Federal government has questions about public-private deals

The federal centers for Medicare and Medicaid Services has raised questions about Louisiana’s plan to provide extra federal funding to private hospitals that take over operations of LSU public hospitals.

The supplemental Medicaid payments are key to the financing included in the plans for public-private partnership deals that are either signed or under negotiation as the Jindal administration moves quickly to dismantle the LSU-operated hospital system.

Medicaid is the government health insurance program for the poor and uninsured. Some 1.3 million Louisiana residents are enrolled in it — mainly children, pregnant women and the elderly.

The questions came in a letter from Bill Brooks, associate regional administrator for the federal Centers for Medicare and Medicaid Services, or CMS, in response to Louisiana’s filing of a proposed state plan amendment that would revise the reimbursement method for inpatient hospital services. The change, which requires CMS approval, would allow supplemental Medicaid payments to non-state-owned hospitals in order to encourage them to take over the operation and management of state-owned and -operated hospitals that have terminated or reduced services.

The public-private deals are expected to be completed in the next two months without CMS approval of the financial provision.

“Before we can continue processing this amendment, we need additional or clarifying information,” Brooks wrote in a seven-page letter.

Brooks then proceeded to list the omissions in the state’s application and advised that CMS would do nothing more until the state provided a complete response to concerns that ranged from financial impact analysis to public reaction to the change.

State Department of Health and Hospitals Undersecretary Jerry Phillips said the state has not yet filed its reply with CMS. He downplayed the significance of the CMS inquiries.

“It’s not anything out of the ordinary. There are a lot of questions, but that’s not unusual,” Phillips said. “I’m not concerned. We will have the answer to every question they ask to their satisfaction.”

Phillips said the delay in receiving CMS approval won’t affect deals involving Our Lady of the Lake Regional Medical Center in Baton Rouge or those scheduled to be closed in the coming months with other private hospitals.

Inpatient hospital services and medical education programs move from LSU’s Earl K. Long Medical Center in north Baton Rouge to the Lake on April 15.

Under a recent change, the Lake also will assume outpatient clinic operations on that date.

Upon CMS approval, the new payment methodology would be retroactive to the date the state published notice of the proposed change in November, Phillips said.

LSU and the state are negotiating cooperative endeavor agreements involving five other Health Care Services Division hospitals in New Orleans, Lafayette, Houma, Bogalusa and Lake Charles.

LSU System Executive Vice President Frank Opelka said the New Orleans hospital deal with Children’s Hospital is “in its final stages” and negotiations are midway through on Lafayette General Medical Center’s takeover of the University Medical Center in Lafayette.

“We hope that those are mid-April events for us, if not sooner,” Opelka said.

Other deals involving private management of Leonard J. Chabert Medical Center in Houma and W.O. Moss Regional Medical Center in Lake Charles are expected to be complete in May with the Bogalusa Medical Center not far behind.

CMS requested from the state completed cooperative endeavor agreements with the private hospitals that would get the supplemental Medicaid payments.

Once one or more of those deals are completed, the state is prepared to fully respond to CMS inquiries, Phillips said. Then, CMS will have 90 days to review and either raise more questions, which would stop the approval process again, or sign off on the change.

Phillips said he expects to have a response to CMS questions by late April or early May.

The Lake deal would be the first cooperative endeavor agreement sent to CMS, he said.

CMS specifically asked for detailed information to determine whether the dollar values of the contracts between private and public entities had any fair market valuation.

“There can be no transfer of value or a return or reduction of payments reflected in these agreements,” CMS’ Brooks wrote.

Other questions included:

  • “Did the state receive any feedback or complaints from the public regarding the cooperative endeavor agreement? If so, what were the concerns and how were they addressed or resolved?”
  • “Are the hospitals required to provide a specific amount of health care service to low-income and needy patients?”
  • “Please clarify if the state or a hospital service district has issued any proposals or enacted any legislation to support the public-private partnerships. Please submit that documentation for our review.”
  • “How were providers, advocates and beneficiaries engaged in the discussion around rate modifications?”