizona lawmakers cut $75 million during the recession — and they haven’t fully recovered. 

“We could use more funding for sure” Dunn said.

But some people in New Mexico don’t want to see their funds move west.  State Senator Mary Kay Papen is a Las Cruces Democrat. 

"Don’t we have anybody in New Mexico that’s qualified to come in and look over the management of these agencies?  So, yes I have mistrust of the Arizona providers, we don’t know anything about them” Papen said.  

Papen said she’s hearing complaints from constituents who say they can’t get their medications. But the Arizona health care groups said they’re working quickly to reinstate care for the thousands of New Mexico clients affected by the transition.