Monday, October 20, 2014

Monday, October 20, 2014

Hospital financing scheme under scrutiny; Feds could force state to repay $500 million; Kennedy: “Bernie Madoff would shudder” at OGB mess; and Rent-to-own America: Industry blossoms in recession’s wake

Hospital financing scheme under scrutiny

Federal authorities are raising fresh questions about an unusual accounting method the state has used to draw down more than $400 million in federal Medicaid funding for hospitals in recent years. The complex accounting arrangements – pioneered in Texas and later adopted by Louisiana – involve shuffling money around in a way that makes private dollars appear as “state match” for the Medicaid program. The Advocate’s Marsha Shuler reports that the federal Centers for Medicare and Medicaid Services has postponed payments to 57 hospitals in Texas.

 

“There is the potential that these funds will go away, and that is the message that CMS seems to be sending right now,” said Sean Prados, a vice president of the Louisiana Hospital Association. “This is not unexpected, but it’s troubling.” Texas and Louisiana are the only two states that have structured the finances this way for this Medicaid service, Prados said. The arrangements are worth billions of dollars in Texas and hundreds of millions in Louisiana. Other states use a different method.

 

If the arrangements are banned, it would make it harder for the state to pay for health care for the uninsured in safety-net hospitals. That, in turn, would increase pressure on state officials to accept Medicaid expansion, in which the federal government would pay to cover adults below 138 percent of the federal poverty level.

 

Feds could force state to repay $500 million

Louisiana could be forced to pay back more than $500 million to the federal government for grant money given to homeowners after the 2005 hurricanes that was supposed to pay for home elevation projects. Nola.com reports that the U.S. Department of Housing and Urban Development has rejected a state request to relax the rules governing the Road Home program, which could leave state taxpayers on the hook for $522 million. The money involves “supplemental” grants paid to some 30,000 recipients whose original Road Home grants weren’t enough to complete repairs on their flood-damaged properties, and who have failed to come up with enough paperwork to document the repairs.

 

This seems absurd to many housing advocates. Grant recipients were not told when they received their money to keep all the documentation associated with the repairs, noted Monika Gerhart, senior policy analyst with the Greater New Orleans Fair Housing Action Center. By the time the amnesty rule was passed in 2013, it had been years since the repairs were completed and many homeowners had lost their receipts and contracts, if they ever thought to keep them in the first place, Gerhart said.

 

Kennedy: “Bernie Madoff would shudder” at OGB mess

State Treasurer John Kennedy stepped up his criticism of Gov. Bobby Jindal’s administration with an op-ed in The Times-Picayune. He argues that the Division of Administration intentionally drained a $525 million reserve fund in the Office of Group Benefits in order to deal with short-term budget problems, and now is making state workers pay through higher co-pays and deductibles.

 

The state initially claimed it dropped premiums on the advice of its actuary.  Here’s the problem: There’s always a pesky paper trail. The actuary, Buck Consultants, wrote a report, saying it didn’t recommend either decrease.  Buck’s take was that the state deliberately set premium rates “artificially low to draw down the OGB’s reserve fund.”Now the state is suggesting that the crucial rate recommendations by Buck may be in a bureaucrat’s email inbox somewhere.  The state’s “looking” for the elusive emails.

 

While Kennedy and members of the Legislature have complained loudly about the changes, Melinda Deslatte of the AP notes that there is little they can do to change things.

 

Until they return for a legislative session in April, lawmakers have few ways to force change in the Jindal administration plans, despite the screaming of their constituents and any indignation the officials might share with them. And by the time the regular session begins, the rewritten health insurance plans will already be in place as workers and retirees show up to their doctors’ offices, hospitals and pharmacies.

 

Rent-to-own America: Industry blossoms in recession’s wake

The Washington Post takes an in-depth look at a business that’s flourished since the Great Recession robbed millions of vulnerable Americans of their economic security. The rent-to-own industry, which will sell you a laptop computer, living-room set or any number of other middle-class accoutrements, paid for in weekly installments that end up costing far more than the actual retail price.

 

In some ways, the business harkens back to the subprime boom of the early 2000s, when lenders handed out loans to low-income borrowers with little credit history. But while people in those days were charged perhaps an interest rate of 5 to 10 percent, at rental centers the poor find themselves paying effective annual interest rates of more than 100 percent. With business models such as “rent-to-own,” in which transactions are categorized as leases, stores like Buddy’s can avoid state usury laws and other regulations.

 

Number of the Day
29 – Percentage decrease in number of employees at state Office of Motor Vehicles offices, 2009-14. (Source: Legislative Fiscal Office)