We are continuing our reporting on New Mexico’s mental health situation. In June 2013, 15 providers responsible for 87 percent of the behavioral health services delivered in New Mexico were stripped of their contracts. The ostensible reason was the presence of “credible allegations of fraud.” Two years later, New Mexico’s Attorney General found that there never were any credible allegations of fraud – but that’s another story. Here, we are going to focus on La Frontera, a company based in Tucson, Ariz.

When the 15 providers were stripped of their contracts, it was based on information provided by Optum, a UnitedHealthcare subsidiary brought in to revamp the system. Once they were out, UnitedHealthcare worked feverishly to bring in new companies. La Frontera was to open up in New Mexico. 

According to court documents, UnitedHealth’s CEO, Andy Sekel, contacted Frontera and invited it to take over the operations of a few of the New Mexico facilities. Although the 15 exiled providers were out, they had left behind a number of facilities that needed to remain operational. Mr. Sekel allegedly told Fonterra that it “should look at this as an investment.” Unfortunately, Frontera had no idea what an investment it would turn out to be. 

In a complaint filed by Frontera, it is alleged that UnitedHealthcare had promised that its claims processing system would link to the Frontera system, and that this would lower administrative costs and also ensure timely payment when claims were submitted. UnitedHealthcare also is said to have promised that all of the enrollee medical records were online and would be easily accessible by Frontera. Promises were allegedly made that each facility to be taken over would be staffed with experienced employees and fully licensed and credentialed professionals. The complaint states that Frontera was promised that the takeover of each facility would be a “turnkey” transition.

Frontera stated that New Mexico’s Human Services Department also reached out, asking it to “help New Mexico salvage its behavioral health and substance abuse delivery programs that were nearing collapse.” In spite of its hesitation to enter business in a new state that was unfamiliar territory, La Frontera committed.

UnitedHealthcare then allegedly started to cut off funding for the providers. The complaint details that on July 24, 2013, UnitedHealthcare cut off funds for Southwest Counseling in Las Cruces the day before payroll was due. Frontera rushed in and forked out its own cash to meet the payroll. Frontera was able to keep the facility going so behavioral services were not interrupted. But Southwest was only the first of a number of facilities Frontera was asked to take over.

As Frontera began transitioning into facility after facility, a pattern emerged, the complaint noted. Everything was on short notice. There would be a hasty phone call from UnitedHealthcare and then a very short, 5-7 day deadline to take over an entire facility. It was one fire drill after another.

Frontera’s complaint details how things then turned really bad. First of all, even though UnitedHealthcare allegedly continued to collect money from the State of New Mexico, no checks went out to any providers, including Frontera. The information system never worked as promised. Frontera found the health records found on the UnitedHealthcare information system impossible to access. Frontera says that UnitedHealthcare would not supply a list of the enrollees for each facility.

The complaint also details a number of restrictions that UnitedHealthcare placed on Frontera. For example, it was required to retain all former employees from the terminated providers for 90 days. UnitedHealthcare also allegedly required that all of these employees be re-credentialed, even though all of them already had recently been credentialed. It goes without saying that unless UnitedHealthcare recognized its own credentials, there would be no way to get reimbursed for services rendered. This is one of the more bizarre aspects of the complaint. 

Frontera also reportedly found that the takeovers were far from being “turnkey,” as promised. For example, it was forced to renegotiate all of the facility leases at unfavorable terms. And while all of this was going on, Frontera allegedly found that the UnitedHealthcare claims payment system would not pay claims without significant technical modifications. But the complaint states that the State of New Mexico had already waived technical requirements for UnitedHealthcare, meaning that it was under no obligation to make any investment in improving its information system.

Day after day, week after week, the complaint noted, no payments came from UnitedHealthcare. Frontera was burning through its cash and going deeper into the hole. Then UnitedHealthcare reportedly requested that Frontera submit all of its unpaid claims to the Netwerkes Clearinghouse, which is a subsidiary of UnitedHealthcare, according to court documents. but all of Frontera’s claims allegedly were rejected because United had provided Netwerkes with the wrong provider identification number.  

Frontera started to use its own funds to iron out the technology issues in the claims submission system.  The complaint details how it performed a test run of unpaid claims sent to Netwerkes. UnitedHealthcare allegedly did not provide any technical help; the result: still, none of the claims could be paid.

Months later, in March 2014, UnitedHealthcare asked Frontera to resubmit all of the claims again, the complaint alleges. When Frontera did this, again all 30,000 resubmitted claims were reportedly rejected.  According to the complaint, UnitedHealthcare indicated that it was unable to override its own information system.

Then UnitedHealthcare allegedly asked Frontera to resubmit yet again, but over a 10-day period, with no more than 5,000 claims per day. Frontera reportedly did this, but each and every claim had to be manually edited in order to be compatible with the UnitedHealthcare information system. UnitedHealthcare allegedly continued to insist that it could not make any changes in its system. Again, all claims were rejected. By this time, Frontera was facing $3.9 million of claims it could not get paid for. 

The company then sought a CEO-level meeting with UnitedHealthcare, the complaint said. According to the complaint, when this meeting took place with Elizabeth Martin, then CEO, she provided an explanation of why Frontera was not getting its money. According to Martin, the complaint said, the company had no more money to pay, because all the money had been spent. After this apparent admission on the part of United, Frontera then filed a complaint.

It is difficult to characterize these events. But they do present a warning to providers: look before you leap. 

About the Author 

Edward M. Roche is the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations.

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