Maryland’s Medicaid Information Technology Vendor Under Federal Investigation

Several Maryland agencies are doing business with a Gaithersburg Information technology firm that is under a federal grand jury investigation in Louisiana, was disqualified from bidding contracts in Arkansas, and booted out of Maine.

According to The Chicago Tribune, Client Network Services Inc., based out of Gaithersburg, is under a federal grand jury investigation into its $200 million contract to overhaul Louisiana’s Medicaid Information Technology systems.  Louisiana Governor Bobby Jindal cancelled the contract in March, after the state began its own investigation.

CNSI is an information technology and business outsourcing firm with federal, state and private industry clients.  The Baltimore Business Journal notes that CNSI is a subcontractor on Maryland’s $297 million contract with Computer Sciences Corporation, to restructure Maryland’s Medicaid IT systems.

According to the Tribune:

In January, Louisiana received a subpoena from a federal grand jury requesting documents related to its contract with CNSI. 

Meanwhile, the state had been conducting its own investigation into the deal, and it found that then-Louisiana Health and Hospitals Secretary Bruce Greenstein, a former CNSI vice president, exchanged “hundreds of telephone calls and thousands of text messages” with the company throughout the bidding and award process, according to a letter sent to CNSI’s attorney from Sandra Gillen, Louisiana’s director of state purchasing. 

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The state’s procurement rules “expressly prohibited” those communications, which “created an unfair advantage to CNSI and prevented the fair, impartial and free competition among all” companies that sought the contract, Gillen said in the letter. 

Greenstein resigned a week after the federal probe was revealed, state officials said. He denied any wrongdoing. 

Further, CNSI vastly underbid the contract in order to capture the winning submission, then came back to the state months later requesting an additional $40 million, which would have placed CNSI’s bid in the ballpark of competitors, state officials said. CNSI is suing Louisiana for breach of contract.

After extensive background checks, Arkansas procurement officials removed CNSI from the bidding process on its Medicaid IT system for being “a non-responsible” vendor.  

In a letter to CNSI dated Aug. 9, Jane Benton, director of the Arkansas Department of Finance and Administration, said the state collected “significant unfavorable information” about the company from other states contacted during mandatory reference checks. 

Benton highlighted a conversation with Jason Stewart, a project director for Utah’s Medicaid management information system, who “gave less than a wholly favorable review” of CNSI’s performance in its first few months setting up a new processing system in Utah. 

Stewart told Arkansas officials “there had already been ‘slippages on deliverables’ and that his office regularly had to ‘push’ CNSI to remain on schedule,” Benton said in the letter.

Maine officials bemoaned CNSI’s work in their state.  “When the switch got turned on, everything crashed,” a former official with Maine’s health department told the Tribune.
Not long after the system went live more than 600,000 Medicaid claims were suspended, costing the state $500 million.
According to the Baltimore Business Journal, Maryland Health Department officials are monitoring the Louisiana case, but stated they have no concerns about CNSI’s ability to develop Maryland’s Medicaid IT system. “Deputy Secretary of the Maryland Department of Health and Mental Hygiene, Charles Milligan told the BBJ,  CNSI continues to the best company to develop these systems.”

Milligan did note that the roll out date for the new Medicaid system—originally scheduled for October 201–will be delayed three months to January 2015.

While the CNSI boasts 10 state agencies as clients, the Maryland Funding and Accountability Database only lists two contracts.  According to the database CNSI has a $2.1 million contract with the State Highway Administration, and a $650,000 contract with the Maryland Port Administration.

  • Maryland Aviation Administration
  • Maryland Department of Health and Mental Hygiene
  • Maryland Department of Human Services
  • Maryland Department of Labor Licensing and Regulation
  • Maryland Department of Transportation
  • Maryland Office of Health Care Quality
  • Maryland Office of Traffic and Safety
  • Maryland Port Administration
  • Maryland State Retirement Agency
  • Maryland Transportation Authority

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