Medicaid costs up $950M as hospitals privatize

BATON ROUGE (AP) — Louisiana’s Medicaid spending rose about $950 million while the state privatized public hospitals and much of Medicaid, a legislative audit found.
Medicaid annual spending stayed about $6.6 billion to $6.8 billion from 2010 through 2012 but hit $7.6 billion by June 30, when fiscal 2014 ended, according to the report released Monday.
However, Ernie Summerville, assistant director of Financial Audit Services, said he lacks enough information to say if the net cost of privatizing the programs is that high.
“There are a lot of other factors that go into the overall determination whether this is costing us that much money,” he said.
Much of Medicaid was made private in 2012. Hospital privatization started in 2013 and continued into this year.
Auditors found spending up $600 million for Bayou Health, the private insurance program handling two-thirds of Louisiana’s Medicaid recipients.
They estimate increased payments for uninsured patients to private operators of LSU hospitals at $350 million.
Former health secretary Bruce Greenstein said in early 2012 that the state expected Medicaid privatization to save $135 million in the 2012-13 fiscal year and to slow the rate of growth in the Medicaid program in later years. Last year, Gov. Bobby Jindal’s top budget adviser, Commissioner of Administration Kristy Nichols, said the hospital deals would save Louisiana an estimated $100 million a year.
The Medicaid data trend was part of a report that identified problems, some of them long-standing, in the state Department of Health and Hospitals’ main office operations.
The auditor cited a seventh straight year of improper payments for non-emergency medical transportation, identifying $863,480 worth of payments between July 1, 2013, and June 30, 2014, that the state may be liable for because they did not meet established policies.
One company had a contract to provide all transportation for a medical company — something that goes against a Medicaid regulation requiring recipient “freedom of choice,” the auditor said.
DHH Undersecretary Jeff Reynolds wrote that the department is investigating whether to demand repayment. Including transportation services in Bayou Health plans should provide a solution to the billings, he said.
Among other problems, the Legislative Auditor’s report said that DHH:
—Disclosed protected health and personal information before it reached data-sharing agreements with its Medicaid dental benefits program private contractor. In addition, the agency launched the dental program without federal approval of the $484 million contract and paid the contractor before the state Office of Contractual Review approved the agreement.
DHH Medicaid director Ruth Kennedy said federal contract approval was not required before enrolling people in the dental plan. She concurred with the other findings, blaming them on a “communications breakdown.”
—Did not require Magellan of Louisiana to submit details on behavioral health service claims to ensure timely filing and prompt payment.
—Paid $1.2 million in Medicaid claims that were filed more than a year after the service.
“The Department is continually working to strengthen the integrity and quality of its programs,” DHH communications director Olivia Watkins said in a statement Monday. “While we do not agree with all of the audit’s findings, DHH has taken aggressive steps to implement corrective action and improve services, including new staff education and technology systems to prevent future errors.”