Legislators looking for health care funding alternatives

Agency to seek more federal leeway on Medicaid

The Louisiana Legislature directed the state’s health agency to seek permission to go outside federal rules to provide more financial stability in Louisiana’s health insurance program for the poor.

Legislators voiced worry about potential changes in the federal government’s funding under the new Patient Protection and Affordable Care Act, particularly for states like Louisiana that rejected the “Medicaid expansion” part of Obamacare.

Louisiana’s Medicaid budget is approximately $7.8 billion, from both state and federal sources. State officials already are struggling with coming up with more state dollars for its portion of the program that serves more than 1 million Louisiana residents. They fear the federal government will shift more of the costs on state government.

The Legislature ordered the state health agency to seek special permission from the federal Centers for Medicare and Medicaid Services to:

  • Use local and state dollars that have not heretofore been tapped as a local match to draw down federal Medicaid funds, thus increasing dollars available for care for more than 1 million Louisiana residents.
  • Loosen the strings on extra payments providers receive for care of the poor and low-income needy so a revenue stream would continue to flow as Louisiana moves more toward private-sector-based managed care.

Officials with the state Department of Health and Hospitals, or DHH, say they are weighing the options amid the directives, which involve what are called “Medicaid 1115 waivers.” The name refers to the section of the Social Security Act that gives the U.S. Secretary of Health and Human Services the authority to approve experimental procedures, programs and policies aimed at improving access and reducing costs.

“We have worked with the Legislature and provided information as needed,” DHH Undersecretary Jerry Phillips said. The 1115 waivers allow “a great deal of variability.”

State Rep. Jack Montoucet, D-Crowley, and state Sen. David Heitmeier, D-New Orleans, sponsored the resolutions directing DHH to act.

“Both of them are attempting to give the state more flexibility in how it operates the Medicaid program,” said Sean Prados, vice president of the Louisiana Hospital Association.

A congressional change last year increased the state match requirement to the highest level in decades, so identifying more in-state funds that can be used as match would relieve some of the budget pressure.

Tough state budget times prompted cuts to health care and potential federal changes in health care financing with Obamacare and its aftermath are fueling the initiatives.

Uninsured care payments are supposed to decline with Medicaid expansion. Gov. Bobby Jindal rejected Louisiana participation in the expansion.

In addition, hospitals are concerned that with the stroke of a pen another program called “upper payment limit,” which many rely on to generate funds, will go away, Prados said.

“It’s about an uncertain future and if payments to providers are going to be there to protect the services,” Prados said.

Montoucet’s House Concurrent Resolution 122 calls on DHH to submit a “demonstration waiver” that would allow use of costs not otherwise matchable to bring in federal funds for certain state and local health programs with excess dollars reinvested in the Medicaid program.

“It’s all wide open,” Montoucet said. “We have a lot of money out there that under the waiver system that’s eligible.”

Montoucet said other states have been more innovative than Louisiana in leveraging state and local funds to meet health care needs. The financial plight of some rural hospitals spurred the resolution but other hospitals and health care providers can benefit too, Montoucet said.

Linda Welch, executive director of the Louisiana Rural Hospital Coalition, said there are many opportunities to tap funds that could bring dollars in for cutting-edge telemedicine technology at hospitals. The idea is to offer services locally that otherwise patients would have to travel to urban hospitals for treatment, Welch said.

She said she envisions the development of medical teams that would develop specific care plans for patients who are monitored.

“The feds have been generous to states in the past by allowing them to use funds if they can remotely be tied to health care,” Welch said, for instance, “funds for mosquito abatement, water treatment.”

Some states have received approval to use dollars spent on prisoner health care, Welch said. Louisiana currently spends $50 million annually that could potentially be used to bring in more than twice that in federal funds.

Heitmeier’s Senate Concurrent Resolution 87 directs DHH to develop a waiver “designed to protect Medicaid and uninsured services being delivered and complement existing ‘upper payment limit’ funding programs.”

Called UPL, the “upper payment limit” is the difference between what the state Medicaid program reimburses and the higher-paying Medicare rate.

Louisiana has relied more and more on UPL to help hospitals that have been hit with heavy budget cuts in recent years. The program reimburses the hospitals for care for which they would otherwise not been eligible.

Heitmeier said the idea is to protect Louisiana’s program, which under current federal rules can be used under the Medicaid program based on paying providers on a “fee for services” basis. Some of Louisiana Medicaid is operated on a private sector plan, in which there is a rate similar to an insurance premium.

Exactly what will be submitted for federal approval is unclear but Heitmeier said he has been to Texas to look at what that state did to protect federal dollars under managed care plans.

“Ultimately it adds dollars to the system,” Heitmeier said.