Who Was Paying Attention to Medicaid Fraud in Maryland? By David Reel

Maryland Attorney General Anthony Brown recently announced that his office is suing United Health Group.

Between 2019 and 2024, a wholly owned subsidiary of United Health Care— Optum — had a 126.9-million-dollar contract with the Maryland Department of Health to process Medicaid claims and payments to substance use and mental health treatment programs.

The suit alleges Optum’s software stymied the efforts of state health department regulators to address Medicaid fraud in those programs.

The state alleges that occurred because Optum replaced its own claims management software and installed a subcontractor’s system that had not been adequately tested.

The state further alleges the replacement system crashed the day it was launched and never functioned properly after that crash.

As a result, the state claims the replacement software platform could not distinguish between medical services that were necessary, unnecessary, or frivolous.

It also denied legitimate claims and paid incorrect amounts to providers. Other problems included an inability to address what Attorney General Brown said was “rampant” multimillion-dollar fraud in drug addiction treatment.

The state is now seeking approximately 380 million dollars in damages, an amount three times more than the contract fee price it paid to Optum. In response, Optum has argued that the state’s claims fail to account for the complexities of the program’s implementation and overlook the company’s commitment to provide services for the state.

Apparently, no one in state government or Optum was aware of or cared about articles published in 2024 in the Baltimore Banner and New York Times that highlighted regulatory shortcomings that hindered and strained the state’s ability to oversee providers of drug addiction programs in Maryland.

As frustrating as this latest news is about Medicaid fraud in Maryland, the reaction to that news from two key players in Annapolis is even more frustrating.

A written statement from Attorney General Brown includes a message that he hopes to recover money owed by United Health Group to the state taxpayers.

Maryland taxpayers deserve much better than hope as a litigation strategy to make the state whole on this matter.

Another frustrating response is from State Senator Clarence Lamm. Senator Lamm is a former chair of the General Assemblies’ Joint Audit and Evaluation Committee, while Optum was a state contractor.

Lamm told reporters for the Baltimore Banner that Maryland could have done more to hold the company accountable in previous years. He also said that a provision in Optum’s contract would have allowed the state to claw back more than 20 million dollars when the system didn’t perform as expected.

Serious unanswered questions remain: Why was there not a claw back provision in a 126.9-million-dollar contract? Why a potential claw back amount of only 20 million dollars on a 126.9-million-dollar contract that was deemed by the state as failure on day one and further deemed by the state to never have functioned properly. Are there other state contracts in place without performance expectations, penalties, and claw back provisions?

With regard to the Attorney General’s lawsuit, Senator Lamm told the Baltimore Banner, “Better late than never.”  Even better is doing it the right way in the first place and making corrective adjustments on a timely basis if necessary.

Lamm also said, “Hopefully this will send a message to vendors that you can’t run a bait and switch on the state without consequences.” Again, being hopeful is not a strategy. If the state lawsuit fails, the message to vendors is you may be able to run bait and switch on the state without consequences.

Medicaid fraud in Maryland was not inevitable. Failure to address it properly was not inevitable.  It could have been, should have been, and would have been avoided if the state had properly managed a contract to address that fraud.

Going forward, taxpayers should be assured that their state government is committed to monitoring and evaluating the performance of every vendor with a state contract. When the performance does not meet contract requirements, the state also needs to pursue timely corrective action by the vendor.