3176179860_5b74cda3c0A firm that took over management of the state’s behavioral health care system July 1 has not paid millions of dollars to nonprofits and other companies for work they have completed, the state said Friday.

As a result, the firm, OptumHealth New Mexico, faces a fine of a more than $1.4 million for non-payment and a potential loss of the state’s four-year $1 billion contract if the problems aren’t corrected soon, according to a state documents.

The trouble appears to be with OptumHealth’s electronic claims management system, which was touted as a way to promptly pay nonprofits and others working with those in need of behavioral health care — the mentally ill and those struggling with substance abuse.

But “thousands of provider claims, amounting to millions of dollars, have gone unpaid,” placing many providers under financial strain, and in some cases, “financial crisis,” according to a news release the state sent out Thursday.

The news release also quotes Gov. Bill Richardson as saying he was upset by the non-payment:

“I have received numerous complaints from providers who are providing critical behavioral health services for New Mexicans, but are not being paid for those services from OptumHealth. Four months is more than enough time for OptumHealth to get their act together and pay providers for the work they are doing.”

The company took over the state’s $1 billion four-year behavioral health contract July 1.

A spokesman for OptumHealth said the company planned to release a statement responding to the state’s allegations.

David Ley, Ph.D., of the New Mexico Youth Provider Alliance, said Friday that each month Optum is not paying millions of dollars for services performed, many providers are dipping into cash reserves to survive. At the same time, they are looking toward an uncertain future, he added.

“Next year will be horrible,” Ley said, referring to the state’s dismal finances. Some state lawmakers predict a $1 billion shortfall when legislators converge in Santa Fe in January to write next year’s state budget and say spending cuts and tax increases both can be expected.

“We could have used the money we had in hand to get through some of” the spending cuts, Ley said. “But unfortunately we have used that money to survive this company coming in and not being able to process these claims.”

The news release said that the state was hopeful that the sanctions would result in corrections and that “providers will begin to see prompt payments.”

“However, if the sanctions do not result in significant changes and contract compliance the Collaborative will have no choice but to look at other options,” the release said.

The state of New Mexico hasn’t yet appointed a monitor to oversee Optum’s performance, said Betina Gonzales McCracken, the spokeswoman for the state’s behavioral health collaborative, which hired OptumHealth.

“We are in the process of selecting a monitor,” McCracken said. “Until then, we do have state staff who have oversight of the contract.”

The missed payments are the latest trouble New Mexico has encountered after farming out the management of behavioral health services to the private sector.

The state contracted its behavioral health care services to a separate firm — Value Options — in 2005 in the hopes of streamlining delivering services. ValueOptions took over management of those services from more than a dozen state agencies.

OptumHealth beat out ValueOptions for the state’s four-year behavioral health contract this past year after criticism of ValueOptions’ performance.

Critics of ValueOptions accused it of trying to protect its bottom line by denying treatment or making access to care difficult.

The state found last year that ValueOptions applied a stricter standard to the definition of medical necessity, which resulted in more denials of certain types of out-of-home services for children, according to a state news release from February.

A lawsuit filed earlier this year by Ley’s group alleged that when ValueOptions found out it lost New Mexico’s behavioral health contract, it started cutting back on services to increase profits.

ValueOptions released this statement Friday upon news of the fine against OptumHealth:

“ValueOptions ran the statewide contract for four years – and earned praise in an audit from the federal Centers for Medicare and Medicaid Services. We bid to continue running the state’s behavioral health programs, but despite ValueOptions’ lower-cost offer, United/Optum was
chosen. We would be delighted, if needed, to bring our innovative programs back to the state of New Mexico.”

Updated 2 p.m. Here’s OptumHealth’s statement regarding the state’s actions:

Weeks of productive collaboration between OptumHealth and the State Behavioral Health Collaborative have resulted in material progress toward our shared goal of ensuring a strong and healthy provider network for the people of New Mexico. We are concerned, however, about directives in the State’s corrective action plan that are inconsistent with the terms of our contract. We are actively addressing these concerns with the State.

OptumHealth remains committed to working with the State of New Mexico and its providers to create a progressive system that fully supports the mental health recovery and resiliency of New Mexicans, while ensuring responsible management of state and federal funds.