Gov. Bobby Jindal got only good news when the federal Medicaid agency signed off on financing plans for his LSU hospital privatization deals. But the result was more mixed for lawmakers and future governors, who learned Jindal’s deals will leave them with a lingering budget worry after he’s gone.
Approval from the U.S. Centers for Medicare and Medicaid Services, known as CMS, will keep money flowing to pay for the privatization contracts and ensure care for the uninsured won’t be upended. That keeps the hospital deals on track for Jindal’s last year in office.
CMS approval came with a blow, however: Louisiana was ordered to repay $190 million to the federal government for pieces of prior hospital deals the Medicaid agency rejected.
That won’t touch Jindal though, because an appeal of the repayment order is expected to drag on for years. If the hospital deals cause the state financial trouble, Jindal will be gone when the mess has to be cleaned up.
The Republican governor privatized nine LSU-run hospitals and their clinics over the last two years through no-bid contracts. In most instances, the management company of a nearby hospital took over operations of the LSU facilities. Three contracts closed an LSU hospital and shifted its services to private facilities.
Jindal said the deals, estimated to cost $1.2 billion this budget year, provide better health care for the state’s poor and uninsured, with reduced wait times, expanded services and improved access.
But the Jindal administration didn’t first get federal approval for the financing deals, which rely heavily on federal Medicaid money to stay afloat. And that caused problems.
In May, CMS rejected financing plans for six deals, which governed the management transfer of hospitals in New Orleans, Lafayette, Bogalusa, Shreveport and Monroe, along with the closure of LSU’s Lake Charles hospital and move of its inpatient services.
The Jindal administration rewrote the contracts in consultation with the federal Medicaid agency. The LSU Board of Supervisors backed them in October. And federal officials approved them late last month. That keeps Medicaid dollars flowing to the deals.
But federal officials had problems with “advance lease payments” the hospital managers paid upfront as part of their agreements with the state — and CMS has demanded reimbursement of $190 million in federal money it says was tied to those upfront payments.
Jindal used the millions of dollars in advance lease money to plug state budget holes.
Federal officials said those payments appeared linked to higher Medicaid payments that the private hospital operators were receiving, reimbursement rates that were larger than what other private hospitals in the state get for uninsured and Medicaid patient care.
The Jindal administration described the advance lease payments as a sign from the private companies that they were committed to the hospital privatization deals and disagreed that they were somehow improper. But the federal Medicaid agency said the advances “are not usual and customary industry payment arrangements.”
Louisiana’s Department of Health and Hospitals intends to appeal the repayment order and says such appeals typically take five to seven years to be decided.
Under that timetable, Jindal and administration officials whose budget-crafting benefited from the advance lease payments will be gone before any repayment could come due.
Meanwhile, another financing threat looms.
The hospital deals were built on sizable amounts of federal uninsured care dollars, but that pool of money is slated to start shrinking in 2016 under the federal health care overhaul.
The idea was that more people would get insurance, particularly through Medicaid, under the health revamp and fewer dollars would be needed to pay for uninsured care. But Jindal opposes the Medicaid expansion, so Louisiana hasn’t shifted more people to the coverage.
If cuts to the uninsured care dollar stay in place, federal officials will have wide latitude over how to divvy them. If the agency chooses to sizably ratchet back the allocation to Louisiana, the long-term viability of the LSU hospital deals could be threatened.
That potential problem, too, would be for Louisiana’s next governor to handle.
Melinda Deslatte covers the Louisiana Capitol for The Associated Press.