State health claims vendor under scrutiny is ‘not up for the job,’ lawmakers are told

A state Department of Health contractor whose troubled payments system led to a scathing audit pledged anew on Tuesday to improve its performance.

Monica McNeil, CEO of Optum, a company that processes behavioral health and addictions services claims, acknowledged that its payment system hasn’t always functioned properly. She told members of several General Assembly committees that the firm, a subsidiary of the health services giant United Behavioral Health, is “committed to doing better going forward.”

While the company’s goal is to make prompt, accurate payments to the state’s health care providers, she said, “I am not proud at all of the challenges that we have experienced.”

Optum is in the middle of a five-year contract with the Maryland Department of Health. A lengthy review of Optum’s performance, released Friday by the Office of Legislative Audits, said the company’s payments system wasn’t sufficiently tested prior to launch. As a result, auditors concluded, more than $220 million in payments for behavioral health services lack proper documentation or haven’t been recovered.

Shortcomings in the Optum system have delayed payments to providers, who have been experiencing an increased caseload since the pandemic began. Many providers have been forced to spend long hours working with claims adjustors to correct errors, an advocate said.

The system’s lapses have prevented Maryland from tapping approximately $28.8 million in federal reimbursements. The company processes well over a billion dollars in claims each year, much of it funded by Medicaid.

Although McNeil and a second top company official said that Optum is turning things around, a top advocate for health services providers said payments are frequently late and inaccurate. “In case you’re under the impression that Optum’s problems are fixed, I’m here to tell you they’re not,” said Lori Doyle, public policy director for the Community Behavioral Health Association of Maryland.

Doyle said the company’s use of manual processing far exceeds industry standards and serves “as a work-around to its system’s dysfunction.” She also said the company’s security flaws put patients’ personal information at risk.

“The state picked the wrong vendor, a vendor who was not up for the job,” Doyle said.

There was broad consensus that Optum will not be renewed when their contract ends in two years. Steve Schuh, a Department of Health deputy secretary, told lawmakers that the agency intends to launch a new procurement by the end of December, to allow for the selection of a new vendor and for testing of their health claims system.

In the meantime, “they remain our contractor,” he said. “(The Optum) system is functional, but we do need to make significant improvements over the next year.”

Remarkably, McNeil, the Optum CEO, appeared to concede that her company will be given the boot in 24 months. She noted that her firm’s contract with the state includes “requirements around transition… to a new vendor.”

Lawmakers pressed health department officials about their oversight of the Optum contract and their failure, to date, to extract concessions from the firm.

Del. Shane Pendergrass (D-Howard), the chair emeritus of the House Health and Government Operations Committee, suggested that it appears that refund provisions were either not included or aren’t being enforced.

“I don’t get that you’re taking responsibility for the mess that this is,” she said. “How much did this cost the state of Maryland?” She also sought the whereabouts of Health Secretary Dennis Schrader, who did not attend the hearing.

“There should be something in the contract that says that if you’re liable, you’re negligent, and you cost money to the state, that the state can go ahead and try to recoup that money,” said Health and Government Operations Chair Joseline A. Peña-Melnyk (D-Prince George’s). “We need to be made whole. These are taxpayers’ monies.”

Other lawmakers expressed astonishment that Optum didn’t realize that it is bound by the terms of the state’s “prompt payments” law.

Ye said the agency is “imposing financial penalties” against Optum, but he didn’t reveal the dollar amount. He said the agency would consult with its attorneys and respond to the committees’ questions in writing.

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