BANGOR, Maine — Maine’s Department of Health and Human Services has asked a federal court to overturn a decision of the U.S. Department of Health and Human Services that disallows close to $30 million in federal case management funds for children in Maine’s Medicaid program, called MaineCare.

If the state should lose its case, Maine DHHS could be required to repay the money, which dates to services delivered in 2002 and 2003.

State Health and Human Services Commissioner Brenda Harvey said Tuesday that she was unable to comment on the specifics of the case, but that it would have “no short-term impact” on the current budget-paring process under way in Augusta.

In the longer term, she said, the state expects to win its case and has not made plans for repayment of the money.

A 2007 audit performed by the federal DHHS Office of Inspector General found that Maine DHHS had overstated expenditures associated with delivering case management services for children in the MaineCare program, including many in state custody. The OIG also found that the state had failed to ensure that Medicaid costs for those services were “reasonable, allowable, and allocable, in accordance with Federal requirements.”

Specifically, the OIG audit found that the cost of delivering the case management services in question was overstated by nearly $10 million; that the state had illegally included administrative and support costs in its charges; and that unallowable services considered “direct services” for children in the foster care system had been improperly billed to the federal Medicaid program.

The conclusions were based on a review of more than 600 case management services delivered in 2002 and 2003 to 99 children, most of whom were in state custody at the time.

Federal Medicaid policy defines allowable case management services as those services that help people “gain access to needed medical, educational and social services.”

The direct provision of such services themselves is not an allowable case management expense.

In a decision based on the findings of the audit, the Centers for Medicare and Medicaid Services determined that Maine DHHS should repay $27.9 million to the federal Medicaid program. The state in 2008 appealed the decision to the federal DHHS appeals board, arguing that all services in question had been delivered and billed under Medicaid guidelines and definitions in effect at the time.

In its decision dated Dec. 24, 2009, the appeals board found that the state had failed to demonstrate that the disallowed expenditures were, in fact, allowable and upheld the CMS ruling.

In its complaint filed Monday in U.S. District Court in Bangor, Maine DHHS, represented by the state Attorney General’s Office, asked for judicial review of the federal decision and requested a reversal of that decision. The state also seeks a declaration that the actions of the federal DHHS are “contrary to federal law, arbitrary and an abuse of discretion.”

No court date has been set.


Meg Haskell

Meg Haskell is a curious second-career journalist with two grown sons, a background in health care and a penchant for new experiences. She lives in Stockton Springs. Email her at