MEDICAID EXAMINATION

With a federal audit claiming Maine has overspent Medicaid dollars, coupled with impending cuts in federal funding for the health care program and a growing state budget shortfall, lawmakers in Augusta need to examine whether Maine’s program is sustainable. They had an opportunity to begin the process last year with a bill that would have launched a comprehensive, independent study of the program called MaineCare. The study was rejected, but the need for such a review has only grown.

According to an audit by the U.S. Department of Health and Human Services, Maine’s Bureau of Child and Family Services overbilled the Medicaid program by more than $44 million in 2002 and 2003. Nearly $30 million of the total was paid by the federal government.

Brenda Harvey, commissioner of the Maine Department of Health and Human Services, says the federal audit applied new billing standards to services provided several years ago that complied with the rules at the time. Audits in other states also found improper billing, but when the states contested the findings, an agreement was reached to not bill for the services in the future, but no money was returned to the federal government for the supposed overbilling for past services. Maine hopes for the same treatment.

Worse than the audit, however, are new rules from the federal Centers for Medicare and Medicaid Services that reduce federal funding for services provided by states to disabled and foster children.

The rules, published last month and set to go in effect in March, would reduce Medicaid spending by nearly $1.3 billion over five years. CMS says the reductions are needed to comply with the Deficit Reduction Act of 2005, but an analysis by the Center for Budget and Policy Priorities shows that the cuts go beyond what Congress intended in passing the act.

A major change in the recent CMS rules involve what is known as case management, which is a comprehensive plan detailing how an individual’s medical, educational and social needs will be met. By limiting what can be included in case management, the rules leave states to either cut services or pay for them with their own limited resources.

Other rule changes, aimed at reducing federal Medicaid expenses, are expected.

Lawmakers in Washington are trying to slow down the case management rules and to restore some of the federal funding for services for foster children, the elderly and the mentally ill, an effort worth further scrutiny and support.

In the meantime, states, like the federal government, must find ways to deal with the growing costs of health care at a time of state budget shortfalls nationwide.

A first step would be to take a look at what drives Medicaid costs. Rep. Richard Woodbury of Yarmouth proposed such a study last year, but it was rejected by his colleagues, likely because of the $1 million price tag. Given that Medicaid is the second-largest item in the state budget – nearly $1.5 billion – determining why Maine’s expenses are higher than average and looking for ways to reduce them would be money well spent.