Faulty Maryland payment system threatens mental health and addiction professionals, providers say

Dozens of mental health and addiction treatment providers in Maryland say a faulty state payment system is jeopardizing their work at a time when the coronavirus pandemic is increasing demand for their services.

The problems have persisted all year but are being felt more acutely as more people enroll and seek care through Medicaid, the federal-state health program for low-income residents that typically manages more than $1 billion in payments a year for more than 200,000 Marylanders.


“I can’t think of a worse time for this to happen,” said Jeff Richardson, vice president and chief operating officer for community programs at Sheppard Pratt, the state’s largest behavioral health provider with tens of thousands of clients. “People are struggling emotionally through the pandemic, and we’re struggling with this system. It could affect everything we do.”

The billing problems affect about 2,200 doctors, hospitals, clinics and other facilities that offer such services through Medicaid, which covers a disproportionate amount of behavioral health treatment in the state. But the issues could risk treatment for all their clients if they cannot get paid.


The issue began late last year when the state’s Medicaid payment system was taken over by Optum, an affiliate of the insurance behemoth UnitedHealthcare. State officials told state lawmakers last week during a hearing on the issue that they were looking to control costs, and replaced the existing management firm Beacon because it was seeking to nearly double the management fees from $20 million annually.

Beacon bid $27 million annually on a five-year contract with two, one-year extensions. The state would save almost $50 million with Optum, the only other bidder, Health Secretary Robert Neall told lawmakers on the House Health and Government Operations Committee.

The state spends about $1.4 billion of its overall $12.5 billion Medicaid budget on behavioral health.

Neall and Optum officials acknowledged the technical difficulties in the rollout, which they blamed partially on a lack of documentation left behind by Beacon.

For its part, Beacon wouldn’t comment through spokesman Chris Curran on the performance of the new vendor but said its officials were available to help.

“Beacon enjoyed a 10-year longstanding and high-performing relationship with the Maryland Department of Health, the providers and the most vulnerable residents of Maryland,” Curran said. “While we were disappointed by the loss of the contract, as a good partner we remained heavily invested in a smooth transition and have continued to be open to assisting in the remediation of the current situation.”

Neall told the lawmakers that the department and Optum were rectifying the problems and would end with a better system than the previous one. He said the system began making estimated payments in January when it couldn’t process claims, and those payments totaled $1 billion through the beginning of August. It has processed an additional $453 million in actual claims since then, on par with payments made last year.

“Optum was frustrated and frankly disappointed in how this has gone,” Chad Burkholder, an Optum executive, told the lawmakers.


“It’s not at all how we operate our business,” he said, before adding: “The claims performance has improved exponentially.”

Burkholder also said Optum is replacing a vendor it uses for customer service, a big source of complaints from providers who said it could take days to get a response.

Providers say they spend far more time on administrative work than in the past, and have difficulty completing basic tasks such as looking up records of what is billed and paid. They can’t easily fix errors on authorization forms, leaving treatment and medications in limbo. And they have trouble adding new clients; some 60,000 people enrolled in Medicaid this year during a special enrollment period aimed at those who lost workplace coverage during the pandemic.

The providers say they also face a paperwork quagmire in matching months of estimated payments from Optum to their clients’ bills. They’ve already been told by state officials that they’ll need to repay an estimated $163 million in overpayments, though Neall said they would have until next year. Some providers said they recognized some big mistakes, such as paying multiple times on the same claim, so they never spent that money.

Most providers continue to provide services anyway, citing a rise in substance use and overdoses in recent months and the pressures of the pandemic. The American Psychiatric Association reported recently that providers are seeing double-digit jumps in demand for treatment of anxiety and depression.

Nearly every member of the Community Behavioral Health Association of Maryland, a provider advocacy group, said the Optum system is harming their clinical and financial performance.


“Add together all the things that don’t work with this system, and it’s like we bought a lemon from the dealership,” said Shannon Hall, the group’s executive director. “This piece breaks and that piece breaks and that piece breaks.”

In a recent letter the association sent to Gov. Larry Hogan, 82 providers and groups said there has been “chaos” for much of the year since Optum took over. They said if the problems can’t be rectified, they urged “immediate action be taken to either require replacement of Optum’s claims payment system or rebid” the contract entirely.

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An Optum spokeswoman did not respond when asked how they fixing the system after being provided a copy of the providers’ letter.

Catholic Charities, a large provider of behavioral health services in Maryland, wrote a separate letter to state lawmakers ahead of the hearing saying the lack of a “functioning authorization or claims system” was unprecedented in the organization’s 100-year history.

Despite comments from state health officials that they had heard only a few anecdotes of people not able to access treatment, Catholic Charities said that a quarter of clients in a special rehabilitation program for some of the most fragile psychiatric patients were being denied authorization for care.

That’s almost 10 times the denial rate under Beacon, and most are for administrative and not clinical reasons, such as signatures in the wrong place, the organization said. Optum made it difficult to fix the issues, officials said.


Others including Kathryn Seifert, CEO of Eastern Shore Psychological Services, say they fear they will close their doors and clients will not find new providers easily.

The group has five sites and 2,000 patients, and Seifert said she’s owed hundreds of thousand of dollars from Medicaid, making it difficult to meet rent and payroll. Seifert said the group had borrowed money to pay staff, assuming it would be reimbursed eventually for the work. When she has been paid, Seifert said, it’s often late.

“We are in a pandemic, and people are having mental health and substance use problems and we and other behavioral health providers and hanging on by a thread,” she said.