LEGISLATIVE AFFAIRS: Joint Legislative Committee on the Budget on Louisiana Medical News

LEGISLATIVE AFFAIRS: Joint Legislative Committee on the Budget

By: CINDY BISHOP

State lawmakers head back to the capitol Monday, March 29, at Noon to begin the 85 day regular session of the Louisiana Legislature. There have been some preliminary meetings where the budget committees have held briefings on the Governor’s Executive Budget. It is being said that state lawmakers have to cut a whopping $1 billion from the state’s budget to address a deficit. On February 19, 2010, state officials presented the Governor’s Executive Budget. Below are some excerpts from the budget plan relative to healthcare financing:

The expected reduction of Louisiana’s base Federal medical assistance (FMAP) due to the flawed federal formula, the Disproportionate Share Hospital (DSH) audit rule, the loss of both social services Block Grant and the Primary Care Access and Stabilization Grant dollars and the scheduled expiration of the enhanced FMAP in December 2010 combine to a loss of $663.3 million of federal funding. In response, for fiscal year 2011 the budget utilizes $233.7 million in collections from the Louisiana Tax Amnesty Act of 2009, as well as the $76 million of state general fund surplus, to decrease debt in FY 10, thereby reducing the state debt service by $309.7 million in FY 2011. The funds made available from this reduction, in turn, are budgeted in Fiscal Year 2011 for the Department of Health and Hospitals.
Total DHH funding for fiscal year 2011 is $7.73 billion, including proposed state general fund expenditures of $1.684 billion. The total impact of the $309.7 million contingent upon utilizing amnesty and surplus funding to decrease debt is $1.1 billion, including federal match. The total loss of allowable DSH is $198.5 million. Of this loss in total funds, the state projects that $136.5 million will be attributed to LSU, $42.9 million will be attributed to the DHH mental health institutions, $20 million will be attributed to the rural hospitals.

LSU – The budget proposes to replace the lost DSH funds with $122.5 million in State General Funds and $13.1 million in federal funds through cost reports.

Mental Health – The budget proposes to replace $30.9 million of the lost dollars with states sources of funding in the Office of Mental Health.

Rural Hospitals – The budget recommendation includes $11 million in state General Funds to offset the loss of $20 million in allowable cost.

In addition, the Department of Health and Hospitals will be filing a bill that will authorize an increase in rural hospital reimbursement under Medicaid up to the Medicare reimbursement levels. This will allow the state to match some of of the $11 million, which will help offset the loss of DSH. It is expected that as much as $7 million of the funds will be matched by federal funds, while up to $4 million will be direct grants to hospitals, thus fully offsetting the loss loss of DSH.

Healthcare Reform Initiatives: Secretary Alan Levine, DHH, said that they are in the process of transforming Medicaid. The Governor’s executive budget envisions improving quality and access for one-quarter of Louisiana residents. The budget directs the Department of Health and Hospitals to implement healthcare reforms that were enacted by the legislature.

A phase-in bill will begin in early 2011, leading to modest savings of $15 million in FY 2010-2011, with a substantially higher savings expected in Fiscal Year 2012. Among other things, the features of a reformed Medicaid will include:

market based competitive rates for certain specialties;
choices for consumers with choice counseling available;
management of chronic disease to ensure reduced hospitalizations and improved quality of life;
accountability of outcomes of the populations served by Coordinated Care networks. The state will select quality measures that correlate with improved healthcare outcomes. These measures will be published on www.healthfinderla.gov
aggressive fraud and abuse detection by the community care networks and the state.

Also DHH reported that they plan to launch the South Central Louisiana Human Services Authority, a local government entity operated by a local board of directors in Region 3 of the state. $24.8 million will be transferred from the Offices of Addictive Disorders, Citizens with Developmental Disabilities and Mental Health to the Authority and 123 positions will be converted to non-appropriated positions as part of the transfer of funding.

Our Lady of the Lake Regional Medical Center and Louisiana State University partnership: The Department of Health and Hospitals’ budget for fiscal year 2011 includes $14.3 million in non-recurring funds to be part of a new partnership with OLOL/LSU. This new partnership will result in expanded access to primary and urgent care for the poor, a new level 1 trauma center for the region and enhanced medical training opportunities for medical students, residents and those training for professions in the allied health field. The partnership will result in new physical patient care capacity as well as physical space for enhanced academic capacity for LSU. Finally, the partnership will save the state as much as $400 million in capital expenditures, which will not need to be expended to replace Earl K. Long Medical Center.

For more information on the state’s budget, visit the Division of Administration’s Web site at www.doa.louisiana.gov/opb/pub/ebsd.htm For the state’s online state spending database, visit www.latrac.la.gov

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