Not that we told you so, but…..we told you so. Several times.
LouisianaVoice has questioned the wisdom—and legality—of the shaky LSU hospital privatization deals since day one and on Friday, the U.S. Centers for Medicare and Medicaid Services (CMS) notified the state that it had refused to sign off on the administration’s plans to privatize LSU hospitals in New Orleans, Shreveport, Monroe, Houma, Lake Charles and Lafayette.
The decision deals a devastating blow to the administration and the state budget for next fiscal year which begins on July 1.
Even more important, the decision throws into serious doubt the operating budget for higher education for the remaining two months of the current fiscal year.
Only last week, Jindal asked State Treasurer John Kennedy to transfer $40 million from other areas to continue funding higher education because an anticipated $70 million in hospital lease payments had not been made.
Kennedy said Friday he was assured that the money would be repaid as soon as the lease payments were received. “Now, I just don’t know,” Kennedy said. “If that $70 million isn’t forthcoming, we have a problem right now, not next year. I don’t believe the legislators realize this yet. I don’t think they realize they will have to cut another $70 million from somewhere to keep higher education afloat. We have to support higher ed.
“Wow. This catches me flat-footed,” he said. “I didn’t expect a decision this soon.”
Commissioner of Administration Kristy Nichols said last week that she was confident that the lease payments would be made but the CMA decision casts a huge shadow over those prospects.
Kennedy added that he believes the legislature will now have to consider his proposal calling for an across the board 10 percent cut in consulting contracts. “That would generate $500 million,” he said.
State Rep. Rogers Pope (R-Denham Springs) said the decision raises the question of “where the state will make up $300 million-plus. You have to wonder how many cans we can keep kicking down the road.
“This is a discouraging development. The budget is scheduled to come to the House floor next Thursday, so there’s no time to find additional money. I just don’t know how to react or how many services we can cut.
“Just last week (Department of Health and Hospitals Secretary Kathy) Kliebert assured the Senate there was nothing to worry about and now this…”
Another legislator was even more outspoken in his criticism of the governor.
“Governor Bobby Jindal’s reckless pursuit of using federal Medicaid funds in an ill-conceived scheme to privatize state-run hospitals has backfired and now the people of Louisiana will pay a dear price,” said State Rep. Robert Johnson (D-Marksville) in a prepared statement. “Governor Jindal has written a blank check to sell our charity hospital system, which is ultimately used by Louisiana’s working poor, and today it has bounced.
“People could die. The sick will get sicker. Our precious hospitals are in turmoil. The state budget is in tatters. Governor Bobby Jindal sits in the midst of this fiscal and healthcare debacle clutching his dreams of the presidency at the taxpayers’ expense.
“I, along with many others, predicted this outcome and now the people of Louisiana have been left with the tab.
“The Jindal administration’s announcement of an appeal is a typical, timid, tepid response that will bear no more fruit than the barren tree Jindal planted last year.
“It will take all of us. Now is not the time to fall back on partisan bickering or to cling to ideology in the face of a fiscal and healthcare disaster,” he said.
Part of the problem was most likely the manner in which the administration was attempting to use federal dollars to attract more federal matching dollars to finance Jindal’s privatization plan; the feds just weren’t buying it.
Here is the scheme: The private hospital pays LSU money to lease the LSU hospital. That money does not stay with LSU; it ends up (directly or indirectly) being used as match in the Medicaid program. After matching those lease payments with federal funds, the total, larger amount is paid back to the private partner in the form of a Medicaid payment. The lease payments supplant the state funds. However, the legislative fiscal office has already raised concerns about the leases being $39 million short which is why the Division of Administration has already begun planning on “double” lease payments this year.
For years states have devised schemes to receive additional federal funds while reducing the state contribution for Medicaid. There is a problem with these schemes, however. Consider this from a 2009 report by the Congressional Research Office:
“In 1991, Congress passed the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments (P.L. 102-234). This bill grappled with several Medicaid funding mechanisms that were sometimes used to circumvent the state/federal shared responsibility for funding the cost of the Medicaid program. Under these funding methods, states collect funds (through taxes or other means) from providers and pay the money back to those providers as Medicaid payments, while claiming the federal matching share of those payments. States were essentially “borrowing” their required state matching amounts from the providers. Once the state share was netted out, the federal matching funds claimed could be used to raise provider payment rates, to fund other portions of the Medicaid program, or for other non-Medicaid purposes.”
