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Archive for the ‘Privatization’ Category

Notable Quotables (in their own words)

Posted in Governor's Office, Health Care, Layoffs, Notable Quotables, Privatization on July 11, 2013| 1 Comment »

“We approached the state…about how we might be able to help solve the problem with Southeast closing.”

—Meridian Behavioral Health Systems CEO Wes Mason, discussing his company’s selection as the private firm to take over operations of the privatized Southeast Louisiana Hospital (SELH) last October.

“Meridian was the only company that met all of DHH’s requirements and expectations…”

—DHH Public Information Officer Ken Pastorick, on the selection of Meridian, which operates Northlake Behavioral Health System, formerly SELH. (Northlake has been notified by the Center for Medicare & Medicaid Services that deficiencies at the facility have caused it to lose eligibility to participate in Medicare.)

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Another Jindal Swindle in trouble: SELH, aka Northlake, loses Medicare eligibility nine months after privatization

Posted in Contract, Contracts, Governor's Office, Health Care, Layoffs, Privatization, Public Records, Transparency, Uncategorized on July 11, 2013| 21 Comments »

It’s been all of nine months since Meridian Behavioral Health Systems took over operation of Southeast Louisiana Hospital (SELH) in Mandeville in what we like to call the Jindal Swindle and already the facility has been notified that it has been found to have deficiencies serious enough to threaten its eligibility to continue participation in Medicare.

Meridian, a Florida-based company chosen to run SELH after Gov. Bobby Jindal chose to close the hospital, has been running the 58-bed facility under the name of Northlake Behavioral Health System.

Jindal announced last year that he was closing the hospital, effective Oct. 1, a move that left mental patients in all of southeast Louisiana, including the New Orleans, Houma and Thibodaux metropolitan areas, with no access to any state mental treatment facility. The move threw more than 300 SELH employees out of work.

Formed as a company less than a year before taking over the Mandeville hospital, Meridian had never handled a facility the size of SELH and in fact, listed no facilities it had ever run on its application.

And it didn’t take long for that inexperience to surface.

Northlake Behavioral Health System CEO Richard Kramer was notified by the Center for Medicare & Medicaid Services (CMS) on June 3 that Northlake no longer qualified for participation in Medicare.

“After a careful review of the May 23, 2013, survey report, we have determined that Northlake Behavioral Health System no longer meets the requirements for participation in the Medicare program,” wrote Greg Soccio, manager of the CMS Non-Long Term Care Certification and Enforcement Branch.

“Although the deficiencies do not constitute an immediate threat to the health and safety of patients, the deficiencies have been determined to be of such a serious nature as to substantially limit your hospital’s capacity to render adequate care and prevent it from being in compliance with all the conditions of participation for hospitals,” Soccio’s letter said. “Consequently, we plan to terminate participation in the Medicare program if compliance is not achieved within the given timeframes specified.”

Soccio, in his letter, gave Sept. 1, exactly 11 months after Meridian took over the facility, as the date of its termination in Medicare. “CMS will monitor your progress in correcting the deficiencies cited,” he said. “You must submit by June 14 a plan of correction with acceptable time schedule.” His letter, while imposing a July 3 deadline for completion of corrective action, listed criteria Northlake must meet for recertification:

• The plan must address correcting the specific deficiency cited;

• The plan must address improving the processes that led to the deficiency cited;

• The plan must include procedures for implementing the acceptable plans of correction for each deficiency cited;

• A completion date for the implementation of the plans of correction for each deficiency cited;

• All plans of correction must take a QAPI (Quality Assurance/Performance Improvement) approach and address improvements in its systems in order to prevent the likelihood of the deficient practice reoccurring;

• The plan must include the monitoring and tracking procedures to ensure that the plan of correction is effective and that specific deficiency cited remains corrected and/or in compliance with the regulatory requirements;

• The plan must include the title of the person responsible for implementing the acceptable plan for correction.

Subsequent to Soccio’s letter, Kramer submitted a 43-page plan of correction to CMS on June 14, the deadline given by CMS.

As serious as the letter may have been to Northlake and as welcome as it may have been to those opposed to the privatization, it did leave one gigantic loophole for Jindal:

“The Louisiana Department of Health and Hospitals (DHH) will conduct a focus Medicare survey of your facility to assess your hospital’s compliance with the conditions of participation that were found out of compliance and assess your corrective actions,” Soccio’s letter said.

