AUGUSTA (AP) – Federal inspectors are in Maine amid questions about state efforts to boost Maine’s share of federal Medicaid money in 2002.

State Auditor Gail Chase told Maine lawmakers last fall about $8.7 million was at issue and that her department had contacted officials of the U.S. Department of Health and Human Services.

According to Chase, Maine increased its reimbursement rate for schools facing the costs of rehabilitation services as part of a strategy to maximize federal dollars available to the state.

“The strategy was not to reimburse the schools, which had incurred the cost of rehabilitation services, but to apply the increase to the schools’ previously submitted qualifying costs and then to keep the federal reimbursement,” Chase wrote in a Nov. 19 letter to the Legislature’s Appropriations Committee.

Attributing the strategy to the state Department of Human Services, Chase added: “To achieve this, the department wrote checks to the eligible schools, did not send them, but redeposited them to the General Fund.”

Materials relating to the case were provided to The Associated Press on Saturday by Commissioner Rebecca Wyke of the state Department of Administrative and Financial Services.

In a Saturday story carried by Blethen Maine Newspapers, state Controller Edward Karass said he believes the state was entitled to keep the money but that the method of the transaction was subject for discussion.

“At this point, I don’t have any basis to say the funds were misused,” Karass said. “The money was available for the state to use. The question is how should the transfer take place. We’re working on a plan to correct some of the mistakes made by DHS.”

Chase said the state initiative may prove to be acceptable.

“Initially, it looked strange,” she told the newspapers Friday. “But it had gone through a couple of legislative committees. Everyone was honest and open about what they were doing. There is a lot the state has on its side.”

AP-ES-02-14-04 1533EST

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