The problems with the new state computer that have fouled up payments to thousands of Medicaid health-care providers will cost the state an estimated $4 million in consulting fees to fix and are likely to feel worse before they get better.
The number of suspended claims or bills stuck in the Department of Health and Human Services (DHHS) computer is now 436,132, or 200,000 more than were reported last month. Some of those claims were simply misclassified before or are duplicates to old bills that were never paid, but the list does continue to grow, according to a recently issued report.
The numbers of claims in limbo soon should go down dramatically, officials say, as the state starts to deny them and send providers notices requesting more information or explaining why the claim was deemed invalid. And, the number of claims properly paid through the system is growing.
At the same time, the state is trying to figure out how much it really owes or is owed in Medicaid payments for the fiscal year that just ended on June 30.
While the state had enough money to pay all its Medicaid provider bills in the last weeks of the fiscal year, those were “only the claims that cleared the system,” said State Controller Ed Karass.
Another Medicaid shortfall?
The governor’s finance commissioner, Rebecca Wyke, said if she had to guess, “the state is likely to owe more money out,” and if it hits the tens-of-millions-of-dollars range, a supplemental budget would be needed in January. A clearer picture should emerge in mid-August when a more detailed audit of the state’s books is complete.
The new system has been rejecting claims en masse, in part because new codes are required and identifying providers and Medicaid participants by their social security numbers is now prohibited under federal privacy rules. As an accounting safeguard, all the blanks have to be filled in on the new system before a claim is accepted, whereas the old system allowed the machine operator to override the computer.
The state doesn’t really know what its liability is yet because since the new computer went on line this past January, close to $250 million has been sent out in interim or estimated payments to the state’s 7,000 providers. Most of that money has gone to the state’s most active 400 providers.
Some providers have stopped billing and now just use their interim payments to pay their own bills. Others have never sent in any bills, saying they would “wait until this mess clears up,” to submit claims, Wyke said. Some have been overpaid – $9 million already has been recovered – but Wyke said the odds are the state is in the hole.
To figure that out and help deal with angry providers, the state hired three outside companies, including the accounting firm of Deloitte-Touche, which was owed $750,000 at the end of the fiscal year. Its bill is likely to be several million dollars by the time the system is running right. Two other companies – one to help answer phones and one to help manage the project – are expected to cost another $2 million, with $500,000 already spent as of June 30.
That does not include the contract the state is about to enter with Deloitte for 18 to 24 months of consulting services to figure out what’s really wrong with the accounting systems and overall setup of the state’s Medicaid office – known as the Bureau of Medicaid Services or MaineCare. Wyke said she would not guess at the amount, saying the contract currently is under negotiation.
She did say it would be money well spent since $2 billion in state and federal funds flow through that office each year. “Fixing this problem is expensive,” she said, but not doing so would cost even more.
What went wrong
Hiring Deloitte for up to two years is part of Gov. John Baldacci’s plan announced last week to “transform” the state’s Medicaid office – which he described as one of the state’s largest insurance companies – into “a high-performing organization” that lives within its means and is customer friendly. There currently are more than 260,000 Maine residents on Medicaid.
The computer meltdown at DHHS, he said, “uncovered greater system deficiencies and insufficient business systems, many of which have existed for decades.”
What has never been clearly explained is why the state decided to flip the switch on the new computer and shut the old one down without doing adequate trial runs with providers.
Some providers say that at a meeting hosted by the DHHS last fall, they offered to be part of a trial run, but it never materialized. Others point to the fact the state was blazing new ground when they hired the computer company that created and is still running the system.
Richard Thompson, the state’s chief information officer who now runs a newly formed central technology staff, said the vendor, CNSI of Maryland, had never created a system like this before. Thompson was called in from the central office to help fix the problem at DHHS when the computer malfunction brought vendor payments to a standstill.
“We were their first in the Medicaid management system” line, he said of CNSI, and now other states are looking at Maine as a trailblazer.
The initial price tag for the system was $21 million, 90 percent of which is being paid with federal dollars. The state is holding back the final $5 million payment until the system is running right.
“When this system is done it will be state of the art,” Thompson said.
Providers also are being trained at meetings around the state on what information they have to include in their bills.
“We’re now at a point where we should be talking about going live,” Wyke said. “The problem is we’re already live.”
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