“Compliance must be achieved at the time of this revisit if further action is to be avoided. If you remain out of compliance at the time of your revisit, you can expect to receive another letter advising you of the continuation of the termination process and your appeal rights.

“You will again be asked to submit an acceptable plan of correction to our office and we may conduct one final revisit before the termination date,” it said.

That July 3 deadline was more than a week ago and a CMS spokesperson in Dallas said on Wednesday that no new paperwork had been received on Northlake by his office.

But allowing DHH to make the determination of compliance? This is the same agency that, under former Secretary Bruce Greenstein, was allowed to manipulate specifications to allow Greenstein’s former employer, CNSI, to bid on and win a $280 million contract that is now the subject of a federal investigation.

Greenstein may be gone but his successor, like Greenstein, was appointed by Jindal and does anyone really doubt that the governor maintains an iron grip over DHH? And Jindal doesn’t like to admit he ever made a mistake.

Anyone care to take any bets on the outcome of that DHH focus Medicare survey of Northlake?

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Jindal’s veto of developmentally disabled funds is part of multi-state trend to slash benefits for Medicaid recipients

Posted in ALEC, American Legislative Exchange Council, Contract, Contracts, Governor's Office, Health Care, Layoffs, Privatization, RFP, Request for Proposals, State Agencies, Transparency on July 1, 2013| 29 Comments »

If you think Gov. Bobby Jindal’s veto of $4 million to provide in-home services to the developmentally disabled was merely an aberration, an inadvertent blip on the budgetary radar, you may wish to reassess your decision to give the governor a pass on this issue.

Jindal, of course, offered his own spin in his pushback against criticism he has received from proponents of the measure but he simply can’t get around the fact that cutbacks of services to the poor appear to be the norm in several states these days. Surely he has not forgotten his closure of Southeast Louisiana Hospital in Mandeville less than a year ago that put mental health treatment by state facilities out of reach for many in southeast Louisiana.

No one denies the current budgetary shortfalls—brought about in large part by Jindal’s stubborn refusal to seek new means of tax revenue except through the New Orleans hotel fee increase (which is not a “tax,” in the land of Jindal-speak, but an “enforceable obligation,”) and college tuition increases (“fees,” not taxes). But were it not for the more-than-generous tax incentives doled out in the form of corporate welfare, er, industrial incentives the state’s coffers would be $5 billion richer each year.

It’s not like he couldn’t have trimmed a couple of million or so from the $1.285 billion appropriation for his Office of Homeland Security and Emergency Preparedness. Of course, to suggest there might be the remote possibility of waste in a budget of nearly $1.3 billion for a pet agency would be blasphemy.

The Louisiana State Racing Commission got its full share of funding—$12.2 million. Surely, there’s no waste there. Likewise, the $82.7 million appropriation for the Louisiana Stadium and Exposition District administered by a commission made up 100 percent of generous Jindal campaign donors.

Then there’s the Department of Economic Development and the Office of Business Development which combine to receive the full complement of their $36.6 million appropriation in order to ensure the uninterrupted flow of those $5 billion in tax incentives, rebates and exemptions to attract all those new jobs that are supposed to retain current residents and bring in new ones—even though the state’s population has shrunk to the extent that we now have only six congressmen instead of the eight we had a few years ago.

And we’re not even going to go into detail about all those washed up ex-legislators hired by the various agencies at six-figure salaries—or the glut of administrative personnel with limited experience with which John White has loaded down his Department of Education, also at six-figure salaries. Or White’s slipshod management of the disastrous voucher program that allowed New Living Word School in Ruston to rip off DOE to the tune of nearly $400,000—money that will never be recovered, by the way.

Sorry, folks, the money’s not there for the developmentally disabled. You just should have had the good sense to be born developmentally abled or better yet, rich.

And as we said in the first paragraph, that veto was no accident. It was planned from the get-go as will future cuts of medical benefits to the poor.

Why do you think Carol Steckel was brought here in the first place?

Steckel was Alabama’s Medicaid Commissioner from 1988-1992 and again from December 2003 until her move to Louisiana in November of 2010.

While at Alabama she issued a ruling that poor amputees in that state didn’t really need artificial limbs. In January of 2008, she submitted the state’s Medicaid budget that cut programs that pay for prosthetics and orthotics (used to provide support and alignment to prevent or correct deformities) because, in her words, the programs were optional, not mandatory.

