Fiscal Office: State short for private operation of public hospitals

Louisiana legislators may have to fix the state budget because the Jindal administration appropriated too little money to pay for the private operation of LSU public hospitals, the Legislature’s financial advisers project in their latest report.

A Jindal administration official disagrees, saying the budget is coming in just as expected and no adjustments are necessary.

The Legislative Fiscal Office report found the money set aside in the state budget to attract matching federal dollars is $13.77 million less than what’s needed. The state and federal dollars, together, pay the private companies to manage and operate most of the LSU hospitals.

“When you are short on match that will have a bigger impact and most likely cause us to have to find additional matching funds,” Legislative Fiscal Officer John Carpenter said Monday. “It puts another strain on an already strained budget.”

Under the terms of the contracts with the private operators, the state’s portion should be an estimated $441.89 million.

But the state budget appropriates $428.11 million, the Fiscal Office said.

“It is not known how the department will solve for the match shortfall,” the report stated.

Because the state budget is a law, the Legislature would have to find additional dollars, then vote on changes to the appropriations if the projection is correct.

State Department of Health and Hospitals Undersecretary Jerry Phillips disputed the report’s findings Monday.

“We are seeing we are coming in on budget,” said Phillips. “That’s what we reported to the Legislature.”

Phillips said the agency is projecting to be $6.4 million under the appropriated amount.

The Fiscal Office report looks at services paid for at the maximum amount paid under the hospital agreements, Phillips said. The agreements include savings incentives. “The hospitals should be able to provide the services at less cost,” he said.

Shawn Hotstream, who wrote the report for the Fiscal Office, said the projection is based on “the hardest numbers we can get right now,” which are cost report worksheets.

Hotstream said the state “likely didn’t have enough (state) match to begin with in the budget.” In addition, there’s also been some shifting around of how things are to be funded with more reliance on the Medicaid uninsured care program which requires a higher level of state match, he said.

“Partnership payments” are paid to the hospitals for regular Medicaid services; disproportionate share, which reimburses for uninsured care; and for upper payment limit, which allows certain special private hospital providers to be reimbursed at a higher level than traditional Medicaid.

Medicaid is the government’s health insurance program for the poor. Costs are shared between the state and federal government, with federal officials paying just over 60 percent.

Funding allocated for hospital partnership payments and charity hospitals that will temporarily operate as public facilities totals $1.11 billion during the fiscal year that ends June 30.

The dollars cover nine of the 10 LSU public hospitals now privatized.

The Fiscal Office said the budget appropriates $1.11 billion funding for hospital payments called for under the agreements. With the addition of LSU Lallie Kemp Regional Medical Center which remains public, the number jumps to $1.14 billion.

The Fiscal Office projected that $1.15 billion will be needed to cover expenses. The shortfall is tied to greater that anticipated spending on payments for care of the uninsured, a shortfall of $11.9 million overall in total state-federal funds.

The projected partnership spending is based on prior public hospital cost reports from fiscal year 2012, and funding is reflected in the cooperative endeavor agreements cost worksheets and DHH backup worksheets provided to the Fiscal Office.