DHH’s scheme included a “borrowing” component that looked similar to the practices this legislation was aimed at preventing. Medicaid rules do not allow a Medicaid provider (read “hospital” here) to voluntarily donate money to the state when they know they will get this money back plus more (the federal share) as part of an increase in their Medicaid payments. The federal oversight agency, CMS, had previously expressed concerns to state officials that these lease payments could qualify as non bona fide provider donations.
If CMS determined these are conventional fair market value leases, they would have allowed the payments. Beyond the basic annual lease payments, the deals included “double lease payments” and other large up front lease payments designed to fix the state’s budget problem raising the specter of non bona fide provider donations. If these payments were deemed to be non-allowable, the federal government will recoup any federal funds that were paid as match for these state funds.
The privatization deals were done at a cost of $1.1 billion to the state this budget year, much of that ($882 million) expected to come from federal funds under the scenario alluded to above.
But a terse message from CMS brought all those plans crashing down: “To maintain the fiscal integrity of the Medicaid program, CMS is unable to approve the state plan amendment request made by Louisiana.”
Predictably, Jindal, who refused to wait for federal approval before plunging ahead full bore with his sweeping privatization of the LSU hospital system, said, “CMS has no legal basis for this decision.” (At least he didn’t call the decision “wrong-headed,” as he did in 2012 when a state district court ruled his school voucher program unconstitutional.)
Jindal said he will appeal the decision but for the time being, the six hospitals will be operating under financing plans that have been shot down, which should come as no surprise to observers of this administration. Friday’s decision prompted one of the governor’s critics to comment, “Jindal deserves every misfortune that this may bring him. The people of this state, however, don’t deserve this. He used them for his selfish political purposes.” Another said, “It would be karma if this fiasco totally destroyed Jindal’s national dreams.”
The one question still left unanswered is whether attorney Jimmy Faircloth will once again be called on to defend yet another dog of a legal case on behalf of this blundering administration, thus adding to his legal fees which already exceed $1 million.
Great work, as usual, Tom!
This is not something Kathy Kliebert just found out. The question is did she purposely mislead the senate? Sounds like the Obama administration.
Let’s not kid ourselves, everyone at DHH knew this was going to happen…Kliebert is just “following orders”.
Wow, Tom! If I depended only on the newspapers (namely the Advocate), I wouldn’t know what actually happened or have a good picture of the implications.
Wish I knew what Fred Cerise and Roxane Townsend are thinking when I think they warned of a need for a plan should this fail and there could be devastating budget problems. Is my memory correct?
Pure Jindal, the flim-flam man. The legislators knew. John Kennedy knew.
Bob, N, I don’t understand what Obama has to do with this disaster. Put the blame squarely where it belongs, on Jindal’s lust for a position of power on the national scene, and the spineless legislature’s failure to rein him in. As a friend of mine said, Jindal didn’t plan to be around when his house of cards collapsed. He expected he would have moved on by now.
Yes, John Kennedy did know and he attempted to warn Jindal of the pitfalls of this plan at least as far back as last October, right after the Shreveport and Monroe hospitals were taken over. He called the plan an “accounting maneuver” designed to leverage more money from the federal government.
Bottom line: Kennedy should be recognized for his efforts to avoid this disaster. Yes, he knew and he warned us of the folly.
Agree on Kennedy.
June,
The Jindal administration lies like the Obama administration. Both men are pathological, and they are both somehow able to find morons to blindly follow them and cover up their lies.
