LSU hospital deals run into snag under federal scrutiny

Kathy Kliebert for KECK GONE 1-5.mes
Kathy Kliebert for KECK GONE 1-5.mes

The Jindal administration’s revised plan to finance privatizing the state’s charity hospitals has run into a new snag.

The federal Centers for Medicare and Medicaid Services, called CMS, notified state officials Tuesday that it had “stopped the clock” on review of the plan and wanted the state to answer more questions about its features. The federal agency needs to approve the plan.

The state Department of Health and Hospitals posted news of the notification on its website Wednesday.

Calling the delay a typical part of the process, state DHH Secretary Kathy Kliebert said: “These questions are a positive sign that CMS is working with DHH to review the new reimbursement methodology before granting approval.”

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 arrangement 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 plan now under CMS review eliminates any link to the $260.8 million in lease agreements.

Under the revised plan, the state creates the new classification of “Louisiana Low-Income Academic Hospitals,” which would get special higher levels of Medicaid reimbursement. The hospitals get a higher level reimbursement based on how many poor and uninsured are served as well as what role they plan in training future physicians and other health care providers. The federal government sets its reimbursement rates to the classification rather than to the specific hospital.

Kliebert had earlier said she expected CMS approval of the new financing plan which was submitted in late May.

But as the deadline for CMS to complete its review approached, the agency’s associate regional administrator Bill Brooks raised more questions.

“We need additional or clarifying information,” Brooks wrote state Medicaid director Ruth Kennedy. Then, he listed a series of “questions/concerns.”

Brooks sought — among other things — copies of signed agreements between LSU and the private hospitals involved as well as copies of “signed existing graduate medical education affiliation agreements with LSU Health Sciences Center.”

Brooks also wanted to know whether the state had received any feedback or complaints from other providers or the public in regard to the financing plan and state response.

In addition, Brooks questioned a new provision of the Children’s Medical Center deal in New Orleans involving “minimum financial performance.” The document provides that if the private facility does not meet a certain level of financial performance, the private facility has options that include having rent payments forgiven or applying prepaid rent that are equal to the “funding shortfall.” Brooks wanted to know who sets the levels of financial performance and whether it only applied to the Children’s deal.

Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.