Gov. John Baldacci has signed a $24 million transfer to help pay the bills at the Department of Health and Human Services after the federal government decided to hold back reimbursement on the cost to fix a failed Medicaid billing system.

The transfer was never fully explained to the Appropriations Committee, which last month thought it was reviewing a $1 million request, not a $24 million one. The committee met on June 21 and the financial order approving the transfer was signed by the governor on June 23. The full amount was only briefly mentioned at a Health and Human Services meeting a week later.

Becky Wyke, the governor’s commissioner of finance, said time ran short to inform the committee.

“I don’t think we even had the full number in front of us,” Wyke said. “On Wednesday night (June 21) we were still kind of getting the details. The governor signed it later on Friday.”

The hope is most of the money, which will come out of the medical care services account, will be reimbursed by the federal government later this year. If not, the Legislature will have to deal with it in a supplemental budget when they return next year.

Sen. Richard Rosen, R-Hancock County, who serves on the Health and Human Services Committee, said the first time legislators heard of the financial order to transfer the $24 million was when it was briefly mentioned at his committee’s meeting last Tuesday.

Rosen believes the administration is overstepping its bounds by using money in the Medicaid account to pay for administrative costs.

“The money in the Maine Care (Medicaid) account is for payment of client services. I don’t believe the intent of the Legislature was that money could be transferred out of the Maine Care account to pay for administrative services.”

He said the authority to transfer money from one Health and Human Services account to another, given to the governor by the last Legislature, was also supposed to be in the case where there was a balance left in one and a shortage in another.

“You cannot make a straight-faced argument that there’s a balance that can be transferred. We’re just starting the fiscal year,” Rosen said.

The shortage is largely a result of the federal Center for Medicare and Medicaid Services retroactively rejecting the state’s plan to fix its new Medicaid billing system, which went on line in January of 2005 and immediately started rejecting all the bills entered into it. At the height of the meltdown, there were more than 400,000 claims stuck in the system and tens of millions of dollars going out the door in estimated payments to Medicaid providers.

While the system, after many employee hours and the help of outside consultants, appears to be working properly for most types of bills, the state found out in May the federal government won’t fully reimburse the costs of fixing the computer until it sees an updated plan and timetable for making the system fully operational. The billing system is not, for example, yet able to comply with new federal HIPPA (Health Insurance Portability and Accountability Act) privacy and security requirements.

The state got the news after the Legislature already had passed the supplemental budget for the fiscal year that just ended last Friday, Wyke said.

Rejection of the state’s plan, known in Medicaid circles as the Advanced Planning Document (ADP), affects bills dating back to July 1, 2005.

“Without the ADP approval by CMS, retroactive to July 1, 2005, there is limited federal participation in various aspects of the project,” Wyke said.

Bills the state expected to be paid 90 percent by the federal government, may only get 50 percent reimbursement or nothing, for the time being, Wyke said.

The federal government already reimbursed 90 percent of the original $23 million cost of the computer system that failed.

The goal is to update the plan and get federal approval for all the reimbursements the state had been anticipating. That approval, however, is at least months away, Wyke said.

And, the state needs to pay its contractors now.

The transfer covers $5.6 million in miscellaneous items including system hardware and leases; $4.6 million to the accounting firm Deloitte-Touche; $7 million to Xwave computer consultants; nearly $3 million to the state’s own information technology department; and, $336,000 owed to CNSI, the company that sold the computer to Maine in the first place, along with some smaller consulting contracts.

There is also money in the transfer to hire seven additional staff for the state’s Medicaid office in this fiscal year, to continue investigating claims that were mishandled by the computer system and improve customer relations with the state’s Medicaid providers.