Federal approval should come this week to financial arrangements that are key to privatizing six of the LSU charity hospitals, state health Secretary Kathy Kliebert said Monday.
“We have been given assurances ... that the state should get approval this week,” Kliebert told the state Senate Finance Committee.
Kliebert said the Dallas office of federal Centers for Medicare and Medicaid Services, or CMS, has forwarded documents to the national office for final sign-off.
Approval would end a lengthy process, which included CMS rejection of financing plans, followed by revisions to address the federal agency’s concerns.
Federal approval means the private concerns contracted to operate the public hospitals can receive a higher level of reimbursement for care of the poor and uninsured. The hospitals are located in New Orleans, Lafayette, Bogalusa, Lake Charles, Shreveport and Monroe.
CMS, which provides a majority of the health care funding in the state, must approve state plan changes involving Medicaid. The privatization agreements are worth more than $1 billion annually.
In early May, CMS rejected the administration’s initial financing plans, questioning deals that required private companies to pay more money at the beginning of the leases and less toward the end of the long-term arrangements. The private companies are paying to lease six LSU medical centers spread around the state, including those in New Orleans, Lafayette and Houma.
CMS officials said the arrangements amounted to Louisiana trying to get extra federal Medicaid dollars to repay private managers for those advance lease payments, which constituted a “hold harmless arrangement” not allowed under federal rules.
The state then eliminated any link to the $260.8 million in lease agreements in its revised federal submission.
Under the revised plan, the state creates the new classification of “Louisiana Low-Income Academic Hospitals,” which would get special higher reimbursement levels, based on how many poor and uninsured are served. The federal government sets its reimbursement rates to the classification, rather than to the specific hospital.
More questions were raised by CMS.
So, the state revised the deals again, eliminating the funding guarantees to the private hospitals, which had bothered federal authorities. In return, the private partners would get an early out provision, if things go awry and the financing isn’t working for them.
The private partners obligation to continue providing “core” and “key” services at the LSU hospitals is also more limited than under the now-abandoned cooperative endeavor agreements.
The changes required renegotiation of contracts with the private managers of LSU operations in New Orleans, Lafayette, Bogalusa, Lake Charles, Shreveport and Monroe.