Legislators call for answers after learning of agency’s $20M budget hole

PROVIDENCE — A day after the Raimondo administration went public with a long-running federal compliance problem at the state hospital that has produced a $20-million budget gap, the House Finance Committee is demanding answers.

At 9:14 a.m. on Thursday, the budget-writing committee chaired by Newport Democrat

Marvin

Abney posted notice of a hearing Wednesday on the “new deficit projection’’ and the findings of a ”federal funding compliance review.“

Abney and his Senate counterpart had expressed their dismay and frustration a day earlier, after the Raimondo administration acknowledged, for the first time, that it had not billed Medicare or Medicaid for reimbursements for patients at the state-run hospital for more than six months.

The problem stems from a federal prohibition against having more than 50% of the state’s general hospital population in psychiatric beds.

The state has acknowledged it was out of compliance between August and Feb. 11.

The discovery came as a result of a restructuring of the agency’s financial operations, after an investigation that revealed a top-level agency official had stolen $220,602 before committing suicide.

When internal finance staff discovered the problem, the state suspended billing for federal reimbursement dollars.

The state says it hired Manatt, Phelps & Phillips LLP, a law firm with “expertise in healthcare and other complex industries, to review [state Department of Behavioral Healthcare, Developmental Disabilities and Hospitals] billing practices. The contract allows for spending up to $300,000. To date, Manatt has been invoiced for $90,157.”

The Raimondo administration has not yet made any of the findings public.

“In addition to the sheer magnitude of the money at stake here, I am troubled by the lack of disclosure,’’ Abney said Wednesday.

“The problem appears to date back to last summer, and the Administration has had numerous formal and informal opportunities to alert us to the potential problem. The Governor submitted a revised spending plan to the Legislature in January that doesn’t even hint at the problem, let alone provide for a contingency funding plan.”

Echoed Senate Finance Committee Chairman William Conley: “It is incredibly frustrating to be learning now of a significant budget shortfall in the current year budget.

“It is the responsibility of the Administration to understand and comply with federal laws related to our hospitals and Medicare billing. Apparently, the Administration has known since at least August that there would a significant budgetary impact. Yet, the Governor proposed a supplemental budget that made no provision to address what should have been an anticipated shortfall.”

Officials with the state Department of Behavioral Healthcare, Development Disabilities and Hospitals appeared before the House budget-writing committee as recently as Feb. 13 without mentioning the billing suspension or the potential $20-million budget gap.

Following a series of Journal inquiries to BHDDH over the last eight days, Jonathan Womer, director of the state Office of Management & Budget, sent the two legislative finance committee chairmen a letter spelling out the problem. kgregg@ providencejournal.com

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