Baton Rouge -- Internal documents from Louisiana State University show a divide between Gov. Bobby Jindal's administration, which sought to deal with Medicaid cuts through the sale of public hospitals, and the head of the university's health division, who proposed spreading the cuts throughout state health services and reversing course on the administration's rejection of a federal expansion of the Medicaid program.
The plan to sell LSU Health Sciences Center in Shreveport, and possibly the hospitals in Houma and Bogalusa as well, would aim to bring in enough money to keep LSU's public hospital system afloat for two years in the face of a reduction in the state's Medicaid reimbursement rate that has left a $329 million hole in the state budget for the hospitals.
The sales were proposed by former Department of Health and Hospitals Secretary Alan Levine, who now works for a private hospital company, and current Secretary Bruce Greenstein, according to a memo by Fred Cerise, head LSU's health care division. Levine also suggested it would be possible for a firm to also purchase additional hospitals, such as East Jefferson General Hospital or West Jefferson Medical Center, and manage them in a joint venture with LSU.
LSU on Thursday provided internal memos and emails produced in the run-up to last week's announcement about how the cuts would be handled following public record requests by The Times-Picayune and other media outlets.
In the memos, largely written by Cerise, the hospital chief pushes back against relying on a sale or private partnership as a panacea for the system. Such moves are risky and may not be possible within the time frame necessary to balance the system's budget, Cerise wrote. He also suggested that using money from the sale to finance hospitals around the state could create community opposition to the plan.
"Money generated from a sale would logically remain in the community to support the ongoing operations, and so we are likely to encounter resistance to the idea of selling the Shreveport hospital and using the funds for a one time budget fix across the state," Cerise wrote in a memo to Interim LSU System President William Jenkins.
"My fear is that we depend upon this sale and later in the year when we hit stumbling blocks, we will have no way to reduce our spending enough across the system to avoid running a deficit. The prospect of an expedited sale is a risky play to deal with this immediate budget crisis and it does not produce a sustainable solution," he wrote, before asking for more time to explore the possibility of a sale to determine whether it is feasible.
In a statement responding to one of the memos, Greenstein said the state's public hospital system needs to be updated.
"The U.S. health care system has been changing dramatically over the last decade and the LSU system has not kept pace," he said. "In order to make the system sustainable, it must change to have a stronger business model, to be more efficient, and to focus on its core mission."
If the sale does not go through in the next year, "Plan B" would be to shut down half the hospitals in the LSU system and seek additional federal money, according to the memo.
Last week, Cerise announced a plan that will cut about $50 million from the public hospital system and make up for the rest of the shortfall by redirecting money originally allotted to other uses within the division. The hospital cuts will fall hardest on Lallie Kemp Regional Medical Center in Independence and the Walter O. Moss Regional Medical Center in Lake Charles. After the announcement, officials said they are pursuing private partnerships to bring in new revenue.
The cuts stem from a drop in a federal formula used to determine how much of a federal match Louisiana receives for money it spends on Medicaid. That reduction, which was contained in a bill signed into law last month, was designed to correct an error that gave the state a higher rate than it should have and brings the state's reimbursement rate down to one of its lowest levels in the history of the program in Louisiana. In total, the reduction amounts to a $859 million budget cut to the Department of Health and Hospitals.
Four scenarios, none of which exactly matches the proposal put forward last week, were included in the documents. Those scenarios range from spreading the cut evenly across all the public hospitals in the state to completely shutting down all hospitals other than those in New Orleans and Shreveport, A fifth scenario calls for the cuts to be spread across the entire Department of Health and Hospitals budget and for the state to sign on to an expansion in the Medicaid program, which is part of the federal Affordable Care Act and goes into effect in 2014, to help make up for some of the lost revenue.
The proposal to expand Medicaid was "immediately rejected" by Greenstein, according to the memo. Jindal is one of several Republican governors who have said they will not participate in the program.
Greenstein referred to the federal healthcare law as "bad healthcare policy" Thursday and said in a statement that new enrollees will cost the state about $3.7 billion over the first 10 years.
Jan Moller, executive director of the liberal Louisiana Budget Project, said the memos painted a picture of haste and a focus on short-term fixes that would not address the need to adequately fund the hospitals over the long term. Moller, who had filed his own public records request and received the documents independently, said the Medicaid expansion would help take the burden of caring for the uninsured off of the public hospital system.
Jindal's rejection of that option will hurt the working poor, he said.
"If we're going to downsize and reimagine our healthcare system it has to be accompanied by more coverage," Moller said.
Jeff Adelson can be reached at jadelson@timespicayune.com or 225.342.5207.
Source: http://www.nola.com/politics/index.ssf/2012/08/response_to_medicaid_cuts_divi.html
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