Federal regulators haven’t decided on LSU deals

BATON ROUGE, La. (AP) — Though most of LSU’s charity hospitals and clinics have been turned over to private managers, federal officials still haven’t decided whether they’ll agree to the financing plans that are being used to pay the new hospital operators.

Gov. Bobby Jindal’s administration expresses confidence that the deals will eventually gain approval from the federal Centers for Medicare and Medicaid Services, known as CMS, but says that these types of complex arrangements take time.

CMS isn’t talking about how far apart the two sides are in negotiating final terms.

Privatization deals have taken effect for seven university hospitals and their clinics, with two more pending. They are pushed by Jindal as a way to cut state costs, improve care for the poor and uninsured, and bolster medical training programs.

The deals are costing the state $1.1 billion this budget year, much of it paid with federal health care dollars.

But only one contractual arrangement has received federal approval so far, a deal that shuttered LSU’s Earl K. Long Medical Center in Baton Rouge and transferred most of its inpatient services to a private hospital, Our Lady of the Lake Regional Medical Center.

“This is the normal process that the state goes through with CMS on (changes) that are somewhat complex,” said Department of Health and Hospitals Undersecretary Jerry Phillips.

But negotiations dragged on long enough with federal officials that the state health department asked to withdraw its official approval requests with CMS so the clock wouldn’t expire on when a decision needed to be made.

Informal talks continue between state and federal officials, with the Jindal administration continuing to answer questions about the deals for university hospitals and clinics in New Orleans, Lafayette, Houma, Lake Charles, Shreveport and Monroe and for a hospital in Bogalusa to be transferred to private management in March.

Phillips said discussions with CMS over the Baton Rouge privatization deal stretched over eight to 10 months before federal officials signed off on the financing in July. However, the structure of that deal is different than the other LSU hospital contracts.

“We’re confident that these will be approved once we answer all the questions,” Phillips said of the remaining contracts.

Lawmakers have said they’re nervous about starting deals that involve hundreds of millions of dollars in federal Medicaid cash, without first getting an endorsement of the financing plans, particularly in a state that has had to repay improperly spent Medicaid money in past years.

“I am always going to worry until the signature and the ink is dry. That’s always going to be a nagging concern,” said Sen. Sherri Smith Buffington, R-Keithville, who has been an advocate for LSU’s hospital in Shreveport.

Former DHH Secretary David Hood said when he worked at the health department, the agency didn’t move ahead with changes to the way the state spent large amounts of federal money without first getting CMS approval.

“Maybe they’ve gotten more flexible, more liberal, I don’t know. I’m not aware of that. I think that before you go spending federal money, they want to OK it,” he said.

A spokeswoman for CMS refused to comment on the pending requests, saying only that they were under review.

Phillips said no timeline has been set by the federal agency for a decision.

The complex privatization deals include multiple types of federal Medicaid dollars, each with their own sets of restrictions and limits, designed to cover care for the uninsured and for Medicaid patients.

The last sticking point, according to Phillips, is the Jindal administration’s receipt of $281 million in advance lease payments from several private hospital operators and whether some of those payments can be used to draw down federal Medicaid matching funds.

The advance payments helped the governor and lawmakers plug immediate budget holes by lessening lease bills in later years and drummed up construction money for an ambulatory care building and parking garage that will be part of the hospital complex in New Orleans.

In a letter sent to CMS earlier this month, Health and Hospitals Secretary Kathy Kliebert and LSU hospitals chief Frank Opelka outlined their case that the upfront lease payments weren’t donations and were covering rent obligations for facilities and equipment.

Phillips said the Baton Rouge hospital deal had a similar advance payment and received federal approval, so he said he’s confident about the fate of the other financing arrangements.

“We will reach an agreement with CMS. It just takes time to work through these issues,” he said.

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