Committee advances procurement audit of DHRD after contested testimony over billing and IMS

The House Committee on Labor voted to pass HCR 172 with amendments to narrow the resolution’s title and focus to a performance and procurement audit of the Department of Human Resources Development (DHRD) to review compliance with the Hawaii Public Procurement Code.

Testimony was sharply divided. Kathy Wilson, president of Aloha Billing Company, urged a balanced audit and said the resolution should examine DOH and IMS practices without conflating compliant pharmacy dispensing with outliers: "Do not use a few extreme outliers to condemn compliant dispensing and 503B products," she said. Matt Matsunaga, an attorney for the Work Injury Medical Association of Hawaii, described delays and access problems in workers' compensation care and offered a patient example to illustrate how billing disputes can limit treatment options.

Chris Kadzlaw, co-founder of Solari Integrated Medical Solutions, recommended hiring a qualified auditor, saying an audit should verify claimant experiences and pricing across state programs. An IMS representative disputed allegations that the vendor profits by denying payments, stating the company has not behaved that way in its 33-year Hawaii practice and clarifying its fee structure.

Committee discussion probed the contracts and procurement exemptions that allowed IMS to begin work; members noted the contract went out for bid and that IMS began work on Jan. 1, 2020. The chair announced amendments to limit the audit scope to a performance and procurement review of DHRD’s compliance with the procurement code and to strike several lines from the original title before advancing the resolution.

At decision-making the chair’s amended recommendation was adopted; the committee recorded an excused absence for one member.

Next steps: the committee will transmit the amended audit request per the chair’s language for subsequent review.