AUBURN — Nearly 20 public school systems in Maine are being asked to repay often sizable MaineCare funding from the Maine Department of Health and Human Services.

Robert Nadeau, a lawyer representing 12 of the school systems, including the Auburn School Department, said he’s aware of more than $2 million the department is trying to recoup from schools. The money is from 2010 through 2012, Nadeau said.

For Auburn, the amount in dispute is $379,000. The figure could punch another hole in an already strained budget that has failed at the polls twice this summer.

The ongoing dispute involves services provided to special education students that were paid for by the state’s Medicaid program, MaineCare. A DHHS audit determined the schools either did not correctly document the services or the services they billed for were not eligible as medical expenses.

John Martins, a spokesman for the department, said DHHS could not provide a list of the schools or other details because many of the repayments are being appealed.

The schools have said they are obligated to provide the services under both state and federal mandates and previously were allowed to bill for those services.

A memo from DHHS Commissioner Mary Mayhew to the Legislature’s Education and Cultural Affairs Committee details concerns from the federal government that were identified by the Centers for Medicare and Medicaid Services during a 2010 assessment of Medicaid services being provided by schools in Maine.

“During this assessment, it was discovered that many of the services provided were primarily educational in nature and did not fit the definition of medical necessity as required by (the Centers for Medicare and Medicaid Services),” Mayhew wrote. “Also, many of these services were being delivered by staff that did not hold the required credentials.”

A subsequent audit by the federal Office of the Inspector General determined DHHS was not adequately monitoring the claims being submitted by schools, which resulted in paying for services that were either ineligible for coverage or not documented correctly. To remedy this, the state’s Office of Program Integrity began individual audits of school billing practices, Mayhew wrote.

In her letter to the committee, Mayhew noted that the results of many of those audits were being disputed. She also wrote that the details of the audits could not be provided to the committee until the disputes or appeals were resolved, citing “Ex Parte Communication” laws.

“Out of concern for due process for cases that are actively under appeal and review, we cannot speak about individual cases or about the scope of potential violations and issues within those cases,” Mayhew wrote.

Even so, school districts that have billed for those services and have been paid for them are being put on notice by DHHS, Nadeau said.

He said Wednesday that DHHS is willing to allow districts to pay back the debt over time, so the immediate impact on budgets would not be so difficult.

Nadeau said schools are disputing the debts because they were not given clear guidance on how to bill for services they were previously allowed to bill for after a set of rule changes in 2010.  

Under the state MaineCare handbook, two sections that allowed schools to bill for special education services were eliminated and the schools were directed to bill those services under a different section of rules.

Nadeau said DHHS did not provide clear guidance to schools on how to achieve this, and that after schools requested that guidance, DHHS still did not provide it. The schools did the best they could, he said.

He said DHHS maintains that schools were unable to provide adequate documentation for the services they provided and billed to MaineCare.

“We don’t agree with them that the documentation was inadequate, but that is their position,” Nadeau said.

He said DHHS is seeking to recoup 95 percent of the payments it made over the two years. 

“Basically, what DHHS is saying is the school districts need to repay almost all the money they received for the audit period,” Nadeau said. “The thing that’s maddening about this to me is if you look at the MaineCare rules, the rules actually allow DHHS to recover a lesser amount. Rather than recover the 95 percent or the 100 percent, they have the ability to recover up to 20 percent.”

Most of the costs in Auburn were for students with behavioral or emotional impairments for which they required additional help to get through the school day. In the past those costs, outside the costs of instruction and programming, were billed to MaineCare, according to the district’s special education director, Laurie Lemieux.

“Everybody knows these services are medically necessary,” Nadeau said. “It’s not like we are billing them for teaching or education, we are billing them for medically necessary services to help these kids get through the medical issues they might have so they can take advantage of the educational setting.”

Lemieux said Auburn doesn’t view the costs as an “overpayment” by the state because they feel the services were provided and allowed under both state and federal Medicaid rules.

“They didn’t like how we documented,” Lemieux said. “How we documented the need is what they didn’t like.” She said the state hasn’t said how it wants schools to document the need. She said DHHS did not approve of certain assessments the school used to determine need but didn’t say which assessments they would prefer.

“They tell us the what but not the how,” Lemieux said.

She said the costs were unlikely to go away and if they were not paid for by MaineCare, which is funded in part by the federal government, then the funding would likely come from the school’s general fund budget.

“If we can’t get any of them covered through Medicaid, we still have to provide the services,” she said. 

The money would either come from state aid to the Auburn’s school system or from the portion paid by local property taxes.

She said schools are in a difficult situation because they were “encouraged” by the state to bill for the services through MaineCare. 

“I just wish everybody would work together as best as they can to try to resolve this,” Lemieux said. After the rule change in 2010, she said, schools “tried the best they could to keep up with that and be able to use the resources that were available to us to support kids and now we are being told what we did wasn’t right.”

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