She also awarded a $3.7 million contract to Affiliated Computer Services (ACS) in 2007 even though that company’s bid was $500,000 more than the next bid. ACS had hired Alabama Gov. Bob Riley’s former chief of staff Toby Roth, which probably greased the skids somewhat.

Sound familiar? ACS, which is now part of Xerox, was awarded four state contracts totaling $45.55 million and ACS contributed $10,000 to Jindal political campaigns. Jan Cassidy, sister-in-law to Congressman (U.S. Senator wannabe) Bill Cassidy, previously worked for ACS and then for Xerox as Vice President, State of Louisiana Client Executive. Where is Ms. Cassidy today? She heads the State of Louisiana Division of Administration’s Procurement and Technology Section at a salary of $150,000. Toby Roth in reverse?

Steckel was imported from Alabama and given the title of Chief of the Department of Health and Hospital’s (DHH) Center for Health Care Innovation and Technology. She created quite a stir when she failed at first but eventually succeeded at terminating 69 information technology positions at DHH and giving the contract to the University of New Orleans to run. The 69 employees moved over to UNO’s payroll, saving the state zero, and UNO began collecting an administrative fee of 15 percent to run the IT operations for DHH. Thus, instead of a savings, the state is now paying an additional 15 percent for privatization.

Steckel has moved on again, this time to work her magic as Medicaid Director for North Carolina.

Now let’s move about 400 miles to the west—to Austin—and examine what occurred when similar legislation was passed in Texas a decade ago.

Dave Mann (not to be confused with the premier political analyst of our era, Bob Mann), then a reporter for the Texas Observer, covered the story in June of 2003 and predicted a train wreck would result from the legislation pushed through by Republican Rep. Arlene Wohlgemuth. Mann, it turns out, was dead-on in his predictions, which could explain in part why he is that publication’s editor today.

HB 2292 amounted to a “massive rewrite of the state’s social services safety net,” Mann wrote by squeezing 11 existing state agencies into four, all under the control of a powerful governor-appointed commissioner. It also cut many relatively inexpensive healthcare services for the poor, wiping out 1,000 state jobs in the process by privatizing several core state functions (again, sound familiar?)

The bill cut services under the Children’s Health Insurance Program and threw up bureaucratic barriers that purged an estimated 160,000 kids from its rolls. It abolished an entire section of Medicaid that offered temporary aid to families who were unable to pay high medical bills because of illness or accident—knocking an additional 10,000 people month out of medical coverage. It also put the squeeze on nursing home patients by reducing their “personal needs” allowances by 25 percent—from $60 per month to $45 (money nursing home residents spent on such things as toothpaste, shampoo, and shoes).

Proponents of the bill crowed that it would eliminate more than 3,000 state employees and hand over several core functions to large corporations, many of whom were major campaign contributors to key Texas politicians.

Among those outsourced functions were four privately run call centers with operators charged with making the determination of which families would be eligible for state programs like Medicaid, CHIP, Supplemental Security Income, welfare and food stamps.

Would anyone care to guess which company tried desperate to jockey itself into position of grabbing a call center contract? None other than our old friend, ACS, which was already running Medicaid programs in 13 states, including Texas.

ACS ended up not getting the call center contract, but if it had, it would have created the mother of conflicts of interest because by virtue of running the Texas Medicaid program, it was charged with keeping administrative costs down. Thus, the fewer Medicaid cases on the books, the lower the costs and the more money ACS would have stood to make. Thus, had it run the call center in the dual role as guardian of the program, it would have had a financial incentive to approve as few people as possible for Medicaid benefits.

Mann, contacted Monday, said though ACS did not get the call center contract, the operation nonetheless “fell apart within months.”

He said the error rates skyrocketed “because experienced state employees who knew the system were gone” and the contractors knew precious little about the system. “The enrollment process was messed up from the start,” he said, and the state was handed a substantial fine by the federal government.

He said Texas had to try and rehire all the former state employees who had been doing the job before. “They had to bring them back in and have them salvage the system,” he said.

Now, if you happen to wonder how four states—Alabama, Louisiana, Texas, and with Carol Steckel now on the scene, most probably North Carolina—could each stumble into the same scenario with Medicaid reforms and privatization of support staff, rest assured it was not a coincidence.

Efforts in Texas, Louisiana and Alabama (and presumably North Carolina) to slash health care benefits under the states’ Medicaid programs come to us courtesy of our old friend, the American Legislative Exchange Council (ALEC).

