BY JOHN RICHARDSON

The Portland Press Herald

A $120 million shortfall in the state budget for this year has set off an ideological debate over the future of Maine’s Medicaid program.

The shortfall itself, however, is mostly the result of a series of technical budgeting miscalculations, according to a report prepared by the LePage administration. Problems with a new claims processing system, a loss of federal funds that wasn’t accounted for and a failure to budget for increases in federal premiums are among the biggest causes.

Leaders in the LePage administration presented a report on the shortfall Tuedsday to the Legislature’s Appropriations and Financial Affairs Committee. A written report was provided to the lawmakers Friday.

The shortfall has created a financial emergency that Gov. Paul LePage wants to solve by making deep cuts in MaineCare, which he says has grown out of crontrol in the past decade.

“For decades, policies led by Democratic leadership have expanded Medicaid benefits far beyond the national average, creating an unsustainable program,” LePage said in a statement on Monday.

Growth in enrollment has continued this year and is contributing to the shortfall, but not significantly, according to the administration. Increased membership accounts for $6.5 million of the overall shortfall, the report says.

Most of the shortfall is instead because of inaccurate assumptions built into the budget, some of which were carried over from past budgets, the report says.

The transition last year to a new system for processing health claims from doctors and hospitals, for example, disrupted claims and caused an estimated $30 million overrun when the claims arrived this year instead of last year, the report says. “The number of claims carried over …was higher than anticipated due to several (processing) system defects,” the report says.

Another big chunk of the shortfall is because of the fact the budget simply did not set aside enough money for private non-medical institutions, such as residential homes for the disabled. “The PNMI room and board account has been historically underfunded,” it says.

Mary Mayhew, commissioner for the Department of Health and Human Services, said the LePage administration inherited some of the mistaken cost assumptions when it built its first budget last spring.

“We had a very short period of time to build a biennial budet. We were building a (budget) on top of a baseline where we did not have a lot of the supporting information around the assumptions,” Mayhew said Monday.

Mayhew said she is working to improve the department’s ability to track spending and predict expenses for future budgets.

There were some special challenges this year, aside from the change in administrations, she said.

Maine lost hundreds of millions of dollars in federal stimulus funding, which ended up increasing claims costs this years in ways that were not anticipated. The loss of federal funding meant the state now has to pay more for health claims, including for a number of past claims that had to be reprocessed because of errors.

“Clearly the magnitude of the change in federal funding certainly has created even greater challenges for this budget than perhaps were fully understood or anticipated,” Mayhew said.

MaineCare budgets are notoriously complex and difficult to predict. Shortfalls — and supplements budgets to close the deficits — have been common over the years, including under the previous administration.

Mayhew, however, faced some pointed questions from lawmakers Tuesday about the shortfall. That’s partly because of the magnitude of the cuts that the administration wants.

Democratic lawmkars also say they aren’t convinced the numbers are solid. Mayhew had increased the estimated size of the shortfall repeatedly in recent weeks.

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