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Second state audit blasts Health Connector for wasting public funds

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A second state audit of the Hawaii Health Connector’s contracts with one of its vendors further blasts the agency for a "multitude of missteps" that resulted in the abuse of public funds. 

A follow-up report released Tuesday by state auditor Jan Yamane reiterates findings in a January report that sharply criticized officials of the state’s health insurance exchange for incompetent oversight of contract awards and wasting more than $11 million in taxpayer dollars. 

It zeros in on a "seriously flawed" $21.6 million contract with Mansha Consulting LLC, whose main role was supervising the work of the Connector’s IT developer CGI Group Inc., which won $74.2 million in contracts but delivered a problem-plagued system that opened two weeks late in October 2013. Mansha also was assigned to resolve data transfer problems between the Connector and Medicaid health insurance program for low-income residents. 

The Connector previously said it paid Mansha at least $14.7 million before cutting off payments and launching an investigation into the performance of the information technology vendor. An attorney for Mansha earlier told the Hono­lulu Star-Advertiser that the vendor is owed $4.2 million and was forced to lay off more than a dozen workers after the Connector stopped payments. Virginia-based Mansha, which rents space in a shared office in Hono­lulu’s Waterfront Plaza, is the second-highest-paid vendor behind CGI. 

Connector officials said in their response that over the past year, the agency has improved the existing procurement and contract management practices. The Connector also said there are a number of errors and inconsistencies in the audit, including an assertion that "assumes Mansha is owed money" and that "the state of Hawaii’s taxpayers will be responsible" if the Connector doesn’t get federal funds to pay its contracts. 

There are major errors in the audit report, some that are "egregious," including a statement that "inept procurement practices wasted more than $11 million in taxpayer moneys," said Jeff Kissel, the Connector’s executive director. 

"The numbers the auditor used in the report don’t tie to any numbers the Connector supplied to them," Kissel said. "I don’t know where they got that. The problem is they didn’t review this draft before publishing. If they had, we could have helped them. We disclosed all information about Mansha in public testimony at the Legislature and in public board meetings. Therefore this is not only a rehash of old news to grab new headlines, I would question the wisdom of the auditor’s choice to spend new state resources on this kind of activity." 

The Connector is in the process of transitioning operations to the state and will direct future enrollees to sign up through the federal website. Connector operations fell apart in the middle of the auditing process, Yamane said, acknowledging much of the information in the audit is dated. 

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