Audit shows Maryland health exchange improperly billed $28.4 million

The discrepncy came from problems in the first year of the health exchange.
By Ed Adamczyk  |  March 27, 2015 at 2:36 PM
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WASHINGTON, March 27 (UPI) -- Maryland's health insurance exchange improperly billed the federal government $28.4 million, a Department of Health and Human Services audit reported Friday.

An inspector general's probe found a lack of oversight and internal controls, not criminal wrongdoing, was the cause of the exchange's problems since the marketplace opened in 2013.

The Maryland Health Connection was among the first state exchanges approved by the federal government, but its website crashed on its first day of operation and it experienced numerous software problems and feuds between contractors. The entire technological infrastructure of the exchange was scrapped in 2014 and replaced by a platform used by Connecticut's exchange.

The audit said the state used a 2013 and 2014 federal grant to cover the exchange's costs when it should have used funds from a Medicaid program jointly financed by Maryland and the federal government. State officials contended the federal grant was the appropriate for funding because their projections indicated most residents using the exchange would sign up for private health coverage; when the projections were seen to be erroneous, at the end of the first open enrollment period, the state was slow to correct the record with Medicaid regulators, the audit said.

The audit found two accounting errors, a $15.9 million misallocation caused by out-of-date enrollment data, and $12.5 million through an unidentified contractor's incorrect calculations. It recommended Maryland pay back the $28.4 million, then apply for the actual amount due it from the federal government.

"We really feel we followed federal guidance," exchange director Carolyn Quattrocki told the Baltimore Sun. "We had no red flags along the way that we were doing anything that was not in keeping with the guidelines."

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