Feds OK LSU hospital deals but tell state to repay $190M in matches for advance lease payments

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NEW ORLEANS — Federal Medicaid officials have approved financing plans for contracts that turn six LSU hospitals over to private companies, ensuring that care for the uninsured won't be disrupted. However, Louisiana also was ordered to repay $190 million to the federal government.

The Centers for Medicare and Medicaid Services said Louisiana must repay money that was paid under prior contracts — deals that the agency later rejected. CMS said the money is owed because federal officials rejected "advance lease payments" paid by private companies.

The Department of Health and Hospitals said Tuesday it will appeal the order to repay the federal money.

Gov. Bobby Jindal signed the contracts without first getting federal approval, which was needed because the contracts rely on Medicaid money. The state rewrote the contracts after CMS rejected financing plans in May.

Sen. Fred Mills, a member of the state Senate Health and Welfare Committee, said that when DHH Secretary Kathy Kliebert called him to tell him about the approval, he asked her about the up-front payments.

"She said, 'We'll appeal that, and a decision is probably five years away and our attorneys feel we have a real strong case,'" he recounted. "I'm not a lawyer. I said, 'I guess congratulations on the lease, but I'm very concerned about the disallowance.'"

House Speaker Chuck Kleckley said he knows that part of the decision is being appealed, and he is enthusiastic about the overall approval.

"I can tell you here in Lake Charles, the quality of care has dramatically approved. The access has improved. The public-private partnership has worked well for southwest Louisiana, as it has for the whole state," Kleckley said.

The federal rejection letter said the $190 million is part of $311.6 million in "impermissible provider-related donations" turned down because they required participating hospitals to pay "substantial advance lease payments ... linked to increased Medicaid payments to the same privately-owned hospitals."

However, the state health department said in a news release that the advance payments were not used to bring in matching federal money. The department said the lease amounts were based on independent, third-party assessments.

Appeals usually take five to seven years, the department said, and if the decision isn't reversed the department would set up a repayment schedule.

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