By SUSAN M. COVER
Staff Writer Friday, January 12, 2007

In an interview Thursday, Harvey said she's meeting with three companies that routinely perform this type of billing for other states. More than 30 states hire fiscal agents to do the work, she said.

Hiring a vendor would result in the elimination of 100 jobs from the department.

"My goal is, less than a year from now, we will have a plan in place that has full federal support, and that I can divert my attention to the other issues of this department," said Harvey, who inherited the problems when she took over as commissioner in the spring of 2006.

More than a year earlier, in January 2005, the state switched to a new system to handle Medicaid claims from more than 7,000 service providers across the state. Those service providers include nonprofits and businesses that help the mentally ill, mentally retarded, former inmates, nursing home residents, and low-income children who need dental care.

The system did not function properly, leaving many providers without reimbursement checks, or with payments in the wrong amount. After several months, some closed their doors and others started to receive estimated payments to keep them afloat.

After an initial contract price of $22 million, the state has now spent more than $50 million on the system.

The system currently in place is working for most claims, Harvey said, but not all. Because the state hasn't been able to make all of the upgrades deemed necessary by the federal government, the system cannot be certified. Without certification, the state isn't eligible for money that could be used to help pay for development and implementation of the system.

The two-year budget proposed last week by Gov. John Baldacci allows the department to hire an outside company to handle the billing, and to move 100 positions from the state's billing department to other positions, Harvey said.

"It's premature to say we're scrapping (the system)," she said. "That's not where we are. It may be an outcome. I can't tell you it is or isn't.

"Even if we decide we would be going with an entirely different system, we continue paying claims in the interim."

Local service providers say they understand that a change may be necessary, but worry about going through yet another switchover.

"I certainly am very skeptical, from what I've seen so far, that the (current system) is going to be fixed," said Charlene Kinnelly, executive director of Uplift Inc. in Gardiner. "It just doesn't seem realistic."

At one point in 2005, the state owed Uplift, which provides services for the mentally ill and mentally retarded, $250,000 in back payments.

Kinnelly said the billing system is doing well now, though some changes to the system over the summer once again disrupted her payments.

"The concern, of course, is another switch," she said.

For Mark Tully, executive director of Community Correctional Alternatives in Waterville and Farmington, payments are coming in "fairly regularly."

As for the prospect of a new vendor handling payments, Tully said he just wants to make sure he can count on the money coming in on time.

"The only concern we would have is, would there be another problem with enrolling and having payment interruptions?" he said.

Harvey said avoiding those kinds of problems is one of the details she would work out with a potential vendor.

"We are very cognizant of the experience providers have had," she said. "We will do everything in our ability to mitigate any further challenge to them."

For lawmakers, it's time to do something different.

"I think we need to do something serious," said Sen. Joseph Brannigan, D-Portland, chairman of the Health and Human Services Committee. "A serious change is in order to make this right."

Rep. Sarah Lewin, R-Eliot, a member of the committee, criticized the state's actions to date.

"I think it's a shame we wasted $50 million while we fiddled around with something we couldn't handle," she said.

Because of the problems with the payment system, some doctors decided to stop accepting Medicaid patients.

Lewin said her allergist is the only one in York County that continues to treat those on Medicaid, and the state owes that office $25,000.

"I have personal knowledge that the nonsense goes on," she said.

Susan Cover -- 623-1056

scover@centralmaine.com