Treatment provider in limbo over repayment of hundreds of thousands in disputed claims

An Anne Arundel County-based mental health and substance abuse treatment provider said ongoing issues with an embattled state contractor have left it in limbo and worrying about the potential of repaying hundreds of thousands of dollars in disputed claims.

Optum Maryland was hired in 2020 to pay claims for state Medicaid patients using behavioral and substance abuse treatment programs. The company has acknowledged it failed to pay claims on a timely basis and that it lacked working automated billing programs. The head of Pascal Crisis Services, in a letter to the General Assembly, said the nonprofit has been unable to resolve issues with Optum and is concerned over its lack of a reliable system to track billed and paid services.

“Pascal remains in limbo as Optum continues to be unable to account for their reconciliation of internal payment data,” Phillip Bonincontri, chief operations officer at the nonprofit, wrote. “The burden on the provider is to submit billable claims accurately and maintain clinical notes as supporting documentation for each individual claim. (Optum) is responsible for accurately reviewing the claim and making payment to the provider, neither of which was accomplished by Optum. Our agency continues to dispute wrongfully denied valid claims to present day,” he added.

Bonincontri’s letter, sent before the head of Optum Maryland and state health officials appeared before a joint committee hearing earlier this week, directly contradicts claims that the payment administrator is on solid footing after more than two years of missteps.

On Tuesday, a number of lawmakers raised the letter as an issue with officials with Optum during a joint hearing.

“It’s really compelling and very upsetting,” said Del. Joseline Peña Melnyk, D-Prince George’s County and chair of the Health and Government Operations Committee.

Del. Sue Krebs, R-Carroll County and a member of the Health and Government Operations Committee, said lawmakers wanted to move forward but were upset about the complaints raised in Bonincontri’s letter. She called it “very disturbing.”

“It’s really unbelievable, the lack of communication and what happened,” Krebs said.

Optum has been in the crosshairs of lawmakers since they took over payment services in 2020. The company, which was the lowest bidder and unseated an incumbent contractor, failed to have systems in place that allowed it to quickly and properly pay service providers.

A recent review by the Maryland Insurance Administration found the company was not complying with the state’s prompt pay laws. Optum, for its part, told regulators they were unaware that the law applied to its work in Maryland. The company entered into a consent agreement with the agency to fix problems, but admitted no fault.

Since then, Optum officials said they have started to move to a new payment system. They’ve also started paying providers using an estimate for services. The company however is still using a high rate of manual processing that has an increased error rate, according to an association that represents the providers.

Last week, a review by the Office of Legislative Audits found a number of problems with Optum that resulted in lower federal reimbursements. A joint committee is expected to conduct a hearing on that report.

Meanwhile, officials with Optum Maryland told lawmakers that problems had been resolved and the situation was improving.

“Our system is paying claims. Our system is processing authorizations,” Monica McNeil, CEO of Optum Maryland, said on Tuesday when asked about the letter. “Is our system perfect? No. No system is perfect, but we do have policies and procedures in place to help address any issues that may arise.”

Bonincontri told lawmakers Optum sent a demand for repayment of overpaid estimated reimbursements for services in August. The letter was sent to the wrong address and was not received until a week before the deadline.

Optum demanded nearly $750,000 or it would withhold half of all future payments until the nonprofit was paid up.

So far, the nonprofit has assurances from the state that it will not be subject to withholdings, but the underlying billing issues remain unresolved.

“Pascal spent countless hours reviewing more than tens of thousands of claims arriving at the conclusion that Pascal not only did not owe the overpayment, but was in contrast actually owed hundreds of thousands of dollars in unpaid claims by Optum,” Bonincontri wrote, adding that Optum could not provide details or justifications for its repayment demands.

“The amount of pressure and stress our agency has endured due to the initial Optum transition, and subsequent threatening letter, due to their own inability to properly execute a reconciliation process highlights the unbelievable reality that Optum could have potentially and illegally reduced Pascal’s properly billed claims — a situation which could have been catastrophic,” Bonincontri wrote.