Louisiana will pay $5.4 million to the federal government to settle a debt tied to former Gov. Bobby Jindal’s privatization of the charity hospital system—far less than the $190 million federal officials originally said the state owed.
As The Associated Press reports, details of the settlement were released today.
The U.S. Centers for Medicare and Medicaid Services in 2014 ordered Louisiana to repay the money for pieces of the initial privatization deals that the Medicaid agency, known as CMS, rejected as improper.
Louisiana officials have been haggling over repayment terms ever since.
Gov. John Bel Edwards’ administration tells The Associated Press a settlement had been reached for the state to repay $5.4 million during the current budget year.
In addition, Louisiana will receive slightly reduced hospital lease payments from the manager of the state-owned New Orleans charity hospital.
“This settlement to correct the prior administration’s mistake is being done with minimal impact to the state of Louisiana,” Edwards says in a statement.
Jindal privatized nine LSU-run hospitals and their clinics through no-bid contracts, with the earliest deal starting in April 2013.
In most instances, the management company of a nearby hospital took over operations. Three contracts closed an LSU hospital—in Baton Rouge, Lake Charles and Pineville—and shifted its services to private hospitals.
Jindal said the contracts, estimated to cost nearly $1 billion this budget year, provide better health care for Louisiana’s poor and uninsured. But the former governor’s administration didn’t first get federal approval for the arrangement before enacting the privatization deals, which rely heavily on federal Medicaid money.
That caused problems and led to the $190 million debt, called a “disallowance.”
CMS initially rejected financing plans for six of the deals. The Jindal administration rewrote the contracts in consultation with the federal Medicaid agency. But while federal Medicaid officials approved the rewritten arrangements, they had problems with “advance lease payments” the hospital managers paid upfront as part of their agreements with the state.
