Maryland misallocated millions of dollars to establishment grants for a health insurance marketplace, according to a recent audit from HHS' Office of Inspector General.
The audit found that the Maryland Department of Health and Mental Hygiene, the lead agency for Maryland marketplace establishment grants, allocated a total of $76.6 million to its establishment grants on the basis of a cost allocation methodology that "did not prospectively use updated or better data when available" and "included a 'material defect.'" As a result, the agency misallocated $28.4 million in costs to the establishment grants instead of the Medicaid program, according to the OIG.
A majority of the $28.4 million — $15.9 million — was due to the agency using outdated estimated enrollment data instead of updated actual enrollment data. The remaining $12.5 million was due to the agency using a cost allocation methodology that included a material defect.
The OIG said the Maryland Department of Health and Mental Hygiene may seek CMS approval to claim a portion of these costs through the Medicaid program at federal financial participation rates, ranging from 50 to 90 percent.
The OIG made the following recommendations to the agency:
1. Refund the $28.4 million to CMS
2. Immediately amend the Cost Allocation Plan and the Advance Planning Document for the period July 1 through December 31, 2014, so that allocated costs correspond to the relative benefits received
3. Develop a written policy that explains how to calculate cost allocations and that emphasizes the necessity to use updated and actual data
4. Oversee operations to ensure the identification and correction of enrollment projection errors, the use of better or updated enrollment data and the application of these data to allocate costs
The agency concurred with the last two recommendations and said it will develop a written cost allocation policy and implement steps to oversee operations effectively, according to the report. However, the agency did not concur with the other recommendations.
The OIG maintained its findings.
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