The newly rewritten deals for the private groups that would administer most of the state’s charity hospitals eliminate the funding guarantees that bothered federal authorities, but would allow for an early out, if things go awry, according to documents released by LSU on Tuesday.
The private partner’s obligation to continue providing “core” and “key” services at the LSU hospitals is also more limited than under the now-abandoned cooperative endeavor agreements, based on a summary released by LSU.
The LSU Board of Supervisors is scheduled on Wednesday to take up approval of renegotiated contracts involving LSU operations in New Orleans, Lafayette, Bogalusa, Lake Charles, Shreveport and Monroe.
The changes come in the wake of objections by federal Centers for Medicare and Medicaid Services, called CMS, for guaranteeing the hospitals a higher level of reimbursement for care of the poor and uninsured within the contracts.
CMS, which provides a majority of the health care funding in the state, must approve state plan changes involving Medicaid. The privatization agreements are worth more than $1 billion annually.
The Legislative Fiscal Office said Tuesday that to the extent the altered proposal is not approved by CMS, the potential state liability could be as high as $704 million to the partnership hospitals.
“The absence of a contractual funding commitment by the state, as apparently mandated by CMS, fundamentally changed the parties’ expectations,” LSU’s summary document said. “This fundamental change in the parties’ expectations necessitated fundamental changes to the CEAs (cooperative endeavor agreements, which are the contracts).”
State health agency officials assured that the funding would still be there, but the elimination of the specific financial arrangements made hospital executives a little nervous.
Louisiana Department of Health and Hospitals Secretary Kathy Kliebert called the new route “a model of trusting each other.”
Jindal moved aggressively to privatize LSU hospitals after a sudden reduction in federal funding in 2012. He said that privatization would reduce costs to the taxpayers and lead to improved care for more people, while providing a better medical education experience for future state physicians, nurses and others being trained in the facilities.
Both others criticized what they called the dismantling of the state charity hospital system and a shifting of responsibility to private operators.
LSU still owns the buildings and provides doctors, some of whom are in training. But the state pays private partners to run the hospitals.
The deals required private companies to pay more money at the beginning of the leases and less toward the end of the long-term arrangements. The private companies are paying to lease six LSU medical centers around the state, including those in New Orleans and Lafayette. The new agreements also contain a provision that requires the state to repay some advance lease payments if the pacts end early.
In early May, CMS rejected the Jindal administration initial financing structure that included the lease payments. The state then submitted a new plan that eliminated any link to the $260.8 million in lease agreements.
Under the revised plan, the state proposed to create the new classification of “Louisiana Low-Income Academic Hospitals,” which would get special higher levels of Medicaid reimbursement. The hospitals would get a higher level reimbursement based on how many poor and uninsured are served.
In August, CMS said it didn’t want guaranteed levels of Medicaid funding in the agreements, prompting the contract renegotiations.