October 13, 2008

Louisiana Lawmaker Has Plan to Offset Hospitals’ Uninsured Costs

By Webster, Richard A

Since Hurricane Katrina forced the closure of Charity Hospital three years ago, the New Orleans area's remaining medical facilities have struggled financially to care for hundreds of thousands of uninsured patients.

In one year, the big five -- East Jefferson General Hospital, West Jefferson Medical Center, Touro Infirmary, Tulane Medical Center and Ochsner Health Center -- lost a combined $135 million, according to the Louisiana Office of the Inspector General. Between 2005 and 2007 they lost $386 million.

During that time, hospital administrators have gone on bended knee to the state and federal governments pleading for financial assistance only to come up empty-handed more often than not.

But their luck could be changing.

State Sen. David Heitmeier, D-Algiers, plans to introduce a bill in the 2009 legislative session that would provide a steady stream of money to offset the costs of uncompensated care.

Before the storm, the dollars community hospitals spent on indigent care generated matching federal money that went into the state coffers. The state spent those federal dollars in areas deemed to be the highest priorities and where most of the indigent care took place -- the Charity Hospital system and rural hospitals.

East Jefferson General Hospital and West Jefferson Medical Center had limited indigent care costs so they rarely received federal reimbursements.

After the storm, however, everything changed but the system stayed the same. With Charity out of commission, its patients spread among the remaining hospitals, but the state and federal money didn't follow them.

"While that was tolerable by the parish hospitals prior to Katrina, it simply could not work after due to the large increase in indigent care expenses," said Lane Sisung, president of Sisung Investment Management Services in Gretna. "But we realized that it would be incredibly difficult to take those allocations away from the existing priorities that had historically received the funds. So we had to generate a new source of income for the parish hospitals."

Sisung worked with Heitmeier, state Department of Health and Hospitals Secretary Alan Levine and Jefferson Parish President Aaron Broussard to discover a new revenue source -- the parishes themselves.

Jefferson Parish spends between $6 million and $8 million annually on health care. Under Heitmeier's legislation, the parish will send the money allocated to health care to the state, the state will expense it into a federal matching program, and then return the federal money, plus the initial investment, to the parish. That money could then be used to offset uncompensated care costs.

For every $3 million put into the federal matching system, parishes can expect to see a $7 million return in addition to the original $3 million. Florida and Texas are the only other states using such a system, according to DHH.

The plan is to set up as an initial pilot program focusing on community hospitals such as East Jefferson and West Jefferson. If it proves to be successful, it could be expanded to include private hospitals such as Touro, Tulane and Ochsner.

Sisung doesn't expect any major opposition.

"We're not using anybody else's money or taking anybody else's money," he said. "This is voluntary for each parish."

West Jeff CEO Nancy Cassagne said something needs to be done because the number of uninsured patients is going to increase.

"Unfortunately, when we talk about indigent patients the public has a perception that it's just poor people," Cassagne said. "But there are a lot of working people who don't have health insurance, and the phenomenon will continue to grow as the economy gets worse and as companies have to figure out ways to affect their bottom lines."

Credit: Richard A. Webster

(Copyright 2008 Dolan Media Newswires)

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