Friday, 18 October 2013 13:01
Kennedy says feds could kill Jindal's Charity privatization maneuver
Written by 

Kennedy-interview2The reason advanced by the Jindal Administration for privatizing Louisiana's charity hospitals is that a private hospital like Lafayette General or Ochsner, for example, can manage a hospital more efficiently, and therefore cheaper, than the state.


That's why I was taken aback when the chairman of the private entity taking over the Shreveport state hospital testified before the Joint Legislative Committee on the Budget that the private contractor's costs to run the Shreveport facility will be the same as the state's. Where, then, will the Jindal Administration's promised annual savings of $150 million come from if not from achieving operational efficiencies?


Dig deeper into the details and it becomes apparent that the planned "savings" won't result from lower costs but from getting more money from the federal government through an accounting change. This won't make the charity hospitals or Louisiana's Medicaid program, which pays for the hospitals, more efficient. It will just make them more expensive, fueled by additional federal (American taxpayer) money.

Here's how the new financial strategy will work. Medicaid, which is government health insurance for the poor, is a federal-state program. The states run it but the feds put up most of the money. In Louisiana, for every $1 in state taxpayer money we contribute, the feds contribute $2. The more money we put up, the more money the federal government contributes.

Under the Charity Hospital privatization, the state will "lease" the charity hospitals to private hospitals, which then will be responsible for treating our low-income and uninsured citizens. The state will pay the private hospitals to do this with large amounts of federal money from our Medicaid program. The private hospitals will then return some of those federal dollars to the state as "lease payments." The federal dollars paid to the state as "lease payments" now become new state dollars, which the state can use to draw down even more federal money.

This accounting maneuver is undeniably clever. The question is whether it is legal. It must be approved by the federal Centers for Medicare and Medicaid Services (CMS).

Louisiana's track record with CMS is not good. CMS has previously rejected similar financing strategies designed to leverage federal money. In the early 1990s, for example, Louisiana and other states adopted financing strategies such as "provider taxes," "provider donations," and "intergovernmental transfers," designed to launder federal Medicaid funds into state funds in order to draw down more federal funds. CMS and Congress spurned them all. (The Medicaid Disproportionate Share Hospital Payment Program: Background and Issues, The Urban Institute, No. A-14, October 1997).

In fact, Louisiana was more aggressive than most states in trying to leverage federal dollars. Our health care budget grew from $1.6 billion in 1988 to $4.48 billion in 1993. 90% was federal funds. The amount of money actually contributed by the state during this period declined from $595 million to $462 million. (Washington Post, 1/31/94, A9).

When CMS and Congress stepped in to stop what then Congressman Bob Livingston called Louisiana's "abuse" of Medicaid financing, and, in Livingston's words, the "unjustified and unwarranted benefits" came to an end (The Advocate, 2/6/97, 1A), newly-elected Gov. Mike Foster was faced with a $1 billion deficit in the health care budget. To clean up the mess, Foster appointed Bobby Jindal as DHH Secretary, who sought special relief from Congress. As The Advocate newspaper editorialized, "Louisiana pleaded guilty as charged, threw itself on the mercy of the court and got off easy," because "the state for years ran a scam using 'loopholes and accounting gimmicks' to justify fantastic increases in federal payments." (The Advocate, 4/29/96).

Perhaps this time is different. Perhaps CMS will view the new "lease payments" being used to obtain additional federal money more favorably than the strategies CMS has rejected in the past.

One thing's for certain, though. We need to find out. The state should seek CMS review of its new strategy immediately-not "soon" as DHH has promised-but now. Until then, our entire state health care delivery system for over 2 million of our people is at financial risk.

by John Kennedy, Louisiana State Treasurer 

 

Login to post comments
  • Despite 5th plea, Schiff says House Intelligence Committee pursues Flynn's documents
  • Facebook Live: Discuss harm of Trump budget proposal on Louisiana coastal economy, restoration
  • Governor Edwards welcomes Pence with Medicaid, budget, Louisiana coast wishlist
  • World Premiere tonight in N.O. Bilderberg, the Movie

flynn2Despite General Michael Flynn’s announcement via his counsel that the General and former head of National Security, would take the 5th Amendment in Congressional proceedings, the Intelligence Committee will pursue information, regardless.

Read More

560 usgs land loss map 2The efforts to rebuild the Louisiana coast has suffered a major and immediate setback, assuming that Congress goes along with the most recent budget proposal from President Trump.

Read More

penceToday, Governor John Bel Edwards welcomed Vice President Mike Pence to Louisiana as he Veep is attending a event with top Louisianqa Republican officials. Along with the welcome, however, is a wishlist of requests including an item of recent vinctage involving the current Trump budget which tears a hole into the funding for the Louisiana coastal restoration. 

Read More

bilderbergIt is always an honor when a movie premiere is held in New Orleans and tonight is no exception. At 7:30 p.m. Bilderberg, the Movie will premiere at the historic Prytania Theatre, 5339 Prytania Street.

Read More

latter-blum2

Sen. Appel talks budget, economy

TRUMP TALK

Dead Pelican

Optimized-DeadPelican2 1 1