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Archive for July, 2012

“Given how salient the issue of health care is to national Republicans, privatizing the Office of Group Benefits (OGB) would further the national viability of Gov. Bobby Jindal in a number of ways. It would be difficult for Gov. Jindal to continue his strident attacks on President Obama’s ‘government-run health care program’ while leaving untouched a state-run health insurance program right under his nose.

“Therefore, given the idelogical thrust of both the governor’s rhetoric and his policies, coupled with the political timing of the proposed privatization of OGB, it is hard to escape the conclusion that the privatization of OGB is politically motivated.”

–Albert L. Samuel, Ph.D., Chairman of the Department of Political Science at Southern University, discussing Gov. Piyush Jindal’s incessant ongoing audition for the Republican vice-president nomination and his obsession with privatizing OGB.

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A Baton Rouge attorney has filed papers in opposition to the privatization of the Office of Group Benefits (OGB) for Wednesday’s Civil Service hearing but in the process he could get two university professors teagued by Gov. Piyush Jindal.

Attorney J. Arthur Smith filed his lengthy objection on behalf of 177 OGB employees who stand to lose their jobs if the proposed takeover by Blue Cross/Blue Shield (BCBS) goes through. He reminded the Civil Service Commission that the fundamental purpose of the Civil Service system “is to prevent permanent classified employees from being subjected to adverse personnel actions based on political influence.”

Political influence on the part of the Jindal administration is precisely what he is claiming—along with offering evidence that privatization has not proven to be the panacea claimed by governmental entities that have boldly gone where Piyush is attempting to go now.

BCBS was recently announced as the winner of the state contract to take over the OGB Preferred Provider Organization (PPO) which serves some 60,000 state employees, retirees and dependents.

But two political science professors at LSU and Southern University were sharply critical of the administration’s motives for privatizing OGB and challenged the administration’s fiscal arguments in written reports.

The State Civil Service Commission will hear presentations by the administration and by opponents of the privatization proposal on Wednesday at 9 a.m. in the appropriately named Louisiana Purchase Room of the Claiborne Building on North Third Street in Baton Rouge.

Smith cited a court case—New Orleans Civil Service Commission v. City of New Orleans—in which the Louisiana Supreme Court ruled that the mayor and city council “do not have the unfettered discretion to potentially decimate the civil service system by eliminating all civil service positions to privatization, and, therefore, we find that checks on that discretion are necessary and authorized by the Constitution.”

That ruling also said that the city must turn over all documents and other evidence which enable the Commission to determine (1) whether and civil service employees will be involuntarily displaced from the Civil Service; and, if so, (2) whether the contract was entered into for reasons of efficiency and economy and not for politically motivated reasons.”

The Jindal administration has been conspicuously reluctant in providing “all documents and other evidence,” to the legislature as well as the media. The reason for non-disclosure, which has become almost a cliché, is the often-cited “deliberative process,” an obscure provision behind which the governor consistently hides. He pushed through the deliberative process provision shortly after becoming governor and since has boasted non-stop to the nation that he has made state government more responsive, accountable and transparent.

Smith cited several examples in which privatization has run into problems, including cost overruns, little or no cost savings, inferior service, and a lack of accountability. In many of those cases, he said, governmental entities have on occasion been forced to bring outsourced services back in-house. That has already happened with OGB once before.

He also cited what he considered to be conflicts of interest regarding BCBS. He cited contributions to Jindal of $43,500 by BCBS; $12,500 by Louisiana Health & Indemnity (BCBS’s parent company), and at least $100,000 by BCBS to the Supriya Jindal Foundation. The foundation is run by Jindal’s wife, Supriya Jindal.

Moreover, Smith said the State of Louisiana “essentially donated in excess of $1 million to Louisiana Health & Indemnity to expand and upgrade its headquarters building.” That subsidy, which produced only 22 new jobs, was approved in 2009 as an Enterprise Zone project.

Smith also said the Jindal administration has failed to prove that the proposed OGB privatization would result in increased efficiency.

