Hospitals financing plan questioned

The Jindal administration’s new financing plan for private takeover of LSU hospitals has attracted more questions from the federal health agency.

The state Medicaid agency quickly responded to the inquiry as it attempts to expedite the approval process, state Department of Health and Hospitals Undersecretary Jeff Reynolds said late Tuesday. He said the questions posed by the federal Centers for Medicare and Medicaid Services “were routine in nature and part of the standard approval process.”

“We continue to be encouraged by our conversations with federal officials and believe that the new state plan amendment is written to meet federal requirements for a sound reimbursement methodology,” Reynolds said in a statement.

CMS asked for more specific information about the hospitals involved, what services are covered, how cost estimates were derived and the timing of payments.

In the four-page “informal request for additional information,” CMS also tells state Medicaid officials that it wants state assurances that “no payment ... is dependent on any agreement or arrangement for providers or related entities to donate money or services to a governmental entity.”

In early May, CMS rejected a state plan that included use of $260.8 million in advance lease payments to prop up the deals involving six public hospitals, including those in New Orleans, Lafayette and Houma.

The private hospital companies leasing the state’s charity hospitals agreed to pay up-front a larger proportion of their long-term leases, which would result in paying lesser amounts toward the end of the contracts. But a top federal official said the arrangement amounted to Louisiana trying to get extra federal Medicaid dollars to repay private managers for those advanced lease payments.

In late May, DHH submitted a new plan, stripping the advance payments and changing its approach for seeking reimbursement.

CMS prefers that the hospitals are classified by how many poor and uninsured are served as well as what role they play in training future physicians and other health care professionals, DHH Secretary Kathy Kliebert said at the time. The federal government sets its reimbursement rates to the classification rather than to the specific hospital.

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 — 100 percent of uninsured, or uncompensated, care costs.

CMS must approve the plan because it pays a majority of the health care costs.

CMS said the proposed uncompensated care payment method “is not comprehensively described. Please add language that fully explains how 100 percent of uncompensated care costs are to be calculated and how the annual payment amount will be determined.”

“Claims for federal matching funds cannot be based upon estimates or projections,” the letter states.

The plan the state submitted projected a $508 million cost in federal fiscal year 2014 and $460 million in federal fiscal year 2015. “Please provide a detailed analysis by facility of how this determination was made, and provide supporting documentation of the calculation,” the letter asks. “Does the state anticipate these estimate amounts will be offset by what the public hospitals would have claimed?”

CMS also asked why the uncompensated care payments are limited to certain hospitals.

The federal health agency also wants to know whether Medicaid payments made to the hospitals are retained by them or if any portion of the payments are returned to the state, local governmental entity or any other intermediary organization.

Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at

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