By Rob Nikolewski │ New Mexico Watchdog

SANTA FE — In a wide-ranging case where allegations of $36 million of alleged fraud have been leveled against 15 New Mexico behavioral health providers, the state’s reauthorized Medicaid funding to two organizations on Monday — but only after they agreed to pay a combined $4.24 million due to alleged improper billing.

and . are back in business. But, in addition to the payments, they had to sever ties with another behavioral service provider under investigation — . of Santa Fe — and agreed to “intensive new training and oversight of its management.”

PMS will repay $4 million. YDI will repay $240,000.

“This is a positive outcome that allows us to recoup a significant portion of the Medicaid funding that has been identified as overpayments,” HSD Secretary Sidonie Squier said in a news release.

“While we have never agreed with the state’s contentions, allegations, or actions, PMS’s primary motivation in settling was to preserve its critical safety net behavioral health services and over 200 New Mexico behavioral health jobs.” in a statement to Steve Terrell of the Santa Fe New Mexican.

YDI, , also said it “did not fully agree with the processes employed” by HSD, but said the most “prudent” path was to reach an agreement. YDI said the $240,000 in must repay represents about 8 percent of the its billings in the past three years.

“According to the GAO, the national average claim failure rate is between 3 percent and 9 percent,” the release said.

HSD spokesman Matt Kennicott told no other agencies under investigation are being considered for having their funding restored.

Monday’s announcement is the latest chapter in a controversy that broke out in late June, when the HSD suspended Medicaid payments to 15 providers after an audit conducted by a Boston-based firm alleged some $36 million in misspending.

HSD officials say they had no choice, but critics have disputed that , accusing Squier and the administration of of overreaching.

“These two entities (PMS and YDI) were given the chance to respond to the audit,” state , told New Mexico Watchdog Monday night. “They, at least, could learn what the charges were against them, but the others were not … The bottom line is that the other agencies were not given due process … The Martinez administration is just trying to put a positive spin on a terrible situation.”

“They (HSD) could have done this in June or July,” said another critic, state . “They could have sat down with these agencies and straightened things out … We’re just on the outside looking in.”

The allegations have been shrouded in secrecy as HSD and the New Mexico Attorney General’s Office have refused to disclose the details of the audit, saying doing so could compromise the investigation.

But , HSD did say that in addition to PMS and YDI, the companies under investigation face allegations that “employees were told to intentionally up-code services as a means of siphoning extra money out of the Medicaid system, told to bill for services never provided, or told to obstruct the reporting of critical incidents to proper authorities and regulators.”

In August, a story in the that the husband and wife who run TeamBuilders earn as much as $1.5 million a year in salaries and other income, something the couple’s attorney said was “grossly inaccurate.”

Contact Rob Nikolewski at and follow him on Twitter @robnikolewski