Failure to penalize troubled vendor makes Maryland a ‘laughingstock,’ lawmaker says – Maryland Matters

State lawmakers have been unsparing of their criticism of the Maryland Division of Well being on Tuesday, accusing the company of failing to pursue monetary compensation in opposition to a vendor that has acknowledged critical shortcomings.

One after one other, members of the Common Meeting’s Joint Audit and Analysis Committee expressed astonishment that the company determined — as a matter of coverage — to not search liquidated damages from Optum, a well being claims-processing firm whose shortcomings have been the topic of a harsh audit final month.

The Minnesota-based agency processes billions of {dollars} in behavioral well being claims annually. The overview of Optum’s efficiency, which was performed by the Workplace of Legislative Audits (OLA), uncovered quite a few issues.

Auditors found greater than $220 million in funds for behavioral well being companies that lacked correct documentation or haven’t been recovered, lapses that prevented the state from receiving practically $30 million in federal reimbursement for which it was eligible. As well as, psychological well being suppliers, who’ve been stretched skinny and topic to burnout because the pandemic started, have been compelled to spend lengthy hours reconciling cost errors.

Company officers gamely sought to reassure lawmakers that they’ve penalized and withheld funds from Optum, however they acknowledged that they determined to not search liquidated damages for worry of harming their relationship with the agency. The admission appeared to stun members of the panel.

“I believe it sends the fallacious message to contractors that work with the state — and makes a laughingstock of our contracting course of,” mentioned Sen. Clarence Lam (D-Howard), a committee co-chair. “If we enter into contracts with distributors who’re unable to ship, and but don’t pursue damages when these contractors are costing the state thousands and thousands of {dollars}… it’s an instance of what’s damaged with our state procurement course of.” 

Del. Kirill Reznik (D-Montgomery) referred to as the company’s choice “unconscionable” and a harmful precedent. 

Though auditors calculated that the state has suffered lots of of thousands and thousands in losses because of Optum’s struggles — by claims that have been improperly denied, duplicate funds, overpayments and uncollected federal funds — the agency was handled gently, auditor Josh Adler mentioned. 

“It’s virtually, in my thoughts, it’s like [they were] too large to fail,” he instructed the panel. “The division’s place was simply ‘we are able to’t do something.’” 

Lam urged it can fall to the incoming administration of Gov.-elect Wes Moore (D) to chart a brand new course, although one other auditor, Brian Tanen, cautioned in opposition to delay. “The findings should not static,” he mentioned. “The potential losses improve daily that goes by.” 

Well being Secretary Dennis Schrader, who skipped a Nov. 1 dialogue lawmakers convened, was absent on Tuesday as nicely. His absence annoyed lawmakers who wished to know who set the coverage to not sanction Optum extra harshly. 

The company officers who spoke on Schrader’s behalf rejected the declare that the contractor’s failures harm the state financially. 

“It’s our rivalry that the state has not misplaced cash,” mentioned Assistant Secretary Webster Ye, pointing to unspecified cost withholdings and penalties. His feedback elicited sounds of disbelief from Del. Andrea Harrison (D-Prince George’s) that have been audible through the on-line assembly.

“I don’t consider that there have been losses,” mentioned Deputy Secretary Steve Schuh. He mentioned the choice to not search liquidated damages — what he referred to as “the nuclear choice” — shouldn’t be interpreted as an indication the company is glad with poor efficiency. 

Lam referred to as Schuh’s feedback “non-sensical.” He mentioned the division’s protection of its actions represented “such a contortion of the reality that it places Cirque du Soleil to disgrace.” 

Issues with ‘nearly each side of the contract’ 

Lawmakers from each events signaled their unhappiness with the company’s oversight and the period of time it takes to get info. “We’re not getting the solutions that we expect we ought to be getting,” mentioned Del. Steven Arentz (R-Higher Shore). “I believe it’s vital, as a result of we’re coping with some huge cash right here. Loads of taxpayer {dollars}.”

Though practically all OLA audits of presidency businesses uncover some areas the place enchancment is required, chief auditor Greg Hook mentioned the MDH’s efficiency on this occasion was notable. “As a result of monetary significance and repeat nature of many findings, we decided that MDH’s accountability and compliance degree was ‘unsatisfactory.’” That designation triggers a proper “follow-up overview” throughout the subsequent 12 months. 

Adler instructed lawmakers that auditors “recognized issues with nearly side of the contract” — together with gaps within the preliminary procurement, a failure to vet Optum’s many subcontractors, a failure to check Optum’s system earlier than it went reside, shortcomings within the system itself, and the company’s unwillingness to impose stiffer penalties. 

He mentioned the company feared that if it went after the seller extra aggressively, “it could discourage [the company] from resolving the various issues it has.” One other worry, he mentioned, was that Optum may file swimsuit in opposition to the state in response. Adler referred to as the well being division’s stance “opposite to the intent of state legislation.” 

Though the corporate has two years remaining on a five-year contract, the company has signaled it’s shifting on. Earlier this month officers acknowledged they’re nearing completion on a revamped procurement course of shall be used within the seek for a alternative.