Though we have not visited ALEC for some time, the organization of some 2000 state legislators and scores of corporate underwriter-sponsors has never been very far from the action.

Among the major targets of ALEC are state health, pharmaceutical and safety net programs, including:

• Opposing health insurance reforms with state constitutional amendments;

• Opposing of efforts to advance public health care;

• Eliminating mandated benefits intended to ensure minimal care for American workers;

• Supporting Medicare privatization;

• Creating barriers to requiring important health benefits;

• Privatizing child support enforcement services.

ALEC’s number-one priority has been to encourage its members (legislators) to introduce bills that would undercut health care reform by prohibiting the Affordable Health Care Act’s insurance mandate.

Led by PhRMA, Johnson & Johnson, Bayer and GlaxoSmithKlein, ALEC’s model bill, the “Freedom of Choice in Health Care Act,” has been introduced in 44 states. Utilizing ideas and information from such groups as the Heritage Foundation, the National Center for Policy Analysis, the Cato Institute, the Goldwater Institute, the James Madison Institute, and the National Federation of Independent Business, ALEC even released a “State Legislators Guild to Repealing ObamaCare” in which a variety of model legislation, including bills to partially privatize Medicaid and SCHIP, is discussed.

Pardon our skepticism, but after the disasters of the Office of Risk Management privatization and the Department of Education voucher fiasco, we can’t help being a bit leery of these quick-fix schemes. The sweetheart CNSI contract with DHH has already proved to be a major $200 million scandal—and that may well be only the beginning.

Up next is an ambitious program to privatize the IT operations of 20 agencies under the Executive Branch. That privatization could mean the loss of some 1100 more state jobs and their duties turned over to a private firm with no grasp of how things are done. That sad scenario has already played out in other states and invariably resulted in cost overruns and repeated failure. There is no reason to expect a better outcome this time.

It was Albert Einstein, after all, who defined insanity as doing the same thing over and over and expecting different results.

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DOA to issue RFP for contract to consolidate 20 Executive Department IT operations; hundreds of layoffs anticipated

Posted in Computers, Governor's Office, Layoffs, Privatization, RFP, Request for Proposals, Transparency on June 28, 2013| 48 Comments »

The Division of Administration (DOA) on Friday issued a new request for proposals (RFP) for the consolidation of the information technology (IT) departments of 20 departments within the state’s Executive Branch. http://wwwprd1.doa.louisiana.gov/OSP/LaPAC/agency/pdf/5479100.pdf

July 12 is the deadline for submissions and Aug. 16 is the target date to announce the awarding of the contract, tentatively set to begin on Aug. 30, according to the RFP.

This is sure to be yet another contract to be awarded to some company who will in all likelihood underbid the cost and come back later with expensive contract amendments like F.A. Richard and Associates (FARA) with the Office of Risk Management and CNSI with the Department of Health and Hospitals (DHH) to mention two that come quickly to mind.

But even more important, it appears that possibly hundreds—maybe more than 1,000—of state IT employees will be losing their jobs as a result of the new contract which probably will end up costing the state more money than the current in-house IT systems.

The Office of Information Services (OIS) is responsible for the development, implementation and support of the Integrated Statewide Information System (ISIS) application as well as the DOA programmatic and desktop application, including traditional application development of large complex systems run on the DOA mainframe, client service applications run on midrange computers and Web-based applications.

Remember when Carol Steckel tried to fire 69 IT employees and to contract out DHH’s Center for Health Care Innovation and Technology services to the University of New Orleans?

In that case, she got a little ahead of herself by holding a conference call with the IT employees last December to announce that their jobs would be gone in January. The employees returned to their work stations after that call only to find they had been locked out of their computers. These were the employees who, among other things, help other state employees with their computer problems.

After the Civil Service Commission, in a rare moment of lucidity, denied Steckel’s layoff plan because of insufficient information, UNO backed out of its agreement to take over the agency’s IT services.

An IT employee with DHH’s Center for Health Care Innovation and Technology wrote LouisianaVoice that employees had been misinformed on future employment by DHH executives on three separate occasions. “At each meeting, we felt as though we were being threatened with furlough without pay, having to pay 100 percent of COBRA to maintain our insurance, (and) being threatened (with) not receiving our 300 hours of saved annual leave,” the employee wrote.

