Chasing bugs | As DHHS works to solve its Medicaid billing problem, it seeks reforms to prevent a repeat of the crisis

In his eight-year tenure in the Legislature, Rep. Kevin Glynn says he hasn't seen a bigger screw-up than the one that debilitated the Maine Department of Health and Human Services' MaineCare program. The problems started in January 2005, when the new computerized MaineCare billing system built to handle millions of reimbursement claims submitted each year from the state's health care providers proved a bust. That billing system meltdown has for more than 20 months been a thorn in the side of the state's 7,000-plus health care providers. "This is the biggest blunder I have ever seen," says Glynn, an outspoken critic of the DHHS billing fiasco who represents part of South Portland. "This is the worst thing to ever have happened to the health care system in Maine."

Glynn, a Republican, is just one of a chorus of voices who've complained about the problem, from providers angry about unpaid bills to health care professionals shocked by what they see as a textbook case of governmental mismanagement. In fact, CIO magazine in April published a richly detailed case study of the crisis, calling the state's approach to building a new Medicaid billing system a "classic example of how not to run a massive project."

The computerized billing system for the MaineCare Medicaid program was launched after years of behind-the-scenes work by DHHS staffers and consultants from CNSI, the Rockville, Md.-based company hired to build the software program from scratch. The system was the keystone in Maine's strategy for meeting federal Medicaid guidelines for patient privacy, and one that, theoretically, would streamline the way health care providers submitted their paperwork and got paid for the work they did with Maine's MaineCare recipients.

By now, it's common knowledge that the system didn't work. The computer failure threw DHHS's Medicaid division into a tailspin by arbitrarily suspending hundreds of thousands of provider claims and tying up hundreds of millions of dollars in reimbursements to health care providers. Doctors, dentists and other providers relying on a steady stream of reimbursement checks from the state suddenly found nothing but bills in their mailboxes. "It's been unbelievably disastrous," says Kellie Miller, executive director of the Maine Osteopathic Association.

All told, the system for which Maine DHHS initially agreed to pay $14.3 million is expected to carry a price tag of more than $56 million by sometime next year, when DHHS officials believe it will be fully functional. The billing problems required the state to send more than $500 million dollars of ad hoc interim payments to providers to cover the checks they should have been receiving. It's also put additional financial strain on a Maine health care system that many say is already overburdened and underfunded — and it's a bill the state is still paying. DHHS in early August announced it had hired more than 40 additional workers — at a cost of $3.8 million — to help with such tasks as handling claims questions from providers.

What's more, the ongoing MaineCare billing problems have been a significant black eye for DHHS, according to many in Maine's health care community. Whether DHHS deserves that tarnished reputation depends on who's doing the talking, but in many respects it doesn't matter. Perception is reality, and DHHS's false steps and miscues during the past 20 months have helped detractors paint a target on the agency's back. It's a situation that's grown well beyond simple glitches in an error-ridden computer system. Instead, it raises questions about whether DHHS has taken the right steps to reform itself in the wake of what most people agree was a department-wide failure. What have been the lessons learned, and has the agency internalized those lessons, filtering them down through its ranks?

At first blush, the agency has come a long way since January 2005. DHHS's detractors aren't nearly as venomous as they once were, and many applaud DHHS for unleashing a phalanx of administrators, IT professionals and consultants on the problem. Meanwhile, more and more claims are being successfully processed: According to Commissioner Brenda Harvey, who took over as the interim head of DHHS in January after the resignation of former commissioner John Nicholas, the system is successfully processing 92% of all submitted claims, a threshold she says is standard for the industry. "There's noone involved in this that would say this isn't something we wish wasn't in our history," says Harvey. "DHHS has major challenges on its hands, but we're managing it. We understand what we need to do and we've committed personnel to doing it."

But others say that while those efforts are appreciated, providers still worry about the long-term impact of the billing meltdown. For starters, they say, DHHS still hasn't fully fixed the problem. "As much as there are steps forward, there are still a number of steps backward," says Mary Mayhew, vice president of government affairs and communications for the Maine Hospital Association. "We're pleased that there are still considerable efforts to make the needed changes and improvements, but there are major concerns that linger for us."

