More Medicaid woes on horizon for La.

For a second time in as many weeks, the Jindal administration could be facing problems with its Medicaid financing plans.

The latest issue came to light Monday after the federal Centers for Medicare and Medicaid Services fired a warning shot about the way states are pulling in federal dollars for health care programs.

CMS outlined what states shouldn’t be doing and threatened to demand the repayment of dollars where warranted.

In a nutshell, Louisiana did many of the things warned against by CMS, possibly foreshadowing another pricey unpinning of the state’s financial structures for health care programs.

The state already is grappling with a rejection of hospital privatization plans that could put taxpayers on the hook for millions of dollars.

“Our path forward remains the same — we continue to work with CMS and anticipate reaching a solution soon,” state Department of Health and Hospitals Secretary Kathy Kliebert said.

The latest issue involves the care of low-income patients by private hospitals. The state made $458 million in payments last year under the premise that the hospitals should be eligible for added federal Medicaid dollars because they treat patients who otherwise would go to public hospitals.

Now, the federal Centers for Medicare and Medicaid Services said such deals will be scrutinized to determine if they are improper and not donations by bona fide providers.

It’s the same issue that surfaced in the rejection of the LSU hospital privatization financing over advance lease payments made by private partner hospitals.

In a letter to state Medicaid directors, Cindy Mann, director of the federal CMS, wrote that a “hold harmless” provision is not allowed in the arrangements.

“A hold harmless practice exists if there is a positive correlation between the agreement and the Medicaid payments, Medicaid payments are conditioned upon the receipt of a donation from a private entity, or if there is a guarantee that the private entity will see a return of some, or all, of that donation through a Medicaid payment,” Mann said.

“Donations that occur under such arrangements are not considered bona fide,” she said.

Mann said CMS will not approve state plans that include the non-bona fide donations.

If a state plan has been approved — as in the case of Louisiana’s — “and an inappropriate funding arrangement is discovered post-approval, CMS may pursue corrective action to ensure that the state changes its practices, and may recover Federal Financial Participation (FFP) associated with these supplemental payments.”

DHH Secretary Kliebert said the agency is reviewing the new CMS guidance.

“Hopefully this will help other states who want to create similar partnerships and expand access to health care services,” Kliebert said in a statement. “The concerns related to the partnerships ... are the same we received in the letter two weeks ago relating to the advance lease payments.”

Kliebert said Louisiana’s low-income needy program was approved by the current CMS administration and has operated with federal approval for several years. Also, in 2012 CMS conducted a review of the program and did not indicate any concerns. “We will continue working with CMS in order to ensure we are in full compliance with the law,” she said.

Most of the state agreements have been with private hospitals — more than two dozen located around the state when the program began in 2011. The state has been looking to expand the program into other areas.

The program is patterned after one in Texas.

Louisiana Hospital Association president Paul Salles said the CMS decision has been somewhat expected. “They are putting people on notice,” Salles said.

Many hospitals have used the LINCCA arrangements and the new CMS stances “certainly could create some issues.

“Because of 26 percent (Medicaid) cuts since 2008, that’s why hospitals got involved in some of these arrangements to cover some of these cuts,” said Salles. “It certainly could be a big issue for some of our hospitals.”

Former state Medicaid director Don Gregory said CMS has never liked these types of financial arrangements.

“It frees up some funds being spent (by public entities) so they could be transferred to Medicaid and used for match,” Gregory said. “CMS would rather the states increase what Medicaid would have paid for the services.”

“They may have taken on a contract from LSU for $1 million. All of a sudden LSU transfers $1 million to Medicaid and Medicaid draws down 62 percent in federal funds on it,” Gregory said. “Medicaid gets a 15 percent handling fee.”

CMS is going to be “looking at where the money goes,” he said.

Gregory said the program, which began in 2011, grew quickly from an initial $25 million payment to $458 million last fiscal year.

The letter talks about cooperative endeavor arrangements and LINCCA which are specific to Louisiana.

CMS has outside auditors housed at DHH. “I suspect they are going to get really busy now,” he said.

“They will put the squeeze on it. The amounts of money paid through those deals will shrink,” Gregory said.

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