March 19, 2010

State disputing claimof Medicaid overcharges

By PAUL CARRIER Blethen Maine Newspapers

AUGUSTA -- A new federal audit says Maine overcharged the Medicaid program, which is funded jointly by the state and federal governments, by $44.2 million in 2002 and 2003 and the state should reimburse the federal government $29.7 million for its share. But state officials insist that Maine's Bureau of Child and Family Services calculated the costs correctly so the state does not owe the federal government a refund.

Gov. John Baldacci does not plan to ask the Legislature to repay the $29.7 million because the state will contest the findings and defend its billing practices. State government already faces a $95 million shortfall in its $6.3 billion budget for the two years ending June 30, 2009.

"We don't owe them the money," said David Farmer, Baldacci's spokesman.

It may take months for the state and federal governments to hash out their differences over the audit.

"It's far from settled as far as we're concerned," said Deputy Commissioner Kristen Figueroa of the state Department of Health and Human Services, which includes the Bureau of Child and Family Services. "We're going to continue to fight." In light of the state's budget shortfall, legislative leaders in both parties said Wednesday that they support the decision to challenge the findings and they hope the state prevails. "I have faith in the department," said Senate President Beth Edmonds, D-Freeport. "The only legitimate thing they can do" is fight the federal government's bid for reimbursement. Describing the $29.7 million federal claim as "a staggering amount," House Minority Leader Joshua Tardy, R-Newport, said he is "hopeful that we followed all the appropriate procedures" in billing Medicaid so the state will not have to repay the money. "I guess we're going to have to be in a wait-and-see mode."

The dispute involves charges by the Bureau of Child and Family Services for work it did to help Mainers who are served by Medicaid, which insures the poor and disabled. The bureau protects children who have been abused or neglected, and oversees foster care and adoption programs. The audit by the inspector general's office in the U.S. Department of Health and Human Services says the state overbilled and inappropriately billed Medicaid for services provided by the bureau several years ago. The alleged overpayments of $44.2 million represent a tiny fraction of the state's Medicaid budget, which totals $2.4 billion in federal and state funding this year alone.

The federal government pays a little more than 63 percent.

The state's handling of the Medicaid program has been a source of controversy in recent years. In 2003, a series of reports documented sloppy bookkeeping by state officials. Later, a state Medicaid billing system launched in early 2005 sent service providers incorrect payments or nothing at all.

The costs that the Bureau of Child and Family Services put in for "were not always in accordance with federal and state requirements" for Medicaid, according to the audit.

The report does not allege fraud, but it does say the state had "insufficient procedures" to ensure that all charges billed to Medicaid were "reasonable, allowable and allocable, in accordance with federal requirements."

The audit says the bureau applied an excessive monthly rate to Medicaid bills, resulting in $56.6 million in charges for services that should have cost $46.6 million, and accounting for $10 million of the claimed $44.2 million in overpayments.

The bureau says it billed Medicaid at an agreed-upon monthly rate in 2002 and 2003, but it has recalculated the rate within the past year and lowered it slightly.

Figueroa, deputy commissioner of the DHHS, said the federal government paid the state at the higher rate for years so past practice conflicts with the audit's claim that the rate was inflated.

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