For Mayhew, those concerns include Maine hospitals still waiting on roughly 180,000 claims erroneously suspended by MaineCare computers. According to Glynn, the state still owes hospitals as much as $350 million in unpaid claims.

But others worry that this computer problem may leave a lingering mark on Maine's health care system. "Who's going to accept a MaineCare patient now?" asks Glynn, who sits on the Legislature's Committee on Health and Human Services. "The damages that have been done are going to affect Maine's health care system for the next decade."

Walking away from MaineCare
Largely lost in the debate over the agency's management of its Medicaid billing system is the fact that DHHS is more than the guardian of the MaineCare program. It's a sprawling state agency with roughly 4,000 workers handling everything from health care access to suicide prevention. DHHS was formed through the 2004 merger of the Department of Behavioral and Developmental Services and the Department of Health Services. Its bureaus include the Office of Elder Services and the Office of Substance Abuse, as well as programs for mental health and disease control. Its MaineCare division, the Office of MaineCare Services, handles the state's roughly 270,000 Medicaid recipients, whose low incomes or other factors — pregnant women, for example — qualify them for the federally funded program.

In that regard, the billing system failure that brought a torrent of criticism down on the agency was just one institutional mistake from a large organization that otherwise was operating like normal. But that was no salve for the thousands of health care providers who were not receiving their scheduled reimbursements. "Suddenly, claims just stopped," recalls Douglas Jorgensen, a physician at Manchester Osteopathic Healthcare.

The issue is more complicated than a typical non-payment situation, says Jorgensen, because providers don't have the same recourse in disputes with DHHS as they would with a private insurer. "If this was an Anthem or a Cigna, we would have gone to the Bureau of Insurance and taken legal action by now," he says.

Instead, providers like Jorgensen have had to find ways to balance their books without regular reimbursement checks. Some providers opted to ride out the storm while others took out short-term loans to cover the shortfall and keep their practices afloat.

DHHS has been trying to alleviate the financial strain on health care providers by issuing interim payments based on estimates of past reimbursement amounts. But that program also has come under fire because it requires providers to return those interim payments — sometimes before the original reimbursements are made. As of mid-August, the state had sent out more than $509 million in interim payments and recovered just $271 million.

Unfortunately, the easiest way for providers to stop the bleeding on their bottom lines has been to simply see fewer MaineCare patients. "Call any doctor's office you want," says Glynn. "I can't find a dentist that will accept MaineCare patients. Pediatricians are starting to close their doors, too."

For his part, Jorgensen says MaineCare patients make up between 15% and 20% of his practice, and estimates the state still owes him more than $46,000 in unpaid claims. (He refused the state's interim payments, saying he didn't want to be held accountable for paying that money back once DHHS untangled its billing system.) Jorgensen has stopped accepting new MaineCare patients.

Maine is one of only 11 states with 20% or more of its population eligible for Medicaid benefits. If fewer providers accept MaineCare patients, it could leave a significant portion of the state's population without health care options. "From my perspective, it's dramatically changed access to health care in Maine, whether we notice it or not," says Mayhew of the MHA. "No one's seeing it yet, but it's there."

Glynn argues that because it's becoming harder for MaineCare recipients to find providers willing to accept new patients — or any MaineCare patients at all — the next option for many is to go where they can't be turned away: the emergency room at the nearest hospital. Problem is, that means more traffic in Maine's emergency rooms, which already are suffering from overcrowding. (In fact, at least three hospitals have announced in recent weeks plans to expand their ER facilities as a result of steady increases in visitors.

It also means the cost of each procedure ratchets up significantly because of the steeper price tag on emergency care. "Now, the ER is filled with people who shouldn't be there," says Glynn. "Not only do you have the fact that providers aren't getting paid, but now the cost of health care goes up."

