A Maryland health insurance agency failed to audit hundreds of thousands of dollars paid to one of its vendors, resulting in a dispute with the company over excess payments made by the state, according to a recent report.
The state Office of Legislative Audits' review of the Maryland Health Insurance Plan -- a branch of the state's medical services that provides health benefits to uninsured Marylanders and helps cover out-of-pocket costs for seniors' prescription drugs -- found approximately $367,000 in payments lacking oversight.
Because of a change at the agency, which became an independent government entity in 2008, the vendor was paid the amount without a written contract of the agreed-upon work, according to the audit.
The lack of a contract led to a dispute over the vendor's work. The insurance agency, which had previously held several specific contracts with the vendor, took issue when the vendor increased its number of billable hours and performed "unsatisfactory" work.
At the time of the audit, the agency was working on a settlement over roughly $140,000 in dispute with the vendor, whose contract has since been terminated.
In another instance, medical claims totaling $179.5 million made by another vendor, an administrative services company, went unchecked.
And the same vendor's practices went unaudited by the insurance agency for more than three years, from January 2008 to June 2011. Auditing vendors is a standard method for ensuring a company is properly completing the work it is contracted to do, according to the state audit.
In a letter from the Maryland Health Insurance Plan, the agency said it concurred with the audit's findings and was working to correct all issues. A settlement was reached with the vendor regarding the thousands of dollars in dispute, wrote Kent McKinney, executive director of the insurance agency, though the letter did not note under what terms.
Calls to the Maryland Health Insurance Plan were not returned.
The insurance agency likely will be phased out as a part of the state's plan to implement President Obama's sweeping health care overhaul, auditors said. The creation of a health benefit exchange by Jan. 1, 2014, which would market and sell health care plans to uninsured Marylanders and small businesses that don't offer or provide their employees insurance, will make the agency unnecessary.