MAGINNIS: Jindal Copes with Rejection from Feds

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They figured this day would come and the critics and enemies of Gov. Bobby Jindal were lined up on Friday with a chorus of “I told you so” when the federal Medicaid agency rejected the state’s financial plan for the new public-private hospital partnerships. Leading vocalists Democratic gubernatorial candidate Rep. John Bel Edwards and Republican treasurer and potential candidate John Kennedy pointed to their own previous statements warning that the new arrangements would not pass muster or, if they did, would not save the state any money in the end.

The feds did not disapprove of the partnerships themselves, which is a positive note. The community hospitals that have taken over management of state hospitals are delivering on their promises of shorter wait periods and greater access to specialty care. The arrangement allows LSU to focus on its mission of training doctors and not to have to manage a public health care system.

The problem to the feds is that the state has taken advanced lease payments from the private operators and used them as its match to draw down federal Medicaid funds. The frontloaded lease payments are a clear no-no to the Center for Medicaid and Medicare Services, but its letter also questions if annual lease payments — $140 million in next year’s budget — can be used as match money at all.

If that’s the case, the non-partisan Public Affairs Research Council estimated the state’s short-term exposure as high as $444 million, which casts an ominous shadow over the budget debate in the House on Thursday.

Jindal and Co. have gone from assuring legislators two weeks ago that the state plan would be approved to now expressing full confidence that its legal position would win on appeal. Yet the Medicaid center would not have written that letter if its general counsel did not feel very strongly that its decision would be upheld by the U.S. 5th Circuit Court of Appeal. Not to worry, says the Jindal administration, for in the “worst case scenario” the full impact of the federal rejection won’t be felt for almost a year.

The administration contends that if the feds remain pig-headed it can pursue other financing alternatives. Yet, most likely, other options are going to be more expensive, with the only question being by how much. The long term looks even worse, as the Affordable Care Act mandates a steep reduction, between 2015-2018, in the Disproportionate Share Hospital program that is the state’s chief source of federal Medicaid dollars. Once again, the Jindal administration sees no problem, but it will be long gone by then.

For those who will be around, including most legislators, all of the above is causing a sinking feeling about the budget before them and those to come.

Not that there is much they can do about it. The only real alternative to the hospital partnerships is the expansion of Medicaid, which the governor steadfastly rejects, claiming it would cost the state up to $1.7 billion more over the decade. Yet, if the private lease payments are disallowed as state match and if the administration’s assumptions about the availability of DSH funds are proved wrong, the cost gap between Jindalcare and the expansion of Medicaid under Obamacare gets much smaller. And Medicaid would offer patients more primary and preventative care, which can only lead to healthier citizens who won’t need to go to hospital emergency rooms so often. For as admirable a job as the private health care partners are doing, it is supported by a preferential reimbursement rate that non-partner hospitals do not get, though they are getting more and more uninsured patients in their emergency rooms. If those with incomes up to 138 percent of the poverty level were to receive Medicaid cards, their treatment would be spread around community providers.

A future governor might see things that way, but, due to the current governor’s position, the state will miss out on at least two of the three years when the federal government would foot the full bill. By then, that might be all that is left of Bobby Jindal’s health care legacy

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