Federal inspector to audit Maryland health exchange

Lt. Governor Anthony Brown, center, testifies in the House Health and Government Operations Committee on behalf of HB 119, which would provide temporary funding for people who tried to sign up with the Maryland Health Exchange but were unsuccessful.
Lt. Governor Anthony Brown, center, testifies in the House Health and Government Operations Committee on behalf of HB 119, which would provide temporary funding for people who tried to sign up with the Maryland Health Exchange but were unsuccessful. (Barbara Haddock Taylor, Baltimore Sun)

WASHINGTON — — A federal inspector general is launching a review into what went wrong with Maryland's health insurance exchange, the first examination focused specifically on how millions of dollars in federal money was spent by the state, according to the lawmaker who requested the probe.

Rep. Andy Harris, a Baltimore County Republican and vocal opponent of President Barack Obama's health care law, said officials with the inspector general for the U.S. Department of Health and Human Services had contacted him and indicated they will look into the creation of the state's glitch-prone exchange.


The probe, which Harris said would likely begin in a matter of weeks, is the first of its kind to be revealed publicly. It comes days after the U.S. Government Accountability Office said it would review the formation of state-based insurance exchanges — though experts say an inspector general's examination is usually more exhaustive and specific.

State legislators also are scrutinizing problems with Maryland's online exchange, which crashed on its first day last fall and has had continued problems, including feuding contractors and major software issues. The state review is not expected to be completed until mid-2015 — well after this year's gubernatorial primary and general election.


"Unfortunately, Maryland has gained national attention as one of the worst roll outs," Harris, an anesthesiologist who represents the Eastern Shore-dominated 1st District, said in an interview. "This whole issue needs way more transparency."

"Whatever they find, they find," he said of the OIG review.

A spokesman for the federal agency's inspector general declined to comment. The state's Department of Health and Mental Hygiene also declined to comment.

A significant amount of public funding has been used to develop and repair Maryland's health exchange. Maryland expects to spend $261 million on the exchange by the end of 2015 — more than 80 percent of it federal money.


The review by the Office of Inspector General offers an opportunity for a unique accounting of what happened. The agency is likely to be able to quickly collect documents from HHS — the federal agency that largely funded the state's site. And the inspector general has subpoena power.

The scope of the inspector general's review is not clear. Harris requested answers to five questions, including how contracts were awarded, what internal controls were in place and "who specifically failed in their responsibilities to safeguard federal taxpayer money."

Auditors could review all or none of those questions. They could fold an examination of Maryland's site into a broader report of other states that experienced problems. The separate GAO report will review exchanges in several states.

Harris, who sits on a House Appropriations subcommittee with oversight of the health department, requested the investigation last month. In a letter co-signed by a Georgia Republican, Rep. Jack Kingston — the chairman of that committee — he wrote that state officials ignored early warning signs and chose to "waste and abuse federal taxpayer money by opening up what they knew was a flawed exchange to the public."

The Maryland Health Connection — intended to help people sign up for coverage under the new federal law — crashed when it launched on Oct. 1. State officials attributed the problem to technical glitches, but emails and other documents showed that the development of the site had been troubled for months by technical problems and disputes between the main contractor and a key subcontractor.

High-ranking state officials have said they were unaware of the extent of the problems.

The controversy over the exchange carries political overtones. Harris, a conservative and the only Republican in Maryland's congressional delegation, won election in 2010 in part by opposing the Affordable Care Act. He is a frequent critic of both Obama and Maryland Gov. Martin O'Malley, a Democrat.

Lt. Gov. Anthony G. Brown, the state's point man on the health law's implementation, is a leading Democratic candidate for governor this year. He has been criticized on the issue by Republican state lawmakers as well as by Attorney General Douglas F. Gansler, one of his rivals for the party nomination.

Separately, state lawmakers in Annapolis have ordered legislative auditors to review documents that show what was happening behind the scenes in the weeks and months before the site launched.

The joint oversight committee has asked legislative auditors to do a "performance review" of the exchange, an inquiry that would not begin until this summer. Auditors were already scheduled to begin a more narrow inquiry into the finances of the exchange.

Maryland was one of 14 states that chose to build its own health insurance exchange rather than rely on a web portal created by the federal government. Most of those states had their sites in shape by January, though Oregon, Minnesota and Massachusetts continue to experience problems.

Outside watchdog groups said reviews by a federal inspector general are thorough and specific. Inspectors general, who are tied to federal agencies, often employ criminal investigators as well as auditors. Their stated mission is to expose fraud and waste.

"It's almost like gearing up for a trial," Scott H. Amey, general counsel for the Project on Government Oversight, said in describing how inspectors general perform reviews.

The GAO, by contrast, is more likely to look at how exchanges worked, or didn't work, on a broader level, he said.

"I think that you're more than likely to learn a lot more from the OIG," he said.

On the other hand, inspector general reviews are sometimes not released to the public, remaining within an agency instead.

Persistent problems with Maryland's exchange prompted officials last month to terminate the contract with the main contractor hired to build the website, North Dakota-based Noridian Healthcare Solutions. Gansler has said the state will likely explore recouping some of the money it spent on the site.

It's not clear whether the federal government has a role to play in that process. Officials with the Department of Health and Human Services have repeatedly declined to comment about their involvement with Maryland's site since its launch.

As the feuding contractors — Noridian Healthcare and EngagePoint — battled in court, the executive director of the exchange resigned in December.

As a result of the technical problems, enrollment in subsidized private plans has lagged behind projections. The state initially said it expected 150,000 people to enroll in private plans by the end of March, when people face a tax penalty for not having health insurance. Officials later said that goal was in error and revised the target to 75,000.

Through March 1, the site had enrolled just over 38,000 people in private plans.

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