Failure to penalize troubled vendor makes Maryland a ‘laughingstock,’ lawmaker says [Unless the contract involves @mcps, then OK to not penalize vendors. MCPS process already a laughingstock.]

State lawmakers were unsparing in their criticism of the Maryland Department of Health on Tuesday, accusing the agency of failing to pursue financial compensation against a vendor that has acknowledged serious shortcomings.

One after another, members of the General Assembly’s Joint Audit and Evaluation Committee expressed astonishment that the agency decided — as a matter of policy — not to seek liquidated damages from Optum, a health claims-processing company whose shortcomings were the subject of a harsh audit last month.

The Minnesota-based firm processes billions of dollars in behavioral health claims each year. The review of Optum’s performance, which was conducted by the Office of Legislative Audits (OLA), uncovered numerous problems.

Auditors discovered more than $220 million in payments for behavioral health services that lacked proper documentation or haven’t been recovered, lapses that prevented the state from receiving nearly $30 million in federal reimbursement for which it was eligible. In addition, mental health providers, who have been stretched thin and subject to burnout since the pandemic began, have been forced to spend long hours reconciling payment errors.

Agency officials gamely sought to reassure lawmakers that they have penalized and withheld payments from Optum, but they acknowledged that they decided not to seek liquidated damages for fear of harming their relationship with the firm. The admission appeared to stun members of the panel.

“I think it sends the wrong message to contractors that work with the state — and makes a laughingstock of our contracting process,” said Sen. Clarence Lam (D-Howard), a committee co-chair. “If we enter into contracts with vendors who are unable to deliver, and yet do not pursue damages when those contractors are costing the state millions of dollars… it’s an example of what’s broken with our state procurement process.” 

Del. Kirill Reznik (D-Montgomery) called the agency’s decision “unconscionable” and a dangerous precedent...

Failure to penalize troubled vendor makes Maryland a 'laughingstock,' lawmaker says - Maryland Matters