AUGUSTA — Department of Health and Human Services Commissioner Mary Mayhew acknowledged Friday that she should have told lawmakers sooner about a computer problem that allowed 19,000 ineligible Mainers to receive Medicaid benefits.

Mayhew told the Legislature’s budget-writing committee that program directors and a departmental steering committee had been made aware of the computer malfunction last year. However, she said, the problem didn’t make its way to her office until late January. 

Lawmakers have questioned why Mayhew withheld information that may have factored into decisions on a recently enacted spending bill designed to plug a $123 million gap at DHHS. 

Mayhew told the Appropriations Committee she took full responsibility for not communicating the computer problem earlier. However, she stressed that the only reason she didn’t report the malfunction in January was because she did not yet have a full analysis of its impact. 

The department still doesn’t. Mayhew said Friday it could take about a month to determine how many people got health benefits when they were ineligible.

DHHS sent individuals letters notifying them they could no longer use their Medicaid or MaineCare cards. However, at the same time, the state’s payment system was loading the cards with benefits that could be used at hospitals. 

If enough individuals used the cards, the fiscal impact could be significant. It’s likely the federal government, which pays two-thirds of the Medicaid program, will try to recoup the losses. 

Democrats said that not disclosing the computer problem when lawmakers were working on the DHHS budget called into question the data the department provided to lawmakers.

“What I’ve found disturbing about this is that this information was withheld from us at a time when we were reviewing proposals from the governor that would have kicked 65,000 people off MaineCare,” said Rep. Peggy Rotundo, D-Lewiston, adding that lawmakers had been assured that the data provided by DHHS was accurate. 

She added, “There’s a level of trust that needs to exist between the legislative and the executive branches. That trust needs to be repaired.”

Mayhew stressed that communications between her and program directors had to improve. She said the glitch had been identified as one of 1,600 reported defects with the system; however, its significance had not been communicated, or perhaps even fully understood, by her program directors. 

“On behalf of the entire agency, let me assure you that there was no intent to withhold information from this committee,” Mayhew said. 

Issues with payments going to ineligible Medicaid recipients had been identified by state auditors beginning last summer.

State Auditor Neria Douglass said the full audit for the 2010-11 fiscal year isn’t due until the end of the month. However, Douglass said that as auditors encounter errors — such as benefits to ineligible recipients — members of her team inform the appropriate program directors at DHHS.

Douglass said she first began hearing from her staff about potential wrongful Medicaid payments last summer. 

Mayhew acknowledged that state auditors had expressed concerns about the “lack of action” on some of the identified problems. However, she said, communication in her department wasn’t what it should have been. 

She described the directors as working “inside of silos” instead of communicating with each other, or with her.

It’s also possible that the program directors were inexperienced. Mayhew said earlier this week that the program managers who would have been notified of the problem were the director of MaineCare Services, the MaineCare finance director and the director for the Office of Family Independence.

The directors are political appointees of the governor. Gov. Paul LePage, in an effort to implement his new policy initiatives, last year jettisoned a host of program directors from DHHS, including all three directors from the aforementioned offices.

Two of the replacement directors were new to the agency. A third was promoted from within DHHS.

Additionally, implementing the state’s new Medicaid eligibility system has proven problematic. Mayhew said her staff had been “drinking from a fire hose” since the system was installed in 2010. 

Of the 1,600 defects in the system, 1,300 have been addressed. 

Mayhew said a fix for the current computer problem has been identified but not yet implemented. 

The state in 2010 upgraded its eligibility system. It was recently certified by the federal government. However, its payment system is more than 10 years old. 

Problems with the state’s Medicaid eligibility and billing systems are not confined to this year, or to the LePage administration. The Baldacci administration faced multiple issues with the DHHS systems and invited federal scrutiny. 

In 2005, doctors were forced to turn away MaineCare patients because the state was too slow in reimbursing claims. 

Over the next four weeks, DHHS staff will try to determine how many ineligible individuals continued to get taxpayer-funded health care coverage because of the glitch. 

The Legislature was supposed to begin addressing another funding gap for fiscal year 2013. However, work on that budget will likely be delayed until Mayhew presents her fiscal analysis of the ineligible Medicaid recipients.

Removing the 19,000 ineligible recipients is likely to reduce the 2013 funding gap.

The Legislature is scheduled to adjourn in early April.

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