He cited former OGB Director Tommy Teague as saying in March of 2010 that if OGB is dismantled, the PPO provider network, most of the agency’s extensive expertise in claims, provider services, customer service and information technology would be lost. Also lost, he said, would be the capacity to reinstate the existing self-administered PPO plan structure. Teague pointed out that OGB, in addition to providing “excellent customer service,” also holds down costs by self-administering the PPO plan.

His arguments notwithstanding, Smith’s aces are two political scientists who have weighed in on the side of OGB employees with comprehensive reports that take issue with the administration stand that privatization would be best for OGB and the state.

Albert L. Samuel, chairman of the Political Science Department at Southern University, was critical of the fiscal irresponsibility of the administration and legislature in the aftermath of Hurricanes Katrina and Rita which he said led to the current fiscal crisis.

“Due to federal recovery dollars as a result of the 2005 hurricanes and historically high oil prices, the (Jindal) administration inherited a budget surplus of nearly $2 billion. During its first year in office, the administration and its legislative allies swiftly passed a series of large tax cuts and spent millions of dollars in one-time money on road projects, deferred maintenance at state colleges and universities, levee improvements, coastal restoration projects and upgrades to Pennington Biomedical Center,” he said. “Perhaps most notably, Gov. Jindal signed a repeal of the Stelly Tax Plan which provided a substantial tax savings for upper-income Louisianians.”

When the 2008 financial crisis struck, however, Samuel noted that rather than reconsidering the deep tax cuts that were enacted in previous years, Jindal “held steadfastly to (his) conservative ideals.” Jindal, he said, “adamantly opposed every attempt on the part of legislators to deal with the financial crisis through tax increases.”

“Consistent with that Naomi Klein calls ‘The Shock Doctrine,’ the governor capitalized on the financial crisis of the state to advance an agenda that called into the question the rationale for government to perform basic services on a wide range of issues.”

Samuel concluded his 21-page report by saying that political motivations “are driving the Jindal administration’s push to privatize the Office of Group Benefits.

“It locates Gov. Jindal squarely on the cutting edge of a national Republican party, determined to pursue this course without making a clear and convincing case that OGB, as currently constituted, has failed to provide quality service and coverage to its plan members at reasonable costs to taxpayers.

“The proposed privatization cuts to the heart of the fundamental rationales for having a civil service system in the first place—the idea of protecting state government workers from dismissal driven by politics.”

LSU political science professor Belinda Creel Davis cited from Shrinking the State: The Political Underpinnings of Privatization, a book by Harvey Feigenbaum, Jeffrey Henig and Chris Hamnett who said that privatization “is a political tool having the end goal of realigning institutions and decision-making in order to privilege the goals of one group over another.”

Davis cited the privatization of Louisiana’s Medicaid program as “an excellent example” of the difficulty in evaluating the effectiveness of privatization, specifically citing Jindal’s reluctance to approve legislative oversight of privatization programs.

“The Louisiana Legislature has passed bills in the 2011 and 2012 sessions that were designed to give legislators more information on the way the Jindal administration is implementing health care programs for the poor via private health care firms.

“For the second year in a row, Gov. Jindal has vetoed the bills, claiming they were unnecessary and duplicative since the Department of Health and Hospitals (DHH) issues extensive evaluations.

“It is interesting to note that his veto message does not claim that the report issued by DHH provides all or even most of the information sought by legislators. In the 2012 session, Senate Bill 569, seeking greater transparency on this matter passed unanimously in the House and Senate. Legislators seeking transparency regarding implementation must find the reports lacking if they have sought additional information, but they are unable to access the information they seek—resulting in a more difficult accountability process under privatization than you would see under government provision of the service.

“This is exactly the type of consequence systemic privatization predicts,” she said.

“In my opinion, as a scholar of public policy and government, privatization is an inherently political process. The evidence from both national and state studies supports this view. I believe the case before you is a clear case of politically motivated privatization.”

Those are the kinds of statements, bold and insightful as they may be, that seem to get people teagued these days.

Teagueing, after all, is the one activity in which this administration is abundantly transparent and open.

