AUGUSTA — The state Department of Health and Human Services is notifying more than two dozen Maine school systems that they have overbilled Medicaid for services provided to low-income students with disabilities, errors that could cost some districts tens of thousands of dollars and other districts hundreds of thousands.

In each instance, the agency says the school districts improperly billed for such services as speech therapy, social workers and nursing care, which are mandated by federal guidelines and typically reimbursable by Medicaid. The DHHS said the services were educational in nature and not reimbursable.

School districts blame the state for the problem, saying it has failed to provide adequate guidance for complying with the rules of an arcane and fluid Medicaid billing system that they argue was designed more for health care providers than educators.

Resolution of the dispute over disabled-student reimbursements could have a significant effect on Maine property taxpayers, because they could end up having to fund the federally mandated services.

The issue also underscores the state’s difficulty in administering Medicaid while complying with shifting federal mandates in the state-federal health care program for the poor, also known as MaineCare.

The overbilling notices were the result of a state audit done in 2011-2012. Maine Health and Human Services Commissioner Mary Mayhew said the audit found that some districts billed Medicaid for medical services that were actually “educational in nature” and therefore not billable. Her assessment of the audit’s findings was contained in a memo to the Legislature’s Education and Cultural Affairs Committee, members of which described the situation as “urgent” during a meeting Aug. 1.

The department’s explanation for the overbilling notices is of little solace to affected school districts, which rely on reimbursements to pay for services mandated by the federal Individuals with Disabilities Education Act.

“We’ve operated with the best available information,” said Laurie Lemieux, director of special education in the Auburn School District, which recently learned that it owes the state more than $379,000. “I don’t want to keep making mistakes. That’s why we’ve repeatedly asked the state to tell us how to do it correctly.”

Robert Nadeau, an attorney hired by several of the school systems accused of overbilling, said other districts receiving violation notices included:

RSU 38, covering the Maranacook region, owes the state about $847,000.

SAD 52, including Turner and Leeds, owes about $336,000.

SAD 15, including Gray and New Gloucester, owes about $120,000.

The state contends that it held two public hearings and reached out to schools when the administration of then-Gov. John Baldacci changed reporting guidelines at the federal government’s request in 2010.

LePage administration officials at DHHS now say they’re operating under the guidance of federal regulators, who have called for stricter state oversight of school-based Medicaid billings and who could decide to do their own audit.

The threat of a federal audit is fresh for DHHS, which was notified in April by federal Department of Health and Human Services auditors that Portland schools had overbilled Medicaid by more than $667,000 in other categories of services. In its report, the federal Office of Inspector General cited a number of infractions, including services provided by “unqualified providers,” or receiving money for rehabilitative services provided after a student had dropped out of school.

The federal audit partly attributed the overbilling to inadequate claims monitoring by the state DHHS. Auditors said the agency should “strengthen its oversight of the Maine Medicaid school-based health services program to ensure that claims” complied with federal standards.

The state’s justification for the overbilling crackdown doesn’t wash for Nadeau. He said Thursday that neither the Maine DHHS nor the Maine Department of Education has explained how districts are to comply with rules tailored for private health care providers. He also disputed DHHS auditors’ justification for the overbilling violations, arguing it was inconsistent with the department’s own rules and previous guidance provided to school districts.

In a June 17 memo to the Legislature’s Education and Cultural Affairs Committee, Nadeau cited examples of state guidance that was either promised but never provided, or was removed from agency websites after the transition from the Baldacci administration to the LePage administration.

Nadeau quoted an Aug. 2, 2010, response from the Department of Education and DHHS to school administrators’ requests for a guidance manual. It read, “We hope to have a manual out before November 15th (2010). We had hoped to get it out before now,” but agency officials said they were “a little busy” because DHHS was implementing a new Medicaid automated billing system.

Nadeau said the manual never arrived.

“There was a lot of concern about these changes when they were made under (Baldacci),” he said. “The LePage administration really had the chance to fix this and help the districts, but they’ve dropped the ball.”

John Martins, a spokesman for DHHS, said he was prohibited by law from commenting on some of the violations because school districts are in the appeals stage of the state audit. Martins also couldn’t provide the total number of school systems affected or how much money the state had requested be returned. He also would not name any of the districts being sent notifications of overbilling.

He did, however, provide a list of outreach efforts by either DHHS or the Department of Education regarding the 2010 revisions to Medicaid rules. The list showed eight outreach efforts in 2010, two of which included the public hearings required to be held on the reimbursement rule changes.

Other steps included a billing instruction notice for providers, Office of MaineCare Services training for districts, and a 50-page training document distributed statewide, followed by numerous Web conference presentations.

Martins also said a manual, “MaineCare Billing for School Based Services,” was published in February 2011 and distributed.

The Department of Education, meanwhile, currently features a list-serve communications service on its website that allows providers of school-based medical services to query the agency. Samantha Warren, a spokeswoman with the Department of Education, said state officials “have always been just a call, email or site visit away to do our part in helping schools follow the rules.”

“That said, no matter how diligent the state was in our communications about these changes, the responsibility is ultimately on schools to be compliant with the law,” she said.

Nadeau argued that state auditors contradicted in 2011-12 the guidance that was provided in 2010. He cited examples in which special-education administrators completed the required “individual education programs” for students receiving treatment, but were penalized for not documenting a treatment plan. The treatment plan requirement, Nadeau said, was never communicated in guidance documents from DHHS or the Department of Education.

Nadeau had other issues with the 2011-12 state audit, but said a dropoff in Medicaid billings three years ago was proof enough that something was amiss.

According to Maine State Billing Services, which handles Medicaid billings, school districts received $37 million in fiscal year 2009. In 2010, the year after the rule changes, billings fell to $6.5 million.

Nadeau said the federal mandate to provide the services didn’t disappear. The $30 million that once was covered by Medicaid is now paid by school districts and property taxpayers, he said.

That cost will continue to shift if the penalized districts lose their appeals with the state, Nadeau said.

Jill Adams, director of the Maine Administrators of Services for Children with Disabilities, acknowledged the school district complaints Thursday to lawmakers on the Education and Cultural Affairs Committee.

She said some districts have attempted to slog through the reporting bureaucracy. Others, however, are avoiding it altogether.

“Some districts are choosing not to bill because they don’t feel like they’re on solid ground (with the state’s reporting requirements),” Adams told the committee.

Lemieux, with the Auburn district, said the Medicaid dollars are a significant portion of the budget. Without them, she said, costs could rise.

Lawmakers and Mayhew both noted that the state and school units are trying to revise the 2010 rule changes. The federal government will have to approve the changes, a process that Adams said could take “years.” 

Steve Mistler can be contacted at 791-6345 or at:

smistler@pressherald.com

Twitter: @stevemistler