The Jindal administration’s proposed health care budget relies on more than $500 million in funding that is contingent on several things happening first — and that’s making people in the health care community nervous.
“We have great concerns that it’s really not achievable,” said Paul Salles, who heads the Louisiana Hospital Association, the professional group representing most of the state’s hospitals.
“It’s something on paper,” Salles said, but “it leaves us really exposed to dire straits.”
“To say there are a lot of contingencies would be an understatement,” said Jennifer Marusak, governmental affairs director for the Louisiana State Medical Society, a professional association that represents physicians.
Before the state programs that pay for treatments and other health care can get state money in the amounts allotted by Gov. Bobby Jindal in his spending proposal for fiscal year 2016, which begins July 1, Louisiana legislators need to go along with some revisions to the state’s tax laws and the federal government must approve the changes dealing with Medicaid.
That worries doctors and legislators.
“Everything has to fall into place absolutely perfect, and I’ve never seen that,” said Republican Sen. Fred Mills, of St. Martinville, who sits on both the Senate Finance and Senate Health committees, both of which must review and vote on the budget proposals when the Legislature convenes on April 13.
Mills also is president of Farmers-Merchants Bank and Trust Co., a bank with locations across Acadiana, and he looks at the situation from the perspective of a financial executive who spends his days analyzing the plans of businesses seeking loans.
“If you went to a bank with all the assumptions and ‘what ifs’ (on which the health care budget is based), I don’t think many banks will make this deal,” he said.
Department of Health and Hospitals Undersecretary Jeff Reynolds said the state agency doesn’t have a lot of control of the situation.
“We manage the programs with the resources provided,” Reynolds said. It it is up to the Legislature to decide whether to accept the Jindal administration’s plan or develop a new one, he added.
The administration’s proposed budget for the fiscal year beginning July 1 would allocate $9.49 billion to DHH. Of that amount, $8.2 billion is earmarked for Medicaid — the government health insurance program for the poor and uninsured that covers health care costs of roughly one of every four people living in Louisiana.
The biggest DHH funding “if” involves Jindal’s plan to convert a dozen refundable tax credits to nonrefundable status — that is, to allow the taxpayer to cover the tax liability with the credit, but anything above the amount owed would be returned to the state instead of being sent to the taxpayer in the form of a check, as happens now. The idea has any number of opponents, particularly in the business community, but it would allow state government to keep about $526 million in state coffers instead of refunding it.
Under Jindal’s proposed budget, health care and higher education would share in the revenue the state would not have to pay out.
DHH, which actually handles the programs, would get $151 million if legislators pass the bill that allows “refundable to nonrefundable,” Reynolds said. Those state dollars would be used “to draw down” $255 million in additional money from the federal government, which matches whatever funding the state puts up for Medicaid. That would mean $407 million in all, but the amount is dependent on what the state puts up for health care, he said.
“It’s a mess,” said Berkeley Durbin, who heads MedicineLouisiana, a statewide physicians group.
“I don’t think anybody thinks that’s real. I don’t know where we find the money,” Durbin said, adding that he doesn’t consider legislative passage of the tax credit changes to be a sure thing.
Neither do Salles, whose group carries a lot of sway among legislators, and Mills, who likely would get a chance to vote on the measures in two different committees before they are taken up by the full Senate.
They worry about the consequences to patients and their health care providers if dollars do not materialize for Medicaid. Medicaid covers 1.26 million of the state’s estimated 4.65 million residents — mainly children, pregnant women, the elderly and the disabled.
Salles said state money for hospitals has been cut by 26 percent since 2009. More cuts, he said, could lead to service reductions that would impact everyone.
According to a Louisiana Hospital Association analysis, the governor’s budget has a $165 million cut to hospitals, not counting dollars supposed to be coming from the tax credits. The budget plan lacks $142 million in Medicaid funding that private hospitals say is required to meet their obligations to operate LSU hospitals and care for the poor and uninsured who traditionally have gone to them. The proposal also eliminates a program that provides care for medically fragile infants — those in neonatal intensive care units — and it provides fewer dollars for emergency room services.
If the tax credit plan is not approved, hospitals could face an additional $368 million cut, Salles said.
The DHH budget also relies on the approval of the federal Centers for Medicare and Medicaid Services, or CMS, for the change in LSU physician reimbursement. About $177 million in Medicaid funding is tied to the proposition.
Under the so-called “full Medicaid pricing,” the LSU physicians would be paid the average commercial insurance rate for services provided. That rate is higher than the traditional legacy Medicaid rate they have been paid.
Reynolds said LSU Health Sciences Centers budgets would see a net gain of $25 million if the plan is approved. There’s no mention of what happens if it’s not.
CMS needs to approve the new reimbursement rates and also must sign off on required amendments to contracts the physicians have with private insurance companies through which about 900,000 Medicaid recipients get their care, Reynolds said. Those documents should be submitted to the federal health agency within the next four to eight weeks.
The Louisiana State Medical Society is beginning to analyze how the budget would impact its members, which Marusak said has been a difficult task the way the documents are written.
Marusak said anything that impacts the state’s hospitals is ultimately going to affect physicians as well, particularly those who are employed by the facilities.
“I’ve recommended to our leadership that we support anything that raises revenue, period, anything going to health care,” Marusak said.