DHHS: $35 million needed to get through year

Posted Oct. 05, 2010, at 11:40 p.m.

AUGUSTA, Maine — The state Department of Health and Human Services says it needs about $35 million to meet its obligations for the current budget year, even with the reductions mandated by the governor’s curtailment order issued last week.

“Most of that is the change in the Medicaid match rate [from the federal government],” said DHHS Commissioner Brenda Harvey in an interview. “That’s pretty much the only thing we allowed our office directors to really put forward.”

While Congress extended the enhanced Medicaid match rate another six months, the state contribution needed for the state-federal program will increase significantly when that runs out next spring. Medicaid provides a broad range of health care services ranging from doctor visits for children to adults in nursing homes. The state share of the program increases by just more than $23 million during this budget year.

“There are really things we have no choice about,” Harvey said, pointing out the state’s two psychiatric facilities, Dorothea Dix in Bangor and Riverview in Augusta. The two need $3.4 million to meet their budgets for the year.

In addition, Riverview was found by the inspector general of the federal Department of Human Services to have improperly billed for some of the patients at the facility under the disproportionate share, known as DSH, provisions of the Medicaid payments made to hospitals.

“We attribute the excess DSH payments to the state agency’s lack of policies and procedures to ensure that the DSH payments made to Riverview did not exceed the hospital-specific DSH limits imposed by federal requirements and the state plan,” the inspector general’s report stated.

Harvey said those problems have been corrected, but the bottom line is the state owes the federal government $920,781, which must be paid this budget year, as the result of the audit of budget years 2007 and 2008.

“There is also a loss of revenue to the state because of the federal health care reform law,” said Finance Commissioner Ellen Schneiter. Those changes will redirect $5.3 million in drug company rebates from the state to the federal government under the funding provisions of the Patient Protection and Affordable Care Act.

“And there are greater caseloads for the TANF program,” Harvey said. “That program is a block grant and when the demand goes up, we have to go to the General Fund for what is needed.”

The TANF request is for just more than $4 million. Harvey said it will be up to the next governor to make any recommended changes to the programs that might reduce costs, while it is her responsibility to submit a supplemental budget request to fund current programs.

But she acknowledged any changes in program eligibility or what services are offered would take time to implement, even if lawmakers acted swiftly to make changes.

“With all of the federal requirements, probably a month’s worth of savings could be accomplished in this budget year,” Harvey said.

Members of the Legislature’s Appropriations Committee said Tuesday they were aware of some of the individual items in the request, but not some of the specific amounts, and were surprised about the overall amount.

Rep. Emily Cain, D-Orono, the co-chairwoman of the panel, said the new governor and Legislature will need to “hit the road running” to solve the immediate budget problem because the two-year state budget will be even more difficult.

“We will need to start the work as soon as we can to prioritize spending, what we can afford and what we cannot afford to continue doing,” she said.

Sen. Bill Diamond, D-Windham, co-chairman of the committee, agreed the next Legislature and governor would face an immediate and a longer-term funding crisis.

“We have a huge two-year budget coming up and this is just practice, almost,” he said. “Taking care of $35 [million], $40 [million] or $50 million; that’s a lot of money, but we have a much larger task ahead of us.”

He said there are always supplemental budgets, but this year’s reduced federal aid is going to have a “major” impact on both the supplemental and the two-year budgets.

Sen. Richard Rosen, R-Bucksport, is the GOP senator on the panel. He said some of the numbers were surprising, but not that human services would be in greater demand in a recession. He said the request drives home a concern some lawmakers have had for years.

“The promises made for the scope and breadth of services through Medicaid exceeds our ability to fund it as a state,” he said. “We have been bailed out on a temporary basis and now we have to look at the underlying program.”

The supplemental budget request will not be completed until the new governor takes office.

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