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A nurse at Southeast Louisiana Hospital in Mandeville is standing by her story about details of negotiations between the state and Magellan Health Services of Avon, Connecticut, despite denials by a spokesman for a state representative who she insists told her about the preliminary talks with the health care company.

The nurse, who asked that her identity not be revealed because of her job, said Hollis told her that Department of Health and Human Services (DHH) Secretary Bruce Greenstein had confided in a meeting that included legislators that the state was in preliminary negotiations with Magellan to take over the hospital after it begins shutting down as a state facility on Oct. 1.

James Hartman of James Hartman & Associates represents Rep. Paul Hollis (R-Covington), who the nurse said was at the meeting. Hartman emailed LouisianaVoice on Thursday to insist that Hollis “has had no such conversation with Secretary Greenstein.”

“In fact,” said Hartman, “Rep Hollis told me he has never had a private conversation with Secretary Greenstein at all.”

In a second email, Hartman said, “Your source is unreliable. Rep. Hollis has had no such conversation with Secretary Greenstein and, again, has never even had a one-on-one conversation with the secretary.”

The careful choice of “private conversation” and “one-on-one conversation” appear to be the key phrases in Hartman’s denial; LouisianaVoice never said there was a “private” or “one-on-one” conversation between Greenstein and Hollis.

The LouisianaVoice post of Wednesday said that Greenstein “recently confided” in Hollis and Rep. Tim Burns (R-Mandeville) that he (Greenstein) had been in negotiations with Magellan about taking over the operation of the hospital once it is privatized. There reportedly were others in that meeting as well, which would at least lend credibility to the claim of no “private” or “one-on-one” meeting between Hollis and Greenstein.

The nurse, contacted for clarification, stood by her story. “There was a meeting of about 40 people with Greenstein,” she said. “Pat Brister (St. Tammany Parish President) was there and Rep. Burns also attended. It was at that meeting that Greenstein revealed the negotiations.”

She said Hollis called her on Tuesday night after she had initially attempted to contact him. “He told me he had been contacted by more than 30 people in opposition to the closure of Southeast Louisiana Hospital.

“During our telephone conversation, he revealed to me what Greenstein had said. He (Hollis) didn’t name the private company at first and when I asked if it was Magellan, he acknowledged it was,” she said.

Greenstein is in the process of formally declaring the 300-acre site on which the hospital sits as surplus property so that it may be sold at auction. More than 1400 acres of hospital property was sold to St. Tammany Parish last month for $6.45 million, less than half the $14.7 million appraisal of the property in February 2011.

The entire 1900-acre tract (before the adjoining property was sold last month) was appraised at nearly $67.9 million, according to information contained on the Office of State Lands web page.

Even if the property is declared surplus and put up for sale, Magellan would still have to submit the high bid to obtain the property but bid specifications and requests for proposals can be written in such a way as to give a favored vendor an advantage over competitors.

Magellan currently holds three contracts with the state totaling more than $392 million, state records show.

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LouisianaVoice has learned that the recent $651 million cut to the state’s healthcare system may have had nothing to do with the decision by Gov. Bobby Jindal to close down Southeast Louisiana Hospital in Mandeville and in fact the move may have been in the works for months.

In fact, secret negotiations have apparently been ongoing for some time between the state and Magellan Health Services of Avon, Connecticut, to take over the hospital after the hospital is closed and subsequently privatized.

Department of Health and Hospitals Secretary Bruce Greenstein announced late last Friday that the 348-bed hospital would be closed down beginning Oct. 1, putting about 300 employees out of work.

Southeast Louisiana Hospital is one of three state hospitals offering treatment for mental illness, including depression and attempted suicide. Early word is Southeast Louisiana Hospital’s patients will be transferred to the remaining two facilities—Central Louisiana State Hospital in Pineville and East Louisiana State Hospital in Jackson.

Only last month, the state sold 1,442 acres of hospital property to St. Tammany Parish for $6.45 million, far below the $14.7 million the property (including $200,000 in timber assessed valuation) was appraised for in February 2011.

