February 26, 2014

Audit firm gave big bucks to GOP governors; Audit erroneously flagged claims says AG

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New Mexico’s Attorney General, Gary King, says auditors given $3,000,000 by Governor Martinez’s administration to find fraud among the state’s behavioral health services erroneously flagged tens-of-thousands of dollars in claims that they labeled likely fraudulent.

And new word today that the audit firm, PCG, was a big donor to Republican governors across the country in states where they had contracts or would soon get them under Republican leadership.

First the audit.

Another great story from New Mexico In Depth:

The audit the state used to justify suspending Medicaid payments to an Alamogordo health center last year appears to have included mistakenly flagged claims, according to the state Attorney General’s Office.

That raises questions about the process the Human Services Department (HSD) used to ensure the audit was accurate before deciding to suspend Medicaid dollars to the Alamogordo organization.

Without that funding, The Counseling Center closed its doors last fall. While the AG’s office has completed its investigation into the organization’s spending of Medicaid money without filing charges, other investigations – sparked in part by the audit that led to the payment freeze – are ongoing.

Using a statistical formula, the contractor that performed the audit, Public Consulting Group Inc. (PCG) of Massachusetts, estimated there had been $612,000 in potential Medicaid overpayments to The Counseling Center over several years based on $1,873 in questionable costs.

But the AG’s office, during its investigation, flagged only $375 in questionable costs, said Jody Curran, the head of Attorney General Gary King’s Medicaid Fraud Control Unit.

If PCG had been working from $375 instead of $1,873, its estimate of Medicaid overbilling likely would have been less than the $612,000 the audit claimed…

Reviewing another set of claims submitted by the Alamogordo counseling center, state investigators flagged about $4,880 in questionable billing compared to the $43,137 highlighted in the PCG audit, Curran said. Both reviewed the same 10 cases involving 1,529 claims worth $193,871 in government money.

Read the full story here.

Following proper audit procedures, the AG’s staff interviewed staff regarding questioned billings and were able to resolve the majority of them.  Other reviews are still ongoing.

Now, follow the money.  This summary from Joe Monahan’s New Mexico (Feb 26, 2014):

The background–Public Consulting Group— (PCG) was the Boston-based auditing firm hired by the administration to audit the mental health providers. Their audit was instrumental in the administration’s decision to suspend payments to the providers and to bring in firms from Arizona to take over.
News recently broke about how a fund-raiser for then-candidate Susana Martinez discussed a campaign contribution with ABQ Downs racino owner William Wyndham and how the contribution would be run through the Republican Governors Association (RGA). That  conversation was in preparation for Windham’s Sept. 27, 2010 meeting with Martinez to discuss the expiring racino lease. Windham made a $25,000 contribution to the RGA on Oct. 7, 2010. Windham now says the contribution was for the RGA–not Martinez’s campaign. But campaign memos and financial records do not point in that direction. The administration ultimately awarded the Downs a 25 year lease.

The FBI has gathered evidence on the handling of the ABQ Downs racino lease. The status of their investigation is unknown.

Now we learn that Tony McLean Brown, Director of Mergers and Acquisitions at PCG, the audit firm, contributed $100,000 to the RGA on October 11, 2010, four days after Windham made his donation.

The record of that donation is listed here on the RGA’s IRS Form 8872 that “nonprofits” such as the RGA are required to occasionally file.

On Oct. 14, 2010, three days after the Brown contribution, the RGA transferred $160,000 to the RGA New Mexico 2010 PAC for use here. Then–on the very same day–the RGA New Mexico 2010 PAC passed along $170,000 to the Republican Party of New Mexico. The Secretary of State’s record of that contribution is here.

Tony Brown also gave around $87,000 directly to the RGA MI PAC 2010. PCG also has business interests in Michigan.

The attorney general’s office now says the PCG audit mistakenly flagged Medicaid claims made by an Alamogordo health care provider that had their funding suspended. The AG’s findings raises the question of whether the audit that caused the shuttering of all the providers was accurate.

RGA was by far Martinez’s largest contributor to her 2010 campaign. She reported raising $7.4 million of which over $1.3 million came from the RGA.

The questions raised here include how much of that money was donated by persons wishing to do business with the state and ended up doing business? And were campaign contributions run through the RGA as a means of keeping secret the identities of those making contributions and planning to do business with the new administration?