AUGUSTA, Maine — Staff members at the state Department of Health and Human Services were aware of a technical flaw in the state’s new MaineCare claims and payment system in August 2010, a month before the system’s launch.

However, the flaw wasn’t resolved until March 2012, after the state had made $10.6 million in payments to health care providers for patients who were no longer eligible for services from the state’s MaineCare program. And while some staff were aware of the flaws before the system was launched, Health and Human Services Commissioner Mary Mayhew didn’t become aware until near the end of 2011. She wasn’t able to quantify the cost for several months after that.

Those are among the findings of a report from the Legislature’s investigative arm delivered to lawmakers Thursday concerning computer system errors at DHHS that led to the state making MaineCare payments to providers for 7,730 patients who were no longer eligible for services. The director of the Office of Program Evaluation and Government Accountability, or OPEGA, presented the report to members of the Legislature’s Government Oversight Committee.

Lawmakers had requested the review in April, about a month after Mayhew told them about the overpayments made between September 2010 and March 2012. The news about the overpayments came as legislators were considering measures to address a $121 million MaineCare funding shortfall.

Democratic lawmakers had accused Mayhew and Gov. Paul LePage’s administration of withholding information from the Legislature. The OPEGA report, however, found Mayhew spent several weeks pressing DHHS staff members to quantify the financial impact of the computer system errors. She told LePage about the systems error at the end of February 2012 and told lawmakers less than two weeks after that without knowing the full financial impact. The financial impact didn’t become clear until the end of April.

The new MaineCare payment system was a replacement for a system that never functioned properly and resulted in health care providers not receiving the payments to which they were entitled. DHHS officials were so focused on making sure the new system addressed the provider payment issues that other issues were downplayed or overlooked, the report found.

“We could see in the system it was given a high priority and rated as severe, but there was a whole slew of other issues,” OPEGA Director Beth Ashcroft said of the computer system error.

The overpayments occurred because the bill-paying computer system did not communicate properly with the system with MaineCare eligibility data, so about 19,000 individuals who were no longer eligible for benefits weren’t removed from the billing system.

When DHHS staff members first discovered the issue, they filed a request with Molina Medicaid Solutions, the contractor, to fix it. However, the issue didn’t end up on the highest-priority list for several months, and it was competing for attention with hundreds of other issues, Ashcroft said. In addition, Molina was given a high degree of latitude to address the problems it saw as the highest priorities, based on the direction it received from DHHS.

“Here’s an issue where, if someone is ineligible and getting benefits anyway, we’re wasting state dollars that could be going someplace else. We’re running the risk that we’ll have to pay back federal dollars,” said Sen. Roger Katz, R-Augusta, a Government Oversight Committee co-chairman. “How can our vendor not think this is a priority to get fixed?”

“They were focused on certain kinds of problems, namely being able to get providers paid,” Ashcroft said of Molina. “Somehow, other types of risks either did not get recognized or did not get the same priority.”

OPEGA did not interview Molina officials as part of its review. Laura Hart, a Molina spokeswoman, said the company is working closely with the state to address MaineCare computer system issues.

“Over the past several months, together we have implemented a process to address and prioritize change orders, controls for more effective governance and increased the frequency of communication between DHHS and Molina Medicaid Solutions,” Hart wrote in an email.

Mayhew also said the system is functioning more smoothly and DHHS has improved its working relationship with Molina.

“This is a very good system, and we have made significant progress,” she told Government Oversight Committee members Thursday. “Our relationship with Molina has improved greatly. There is always room for further improvement, but I believe we are on the right path.”

Government Oversight Committee members wondered how it was possible for a staff member to know about a problem in August 2010 and for the department’s commissioner — who changed during that time following LePage’s inauguration in January 2011 — not to find out about it for more than a year.

“Obviously, there’s a failure to communicate here,” Katz said.

Ashcroft said the department had no firm system in place that dictated which technical issues were communicated up the chain of command from staff members working to implement the new system to managers and the commissioner’s office.

Mayhew told lawmakers that has changed. Today, she said, more issues reach the steering committee that oversees MaineCare computer systems and committee members evaluate them based on the potential financial impact and other risks.

“As we prioritize, we are prioritizing based on a much more comprehensive view based on the impact,” she said.

Sen. Bill Diamond, D-Windham, said legislators who were eager to see DHHS put a new MaineCare system in place hold some of the blame for the malfunctions.

“The pressure was there, and I don’t think [DHHS] would have dared to come back to us in September [2010] before the committee and said, ‘We need to extend this for another couple months,’” he said. “They moved prematurely, and as a result we got a system that didn’t work properly.”