AUGUSTA — The state Department of Health and Human Services is $66 million over budget in payments to hospitals, the result of the department’s failure to properly convert to a new payment system last October.

Commissioner Mary Mayhew – who took over at the department in February – briefed lawmakers on the problem this morning. In an interview, she said the error occurred because the department had not taken the proper accounting steps while transitioning from one type of payment system to another.

“Changes to the hospital payment system that should have been made by the previous administration were not made,” she said.

Letters to hospitals were scheduled to go out today. Each hospital in the state is affected differently and the state will adjust future payments to reflect the money already disbursed, she said.

In recent weeks, Mayhew has also informed lawmakers of two funding shortfalls at the department that will likely require a second supplemental budget to get through the end of the fiscal year in June.

One is an increase in Medicaid use and continued problems with a computerized billing system. Those issues could cost the state up to $30 million. Another is a court decision that will require the state to repay the federal government nearly $30 million because in 2002 and 2003, the state overbilled for services provided to children in foster care.