LA makes changes to hospital privatization plan

Louisiana tweaked its proposal to privatize its safety net hospitals in the hope that the Centers for Medicare & Medicaid Services will sign off on the deal.

CMS officials objected to the state's plan that allowed private entitites that leased eight state hospitals and a clinic to receive $261 million upfront payments and then use the payments to leverage matching dollars from the Medicaid program. The agency concluded that it amounted to a "hold harmless" financial arrangement that isn't permitted under federal regulations.

Under the new proposal, Louisiana is no longer using the upfront payments to obtain higher reimbursements from the Medicaid program. Instead, it plans to reclassify the eight leased hospitals as "low income academic hospitals," and use the level of care provided to the poor and medical education provided to future physicians and other healthcare professionals in order to qualify for enhanced Medicaid payments, the Advocate reported.

"We believe we have done what they asked us to do in putting forth an approvable state plan amendment," Louisiana State Health Secretary Kathy Kliebert told the Advocate.

As for the advance lease payments, "they can question that at any time," Kliebert said. "If they have a question about means of financing, they can question it apart from the state plan amendment."

Louisiana began in 2012 to turn over its safety net hospital system, which is operated by the state university's healthcare arm, to private operators, despite warnings from even the state treasurer that it was not feasible, and hints from CMS that it was skeptical as to how it was structured.

The CMS' recent rejection of the state's plan sent lawmakers scrambling for an alternative, fearing that not having a privatization plan in place could cost it as much as $882 million in payments this fiscal year and potentially place the state's entire budget into a tailspin.

To learn more:
- read the Advocate article

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