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Maryland Health Exchange Fails Federal Audit

Federal audit asks Maryland Health Exchange to give back $28 million in misspent federal funds

Between March 2014 and September 2014, the US Office of the Inspector General (OIG) audited Maryland Health Connection’s allocation of costs for 2013 and 2014. The OIG audit concluded that Maryland Health Connection misallocated millions of dollars in federal funding. Since the exchange enrolls people in private health plans as well as Medicaid, they received initial funding from the Center for Consumer Information and Insurance Oversight (CCIIO), as well as from Medicaid.

Because the exchanges were starting something that had never been done before, they had to rely solely on enrollment projections heading into 2014. Maryland Health Connection used an enrollment projection of 58 percent private plans and 42 percent Medicaid. Ultimately, that ended up being slightly off, and was compounded by the fact that the projections were based the calendar year rather than the fiscal year.

The OIG audit determined that the Maryland exchange should give back $28 million to CCIIO, and seek reimbursement from Medicaid. Although the exchange notes that the accounting reconciliation would result in the exchange owing the federal government about $5 million, Maryland Health Connection has maintained that no errors were made, and that they worked closely with CMS throughout the exchange implementation process, receiving approval from CMS for their financial allocations in advance of the OIG audit.

It’s unclear whether Maryland Health Connection will have to comply with the recommendation of the OIG audit. Although the exchange does not believe that any errors were made on their part, they’ve expressed their commitment to “…continuing work with CMS so that funds are appropriately allocated, allowable and reasonable.”

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