Computer fixes and institutional changes
Not everybody is convinced that DHHS's billing system issues are the primary reason doctors are shying away from treating MaineCare patients. "I think the system really caused headaches and staff time and a loss for providers, but I think there are more general problems with Medicaid underfunding," says Rep. Hannah Pingree, a Democrat from North Haven.

Medicaid is a notoriously tricky federal program with a veritable maze of rules and regulations. Even without suspended reimbursement claims, providers don't typically look upon Medicaid patients as moneymakers (or even ways of breaking even). "Medicaid and what it pays physicians has always been a matter of contention in most states," says Andy Coburn, director of the Institute of Health Policy at the University of Southern Maine's Muskie School of Public Service. "The prevailing view among physicians and other providers is that Medicaid seriously underpays providers for the care they provide."

Nationwide, providers increasingly are shying away from Medicaid recipients because of reimbursement issues. According to the Center for Studying Health System Change, a Washington, D.C. policy research organization, 14.6% of physicians during 2004-2005 were not taking new Medicaid patients, compared to 12.9% during 1996-1997. Most providers not accepting new Medicaid patients cited heavy paperwork requirements and low reimbursement rates for their decision.

In Maine, errors with the DHHS billing system are the last straw for some physicians. "It's hard to lay blame completely at the feet of this computer issue, but it's absolutely exacerbating problems throughout the state," says Mayhew.

Whether the billing issue will continue to impact health care in Maine remains to be seen, however. But the challenge of fixing the problem — and how quickly DHHS acts — can be seen as a proxy for the challenge of repairing the state's entire health care system.

To that end, Commissioner Harvey, since taking over the agency late last year, has instituted a number of organizational changes aimed at ferreting out inefficiencies in the system. For example, she explains that although the computer billing issue at its core was an IT issue, more oversight was needed from the agency's administration. "Medicaid is a very complex reimbursement structure, which makes the system that we're building so complicated and sophisticated," she says. "The people who understood those dominos needed to be involved in the front end with the IT people."

Harvey has put together a group to oversee the billing system repair process, which includes Rebecca Wyke, commissioner of the Department of Accounting and Financial Services, and J. Michael Hall, DHHS's deputy commissioner and director of the MaineCare program. (Hall also is the agency's link to the federal Centers for Medicaid and Medicare Services, which is intimately involved in the MaineCare billing issue.) Harvey also has appointed day-to-day project managers and IT heads in a bid to provide more oversight for the process.

In addition to using that group to manage internal issues, Harvey has scheduled a slate of regular meetings in hopes of keeping interested parties — from legislators to doctors — apprised of developments with the billing system. Harvey's group meets weekly in Augusta — every Wednesday at 5:00 p.m. in order to minimize work-related no-shows — while bi-weekly meetings are held with roughly 30 providers and directors of industry groups like the Maine Medical Association. "We're not solving all problems overnight, but we're making significant efforts in communicating all problems," says Harvey. "Meeting face to face and talking to each other is one of the greatest strengths we have in Maine."

What's more, 22 new workers were hired this summer to handle provider assistance and call center help, and a new computer listserv gives providers breaking news on billing updates and other need-to-know information. "What I hear from providers when I speak with them, there's no question about our commitment to making this easier," says Harvey.

Harvey admits that there still will be work to do once the billing system is fixed. Primary on the punch list will be nurturing back to health the agency's relationships with Maine's community of health care providers. But she hopes that a working MaineCare billing system will go a long way to making those providers happy. "I'm hoping that getting to the end of this, we have a system that's driving positive long-term changes in health care," she says.

Indeed, most interviewed for this story acknowledged the efforts made by DHHS, with many noting steady improvements in the way the agency has tackled the backlog of claims. Still, many in the health care industry say the computer malfunction was so disruptive that DHHS has exhausted its reserve of goodwill. And, they add, having a strong, trusting relationship between providers and DHHS is key to a strong health care system.

Until that relationship can be mended, however, it's just another broken link in the system. "They made a mistake, and they made a colossal one," says Glynn. "[DHHS] can repair its name by fessing up, laying out an action plan with calendar dates and holding people accountable to those deadlines. Until then, they'll never have people's confidence again."