As Louisiana's Jindal Contemplates 2016 Run, CMS Delivers Back-to-Back Blows

Republican Governor Bobby Jindal moved quickly to privatize 6 public hospitals with advanced lease payments, and he set up a prescription reimbursement schedule without prior approval from CMS. The agency signed off on privatization but rejected both financial pieces this week, which could leave Louisiana's next governor with a budget shortfall.

Governor Bobby Jindal, the Louisiana Republican who countered the Affordable Care Act (ACA) with an overhaul of his state’s historic charity care system, received the equivalent of coal in his stocking from CMS over the past 10 days, as the agency made 2 decisions that could leave gaping holes in the state’s budget.

Early this week, CMS signed off on Jindal’s 2013 plan to privatize 6 hospitals that were part of the Louisiana State University system, but rejected the advance financing plan that paid for it. Without the ability to use $190 million in federal funds for advance lease payments, Louisiana will face a budget shortfall.

Jindal Administration officials vowed to appeal and said they would not repay the $190 million while that decision is pending. As Jindal is scheduled to leave office in early 2016 due to term limits, it seems certain that the fallout of Jindal’s ongoing feuds with CMS will be left for the next governor to resolve.

The decision to privatize Louisiana’s unique charity care structure—in which poor patients were served for generations in a separate bricks-and-mortar system from other patients, at taxpayer expense—was unraveled by Jindal’s privatization plan. The plan has required the public hospitals, all part of the LSU medical school system, to partner with private hospitals that would help manage them. Critics saw the system as a way for the private hospitals to essentially underwrite the public ones, and those who spoke with Evidence-Based Oncology in 2013 said Jindal’s refusal to expand Medicaid under ACA made the entire scheme impossible to finance. Evidence-Based Oncology is a news publication of The American Journal of Managed Care.

Jindal, who served in healthcare administration posts before becoming governor, remains undeterred and, in fact, has been laying the groundwork for a possible 2016 presidential run.

On Tuesday, he touted the privatization approval as a step forward. "The partnership hospitals are revolutionizing health care around the state, and now they'll be able to continue their work to reduce patient wait times, expand access to quality care and train the doctors of tomorrow right here in Louisiana," Jindal said in a written statement.

CMS’ decision to reject the privatization financing came days after the agency ruled that Louisiana had improperly reimbursed pharmacists for the last 2 years through the state's Medicaid program. That would mean CMS could try to collect another $25 million in improper prescription reimbursements on top of the $190 million in the hospital financing.

In both cases, Jindal moved ahead with plans without seeking approval from federal regulators who oversee the program and provide funding. His administration said the lease payments were designed to demonstrate good faith commitments between the parties, and the reimbursement schedule was designed to preserve patient access.

Some of the financing issues could be resolved if Louisiana shifts course and expands Medicaid after the 2015 election. US Senator David Vitter, a Republican who has announced he will give up his seat to run for governor, has said he would be open to expanding Medicaid to working poor earning up to 138% of the poverty line. Louisiana has some of the most restrictive Medicaid requirements in the country, especially for men without children.

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