DHHS largely averts expected $12.5 million shortfall

Posted July 23, 2012, at 6:25 p.m.
Commissioner Mary Mayhew
Commissioner Mary Mayhew

AUGUSTA, Maine — The Maine Department of Health and Human Services has averted most of an anticipated $12.5 million shortfall that threatened to delay payments to health providers who treat MaineCare recipients.

In a memo to lawmakers on Friday, DHHS Commissioner Mary Mayhew said the shortfall, expected to throw off the books as the fiscal year wound to a close on June 30, had been largely eliminated, according to a Monday news release from the department.

Mayhew alerted members of the Legislature’s Appropriations Committee to the potential red ink in late May.

Much of the expected budget gap was covered by $3.4 million in reimbursements for MaineCare, the state’s Medicaid program, including from other departments that provided services, as well as $3 million in increased rebates from drug companies. Weekly claims submitted to the department by health providers who treat MaineCare recipients also came in lower than expected, and funds were shifted to fill in remaining budget gaps, according to the release.

“In the end, just one provider of nursing facility services was unable to be paid a small amount, but that provider was issued payment on the first business day of State Fiscal Year 13,” Mayhew said in the release.

She stressed that predicting MaineCare costs is difficult, given that claims from health care providers fluctuate widely. Weekly payments made to doctors, mental health professionals and other providers ranged from $29 million to $62 million over the last year, Mayhew said in the release.

Providers also have up to a year to bill for their services under federal guidelines.

“The variables outside of our control will always make the year-end financials in the Medicaid program unpredictable,” she said.

Despite the expected shortfall, budget projections by DHHS staff were fairly spot on, said John Martins, a spokesman for the department.

“MaineCare is such a large program that a $12.5 million shortfall at the end of the year equates to less than one percentage point of the budget,” he said.

The MaineCare budget totals more than $3 billion, and is split by the state and federal governments.

Mayhew credited collaboration among DHHS, the Office of the Controller, the Department of Administrative Services and MaineCare Finance for limiting the impact on health providers.

Rep. Peggy Rotundo of Lewiston, the lead Democrat on the Appropriations Committee, characterized the year-end shortfall as an example of Republicans’ wider strategy to slash MaineCare benefits.

“We’ve seen a pattern from the LePage administration and Republicans that starts with a crisis that doesn’t materialize in order to justify cuts to health care for seniors and people with disabilities,” she said. “We have a crisis every few months only to find that more people were hurt than needed to be.”

The anticipated $12.5 million shortfall did not lead to benefit cuts in the MaineCare program. But over the last year, lawmakers have cut $200 million from the DHHS budget, eliminating or reducing benefits for more than 30,000 MaineCare recipients.

Sen. Richard Rosen, R-Bucksport, the Appropriations Committee’s co-chair, said MaineCare has run up against looming shortfalls at the close of the last several fiscal years. The Legislature’s work to rein in MaineCare spending to more manageable levels should help to balance the program’s budget down the line, he said.

“It’s my hope that in the long run we will see the financial requirements of the program line up with the budgeted amount, the expected amount, much more closely,” Rosen said.

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