Bob
Bob N, we disagree. Republican governance as we see in the Jindal maladministration is Republican governance writ large on the national scene, should the party control the presidency and the Congress. Have you checked in on the activities of the US House recently?
maybe faircloth gets co-counsel position to save face, but the heavy lifting will have to be some d c heavyweights. maybe shell will sponsor the state a la jazz fest
The chickens are coming home to roost. Much earlier than Jindal thought they would come home to roost—that is, until well after he was gone.
Just another egregious miscalculation and mismanagement by Jindal.
Please, Mr. Kennedy, do not loan them any more money from other funds.
And, you university leaders, who have been sitting out there silently, apparently afraid of Jindal, it is time you spoke up before your schools get devastated. Have some courage.
Finally, all us citizens, average joes and janes, let’s speak up, talk to our legislators, and, in a little more than a year, vote out the ones who have blindly and spinelessly followed and enabled Jindal’s adolescence wreckage. It is our duty to identify these people and retire them.
hope alvarez and marsal are working overtime to find that half a billion in savings
Maybe one of their suggestions to reduce waste and inefficiency will be to elect a real governor and legislators who represent the people of Louisiana. We currently have a con-artist in charge and a pitiful group of legislators who roll over at the drop of a Benjamin.
Excellent idea, but wouldn’t such a recommendation immediately put them out of business in Louisiana?
Ha!
June,
Your viewpoint is in the minority. We absolutely disagree. If you can’t see and admit Obama is a liar then it’s because you have chosen NOT to. There are numerous examples. Even the liberal press is on to it.
I vote Republican most of the time. But I think Jindal is a fraud. And I wouldn’t let John Boehner run my child’s lemonade stand. I’ll call a liar and huckster out whenever I see it.
Understood, Bob. I will not take the comments here further off topic.
From a financial standpoint, Jindal’s “Ponzi” scheme to “rob Peter to pay Paul” is simply the tip of the proverbial iceberg. A critique of LED’s economic incentive plans results in the realization that these Jindal fostered plans are responsible for the decimation of Louisiana’s revenue base and that such decimation will continue for many years-as much as ten years-to come. However, projects such as the privatization of the Charity Hospital System makes Jindal look like the Forrest Gump(no offense Forrest) of public finance.
Guess who statue is rising. Remember when we all decided Kathleen Blanco had to go because she cried on TV following Katrina. Later, we learned most of the blame for poor response to the crisis went to the Bush Administration. Governor Blanco left the state with a a surplus of nearly 2 billion dollars. The state has a 3 billion dollar shortfall. Also it’s not because of social programs because he nearly cut those to death. It’s been his programs giving his friends state contracts to run state government institutions.
The bottom line is that Louisiana’s structure of government has to be realigned to relieve the near-totalitarian power vested in the governor. At least with Earl Long, there were some obvious defects which resulted in intervention. In the case of Jindal, he’s completely unqualified for the position he’s held, but because there’s no outward signs of mental defect, this child-like governor has been able to experiment with powers just like the state were some frog on the table of a biology lab project he would have conducted in college.
If “realigning” Louisiana’s structure of government = holding all elected officials accountable, you are correct. Existing law is adequate and does not grant unreasonable powers to the governor. The legislature abdicates its legal powers to the governor and uses him as its scapegoat. The governor then uses the legislature as his scapegoat – and everybody wins but us.
Stephen, I agree. The legislators do not do their jobs. I wrote to my two members last night with little hope that the missive will do any good.
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Excellent work Tom. Yet one wonders whether the state legislature will actually confront Jindal. The House Health and Welfare Committee will have its chance to do so this Tuesday May 6 (9am, HCR 5, State Capitol) with regards to SCR 48, which proposes to close central Louisiana’s public safety net provider, Huey P. Long Medical Center. Please join Concerned Citizens of Pineville, Advocates for Louisiana Public Healthcare and others in contacting House Health and Welfare Committee members to REJECT this dastardly and financially unsound proposal.
I wonder if we can get some one to exercise Jindal and his cast of dirt bags plum and nearly? PLUM OUT OF OUR STATE AND NEARLY OUT OF OUR COUNTRY?
I guess Faircloth is seeing $$$! Sines already !
OUT WITH JINDAL THE SOONER THE BETTER!!!!