Possible Revenue for FY15 Supplemental Budget

Today the Appropriations committee held a public hearing on revenue and other proposals for the FY15 supplemental budget.

Cash management

Sen. Flood shared a proposal to change how DHHS pays DRG and APC payments to medical providers. Currently DHHS pays claims within 7-10 days. Federal prompt pay rules require payment within 30 days.

Sen. Flood’s proposal slowly moves payments from 7-10 days to up to 21 days. The intention is not to create debt but to allow DHHS flexibility in cash management.

One estimate of the one-time savings provided by this proposal is $20M.

Bond structuring

Also shared was a proposal to structure the upcoming bond issuance to reflect 9 payments over the 10 year life of the bond. This proposal has the potential to limit bond capacity for the upcoming ten years. Structuring the bond in this manner may generate one-time savings  of $8.4M.

Surveillance Utilization Review (SURS)

Rep. Rotundo proposed a means to address provider based fraud in the MaineCare program.

Surveillance and Utilization Review (SURS) – Detecting and eliminating large scale fraud in public assistance programs

  • Implement a robust surveillance and utilization review of Medicaid payments to providers and consumer uses of Medicaid services to determine the extent of fraud and abuse in the Medicaid System and secure repayment of state and federal funds that have been erroneously expended.
  • The Surveillance and Review will be conducted by an independent entity experienced in surveillance and utilization review.
  • The goal is to secure repayment of $7 million in state funds.
  • According to the National Council of State Legislatures [NCSL], “fraud and abuse account for between 3% and 10% of Medicaid payments nationwide, yet the average state recovery rate id only 0.09 percent.”
  • The range of the states’ recoveries of fraudulent Medicaid payments, however, is from less than 0.01 percent to a little more than 1 percent because most states have not invested in fraud recovery and prevention programs.

Healthcare fraud and abuse includes, but is not limited to:

o   Billing for services not performed,

o   Falsifying diagnoses,

o   Billing for more costly services than performed,

o   Accepting kickbacks for referrals,

o   Ordering excessive or inappropriate tests,

o   Overstating the insurer’s cost in paying claims

o   Billing for covered services when non-covered services are performed,

o   Billing for individual therapy sessions for each person attending the group session,

o   Insurance company misleading enrollees about health plan benefits.

  • In Maine a review of State Auditor findings over the past years shows:

o   58 findings of non-compliance and significant deficiencies in DHHS compliance with accepted financial procedures and fraud control.  Most findings are recurring deficiencies.

  • Including: “inadequate surveillance and review of Medicaid services,” “Inadequate controls over provider eligibility requirements,” etc.
  • The most efficient and effective approach to address provider fraud is to contract the investigation to a professional audit organization. The contract can be funded from the savings from the investigation.

MaineCare Forecasting Commission

Rep. Carey shared a proposal to increase confidence in the method of forecasting the funds necessary to support the MaineCare program. Building on the success of the Revenue Forecasting Commission and the Consensus Economic Forecasting Commission it is proposed that a similar group be established for MaineCare. This session and the last has been marked by decreased confidence in the information provided by DHHS when they choose to provide information.


The Maine Association of Community Service Providers testified in support of payment restructuring for the purpose of cash management. They recommended instituting a revenue threshold below which the billing cycle would not be changed.

Jeff Austin from the Maine Hospital Association (MHA) testified Neither for nor Against the cash management proposal. As the MHA’s policy committee has not met to consider this proposal he cannot take a definitive position.  Amendments suggested by the MHA include:

  1. Strike reference to title 5, section 5553 regarding payment within a 25 day cap
  2. Change effective date to later in FY15
  3. Allow DHHS to decide if they will do this instead of requiring it
  4. Allow the Department flexibility surrounding which providers are impacted


MHA’s potential support would be in danger were funds not dedicated to FY15 MaineCare uses. MHA provided support for both the SURS proposal and a MaineCare Forecasting Commission.  MHA 04042014

DHHS provided testimony that seems to support Sen. Flood’s proposal. Sam Adolphsen asked that this proposal, if adopted, be coupled with a full $32M appropriation for the department’s FY15 MaineCare supplemental request. DHHS 04042014

Vanessa Santarelli of the Maine Primary Care Association, representing Maine Federally Qualified Health Centers and Rural Health Centers, presented her groups opposition to Sen. Flood’s proposal.


The Appropriations committee will meet both on and off-mic this evening and this weekend to work on the FY15 supplemental budget.

The full schedule may be found here: http://www.maine.gov/legis/ofpr/appropriations_committee/schedule_agendas/index.htm

As always please join the committee in Room 228, listen online at: http://www.maine.gov/legis/ofpr/appropriations_committee/audio/index.htm or watch MPBN’s Capitol Connection broadcast either here: http://www.mpbn.net/News/MaineCapitolConnection.aspx, over the air or through your cable provider.


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