Maine lawmakers worried about federal audits of DHHS

Posted Sept. 27, 2011, at 6:26 p.m.
Health and Human Services Commissioner Mary Mayhew
Pat Wellenbach | AP
Health and Human Services Commissioner Mary Mayhew

AUGUSTA, Maine — Members of the state Legislature’s budget-writing Appropriations Committee are worried several federal audits of the Maine Department of Health and Human Services now under way could cost the state tens of millions of dollars.

“It’s very difficult for the Legislature to have a sense of the timing of when we may be confronting the results of the audits,” said Sen. Richard Rosen, R-Bucksport, co-chairman of the Appropriations Committee. “We have heard the concerns of the department; the commissioner was not shy about making sure we know the potential here is significant.”

DHHS Commissioner Mary Mayhew said Monday during a work session that the potential impact of the federal audits is “huge.”

The two most significant audits of DHHS in terms of potential liability to the state are school-based services for children and what are called private nonmedical institutions.

“The federal government is objecting to how we use [private nonmedical institutions] in our MaineCare system,” Mayhew told the committee. “Mental health agencies, residential mental health services, substance abuse services, nursing facilities, and residential care facilities are all being looked at and we have to respond to their objections.”

The state’s formal response to the federal concerns is due next month. Mayhew said there have been several discussions with officials at the Center for Medicaid Services about the federal position that many of the private nonmedical institutions services are not eligible for the reimbursement the state has been getting from the federal government.

“We have been in what I would say have been very good discussions with [the Center for Medicaid Services], but I cannot say whether the inspector general will come in and seek payments retroactively,” Mayhew said.

Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the panel, said even if the problem is prospective, it will mean changing the way the state provides important services and likely will cost the state more to provide services in the future.

The inspector general also is auditing how schools billed for services through Medicaid that did not meet federal requirements. The federal government could seek reimbursement from the state for those payments.

“We clearly remain concerned about the ongoing analysis of the financial accountability of the department and where we may be at risk,” Mayhew said in an interview. “We are very concerned based upon lack of adherence to federal Medicaid policy and what we may end up having to address with the federal government.”

Rotundo said audits of DHHS are not new, and while some have cost the state millions of dollars, others have not. Earlier this year, the state had to pay back $29.7 million in overpayments for targeted case management. That spending went back to 2003 and 2004 and the state fought the matter in court, and lost.

Last month the state was told to pay back $783,000 for misapplying Medicaid match rates to staff used to train foster care workers and parents. Mayhew said that was one audit finding she had expected.

“Our own internal auditors had identified that issue and we agreed with the Inspector General,” she said. “That has been fixed.”

Rotundo said she is not about to panic over the federal audits because she has seen so many of them in her career in the House and Senate. She said the policy in the last decade of trying to maximize Medicaid use has provided help to a lot of Mainers who need it.

“I wouldn’t say that we went too far,” she said. “Certainly we have been working with [the Center for Medicaid Services] to maximize the federal dollars coming into the state that have helped a lot of people, the elderly and the disabled. Those are good things.”

Rosen said lawmakers will have to deal with the findings of the audits as they are completed and he shares Mayhew’s concern the results could be significant and affect the state budget. He said Maine needs to take a close look at the way it has structured its use of Medicaid and whether other states are facing the same problems.

There are two dozen federal audits of DHHS in various stages, ranging from the potentially expensive areas such as the private nonmedical institutions to security audits aimed at making sure the agency is protecting confidential information in its possession.

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