The Legislative Fiscal Office is backing off its projection of potential state savings associated with Medicaid expansion.

The Fiscal Office estimated approximately $55 million in savings in the first year and over five years anywhere between $102 million and $165 million.

But a plan adopted by the 2015 Legislature makes those projections unrealistic, according to a Fiscal Office analysis.

The Fiscal Office change is associated with a legislation under which hospitals would assess a fee on themselves if the state opts to expand Medicaid by April 1. The hospital fee would help pay the state share of the expansion.

The plan — pushed by the Louisiana Hospital Association — also includes a provision that guarantees a “base reimbursement level” for certain Medicaid payments, including uninsured care.

The guaranteed reimbursement level won’t allow uncompensated care to be reduced in future years to the degree the Fiscal Office projected, analyst Shawn Hotstream wrote.

“Based on this provision alone, the short-range savings ... associated with Medicaid Expansion are likely to be diminished significantly,” Hotstream said.

Hotstream did not provide a new fiscal projection.

During the legislative session most of attention centered on the Medicaid expansion possibility which could provide health insurance for some 240,000 Louisiana residents. The resolution sailed through both the House and Senate with bipartisan support.

But the resolution also included multiple provisions with regard to payments to hospital providers. A constitutional amendment, designed to stabilize hospital funding, allows the Legislature to set a “rate floor.” That is what legislators did when they approved the Medicaid expansion measure. The constitution authorizes annual resolutions related to the hospital assessments.

“It is assumed hospital assessments will terminate annually and require annual resolutions to continue future assessments and collections,” Hotstream said.

Hotstream noted that the hospital assessment would pay only the costs associated with delivery of hospital services to the new Medicaid eligibles - not the entire Medicaid expansion costs. He reported that the state Department of Health and Hospitals indicated that hospital services would be about 40 percent of costs related to new Medicaid enrollees.

“To the extent there are temporary SGF (state general fund) savings ... any savings amount is re-directed to the hospital program for rate increases,” Hotstream wrote.

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