January 21

Analyst questions Maine consultant’s report on Medicaid expansion

She says the cost study has several flaws, including what appears to be a $575 million calculation error.

By Steve Mistler smistler@pressherald.com
Staff Writer

A national health-care analyst is questioning the findings of a study of Medicaid expansion commissioned by the LePage administration, including what she says is a miscalculation that produced a $575 million error.

A national health-care analyst is questioning the findings of a study of Medicaid expansion commissioned by the LePage administration, including what she says is a miscalculation that produced a $575 million error. Above, Gary D. Alexander, the study's architect.

Photo courtesy PhillyLive.com

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Kathy Gifford, a Medicaid analyst for Indianapolis-based Health Management Associates, reviewed the study by the Alexander Group, part of a $925,000, taxpayer-funded review of Maine’s public welfare system.

The LePage administration has touted the study’s recommendation that lawmakers reject expansion of MaineCare – the state’s Medicaid program – because it would add 124,000 recipients and increase the program’s cost by $807 million over 10 years. Opponents of expansion have cited the report extensively since it was released Jan. 10.

But Gifford said the report has several shortcomings, including a miscalculation that could significantly overstate the cost of the program and expansion. Gifford reviewed the study for AARP, which favors Medicaid expansion.

She said Monday that the Alexander Group apparently used a lower federal reimbursement rate for its calculations than it cited in the text, effectively inflating Maine’s share of the cost.

Gifford’s comments raise new questions about the report, which had already been assailed as a taxpayer-funded document to validate the LePage administration’s policy positions on welfare and its refusal to expand MaineCare to an estimated 60,000 to 70,000 Mainers.

Critics have said the study of MaineCare exaggerates the state’s costs because it assumes an unsubstantiated growth in Maine’s poverty rate and omits savings from expanded coverage that have been included in cost-benefit analyses in other states.

The report’s author, Gary Alexander, is a former public welfare chief in Pennsylvania who was scrutinized for reforms that prompted an investigation by that state’s auditor general.

The LePage administration defended the report against earlier criticism, saying the recommendations are valid. The findings will likely be debated Wednesday, when lawmakers take up a bill to expand MaineCare. Proponents of that bill hope to build enough support to override a veto by Gov. Paul LePage.

The Portland Press Herald made multiple inquiries to the administration Friday about the federal reimbursement rate in the report, but a spokesman for the Department of Health and Human Services did not respond. State offices were closed Monday in observance of the Martin Luther King Jr. holiday. A spokeswoman for LePage did not respond to a request to explain any discrepancy.


The question raised by Gifford focuses on the percentage of MaineCare costs paid by the federal government, and the percentage paid by the state.

In several instances, Alexander wrote in his report that he used a federal reimbursement rate of 61.55 percent to determine the state’s cost of maintaining its current program, referred to in the report as the baseline.

Alexander wrote that the assumption of 61.55 percent is based on the current federal reimbursement rate for Maine. The rate can change annually because it’s based on a state’s average per-capita income relative to the national average.

That annual cost of Maine’s Medicaid program is now $2.7 billion, of which the state pays $1.1 billion. Alexander’s report says the annual cost will grow to $4.6 billion by 2024, of which $1.8 billion will come from the state.

However, Gifford’s calculations show that Alexander used a 60 percent federal reimbursement rate. The 1.55 percentage-point difference is significant, she noted, because it overstates Maine’s cost of the program by $575 million over 10 years.

In a memo to the Legislature’s Health and Human Services Committee, Gifford wrote that the error is in the current cost for the program, and it’s not clear whether Alexander used the same calculations in his projection for an expanded program, which would include various eligibility categories that qualify for varying reimbursement rates.

(Continued on page 2)

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