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Medicaid
shortfall increases fourfold By Paul Carrier, A
$37 million shortfall in the state's Medicaid program that came to light
last month has now grown to about $150 million, thanks to
higher-than-expected costs in the first quarter of the fiscal year that
began July 1. The
problem is now estimated to be about $112 million bigger than previously
reported, in part because the number of people covered by Medicaid in July,
August and September exceeded projections. In addition, the state's payments
to health-care providers during that three-month period exceeded the amount
of money that had been set aside for such payments. Aides
to Gov. John Baldacci said Wednesday they don't know the exact size of the
latest problem, but the governor's finance commissioner said it probably is
in the $112 million range. They emphasized that the administration is moving
aggressively to shrink the hole by cutting costs at the Department of Human
Services and taking other steps. That means the shortfall may be a lot
smaller by the time the Legislature convenes in January. "What
the dollar value of those (savings) will be is a little hard to estimate at
the moment," Rebecca Wyke, Baldacci's finance commissioner, said
Wednesday. Still, Wyke acknowledged that austerity measures may not fully
eliminate the shortfall and the governor may have to ask the Legislature for
more Medicaid money next year. Medicaid
is a federal/state program that provides health insurance for more than
240,000 people in The
$112 million problem is only the latest in a string of financial headaches
that have plagued the DHS this year, prompting calls from some lawmakers for
new management at that agency, which is now being run by an acting
commissioner. Baldacci has resisted making such changes as he pursues his
plan to merge DHS and the state mental-health agency and appoint a new
commissioner to run the combined agency. The
governor announced Wednesday that he has appointed a screening committee to
come up with a list of finalists for the new commissioner's job at the
merged social-services and mental-health agency. Baldacci said he hopes to
submit a nominee to the Legislature by January. The Legislature has yet to
sign off on the merger, but it is expected to do so next year. Although
DHS has been plagued by financial problems for months, the latest revelation
is different in two key respects. The $112 million shortfall is bigger than
the fiscal problems that cropped up at DHS earlier this year. And although
the earlier deficiencies occurred before Baldacci took office, the new
shortfall developed after Baldacci had been in office for six months. Lee
Umphrey, Baldacci's spokesman, said the new shortfall does not reflect
poorly on the administration, even though it happened on Baldacci's watch.
Umphrey said DHS has had fiscal problems for a long time and it will take a
while to fix them. He credited the governor with taking steps to upgrade
accounting practices at DHS, in part by hiring outside experts and assigning
fiscal experts from other state agencies to work there. "If
anything, it's a positive reflection on the (Baldacci) administration that
something was identified and remedies were set forth to correct it,"
Umphrey said. Administration
officials said Wednesday there was a significant jump in Medicaid costs from
January through June, but that data was not available when planners prepared
the budget last winter for the two-year cycle that began July 1. That's why
officials were caught off guard when high Medicaid costs carried over from
the first half of the calendar year into July, August and September. Trish
Riley, director of the Governor's Office of Health Policy and Finance, said
the Medicaid jump that occurred in the first six months of the year leveled
off from July through September. That was still a bigger bill than the state
had expected for those three months, but it suggests that the spike may have
peakedand may not get even bigger in the months ahead. Peter
Walsh, the acting commissioner at DHS, said the agency will try to cut costs
in and out of the Medicaid program, to free up money that can be used to
shrink the Medicaid shortfall. He also said DHS will try to find new
revenues by looking into whether the state is eligible for more federal
money than it is getting. This
year's litany of fiscal failures at DHS began last spring when the state
auditor disclosed that DHS could not account for how it spent almost $19
million in federal welfare funds in recent years. That prompted Baldacci to
hire PricewaterhouseCoopers, a prominent accounting firm, to help tidy up
the books. In
a report made public in August, PricewaterhouseCoopers concluded that the
problems at DHS were even bigger than Auditor Gail Chase had reported. The
consultant's report documented $37 million in accounting mistakes at DHS,
but straightening out the books eliminated most of those problems without
creating a shortfall in the budget. A
little more than a month after that report came out, Baldacci announced a
Medicaid shortfall at DHS that, coincidentally, also involved $37 million.
Once again, the errors occurred over a period of years. In that case, the
agency missed payments to providers, gave more money to state-run mental
hospitals than federal rules allow and failed to file Medicaid claims with
the federal government in time to get federal reimbursements. At
that time, administration officials indicated that the shortfall might grow,
and they confirmed that Wednesday in a briefing for the Legislature's
Appropriations Committee. One member of that panel, Republican Rep. Richard Rosen of Bucksport, said later he was frustrated that the administration did not specify the size of the latest shortfall during the briefing. That information only came to light after the briefing. Copyright ©
2002 Global Action on Aging
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