With state Medicaid costs rising, a Jindal administration official said Monday that the private contracts for managing the LSU charity hospitals need to be “restructured” because of the financial commitments made in them.

State Department of Health and Hospitals Secretary Kathy Kliebert’s brief comment marked the first time an administration official talked about the need for changes in the deals that Gov. Bobby Jindal points to as one of his successes.

Kliebert testified before the Senate Finance Committee, during which legislators learned state costs of Medicaid — the government insurance program for the poor — had doubled since 2008 to $3 billion. The rest of the $8.4 billion program is federally funded.

The current state budget appropriates $1.26 billion for the deals involving nine LSU hospitals, including those in Baton Rouge, New Orleans and Lafayette. Costs are projected to keep going up because more patients are receiving health care. Sufficient funds may not have been appropriated for the current fiscal year which started July 1. The hospital private partners receive much higher levels of Medicaid reimbursement than other community hospitals.

Louisiana government is facing projected major state revenue shortfalls this fiscal year and for the foreseeable future — putting even more strain on the budget.

The Senate panel is looking at what can be done to rein in health care spending.

“We need to tweak the (hospital) agreements,” Kliebert said in an interview after the meeting. “It’s all about trying to get the system in a place to adequately fund the services we need,” not only through the LSU hospitals but other hospitals as well.

Kliebert said the state needs to carry over “managed care” principles to the hospitals, where payments are based on better health care outcomes for patients.

“You need to restructure to make sure you are paying for quantity and quality of services,” Kliebert said. “When you begin measuring outcomes, I believe you can save costs as well.”

The Senate Finance Committee opened a series of meetings on Louisiana’s health care spending Monday, citing its heavy — and growing — demand on state revenues.

“The single largest cost we deal with in Louisiana is health care costs,” said Senate Finance chairman Jack Donahue, R-Mandeville.

He said the committee wants “to figure out how health care costs as much as it does and what portion of that health care costs is controllable by the Legislature and how much is mandated ... We need to have a firm grasp of what these costs are and what our options are.”

Nearly 1.4 million individuals are eligible for Medicaid services. The program also finances health care services for about 751,000 uninsured residents.

Senate senior fiscal analyst Heather Clark and DHH Undersecretary Jeff Reynolds agreed that the two primary factors in state Medicaid funding growth through the years are lessening federal financial support and increasing Medicaid rolls.

The federal portion of Medicaid spending has dropped from 71.3 percent in state fiscal year 2008-09 to 62.2 percent in the current budget year. The number of people enrolled in Medicaid has risen from 1.05 million to 1.38 million — a 31.2 percent increase in the same time period.

In the past, the state helped close Medicaid funding gaps by reducing the payments made to hospitals, physicians and others for providing health care services. But Reynolds said the federal Centers for Medicare and Medicaid Services has warned that may no longer be an option for Louisiana because it could create a problem with access to care if providers bail.

Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage from the State Capitol, follow Louisiana politics at http://blogs.theadvocate.com/politicsblog/