AUGUSTA — A $12.5 million shortfall at the state Department of Health and Human Services means health care providers who receive MaineCare funding won’t get paid on time in June.

Department of Health and Human Services Commissioner Mary Mayhew delivered that news Monday, telling members of the Appropriations Committee that the state will need to push final payments for June into July because it’s the start of the state’s new fiscal year.

The shortfall is because of higher than expected costs in a handful of areas, including prescription drugs.

“We are monitoring the cycle payments very closely,” Mayhew said. “We’re looking at all the options to minimize the need for any capping of cycle payments.”

Meantime, the state is trying to collect money that was overpaid to providers in the last year. So far, the state has collected $7 million and is sending notices to those who owe another $4 million. In total, the state paid out $16 million more than it should have to providers, and that money must now be recaptured.

The overpayments are because of continued computer billing problems at the department.


In addition, Mayhew said DHHS is two to three years behind in audits that need to be performed on MaineCare providers. “We need to get caught up,” she said.

The budget committee also got a revenue update that shows for the 11 months of this fiscal year, General Fund revenues are up nearly $25 million. For the month of May, revenues were $15.7 million higher than expected, partly because of a settlement received by the Office of the Attorney General, said Michael Allen, an associate commissioner at Maine Revenue Services.

Earlier in the meeting, Maine Public Employee Retirement System Director Sandy Matheson said she will release figures in July that show how much the state will need to pay out to the system over the next two fiscal years. Although original projections indicated the state would need to pay $690 million to the system for the 2014 and 2015 state budget years, that number will be less once the new figure is calculated, she said.

She estimated it would be $600 million to $610 million, although the final figure won’t be available until later next month.

Reforms to the program passed last year by lawmakers have reduced the amount the state owes to the state retirement system. Before the reforms passed, the state would have owed $900 million to the system in fiscal years 2014 and 2015.

The reforms included freezing benefits for three years and then capping future increases at 3 percent, instead of 4 percent. Also, the cost of living increases will be applied only to the first $20,000 of annual retirement income, and new hires and workers with less than five years of service will have to turn 65 before they qualify for benefits.

Susan Cover — 621-5643

[email protected]

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