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The state's Medicaid system overpaid health care providers or failed to obtain federal reimbursement for a potential loss of millions of dollars, according to auditors.

In addition, Maryland auditors found that the state agency that coordinates services for the developmentally disabled paid care providers $235,000 for eight clients who were deceased when those services were reportedly provided. Those cases have been referred to the criminal division of the Maryland attorney general's office.

The revelations were reported in two audits of the Department of Health and Mental Hygiene, one of the state's largest agencies, and the findings were the subject of a legislative hearing Tuesday in Annapolis. Several lawmakers stressed the need to recover any misspent money, noting that the state faces a gap of up to $2 billion next year.

"The state is entitled to these funds, and these are tough times," said Bruce A. Myers, the state's legislative auditor. Maryland Health Secretary John M. Colmers defended his department's record but acknowledged that even relatively small mistakes in the $6 billion Medicaid program - a joint federal-state undertaking - represent large dollar amounts. He also said the computerized claims system is antiquated and should be replaced at a cost of $50 million over three years.

According to auditors, about $98 million might have been paid improperly to Medicaid providers during a nine-month period because computerized safeguards were disabled. Department officials said they believe that $17 million or less was paid improperly.

At the disabilities agency, auditors found that officials lost the opportunity to obtain $3 million in federal reimbursements under Medicaid because they did not submit corrected claims on time.

Auditors also found that a list of about 17,000 individuals waiting for services might not be accurate. The waiting list, used to determine budgetary needs, included the names of at least 250 who were deceased, according to a departmental review. Auditors also found that some providers billed for services for dead clients, including one who paid more than $70,000 for care of a client who had died five years earlier.

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