The Maine Department of Health and Human Services has lost track of millions of dollars in Medicaid overpayments made to nursing homes and assisted-living facilities in the last several years because of computer and accounting problems that were discovered in 2006 but never fixed, according to the Office of the State Auditor.

The agency made an estimated $29 million in overpayments to long-term care providers in fiscal year 2013, which ended June 30, but it doesn’t have adequate computer systems or accounting procedures in place to make sure all of the money is returned to the state or to prevent future overpayments, said State Auditor Pola Buckley.

When the state Office of the Controller recently reviewed Medicaid reimbursements made to assisted-living facilities from September 2010 through June 2013, it found $36.4 million in overpayments, Buckley said.

“The state doesn’t have a record of how much was owed before that. It’s likely millions of dollars,” Buckley said. “In some cases the money is returned to the state, but not always.”

Buckley said the total amount of overpayments is a dynamic number that is always growing and effectively removes $35 million to $40 million from the Medicaid system at any given time. As a result, that money isn’t available to help Maine’s rapidly growing senior population or to fill funding gaps for long-term care providers who struggle to cover rising costs. The total of unrecovered overpayments is unknown.

The overpayments are highlighted in a new report and proposed emergency legislation that will be presented Tuesday to the Legislature’s Health and Human Services Committee. The report was issued earlier this month by the Commission to Study Long-Term Care Facilities, which addressed a variety of concerns related to nursing homes and assisted-living facilities.


The commission’s focus on Medicaid overpayments comes as DHHS increasingly takes heat for recurring operational and financial problems. The LePage administration blames MaineCare – as Medicaid is called in the state – for about $108 million of a $119 million shortfall in the current state budget. Meanwhile, a proposal to expand Medicaid coverage to 70,000 to 100,000 additional Mainers is generating contentious debate in the Legislature.

Maine’s growing senior population is expected to increase demand for long-term care, including in-home care, and put additional pressure on Medicaid as the largest and most complicated division of DHHS.

Maine’s median age – 43.5 years – is the highest in the United States, in part because the state also has a dwindling younger population, according to the U.S. Census. The state’s proportion of people age 65 and older – 17 percent – is second only to Florida’s 18.2 percent.

Maine also has the nation’s highest proportion of baby boomers – 29 percent of its 1.3 million residents were born between 1946 and 1964 – and they’re turning 65 at a rate of 18,250 a year, according to AARP Maine. By 2030, more than 25 percent of Mainers will be 65 or older,

The Portland Press Herald/Maine Sunday Telegram is examining various impacts of having an aging population in a special investigative series, “The Challenge of Our Age.”

The estimated $29 million in Medicaid overpayments to long-term care providers in fiscal 2013 represented 5.5 percent of $528 million in federal and state Medicaid payments to nursing homes and assisted-living facilities between July 1, 2012 and June 30, 2013, according to the state auditor’s office.


Emergency legislation proposed by the long-term care commission would force DHHS to fix its computer systems so they no longer generate overpayments and can assist the agency in collecting past overpayments. For years, tracking and recapturing overpayments has been done mostly by hand.

“(DHHS has) no set method of recouping the Medicaid overpayments,” said Sen. Margaret Craven, D-Lewiston, co-chairwoman of both the Health and Human Services Committee and the long-term care commission.

Craven said the agency keeps track of any money that is repaid on a separate Excel spreadsheet.

The commission’s report includes a study of Medicaid reimbursements that was conducted by Amanda Spencer, a principal auditor in Buckley’s office.

Spencer found that DHHS computer systems frequently make errors in calculating and deducting room and board charges that long-term care users must pay from Social Security benefits and other personal income, so it’s likely that some seniors are being overcharged. In some cases, Spencer found that long-term care facilities received payments from both residents and Medicaid for the same monthly charges.

The state auditor’s office first discovered problems with the reimbursements in 2006, but the problems might have existed earlier, Spencer found.


Spencer said the computer problems occur because programs are either faulty or not designed to do required functions.

The Automated Client Eligibility System often incorrectly calculates and fails to charge long-term care users for the portion of their “cost of care” that they must pay from personal income, Spencer found.

The Maine Integrated Health Management Solution – a computer system that’s had numerous problems since DHHS started using it in 2010 – cannot flag apparent problems with residents’ assessments and fails to deduct them from reimbursements that DHHS pays to providers, Spencer found.

Spencer said DHHS has adopted various manual procedures to address problems with the reimbursements, but they are inadequate, subject to human error and don’t correct the root causes of payment errors or ensure the timely recovery of overpayments.

In reviewing 60 randomly selected cases in fiscal 2013, Spencer found 13 instances in which known computer system errors caused residents’ income or expense information to be incorrect or missing. In nine of the 13 cases, DHHS staff failed to detect system errors or apply manual fixes. In several cases, Spencer found that long-term care providers submitted claims in a manner that could force payments for the same charges from both residents and Medicaid.

Spencer said DHHS doesn’t have enough staff to properly oversee Medicaid reimbursements. While the agency has hired a firm, HMS Government Services, to oversee reimbursements to nursing homes, a “temp” worker oversees reimbursements to assisted-living facilities.


“They need permanent, more qualified people taking care of this,” Spencer said.

The state auditor’s report to the long-term care commission included a response from DHHS, which said the agency is researching a variety of solutions to the identified problems. DHHS officials declined to provide additional comment for this story.

Medicaid overpayments also concern long-term care providers, who say the state is at the same time underfunding nursing homes and assisted-living facilities by at least $39 million annually, according to Rick Erb, head of the Maine Health Care Association, which represents about 100 nursing homes and about 100 assisted-living facilities.

Many providers have adapted their accounting procedures to address Medicaid overpayments, Erb said. Some recognize when they’ve been overpaid and set the money aside until the state asks for it. Sometimes they haggle over how much money should be returned because DHHS calculations are often in dispute.

“We account for the payments of every resident, we recognize when overpayments have been made and we set them aside in an escrow account until they are returned to the state,” said Denise Vachon, chief executive officer of The Park Danforth, a senior independent- and assisted-living facility in Portland.

Providers return the money either by sending a check, accepting a deduction in future Medicaid reimbursements or, if the amount is large enough, setting up a repayment plan with DHHS.


Still, Erb said, providers are frustrated because even as they repay Medicaid funds, DHHS continues to make overpayments. Keeping track of these funds takes additional time and staffing that most providers cannot afford.

“We want to be paid accurately,” Erb said. “There’s no benefit to being overpaid because the money is owed to the state and cannot be spent. It’s a distraction from the real issue, which is that these facilities are seriously underfunded.”

Emergency legislation proposed by the long-term care commission would direct DHHS to use recovered Medicaid overpayments to increase funding to long-term care providers by $10 million in fiscal 2014 and in fiscal 2015.

Formed by the Legislature, the 11-member commission met five times last fall, gathering information from service providers and advocates for the elderly.

The proposed legislation also would create the Commission to Continue the Study of Long-Term Care Facilities and the Blue Ribbon Commission on Long-Term Care. The latter would review the state’s plan to provide long-term care, including less-expensive and often-preferred in-home care, and draft a new plan to present to the Legislature by Nov. 5, 2014.

Kelley Bouchard can be contacted at 791-6328 or at:

Twitter: @KelleyBouchard

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