The state is short an estimated $24 million needed to pay Medicaid bills through the end of June – a budget hole the administration says it can fill but cannot explain.

“I don’t actually think they know,” said Rep. Hannah Pingree, D-North Haven, co-chairman of the Health and Human Services Committee. “It’s impossible to track what lines are over budget. It makes it impossible to make policy choices.”

The ongoing problem with the Department of Health and Human Services computer system, which has been rejecting valid claims for payments from Medicaid providers since January, is also making it difficult to balance the books by account for the close of the fiscal year on June 30.

The best guess is the shortage is a combination of overpayments to some Medicaid providers, who have been getting interim payments while the state works on the computer, and real cost overruns in the Medicaid program. Those are caused by more people using the system than anticipated and because benefit changes put in place to cut spending haven’t worked.

Becky Wyke, the governor’s finance commissioner, said the $24 million shortage could be made up with $27 million in greater than anticipated income tax collections in April. There was a special meeting of the state’s revenue forecast team called late last week to officially recognize that money so it can be spent in this fiscal year, and the Appropriations Committee Monday night unanimously approved the spending as part of the Part 2 budget.

The Legislature this week will be asked to approve that budget with a two-thirds vote so the money can be spent immediately.

Rep. Pingree said she will support the appropriation because without it Medicaid providers won’t get paid in the last weeks of the fiscal year.

“Those who will bear the brunt will be the same providers that have been dealing with this (computer) mess,” Pingree said. “Another three weeks without paying people would certainly mean more people going out of business.”

While a team is working on fixing the computer system, progress has been slow. Some paid claims are getting through, but many still are not. And, the state has now identified $10 million in overpayments to providers who bill more than $100,000 to Medicaid. A payback system is being worked out.

The computer failure, however, is by no means the sole culprit in the Medicaid overrun. Rather, Wyke said, it “exacerbated” the problem.

“This is the third June in a row when we’ve been told the MAP (Medical Assistance Program for Medicaid) account is running low,” said Sen. Richard Rosen, R-Hancock and Penobscot, a member of the Health and Human Services Committee. He said many of those shortages were budgeted savings in programs that were never realized. “The Legislature adopts and books them,” as a way to balance the budget, he said, but the savings don’t materialize.

The state is about to budget more savings due to program redesigns even as the latest shortfall is being uncovered.

In the Part 2 budget that deals with the 2006-2007 biennial budget, the Legislature will be asked to make up a $73 million loss in federal Medicaid dollars – triggered by a formula that reduces federal matching funds when a state’s per capita income rises, as Maine’s did slightly in recent years.

While a chunk of the shortfall is being covered by delaying owed payments to hospitals and taxing services for the mentally retarded, the Department of Health and Human Services is booking cuts already rejected as wishful thinking in the Part 1 budget and introducing stricter controls on what drugs the poor and the elderly can get under Medicaid.

The administration also found some additional money, including $11 million the state can collect in federal Medicaid matching funds for some state employees whose payment claims had been stuck in the DHHS computer.

Sen. Richard Nass, R-York, the Republican senate representative on the Appropriations Committee, said his party members on the committee endorsed the budget because it “restored some of the governor’s cuts,” particularly about $20 million owed to the hospitals.

But, he said, the whole committee had to “swallow hard” on the some of the DHHS program cuts, because history has shown they might not provide the promised savings.

“It was a fairly small package that needed to be done,” Nass said.

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