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March 1, 2011

$30M owed to feds complicates budget

By The Mainebiz News Staff

The state must pay the federal government nearly $30 million for overcharging for Medicaid reimbursements, a U.S. District Court judge ruled last week.

Judge John Woodcock found that the Maine Department of Health and Human Services improperly received $29.7 million in federal reimbursements for managing Medicaid cases in 2002 and 2003, and now must pay it back, according to Capitol News Service. While legislators knew about the possible repayment, it will leave a hole in the current budget that ends June 30. Finance Commissioner Sawin Millett told the news service he will recommend to Gov. Paul LePage that the state use money from reserves, or the rainy day fund, which will deplete it by about two-thirds. Other lawmakers expressed concern that reducing the state's reserves would affect its bond rating, and suggested the state include the repayment in the next budget cycle. The Legislature will make the final determination on where the money comes from.

Woodcock's decision settles an appeal the state made over an administrative decision by federal officials, who said the state improperly sought federal funds for Medicaid's targeted case management program. Woodcock ruled against the state, finding the state sought reimbursements for functions not directly related to Medicaid.

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