The State of Louisiana Health Care Reform

The proposal to transfer the management of Cenla’s Huey P. Long charity hospital to the LSU Health Sciences Center in Shreveport is a small piece of the complex puzzle that makes up the current debate on reforming Louisiana’s health care delivery system. As ninety percent of referrals from the area public medical center end up in Shreveport, the organizations involved have raised little objection to the deal as long as no jobs or programs are displaced. The hospital is currently managed under the LSU Health Care Services Division, and has long supported training programs for the Tulane School of Medicine.

To become modern health care and teaching facility, the Huey P. Long Medical Center would need to be rebuilt. Money set aside years ago for the reconstruction of the hospital has yet to be used, and this session’s Capital Outlay Budget has made available an additional $50 million, raising the total to $226.2 million. According to CEO Don Smithburg, the LSU Health Care Services Division “has been a good steward of limited resources… I trust Shreveport will continue to carry the baton we have carried for so long.”

The New Orleans LSU/VA Charity Hospital

It is unclear how the move squares with last week’s Public Affairs Research Council report that calls for the creation of

true regional academic medical centers at New Orleans, Baton Rouge, Shreveport and Monroe, which would be kindled by community cooperation, partnerships and affiliations between the public and private sectors… The size of these facilities should be compatible with local demographics and medical care needs, as well as the education and research missions of the medical schools… The other six charity hospitals should be transferred to local control over the next two to five years.

The recommendations of the Public Affairs Research Council have been used by
some to argue against the large-scale reconstruction of a different state hospital, the so-called Big Charity in downtown New Orleans. In spite of those claims, a $1.2 billion business plan for the hospital unanimously cleared committee at the end of last week. It must also face the state House and Senate and the U.S. Department of Housing and Urban Development.

Opponents argue that a large new hospital would drain resources and perpetuate the two-tiered system of Louisiana health care (in which the insured get access to higher quality care in private hospitals than the uninsured). State facilities director Jerry Jones, who will present the plan to the VA on May 29, disagrees: “I wanted the hospital to be able to float itself in terms of being able to pay off those bonds.” A large hospital would be necessary for attracting enough of the insured to finance the medical center.

The Push for Privatization

In their report, the Public Affairs Research Council also called for public funds that are currently paid primarily to state-run charity hospitals to be used to purchase private insurance for the uninsured, who would then be free to seek treatment at public or private hospitals. The report mentions that Louisiana’s charity hospital system is indeed unique, but only because the safety net system is administered at the state level. “In other states, responsibility for most indigent care rests at the county level, with community hospitals and primary care providers delivering care that is nearby and more easily accessible for most patients.”

Earlier this year, the federal Department of Health and Human Services, with the support of Senator Vitter, proposed using state and federal funds to cover 319,000 uninsured Louisianans with private insurance. State Medicaid was not included as an option in the plan. Serious concerns over this program and the numbers used by HHS have been raised, most notably by the Center on Budget and Policy Priorities. As the nonpartisan national policy group wrote in a report last month, “the HHS proposal would provide only enough funding to cover half of the state’s uninsured, while eliminating all of the federal funding for the health care safety net that provides care for the uninsured.” The HHS would not allow any extra federal spending on the plan, so any extra expenses would become a sizable burden on the state to the further detriment of the safety net system. Moreover, the federal plan “favors the unregulated health insurance market with a preference for individual rather than group coverage.”

The Public Affairs Research Council suggests keeping redevelopment goals consistent with the conclusions of organizations such as the 40-member volunteer Health Care Redesign Collaborative. The Center on Budget and Policy pointed out that the Bush Administration put pressure on the Collaborative to echo federal support for the HHS plan to redirect $770 million in Medicaid Disproportionate Share Hospital (DSH) dollars to private insurance companies.

