Now that the numbers from the recent legislative session are in, the Louisiana Legislature’s fiscal advisers say the money to fully fund health care for the elderly, poor and uninsured — roughly one-fourth of the state’s population — is short by about $335 million.
In a new report, the Legislative Fiscal Office stated that for the fiscal year that began July 1, the state Department of Health and Hospitals didn’t get the funding it had requested to pay for certain programs, including Gov. Bobby Jindal’s Medicaid privatization. The result could be midyear cuts to programs and “additional pressure” on services paid for by Medicaid, the state-federal government health insurance for low-income residents.
If the numbers hold true, for instance, the dollars won’t be there for home- and community-based programs that help the developmentally disabled and elderly. Past shortfalls led to shutdowns in program intake while waiting lists remained long.
But the Jindal administration, while not disputing the findings, says the situation is manageable. The health care budget is about $9 billion, more than a third of the state’s $25 billion spending plan for the next 12 months.
Commissioner of Administration Kristy Nichols said it would be a mistake to read the Fiscal Office’s report as an indicator that the health care budget will need to be adjusted this winter to ensure the budget balances, as required by the state constitution. DHH’s appropriation is more than one-third of the state operating budget.
DHH Secretary Kathy Kliebert said what happened this year is no different than what happened in past years when agency projected needs were more than what has been funded.
“We will make adjustments,” Kliebert said, adding that access to care will be preserved. “There’s always the ability to move things around” in a $9 billion budget.
Two-thirds of the potential shortfall is projected for the program Jindal pushed to privatize a large part of Medicaid, which state officials don’t have the ability to cut unilaterally. Jindal’s program, Bayou Health, contracts with private insurance companies to manage the care of nearly 1 million residents, mostly children and pregnant women.
At $237 million less, Bayou Health was the largest area in which the Fiscal Office found that the appropriated dollars did not match what state health agency officials had requested. Other short-changed programs at DHH include home- and community-based services for the developmentally disabled and elderly, $59.8 million. Other lesser amounts involve programs where Medicare-Medicaid intertwines for some recipients and long-term personal care services.
Because Bayou Health’s needs are set in contracts, the state will have to come up with the $237 million by reducing reimbursements, cutting elsewhere in the health care budget or moving money around. Bayou Health is more like private-market insurance, in which the state pays a premium for each patient to the company that pays for the health care. Under traditional Medicaid, the state and federal governments directly pay physicians, hospitals and other providers for the services they delivered.
The program already costs more than $2.6 billion and is expected to grow significantly this year. But Kliebert says Bayou Health costs the state about 8 percent less per recipient.
But predicting funding needs is difficult, she said.
“The task of projecting how much or little is spent on health care never has been an exact science,” Kliebert said. Unforeseen events such as outbreaks of the H1N1 virus or of the flu can drive up costs fast.
DHH Undersecretary Jeff Reynolds, who handles the agency’s finances, said the projections were provided to the Division of Administration in September as budget preparation began. He said those estimates were based on what they knew at the time.
“We are still looking to see how things are trending. At the end of October (2015), that’s when we know where we will be,” Reynolds said. “It’s a little early in the process.”
Otherwise, it will be another year of challenges as they juggle the dollars available — moving funds around to plug holes as best they can and hoping to avoid cuts that translate into reductions in services for people in need.
The budget includes “standstill” funding for a variety of programs — meaning dollars are basically the same as the prior year allocation despite expectations of growth.
In addition, the budget is predicated on another $89 million in reductions from government efficiency management savings .
Kliebert said she is confident the agency will be able to hit the $89 million savings target. She said the goal amounts to $34 million in state savings, which, by the time the federal match is figured in, comes close to a $90 million reduction.
One of the biggest money savers — $16.7 million — will come from use of an electronic visit verification system, Kliebert said. The system will ensure Medicaid recipients receiving home- and community-based services actually get the care and that billings are done appropriately. The prior paper-based system left room for problems such as billing for visits that didn’t occur, duplication of payments or charging for more time than actually spent, she said.
The other big chunk of savings — $15.4 million — is projected to come from reducing “improper payment” in the Medicaid program.
Other initiatives from which savings are expected include reducing Medicaid expenditures by giving pregnant women the opportunity to use less-costly birthing centers; consolidating nonemergency medical transportation into a single contract; limiting the number of pediatric day health centers; continuing to move the developmentally disabled and elderly from institutions to community settings; and ensuring that Medicaid recipients are getting the least-costly, most-effective pharmaceuticals.
Commissioner of Administration Nichols said it’s all about management.
“The bottom line is ... about managing growth, managing utilization in a way appropriate for care, managing operational costs and getting operational efficiencies,” Nichols said.
Kliebert agreed, adding, “It takes operational control and awareness every day.”