In the wake of a state audit criticizing the Maryland Health Benefits Exchange’s procurement and security practices, the head of a legislative panel tasked with overseeing the agency says he’s pleased with the progress the exchange has made to correct the audit’s findings.
“I’d say they get an A+ for effort,” said Sen. Thomas M. “Mac” Middleton, D-Charles County, who co-chairs the Joint Oversight Committee on the Maryland Health Benefit Exchange.
While MHBE officials may not have concentrated enough on fiscal oversight as they worked to get the exchange up and running, Middleton said, he expects they would have brought the agency to its current level of compliance “with or without the audit.”
Auditors faulted MHBE — which had to replace the original web portal for its health insurance marketplace after a problem-ridden rollout in 2013 — on 10 points, including failing to verify that $23.4 million in grants were properly spent; spending $8.2 million on hourly vendor services without first reviewing payroll records; and not sufficiently documenting five emergency and sole-source contracts totaling $96.5 million.
Middleton said that while he expects lawmakers will be briefed on the audit’s findings at some point, he doesn’t see any urgent need to revisit the issue.
Delegate Susan W. Krebs of Carroll County, the sole remaining Republican on the joint committee now that three of her colleagues left office, disagrees.
While there has been some accountability — demonstrated in part by the electoral defeat of former Lt. Gov. Anthony Brown, the Democrat who oversaw the exchange’s disastrous initial launch — lawmakers still need to look at what went wrong and who was responsible, Krebs said
Either the oversight committee – which hasn’t met since summer 2014 — or the Joint Committee on Legislative Ethics should revisit the issue, which Krebs said lawmakers had been reluctant to discuss in detail during an election year.
“I still have a lot of questions,” she said. One lingering concern was the lack of technological expertise on the exchange’s board of trustees, she said.
“No one who was assigned to the group had technology experience,” Krebs said. “They put policy people in charge of building the exchange.”
Maryland’s Office of Legislative Audits examined the exchange from its inception on June 1, 2011 through July 23, 2014.
Exchange officials dispute several of the audit’s findings but said in the agency’s written response to the audit that they concur with its recommendations and have already implemented some of the suggested remedies, such as reviewing and tightening IT security procedures and maintaining more detailed inventory records.
“Since the audit, MHBE, which was still a young agency during the audit period, has made considerable progress in enhancing its infrastructure and improving overall operations, accountability, security and transparency,” Executive Director Carolyn Quattrocki wrote in the agency’s response to the audit.
Among the security concerns identified by auditors was that, as of April 28, the exchange’s database contained “sensitive personally identifiable information” and federal tax information for 591,858 people in unencrypted, clear text. Since July, MHBE has made sure that all such information is properly protected either by encryption or other security measures, according to the agency’s response.
One of the disputed findings is that MHBE violated its procurement policies.
“MHBE does not agree with [the Office of Legislative Audits] finding that it acted in violation of its Board of Trustees’ procurement policies,” Quattrocki wrote. Those policies “place discretion and approval for significant contracts with the Board of Trustees, which considered and approved all of the procurement reviewed by OLA,” she wrote.
The audit also found that the exchange paid certain vendors without always reviewing invoices and payroll records — an allegation with which the exchange concurred “in part” — and didn’t verify the propriety of some grant expenditures paid for by state and federal funds — a charge exchange officials deny, arguing that the organization made quarterly reviews of the relevant expenditure reports.
Auditors said the agency also didn’t submit some requests for federal Medicaid reimbursement on time, resulting in a loss of nearly $200,000 in interest revenue; the exchange concurred with that finding and said it has had a dedicated chief financial officer on staff since January 2014 to make sure the process is accurate and timely.
During the audit period, the MHBE board violated the state Open Meetings Act by allowing by having discussions of certain topics in closed sessions and not giving notice of when closed sessions would be held, according to the audit.
On the recommendations of the Maryland Open Meetings Law Compliance Board, the exchange has been complying with the law since April 2014, according to the written response.