Tania Dall / Eyewitness News
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NEW ORLEANS -- The privatization of Louisiana's mental health programs is going south.

That was the message in a state audit released Monday by State Legislative Auditor Daryl Purpera.

'Basically what we have is agencies providing services and not getting paid timely or may not get paid at all because of problematic claims processing and paying processing,' said Earnie Summerville with Louisiana's Legislative Auditor's Office.

The audit says the new privatized system is not going well in New Orleans, Baton Rouge, Houma and Amite. In March 2012, the Louisiana Behavioral Health Partnership began.

Simply put: the $354 million, two-year contract shifts management of the health programs from the state to Magellan Health Services. But, the state auditor's report says that deal is causing claim payment problems, increased costs, and in some cases, health services districts are losing money after being forced to use the private company's electronic health records system.

'We saw the claim processing to be a problem as far as they were having problems with who's eligible, who should be in the partnership, who is eligible for the partnership, the diagnostic codes, the procedure codes, were different from what they thought. It looked like a communications issue between the three as far as what can i actually bill for,' said Summerville.

Department of Health and Hospitals Secretary Kathy Kliebert defends the privatization agreement with Magellan. She said last year they paid out $300 million in mental health claims and doubled the provider list.

'We have worked diligently over the last year to make sure that the people are getting services. We have over 151 thousand children and adults receiving services through Magellen,' said Kliebert who adds the informational audit is questionable based on the number of providers sampled.

'The majority of our providers, and again 4 out of 1700 is what they looked at, the majority of our providers over 80 percent are satisfied with the types of services that are being provided,' said Kliebert.

The contract with Magellan runs through February 2014. The audit says so far the state has paid the company $156 million for its first year of work.

To read the full audit report, click here.

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