Auditors cite costly failures by contractor overseeing behavioral health claims in Maryland

State auditors released a scathing report on Friday detailing shortcomings in the hiring and oversight of the company hired to oversee payments to mental health and addiction treatment providers for low-income residents. of State.

The troubled system has drawn numerous complaints over the past two years from behavioral healthcare providers who have struggled to submit claims for new and existing clients at a time of heightened need during the coronavirus pandemic.

The audit confirmed numerous complaints about system malfunction and also detailed issues with the initial contractor audit, hired by the Maryland Department of Health. The problems are costing the state millions of dollars in potential additional federal funds and millions more in owed damages that health officials have failed to collect.

The routine audit, sent to state lawmakers, does not name the contractor, but it does focus on Minnesota-based Optum, a subsidiary of managed care giant UnitedHealth Group. Optum was awarded a 5-year, $198.2 million contract to manage state behavioral health payments beginning in January 2020, with a possible two-year extension.

After transition issues and growing claims from providers, state health officials have pressed Optum to make more than $1 billion in estimated payments through June 2021 to providers who participate in Medicaid, the federal health program for low-income people. This has led to more problems with collecting overpayments and ensuring claims are not wrongfully denied, a process that is ongoing.

Auditors noted that some issues cited in previous audits have been resolved, but many issues remain or are unexplained, including how state officials even approved the contractor without ensuring that its system complaints handling was working before the launch.

Along the way, health officials failed to monitor and conduct their own audits and hired an IT consultant for a $19.8 million contract without proper bidding.

The actions, auditors said, cost the state $28.8 million in additional federal funding it could have gotten if things were working properly. Auditors also said state officials failed to assess up to $20.5 million in damages allowed by the contract for “the vendor’s continued failure to deliver a functioning system or comply with specific requirements”.

The audit response, signed by Maryland Secretary of Health Dennis Schrader, agreed with most of the findings and detailed new processes and other fixes to address deficiencies in this and future contracts.

One disagreement the department stood firm on was not assessing the damage, saying officials were “concerned that such actions would discourage the [contractor] to resolve the defects found and may lead to litigation, the outcome of which is uncertain.

This prompted a rebuke from listeners, who said it was against state law.

Ultimately, the audit recognized that those ultimately affected by behavioral health disorders were those with behavioral health disorders.

“While not specifically quantifiable, several gaps identified have potentially impacted the effective and efficient delivery of health care to a vulnerable and in-need population,” the auditors wrote.

The audit drew strong criticism from the state health department from Senator Clarence Lam, chairman of the Senate Joint Audit and Evaluation Committee, who said he heard from providers who stopped working. ‘provide services because of the problems.

“This contract with Optum has been a huge debacle for the state from its inception until today,” Lam said in a statement.

“When incompetence and mismanagement cost the state hundreds of millions of dollars, someone in the Maryland Department of Health should be held accountable,” he said. “The level of waste and incompetence uncovered by this audit is disgusting and an indictment of the department’s current broken leadership.”

Lam specifically challenged the audit’s finding that the department failed to properly vet Optum and its subcontractors before awarding the contract.

The audit said health officials had not obtained references or contacted contractors, though another state told the department that Optum was “struggling to manage detailed claim data.” reimbursement of patients and had recommended that any agreement include the possibility of assessing daily penalties for missed deadlines”.

Health officials nevertheless reassured a state panel tasked with approving the contract when panel members raised concerns.

The waste and loss of taxpayers’ money was also a concern, Lam said. He cited the audit’s finding that more than $220 million in estimated payments remain to be accounted for or collected, as well as the loss of federal matching funds and the denial of damages.

The audit committee, he said, plans to hold a hearing on the matter.

Separately, a joint briefing on Optum is scheduled for Nov. 1 to the House Appropriations Health and Human Services Subcommittee and the House Health and Government Operations Committee.

Optum spokespersons did not immediately respond Friday to a request for additional comment.

Chase Cook, a spokesperson for the health department, said the agency “has already made significant changes to our internal procurement process and is moving forward with additional organizational changes.”

Shannon Hall, executive director of the Community Behavioral Health Association of Maryland, a trade association representing 108 mental health and addiction treatment providers, said the audit “brings to light the devastation caused by the many failures of Optum, but hopefully indicates the available solutions”.

She said that means exercising contract oversight through a new state administration. Governor Larry Hogan ends his second and final term in January.

Hall said the “real world implications” of the issues have meant providers, who rely on Medicaid to operate, have to dedicate additional staff to tracking claims that are meant to be automated. Some have fired or diverted staff from care delivery.

“It means that in the midst of an unprecedented mental health care crisis, thousands of Marylanders cannot get the care they need,” she said.