Maryland Overcharged Feds By Almost $30 Million On Bungled Obamacare Exchange, But Won’t Pay Up

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A long-term federal audit of Maryland’s botched Obamacare exchange found that the state misallocated $28.4 million of federal funding, but the state’s contesting whether it will pay the money back.

Maryland quickly signed up for building its own, state-run Obamacare exchange after the Affordable Care Act became law, receiving tens of millions of federal dollars in “early innovator” grants. But after spending big on an ambitious website, the state had to give up on its exchange after its first year and start over with completely new technology. (RELATED: Maryland Obamacare Exchange Spent $90 Million On Tech Before Abandoning Website) 

Now the inspector general for the Department of Health and Human Services has found that the exchange also improperly billed the federal government, which footed the bill for most exchange costs in the first year of Obamacare.

Maryland officials vastly overestimated how many customers would actually enroll in private coverage, and once fewer-than-expected customers turned out state officials failed to update their numbers with the federal Centers for Medicare and Medicaid Services, which runs Obamacare. That resulted in Maryland getting an extra $15.9 million.

The state overestimated how many customers were signing up for private insurance plans through the Obamacare exchange and undercounted the number that were enrolling in Medicaid, the coverage for low-income people. The federal government pays a larger share of Obamacare enrollment than it does for Medicaid, which functions a state-federal partnership, and Maryland’s inaccurate numbers led to another $12.5 million overpayment.

The auditors charged that Maryland must refund the federal government the full $28.4 million for the mistakes. But Maryland officials responded that federal guidelines didn’t require them to update their enrollment estimates for private coverage or for its Medicaid expansion and say they don’t plan on repaying the federal taxpayer dollars.

The audit is the latest in Maryland’s financial problems. Maryland Health Connection was the first state-run Obamacare exchange to shut down its first Obamacare website, along with Massachusetts and Oregon.

Potential waste of taxpayer dollars due to the marketplace’s flops has been a point of contention for the state’s Republicans. (RELATED: Maryland’s Obamacare Exchange Now Under Federal Investigation) 

“Maryland officials ignored early warning signs and chose to waste and abuse federal taxpayer money by opening up what they knew was a flawed exchange to the public,” Maryland Republican Rep. Andy Harris said of the effort last March.

A spokeswoman for HHS said the Obamacare agency “appreciates the OIG’s work examining cost allocations and will review the findings and issue clarifying guidance to State-based Marketplaces as needed.”

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