AUGUSTA, Maine — Department of Health and Human Services Commissioner Mary Mayhew faced grilling from lawmakers Friday over erroneous Medicaid payments as the administration prepared to shake up her department.

Mayhew told the Legislature’s Appropriations Committee that she should have alerted them sooner to a computing problem that led the state’s Medicaid program, known as MaineCare, to continue paying medical bills for up to 19,000 beneficiaries after they became ineligible for the program.

“In retrospect, when I was made aware of the concern and issue pertaining to eligibility, I should have brought it to your attention,” Mayhew said.

Mayhew said she was told about the eligibility problems in late January but the scope of the problem wasn’t clear until she was briefed on its potential impact last week.

Gov. Paul LePage plans to submit a bill next week to restructure DHHS, Mayhew told Capitol News Service on Thursday evening. The overhaul would include consolidating departments and eliminating some positions, Mayhew said.

She would not confirm whether existing employees would be laid off or moved to other positions.

The planned legislation is unrelated to the erroneous MaineCare payments, according to LePage’s office.

Since taking office in January 2011, LePage has swept a host of high-ranking DHHS managers from their positions.

“This is an internal reorganization of the department,” Mayhew said. “Most of the personnel decisions that we make have to be ultimately approved by the Legislature. We have been looking at the structure of the department to ensure that we are accountable for an efficiently structured department that can maximize taxpayer dollars to support the delivery of services and benefits.”

DHHS administers a range of health and social services including child welfare, food stamps and oversight of public drinking water. The MaineCare Services division oversees more than 20 subdepartments.

The restructuring legislation would result in savings within DHHS, Mayhew said, declining to be more specific.

She told lawmakers she’s still trying to nail down a dollar figure on the bad MaineCare payments, which accumulated over the last year and a half. The federal government, which foots the bill for two-thirds of MaineCare costs, is expected to come calling for its share of the erroneous payments.

The computer system that pays MaineCare claims has been plagued with problems since its launch in 2010. The system never was designed to “talk” to a separate system that tracks eligibility, which is now more than a decade old, Mayhew said.

Beginning in September 2010, 19,000 MaineCare recipients were notified that they had lost eligibility. But their MaineCare cards remained active, so they could still visit the doctor and receive other medical services. Health providers, which received the mistaken payments, had no way to know those patients no longer were eligible.

The ineligible beneficiaries with active MaineCare cards represent about 5 percent of overall enrollment, Mayhew said. Determining the financial hit from the erroneous payments will involve finding out how many of those people continued to get health care after losing eligibility.

The MaineCare payment blunder has cast doubt over state budget figures just two weeks after Republicans and Democrats reached uneasy agreement on closing a $120 million shortfall in DHHS this year. Lawmakers are still trying to resolve another $80 million gap for the next fiscal year and it will be at least a month before they know the financial impact of the erroneous payments.

Sen. Dawn Hill, a Democrat from York, said audits raised red flags about the computer problem as early as last summer. When lawmakers quizzed Mayhew later in the year about unexpected spikes in MaineCare spending, the problem still wasn’t identified, she said.

“Nowhere in that process and in all of those conversations, other than to tell us we had a crisis, were we ever told about the possibility that the count was way off and people may still be on MaineCare who don’t belong there,” Hill said.

Mayhew painted a picture of a siloed department where multiple warning signs about the bad payments failed to make their way up the management chain.

“This is more than an issue of systems not communicating,” she said. “This is more than the design of the system. This is about communications and management of a project and communications through management to the commissioner’s office.”

Gov. LePage on Friday expressed confidence in Mayhew and commended her professionalism and openness during her tenure at DHHS.

“Commissioner Mayhew will do what is required to understand what went wrong — from the technical issues to the way staff made and communicated decisions,” LePage said in a press release. “She has taken on the responsibility to fix this problem which predates this administration and I have full confidence that the commissioner will handle this situation with integrity.”

Lawmakers fired questions at Mayhew for more than two hours. She said she took full responsibility for the MaineCare payment error.

“You may have the worst job in the state of Maine,” said Sen. Roger Katz, R-Kennebec. “Thank you for doing it.”

DHHS has brought in the state controller and the Office of Information Technology to sort out the MaineCare payment problem and review the department’s computer systems. They are expected to report to the Appropriations Committee in four to six weeks.

Jackie Farwell

I'm the health editor for the Bangor Daily News, a Bangor native, a UMaine grad, and a weekend crossword warrior. I never get sick of writing about Maine people, geeking out over health care data, and...