Jindal budget uses ideas from $4 million savings study

In just a few weeks’ time, a New York global management firm has found more than $4 million in savings for state government, according to the Jindal administration.

“The contract itself has paid for itself. We’re past (the question of) will the contract pay for itself,” Commissioner of Administration Kristy Nichols told legislators.

The Jindal administration added the savings recommendations into its proposed $25 billion state spending plan for the fiscal year that starts this summer. The ideas all focus on health care and include a new rate for some patients staying in hospitals on the state’s dime, the elimination of a claims processing step and a crackdown on high-cost medication.

Many legislators were skeptical when the governor hired Alvarez & Marsal LLP to find at least $500 million in savings across state government. The company will receive $4.2 million for roughly four months’ work.

The Jindal administration recently amended the contract to clarify that payment hinged on the identification of at least $500 million in savings. The contract with Alvarez and Marsal got more expensive last week.

Legislators questioned why workers already on the state payroll could not find the same savings. Part of the private firm’s tasks include talking to state workers. Legislators pointed out that the state has studied the issue extensively over the years, including most recently through the Commission on Streamlining Government. Several have questioned what new ideas Alvarez & Marsal could find.

Nichols said a contract amendment will add $800,000 to the original $4.2 million pact as the firm gets a new task.

She said the management firm will work with the state Office of Group Benefits, the agency that handles health insurance for about 250,000 state employees, their families and retirees. The firm is to find ways to make the agency more efficient, with a goal of lowering costs for taxpayers and limiting premium increases for those covered.

Nichols said while some changes have occurred in an agency redesign, “we think there’s more to do.”

“We need to be aggressive at looking at all our structures and the way we implement our plan of benefits,” Nichols said. “Our goal is to keep the cost low for OGB members. Certainly, we pay a large share of those costs,” so it is important to keep costs down for taxpayers, too, she added.

Nichols said the continuing impact of health care cost inflation and changes required by the federal Affordable Care Act are of particular concern.

Last week, Nichols assured legislators that the administration will include them in the decision-making process. “It’s a great opportunity,” she said.

The initial ideas and their projected savings include:

Electronic visit verification through a computer-based system that documents when services begin for at-home visits, $500,000.

Case management for pharmaceuticals to curtail needless spending on high-cost medication, $154,000.

Holding owners and operators of pediatric day care facilities accountable for management, $150,000.

Elimination of preprocessing claims to get rid of duplication in health care treatment, $750,000.

Increasing occupancy bed rates, $2.5 million.

New rate structure for subacute care, targeting patients who need less attention than others but more attention than a nursing home can provide, $300,000.

Nichols zipped through the suggestions. However, she said the idea is to trim costs without impacting services.

Alvarez & Marsal is submitting ideas monthly. The firm is supposed to wrap up its work by the middle of April. The Jindal administration could hire the firm to work longer for additional money.

Legislators tore into the firm’s contract in the past, but they had little to say about it Friday as they rushed through a meeting because of bad weather.

State Rep. J. Rogers Pope, R-Denham Springs, did press Nichols about a different contract. Pope wanted more details on delays in paying doctors, hospitals and other health care providers for the treatment of state employees and retirees.

Blue Cross and Blue Shield recently started managing the agency that oversees health care coverage for state employees and retirees. The private company is behind on payments, partly because of a computer program upgrade related to changes required by the Affordable Care Act.

Pope said professionals need to receive payments.

“I’m not here to throw a stone or break a rock or throw through a window,” Pope said. “Those providers need to be paid.”

Nichols said the payment lag will not last beyond a 30-day mark. She said payments will be made this month.

Marsha Shuler of The Advocate Capitol news bureau contributed to this report.