In March, Jan Cassidy, sister-in-law of Congressman Bill Cassidy, was hired to head DOA’s Procurement and Technology section at a salary of $150,000 per year, prompting one observer to ask, “What is she going to procure? The state is broke and there’s an expenditure freeze.”

Apparently we will be getting the answer to that question when the proposals start coming in from vendors and a contract is awarded.

Jan Cassidy previously worked for Affiliated Computer Services (ACS) for 20 months, from June 2009 to January 2011 and for 23 months, from January 2011 to November 2012, for Xerox after Xerox purchased ACS.

As Xerox Vice President—State of Louisiana Client Executive, her tenure was during a time that the company held two large contracts with the state.

The first was a $20 million contract with DHH that ran from July 1, 2009 to June 30, 2011 and paid Xerox $834,000 per month.

The second contract was for $74.5 million, 100 percent of which was funded by a federal community development block grant (remember how Jindal abhors federal money?) and which ran from March 27, 2009 to March 26, 2012 and required ACS/Xerox to administer a small rental property program to help hurricane damaged parishes recover rental units.

A state contract data base search by LouisianaVoice turned up four contracts with ACS totaling $45.55 million and campaign finance reports revealed three ACS political contributions totaling $10,000 to Gov. Bobby Jindal.

In Texas, an ACS contract awarded by the Rick Perry administration quadrupled to $1.4 billion as Texas Medicaid spent more on braces in 2010 ($184 million) than the other 49 states combined but which an audit found that 90 percent of the reimbursements were not covered by Medicaid.

The Wall Street Journal said statewide fraud reached hundreds of millions of dollars as ACS spent more than $6.9 million lobbying Texas politicians from 2002 to 2012.

In June of 2007, ACS agreed to pay the federal government $2.6 million to settle allegations that it had submitted inflated charges for services provided through the U.S. Departments of Agriculture, Labor and Health and Human Services by submitted inflated claims to a local agency that delivered services to workers using funds provided by the three federal agencies.

http://washingtontechnology.com/articles/2007/07/11/acs-settles-federal-fraud-case.aspx

In Washington, D.C. the Department of Motor Vehicles reimbursed $17.8 million to persons wrongly given parking tickets. The contract that operated the District’s ticket processing was ACS.

http://washingtontechnology.com/articles/2007/07/11/acs-settles-federal-fraud-case.aspx
In 2010, ACS settled charges by the Securities and Exchange Commission that it had backdated stock option grants to its officers and employees.

http://www.sec.gov/litigation/litreleases/2010/lr21643.htm

In Alabama, Steckel, then director of the state Medicaid agency, awarded a $3.7 million contract to ACS in 2007 even though the ACS bid was $500,000 more than the next bid. ACS, of course, had a decided edge in getting that contract: it hired Alabama Gov. Bob Riley’s former chief of staff Toby Roth. And Steckel, of course came to Louisiana to work for DHH though she still maintained her residence—and, apparently, her vehicle registration—in Alabama. http://www.ihealthbeat.org/articles/2007/8/22/Alabama-Contract-for-Medicaid-Database-Sparks-Controversy.aspx

http://harpers.org/blog/2007/09/the-inside-track-to-contracts-in-alabama/

Steckel first said the proposed contract with UNO would save DHH $2.1 million over three years but later revised that figure upward to $7 million, prompting members of the Civil Service Commission to express “zero confidence” in her figures and to reject her layoff plan.

Jan Cassidy also worked for 19 years, from 1986 to 2005, for Unisys Corp. where she led a team of sales professionals marketing hardware and systems applications, “as well as consulting services to Louisiana State Government,” according to her website.

Unisys had five separate state contracts from 2002 to 2009 totaling $53.9 million, the largest of which ($21 million) was with the Louisiana Department of Public Safety and which was originally signed to run from April 1, 2008, through Nov. 30, 2009, but which State Police Superintendent Col. Mike Edmonson cancelled in April of 2009, saying he was dissatisfied with the work and that his staff could complete the project.

That contract called for an upgrade to the state computer system that dealt with driver’s licenses, vehicle titles and other related issues within the Louisiana Office of Motor Vehicles.
http://www.wafb.com/global/story.asp?s=10152623

Altogether, the 23 agencies account for 1,158 IT employees who stand to lose their jobs with the awarding of a contract for the consolidation.