The total 1,900-acre tract, including the remaining area of approximately 500 acres on which the hospital is situated and a park area leased to St. Tammany Parish, was appraised at $67.865 million only last week, according to the web page of the Office of State Lands.

LouisianaVoice has also learned from DHH sources that Greenstein is prepared to sign forms to officially declare the hospital as surplus property preparatory to its being put up for auction.

Early speculation had the hospital property being sold for the development of a high-end residential subdivision.

But LouisianaVoice learned that Greenstein had recently confided in Reps. Paul Hollis (R-Covington) and Tim Burns (R-Mandeville) that he had been in negotiations with Magellan about taking over the operation of the hospital once it is privatized.

Moreover, a New Orleans doctor reportedly was approached several weeks ago—before news of the loss of the $651 million in Medicaid funds by the state—about becoming the chief of staff of the Mandeville facility.

The unidentified doctor initially thought he was being recruited for an existing private hospital or for a private hospital’s expansion into the Northshore area because nothing had been said at that point about Southeast Louisiana’s closure. “It all makes sense now,” he told a colleague after learning of the impending closure of East Louisiana Hospital.

Once the hospital is declared surplus property and the facility closed, a request for proposals would have to be issued by DHH and private companies would be required to bid on contracting for either purchasing the hospital or running it as a contractor.

Magellan already has a connection with the state and Jindal, including three lucrative contracts.

The company, in addition to contributing $5,000 to Jindal’s campaign in 2008 and another $5,000 to the Louisiana Republican Party last September, currently has separate multi-million dollar contracts with three separate state agencies totaling more than $392 million. All three contracts run for two years, from March 1, 2012 through Feb. 28, 2014, records show.

The first contract, for $357.6 million, is with DHH through the Office of Behavioral Health. That contract calls for the firm to run a statewide management organization for a prepaid inpatient health plan for behavioral health services.

A $22.4 million contract with the Department of children and Family Services calls for Magellan to provide an array of coordinated community based services and support for children and youth with behavioral health disorders.

The third contract, for $12 million, is with the Department of Public Safety and Corrections and calls for Magellan to provide coordinated community-based services and supports for incarcerated youths with serious behavioral health disorders.

The larger, $357.6 million contract was approved in January but the two smaller ones were each approved in April, retroactive to March 1.

The recent appearance at the Capitol of former DHH Secretary Alan Levine only serves to fuel speculation swirling around the Mandeville hospital.

Levine, who came to DHH from Florida in January 2008, resigned in August 2010 to return to Florida where he currently serves as the Division 3 President of Health Management Associates where he is responsible for the administration of for-profit hospitals in Florida, Georgia, Oklahoma, Kentucky and West Virginia.

Greenstein to a legislative committee last week that Levine was in town to discuss Florida’s setup. He said Florida is one of several models for ways in which to increase revenues for state hospitals.

All the latest developments—Greenstein’s meeting with the legislators, the informal recruitment of the New Orleans doctor, last month’s sale of 1900 acres of adjoining hospital property and the impending declaration of the remainder of the property, including the hospital itself, as surplus, and the administrations reported secret negotiations with Magellan—all point to a covert plan by Jindal and Greenstein to close the hospital that dates back well beyond the news of the loss of the Medicaid funds.

All of which leaves unanswered the question of how indigent patients needing mental health treatment will be able to afford that treatment when the state hospital in Mandeville becomes a private, for-profit facility.

Besides the question of continued treatment for patients, employees of the hospital, like the 177 employees of the Office of Group Benefits, will lose retirement and medical benefits when the hospital makes the transition from public to private provider.

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“So if you just think about the sort of pipeline that’s out there, certainly Louisiana, Kentucky, Washington, Kansas–all those are states that are looking at how did they do it and, in particular, how they do managed long-term care.”

–John Littel, Vice President of External Relations of Amerigroup Corp., during a conference on “Medicaid’s evolving role with the private sector” as administered by the State of Texas, where 6.1 million (28 percent of the population) are uninsured–most in the nation. The Texas program was considered by the conference as a model to be emulated.

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