State officials are promising a smooth transition to a new Medicaid billing system, trying to allay fears there won’t be a repeat of the payment nightmare that occurred when the first computer program they bought completely malfunctioned the day it was turned on in January 2005.

“It doesn’t have to be bumpy,” said Dick Thompson, the state’s head of technology. “I won’t say there won’t be something that might happen,” but “you don’t turn it on until it’s totally ready to go.”

Department of Health and Human Services Commissioner Brenda Harvey, who inherited the computer problems when she was named head of the department just about a year ago, is downplaying how much the state wasted with that first system.

Last summer, Harvey’s own department put out estimates showing $56 million had been spent or committed to the failed project. That number has since been revised to $53 million.

On Friday, Harvey told members of the Appropriations Committee, which is in the process of reviewing the Health and Human Services budget, that only $47 million of that amount has been spent so far, but the rest appears to be promised.

Members of the Appropriations and Health and Human Services Committees, apparently at the behest of leadership, did not publicly ask questions last week about the vendor of that original system – CNSI of Maryland – while negotiations are taking place to keep them on board through what is estimated to be an 18- to 27-month transition to an outside billing agent.

Just how much that transition and new system will cost the state is unclear, but the budget shows the elimination of 100 jobs at DHHS to pay for it.

Thompson said CNSI is currently working under a one-month extension of its contract to help the state operate the system they sold it. A plan to extend the contract through the year-and-a-half to 27-month transition to an outside vendor is currently being reviewed by the federal Center for Medicaid and Medicare Services, which will make a decision on whether the state’s latest plan deserves federal funding.

“That is our hope and that is their hope as well,” Thompson said of keeping CNSI around.

He said state employees are now shadowing CNSI employees in Augusta and at the company’s headquarters in Maryland in order to take over the transition to a new system and learn how to operate the old one “in case of an emergency.”

The old system is now paying most of the bills from the state’s 7,000 Medicaid providers. What it can’t do are functions required by the federal government, including processing third-party liability claims; conducting program integrity and fraud reviews; generating usable data for financial and utilization reports; re-pricing incorrectly paid claims; complying with federal compliance requirements; and electronically paying claims for the poorest of the state’s recipients, who get help under both Medicaid and Medicare.

Gordon Smith of the Maine Medical Association implored the Appropriations and Health and Human Services Committee to make sure Medicaid service providers are better treated in the transition to a new system.

“This next transition is going to be as difficult as the previous transition,” said Smith, adding providers like doctors and mental health clinicians “have gone through hell and back, and we’re going to go again.”

At the height of the computer meltdown, more than 500,000 claims were stuck in the billing system and $516 million in estimated or so-called interim payments was sent out to providers – money the state is now trying to collect back. Of that amount, $160 million has been targeted for collection in this fiscal year in order to make the budget balance, and around $83 million has come in so far.

Smith said collectors have been “aggressive” in their efforts to get physicians to pay the money back, but the state’s own records show DHHS still owes more in unresolved claims to doctors than it is owed.

“It is not and has not been our intention to ask for interim payments back from providers who have outstanding claims issues,” said Kirsten Figueroa, deputy commission of finance at DHHS. If that occurred, she said, it was a miscommunication.