The agencies and the number of filled positions to be affected are as follows:

• Executive: 275;

• Public Safety: 142;

• Children and Family Services: 120;

• Transportation and Development: 111;

• Health and Hospitals: 62;

• Revenue and Taxation: 88;

• Retirement Systems: 58;

• Workforce Commission (formerly Labor): 45;

• Civil Service: 8;

• Agriculture: 13;

• Corrections: 39;

• Economic Development: 3;

• Education: 44;

• Environmental Quality: 29;

• Insurance: 8;

• Natural Resources: 30;

• State: 25;

• Treasury: 3;

• Wildlife and Fisheries: 24;

• Culture, Recreation and Tourism: 14;

• Juvenile Justice 5;

• Public Service Commission; 7;

Given problems and cost overruns in other states, there have to be concerns over similar problems or questions whether there even is a company out there willing to submit a proposal that has not gotten contracts under questionable circumstances or which found it necessary to come back later for costly contract amendments.

In the movie Saving Private Ryan, the operative term was FUBAR. In administration Jindal, the concern should be whether or not we might be headed for another CNSI or ACS/Xerox scenario.

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Cart ahead of the horse? CMS letter to Sen. Ben Nevers continues to leave Jindal hospital plan approval up in air

Posted in Contract, Contracts, Governor's Office, Health Care, House, Senate, Layoffs, Legislature, Legislators, Politicians, Privatization, Revenue, Transparency on June 26, 2013| 6 Comments »

A week after the Dallas office of the Center for Medicare and Medicaid Services (CMS) confirmed to LouisianaVoice that the state still had not answered questions about the proposed privatization of state hospitals, the Washington, D.C. office has weighed in with similar concerns in a letter to two state senators.

On Monday it was announced that Health facilities in Houma, Lafayette, Lake Charles and New Orleans had been turned over to private operators as part of Gov. Bobby Jindal’s drive to privatize the university-run hospitals and clinics.

A three-page letter from Cindy Mann, Director of the Center for Medicaid and CHIP Services (CMCS), to State Sen. Ben Nevers (D-Bogalusa) addressed seven questions posed by Nevers and State Sen. Karen Carter Peterson (D-New Orleans) and the answers were no more encouraging to the Jindal administration than those of the Dallas office on June 12.

“In your letter, you raise questions concerning plans by the state to enter into public-private partnerships with Louisiana State University (LSU) and University Medical Center in Lafayette and LSU and Louisiana Children’s Medical Center, and questions related to the Affordable Care Act,” Mann wrote in her June 19 letter to Nevers.

The entire privatization deal would appear to revolve around the first question posed by Nevers: “Will CMS approve the large up-front lease payment arrangements as proposed in the attached public-private partnership lease agreements in Louisiana?”

“The Centers for (CMS) has concerns over the large up-front lease payments described in the Louisiana public-private partnership agreements,” Mann wrote.

A spokesperson for Mann’s office said nothing had changed since the June 19 letter.

“However, at this time, the state has not submitted state plan amendments (SPA) proposing to fund Medicaid payments through the agreements and CMS cannot offer formal determination as to whether the arrangements would conflict with the requirements described in (the Social Security Act,” Mann said. “Once the state submits the SPAs, CMS will request necessary supporting documentation and explanations from the state to demonstrate compliance with these provisions of the statute and regulations.”

Nearly 4,000 state employees were laid off because of the privatization of the facilities that care for the uninsured and which provide training for the state’s medical students.

Nevers, contacted in California where he was attending a conference, said he had never seen a situation where policies needing federal approval were undertaken and finalized before that approval was forthcoming. “It’s premature, to say the least, to do this without written approval in hand,” he said. “The private partners won’t stay in this deal if there are no payments and if CMS doesn’t approve the state’s plan, the whole thing falls apart.”

Nevers said his primary concern was continued health care delivery for the state’s poor. “In any business venture, you would not jeopardize services based on ‘maybes.’”

He said Jindal may well have more information than he has, “but the people who make the decisions do not have the information. Moving forward is something we should not be doing at this time.

“Neither should the LSU Board of Supervisors have agreed to a major contract for the transfer of the hospitals that contained 50 blank pages,” he said.

Mann, in her letter said that while the lease agreements themselves would not be subject to CMS approval, “to the extent that the lease agreements contain financing arrangements that are involved in the state’s funding of its Medicaid program, CMS will review the lease arrangements to insure compliance with federal Medicaid laws and regulations.”

She said any SPA request by the state to modify its Medicaid service payments will be reviewed by CMS to insure compliance with federal Medicaid laws and regulations. “This includes the source of non-federal funds used to fund the service payments,” she said.

