AUGUSTA – The state will begin testing a new Medicaid billing system at various sites next week as the Department of Health and Human Services works to replace a troubled computer network.

Nursing homes, hospitals and other providers have agreed to be pilot sites for the system, which is scheduled to go live Aug. 1, said DHHS Commissioner Brenda Harvey.

“Each one of those is critical to deciding we’re all set to go on Aug. 1,” she said.

The state delayed the switch planned for April 1 until Aug. 1 after internal tests showed that the system was not yet up to speed, she said.

The new software will replace a five-year-old system that failed just weeks after it was launched. Hundreds of providers went weeks without being reimbursed by the state for Medicaid costs. That system never complied with federal regulations, something Harvey says will change with the new setup.

Complying with federal rules is important because it will allow the state to get reimbursed at a higher rate, she said.

The DHHS spent $47.5 million on the failed system — 90 percent of which was paid by the federal government. So far, the state has spent $34.8 million on the new system. The federal government will also pay 90 percent of that cost, according to the department.

Catholic Charities Maine, which relies on state Medicaid reimbursement for about half of its $26 million annual budget, agreed to be one of the test sites, said Chief Executive Officer Stephen Letourneau.

When the current system ran into problems, his agency was owed $2 million and had to take out a loan to pay its bills. This time, he said, the state has made improvements to the switchover, so he’s hoping for far fewer problems.

volunteering to be a test site, Letourneau said, his agency will get the support it needs to make it through the transition.

“We’re going to recognize efficiencies we were hoping to realize years ago with technology,” he said.

Among the Medicaid services provided by Catholic Charities are dental care and mental health services for children and adults.

Some 3,800 providers in the state rely on the system for payments, including physicians, dentists, nursing homes, hospitals and behavioral-health specialists.