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Maximus might lose $100M contract because of conflict of interest

The Government Accountability Office has ruled that Maximus had an apparent conflict of interest that should have been more fully considered by Centers for Medicare and Medicaid Services before an award to the company of a $105 million contract.

Maximus won the task order under a CMS contract for “qualified independent contractors" to process Medicare and Medicaid claims.

C2C was the other bidder and said that Maximus should have been disqualified. That is because Q2 administrators, a Maximus subsidiary, holds to process appeals of claims decisions.

In essence, this put Maximus in the position of reviewing its own work.

CMS argued to GAO there was no conflict because Q2 would not be evaluating Maximus’ performance.

There also was a question of unequal access to information. But again, CMS didn’t see a problem because Q2 wouldn’t have access to proprietary information.

C2C maintained that the conflicts could not be mitigated.

Maximus also argued that it was too late for C2C to raise the conflict of interest issues. They should have filed a protest before proposals were submitted.

To reach their decision, GAO looked at the relationship between Maximus and Q2. And while they are separate companies, GAO found they operate as a single entity. In fact, Maximus describes itself as the holder of the contract for processing appeals.

GAO also ruled that CMS didn’t fully evaluate the potential conflict of interest.

In its recommendation, GAO told CMS to look at the relationship between Maximus and Q2A. It wants the agency to determine if there is a conflict of interest and how it can be mitigated.

If it can’t be mitigated, CMS needs to decide whether a waiver is appropriate.

If CMS doesn’t think there is a conflict of interest, it needs to document how it reached that conclusion.

GAO also ruled that Q2 should have their protest costs reimbursed.

No word on how long it will take CMS to comply with GAO’s recommendations. Maximus declined to comment on any actions they might take.

Posted by Nick Wakeman on Aug 17, 2018 at 9:10 AM

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