Nevers, in his letter to Mann, asked if Louisiana were to expand its Medicaid program under the Affordable Care Act (Obamacare) “are there any federal provisions that would prohibit Louisiana from withdrawing from such an expanded Medicaid program at any time, including after participating in the 100 percent federal funding available in 2014, 2015 and 2016?”

Mann responded in the affirmative: “A state may choose whether and when to expand, and if a state covers the expansion group, it may later decide to drop the coverage, without any federal penalty.”

The Louisiana Civil Service Commission approved the contracts for the takeover of four hospitals in Houma, Lafayette, New Orleans and Lake Charles on June 10 despite the lack of CMS approval of the state’s privatization plan.

Commission member Scott Hughes of Shreveport said the approval was based on the state budget approved by the legislature which he said assumed the privatization of the hospital. That action, he said, would leave no money available to operate the hospitals through LSU if the deals had been rejected.

While that is not among the criteria that the Civil Service Commission is supposed to consider when layoff plans are submitted by state agencies, it left unanswered the question of what will happen if CMS does not ultimately approve the state’s plan.

A CMS spokesperson in Dallas said on June 12 that CMS does not play any role in the actual privatization of the hospitals. “However, as part of the privatization, the State of Louisiana is modifying the Medicaid reimbursement to those hospitals. The change in reimbursement requires the submission of State Plan Amendments (SPA). CMS currently has received some of the necessary SPA and they are under review.”

Last Jan. 30, Bill Brooks, associate regional administrator for the CMS Division of Medicaid and Children’s Health Operations in Dallas, sent a six-page letter to Ruth Kennedy, director of the Bureau of Health Services Financing for the Department of Health and Hospitals (DHH) in which he requested additional clarifying information which he cautioned had the effect of “stopping the 90-day clock” for CMS to take action on the proposed SPA which “proposed to revise the reimbursement methodology for inpatient hospital services to establish supplemental Medicaid payments to non-state-owned hospitals in order to encourage them to take over the operation and management of state-owned and operated hospitals that have terminated or reduced services.”

He said a new 90-day clock would not begin until his office had received satisfactory responses to his requests.

One of the requirements that Brooks cited was one which said CMS “must have copies of all signed standard Cooperative Endeavor Agreements.” He also asked the state to provide all Intergovernmental Transfer (IGT) management agreements and “any other agreements that would present the possibility of a transfer of value between the two entities.”

He said, “CMS has concerns that such financial arrangements meet the definition of non-bona fide provider donations as described in federal statute and regulations.

“Detailed information needs to be provided to determine whether the dollar value of the contracts between private and public entities had any fair market valuation. There can be no transfer of value or a return or reduction of payments reflected in these agreements,” he said.

“Additionally, whether the State is a party to the financial arrangement or not, the State is ultimately responsible to ensure that the funding is appropriate.”

Brooks asked, “How many entities does the State anticipate will participate in this arrangement? Please submit a list of all participating hospitals, all transferring entities doing the IGT, and the dollar amount that the transferring entities will IGT. Please describe how the hospitals are related/affiliated to the transferring entity and provide the names of all owners of the participating hospitals.”

In the case of the Leonard Chabert Medical Center in Houma, the lessee is listed as Terrebonne Medical Center of Houma but in reality, Ochsner Medical Center of New Orleans will be taking over operations of Leonard Chabert.

“What is the source of all funds that will be transferred?” Brooks asked. “Are they from tax assessments, special appropriations from the State to the county (parish)/city or some other source?

“The State plan methodology must be comprehensive enough to determine the required level of payment and the Federal Financial Participation (FFP) to allow interested parties to understand the rate setting process and the items and services that are paid through these rates,” Brooks said. “Claims for federal matching funds cannot be based upon estimates or projections. Please add language that describes the actual historical utilization and trend factors utilized in the calculation,” he said.

Brooks also asked if the private hospitals destined to take over operations of the state facilities are required to provide a specific amount of health care service to low income and needy patients. “Is this health care limited to hospital only or will health care be provided to the general public? What type of health care covered services will be provided?” he asked.

The CMS spokesperson on Wednesday said if CMS disapproved an amendment, “there would be no federal dollars provided for the changes proposed in the State Plan Amendment.”

“No federal dollars” could translate to hundreds of millions of dollars for a state already wrestling with suffocating budgetary constraints.

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