Louisiana’s Department of Health and Hospitals (not to be confused with the federal Department of Health and Human Services and the Department of Housing and Urban Development) Secretary Dr. Fred Cerise has refused to put the state in financial risk by signing on to the federal government’s proposal. Louisiana is unlike Massachusetts, where the state-run safety net has recently been replaced by universal state health care. Appearing before the U.S. House Subcommittee on Oversight and Investigations last March, Dr. Cerise testified that

if Louisiana were to cover half of its uninsured as optimistically described above, we would end where Massachusetts began just prior to its 2006 reform legislation – about 10% uninsured but without a safety net system of care. As a state with nearly 18 percent uninsured and 45 percent of its population at 200% of the Federal Poverty Level or below, we understand that we must lay the groundwork before we can make such great leaps. The groundwork includes efforts aimed at both insuring more people, and also, very importantly, improving our safety net and the delivery system in general.

Accordingly, the state DHH has suggested expanding the use of DSH funds in a different manner.

DSH Funds

The majority of the uninsured receive care through the state’s system of ten hospitals and more than 250 outpatient clinics run by LSU. This care is reimbursed through a Disproportionate Share Hospital (DSH) funds program, which is a component of Medicaid and exists to support hospitals which carry a disproportionate load of Medicaid and the uninsured. Louisiana receives a seventy percent federal match rate for this money, capped at $1.05 billion for 2007.

Currently, only hospitals are eligible for DSH money, which includes the large system of LSU outpatient clinics. Because of the emphasis on hospitals, a great deal of the money goes to reimburse costly emergency department trips that could have ended up in cheaper (and more sustainable) clinical visits. Moreover, physicians and other medical professionals are currently ineligible to receive DSH funds for caring for the uninsured.

Dr. Cerise has called for a redirection of DSH funds that “will provide great relief by creating a funding mechanism to reimburse physicians for treating the uninsured and by supporting clinics that provide primary and preventive care… and does not require additional funding.” This redirection falls in line with a current plan to establish a network of “medical homes” to care for patients who cannot afford health insurance.

The Medical Home Model

According to Cerise, the Louisiana Health Care Redesign Collaborative concluded that health care must be “patient-centered, quality-driven, sustainable and accessible to all
citizens. The backbone of a redesigned system of care put forward by the Collaborative
is the ‘medical home.’”

The medical home model aims to shift DSH funds away from emergency room care to “improve the efficiency and effectiveness of the health care system and ultimately improve health outcomes.” The proverbial “homes” would operate out of the current network of state hospitals. A primary care provider coordinates and facilitates care appropriate for each patient. The model would serve as “the base from which other needed services are managed and coordinated in order to provide the most effective and efficient care,” and “provide health promotion, disease prevention, health maintenance, behavioral health services, patient education, and diagnosis and treatment of acute and chronic illnesses.”

State Senator Joe McPherson introduced Senate Bill 1 (and SB 238, its funding instrument) to create the Louisiana Health Care Redesign Fund. SB 1 cleared committee with limited concerns over whether health care providers outside of the charity system would be able to fairly compete for DSH funds.

The system of health care delivery in Louisiana was showing signs of wear before Hurricanes Rita and Katrina (and the failure of the Army Corp’s levee system) created a public health nightmare in the region. As Dr. Cerise pointed out in his testimony,

hospitals across the region report seeing a population with more advanced disease than pre- Katrina, more patients without a regular source of care, and even more limited options for discharge and follow-up care in the communities.

The federal plan pushed by the Department of Health and Human Services and U.S. Senator David Vitter to extinguish the safety net for the uninsured and pump public dollars into private insurance companies falls short of covering all individuals and does little to address the need for increased preventative and primary care capacity in the state of Louisiana. State Senator Joe McPherson’s proposal, in line with observations by the state Department of Health and Hospitals and the national Center on Budget and Policy Priorities, focuses on prevention and efficiency in a manner realistic to the current state of Louisiana health care reform.

Please use The Web Portal to the Louisiana State Legislature to stay informed on the progress of legislation during this summer’s session.