Money could be delayed during review

The federal government told state officials it would not pay $307 million — at least for the time being — for medical services delivered at the new privately operated LSU public hospitals, a state official confirmed late Thursday.

State Department of Health and Hospitals Secretary Kathy Kliebert said there would be no immediate fiscal impact to the Medicaid program or to the public-private partnerships that recently took over nine of the 10 LSU hospitals. The federal government is withholding the money, but Kliebert is confident the funds will be released eventually.

The state health agency received on Monday, April 7, a formal “deferral notice” from the federal Centers for Medicare and Medicaid Services, she said. The federal agency oversees the government’s health insurance programs and disburses the federal portion of the state-federal program that pays for care for the poor and uninsured.

Kliebert responded late Thursday after repeated inquiries from The Advocate about issues related to the financing plans. DHH officials gave no indication this week of any problems when legislators inquired about the status of the federal government’s approval of the financing arrangements.

Louisiana taxpayers could have to foot the bill, if CMS doesn’t approve the state financing plans for the Jindal administration’s deals to privatize the state’s charity hospitals. Kliebert said she still remains confident that the federal health agency will approve the financing plans.

“We anticipated a deferral of these funds while the state plan amendments (involving the hospital deals) were still pending,” Kliebert said. “It is part of CMS’ normal procedure to defer funds that are paid out under a state plan amendment that is being reviewed for approval.”

In November, the state health agency pulled back on its application for approval of the plan that is key to the private takeover of LSU’s public hospitals. Then-DHH Undersecretary Jerry Phillips said the state needed more time to answer complex federal questions.

At stake are three amendments to the Medicaid state plan that deals with funding for care of the poor and uninsured.

The plans impact six of the nine LSU hospitals that have been privatized, including those in New Orleans, Lafayette and Houma, as well as separate hospitals operated by two of the private partners.

Two of the three plans involve the federal funds that hospitals are paid for “uncompensated care,” the term for medical services provided to patients who cannot pay.

CMS questions involved calculation of the uncompensated care and upper payment limit payments.

Phillips said DHH has to “completely satisfy the calculations” used so they do not exceed federal funding caps established for hospitals.

He said the state must present “a detailed valuation” of its assessment of funding requirements.

CMS has also questioned details about the LSU leases for six public hospital facilities to the private entities, as well as advance lease payments made by some of the private operators. Receipts from the lease deals are about $140.2 million, revenues that are expected for the state government’s budget for the fiscal year that began in last July.

DHH spokewoman Olivia Watkins said CMS deferrals are not uncommon. “It happens all the time, maybe not on a number this large,” she said.

The state has an opportunity to respond to the deferral and “is continuing to work towards securing approval of the amendments, which will remove the basis for the deferral,” Watkins said.

“Nothing in the deferral notice calls into question that the SPAs (state plan amendments) will be approved once CMS completes its review,” she said.