AUGUSTA, Maine – The Department of Health and Human Services continues to rack up both potential and actual budget problems, plunging the agency’s budget further into the red.
“The outgoing leadership at the Department of Health and Human Services failed to share information that my team needed to make budget decisions,” Gov. Paul LePage said in a statement Friday. “They also failed to develop plans to address severe problems with their new payment systems despite requests for guidance from providers.”
The largest of the new potential budget problems is an audit by the U.S. Department of Health and Human Services Office of Inspector General for Medicaid payments for school-based services over three years, from 2006 to 2008. The audit notice is dated Nov. 19, 2010, but LePage said no one on his transition team was notified.
The total federal dollars that could be in question over the audit period total $138.9 million.
Former DHHS Commissioner Brenda Harvey denies her office failed to tell the incoming administration about the audit letter. In an interview, she said it was on the list of potential problems for the new commissioner that was prepared before she left the post. She said audit notices are routine in the agency and that it is the findings of the auditors that is important.
“There has been no finding,” she said. “This is just the notice they are going to audit, and we went through a lot of those. They were commonplace.”
Harvey said an audit can take months or even years to complete, and then there are opportunities for the state to question the findings.
“This is very disturbing,” said Sen. Richard Rosen, R-Bucksport, the co-chairman of the Appropriations Committee. “To have another issue arise from the federal government, from the Office of Inspector General, and an issue arise locally, from our own state auditor on top of what we have already been made aware of, is now beginning to cause some very serious concerns in both the short term and the long run.”
The state auditor is questioning $11.7 million in claims that have been made in the Medicaid program to take advantage of higher matching rates put in place as part of the federal Recovery Act. The auditor is questioning the practice of processing these adjustments at higher federal match rates than those that were in place when the original claim was made. If that is correct, the state could be required to pay back some part of that amount.
“This is not a completed audit finding,” State Auditor Neria Douglass said in an interview. “This is a draft that was sent to DHHS for their comment.”
She said the document released by the governor’s office is a “confidential working paper” of one of her audit staff. She said the final audit will be completed by the end of the month with any comments from DHHS or federal officials on the initial finding.
Rosen said his committee is already worried about the need to find $29.7 million to pay for mistakes in Medicaid programs from 2002 and 2003 for improper targeted case management claims. The state had filed a lawsuit over that issue and lost.
In addition, the budget for Medicaid this year underestimated the increased use of the programs as a result of the recession. DHHS Commissioner Mary Mayhew has estimated that could be another $30 million in state funds for the budget year that ends June 30.
“We are also worried the estimates for the biennial budget will also have to be increased,” Rosen said, “and we don’t know how much of a problem that will be as we put the budget together.”
Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the panel, said she shares Rosen’s concerns. She said that the always difficult task of crafting a budget has been made more difficult.
“It is discouraging for this to happen on top of the other findings that we are going to have to attend to,” she said. “But we will solve this.”
Rosen agreed and said that what is most difficult is trying to figure out when the bill may come due if the audit findings are finalized. He said there are not enough reserves to handle any significant dollar finding from the two audits.
LePage, in his news release, was critical of former DHHS Commissioner Brenda Harvey. He said his transition team should have been informed of the audit letter.
“The problem is they coasted at the end without developing solutions before leaving town,” he said.
Harvey said the governor’s comments are both unfortunate and unwarranted. She said the audit notice was part of the materials prepared for her successor long before one was named.
“It is clear to me that this administration is looking at their list of things to do and trying to point the finger backwards instead of looking forward,” she said.