Governor Bobby Jindal and LDH Secretary Alan Levine today announced details on “Louisiana Health First,” an initiative to improve the health of the people in our state and create a financially sustainable system of quality health care. The initiative focuses on expanding health insurance coverage for our working poor and offering Medicaid consumers choices on insurance coverage rather than languishing in a government-imposed one-size-fits-all system. This initiative also works to reduce fraud and system abuse, ensure that providers are more involved in patient care, make the new charity hospital a competitive academic institution in New Orleans, reward providers for better health outcomes, and increase transparency in the Medicaid system by making performance measures available on the Internet.
The Governor and Secretary Levine were also joined by legislators and health care advocates at the announcement today, where they discussed their ongoing work with federal partners to put many of these improvements in place.
Governor Jindal said, “We know the statistics, but behind these statistics there are real people. Louisiana is last in health care outcomes, we have far too many people with no health insurance at all, and this system will not improve on its own. We have to take action to improve our health care system, provide more access to health insurance for our people, and have a more transparent system where our system’s performance can be accountable.
“As we continue to work with our federal partners – and legislators and health care advocates here – we remain fully committed to communicating to our federal partners why making the investment in expanded insurance in our state is such a compelling cause. We are continuing our dialogue with the hope that the federal government will look past bureaucratic hurdles, and see that very real objectives for improving our health care are in reach. We are ready and willing to agree to a solution that invests health care dollars into our system so more people can have access – not just to insurance, but access that results in better, proven health outcomes.”
Louisiana ranked 49th in the nation in the 2007 United Health Foundation rankings, and last in the nation in our overall health care ranking in 2006. The state also ranked 48th in prevention of obesity; 49th in infant death rates, 48th in cancer fatalities, and 49th in premature deaths. Additionally, there are many Louisianians currently outside the health care system altogether. Nearly one out of every four Louisiana citizens are uninsured.
Secretary Levine highlighted the fact that while the argument that we are a poor state – 42nd in per capita income – is often used to excuse appalling health outcomes, Louisiana’s total state spending on Medicaid and the uninsured is very high. The latest Kaiser Family Foundation State Health Facts ranks Louisiana 20th in Medicaid spending in 2006. In the two years since, the Medicaid budget has grown by more than $1.6 billion – a 28 percent growth. Medicaid spending has grown from 8.5 percent of state general fund two years ago to more than 16 percent today, with the expectation it will consume nearly 22 percent of available discretionary dollars by 2011 – potentially eclipsing funding for schools, economic/job development, roads and law enforcement.
Governor Jindal added, “This rapid growth in spending with continued poor outcomes is not acceptable. Not only is it not financially sustainable for our state, but it is not sustainable for our people to continue to experience poor health care outcomes that are ranking us at the bottom of the nation.”
Secretary Levine detailed the ongoing discussions between LDH and the U.S. Department of Health and Human Services, DHH’s federal partner in D.C., over the past several months. Levine said that the state has been working to resolve the issue of $771 million potentially owed by the state for alleged overspending in Medicaid in the past so the state can instead invest this money in what has become a state and national priority - expanding access to health insurance. He said the state has also asked the federal government to freeze the interest on this money, which would allow Louisiana to invest this additional $100 million savings in expanded access to insurance, and to “stack” the repayment over a five-year period rather than pay it back over the traditional 15-21 months. Additionally, he said the state is also asking for the full amount owed from the federal government to build a replacement hospital for the Katrina-damaged Charity Hospital in New Orleans, and said that any difference between what FEMA pays and the $492 million the state is owed should be appropriated by Congress.
Levine said that the Louisiana Health First initiative will use many proven approaches to improving health outcomes and the health care system.
“Rather than expand Medicaid as we know it, we are proposing to transform Medicaid into a system where its beneficiaries get the dignity of choice of insurance, a medical home, a system where the incentives are aligned for better health outcomes, and a more reasonable rate of growth in the cost. Also, by changing the governance of Charity hospital in New Orleans, we will create a state-of-the-art teaching facility that can invest properly in research and training, and compete head to head with the most prestigious teaching hospitals in the country. It would be tragic for the taxpayers to be asked to fund a $1.2 billion enterprise only to re-create what we had before – a hospital that was poorly capitalized, unable to invest in its training programs and had no incentive to be efficient. In fact, from 1995-2006, Louisiana was one of only six states to see a decline in the number medical residents training here. We cannot blame this on Katrina. And we cannot make the same mistakes of the past. Let’s move forward using models known to be successful,” he said.
To improve poor health outcomes and create a sustainable system of quality health care in the state, the Louisiana Health First initiative includes a three-pronged approach.
First, the Louisiana Health First initiative focuses on expanding health insurance in the state:
- A statewide expansion of Medicaid financing for parents and caretakers of Medicaid-eligible children. The current eligibility level is 12 percent of the Federal Poverty Level (FPL), and the expansion would include those who live at or below 50 percent of the FPL, including roughly 60,000 more individuals statewide. Parents and caretakers were chosen because studies have proven that children in Medicaid whose parents or caretaker also have insurance coverage have better health outcomes than those who do not have coverage.
- A federally-supported demonstration program in Region 5 (Lake Charles region) that will offer full access to affordable coverage to virtually all residents of the region. This area of the state has the highest rate of uninsured people in Louisiana (approximately 28 percent of the population), making it the ideal place for implementation. First, Medicaid financing will be expanded to all who earn up to 200 percent of the FPL. Next, those who make over 200 percent and up to 350 percent of the FPL will be eligible to contribute to a premium matched with federal matching dollars. As personal income goes up, the federal match goes down. This program should help relieve pressure on low-income families and employers resulting from rapidly increasing health insurance premiums.
The second element of improving the coordinated system of care focuses on ensuring that all individuals have a medical home to meet all of their health care needs. The Louisiana Legislature passed the Health Care Reform Act of 2007 directing LDH to develop and implement a health care delivery system providing a continuum of evidence-based, quality-driven health care services based on the medical home system of care and using successful managed care reimbursement principles.
To meet their specific goals, they directed that medical home systems of care:
- Coordinate and provide access to evidence-based health care, including convenient and comprehensive primary care and access to appropriate specialty care and inpatient services,
- Have strong and effective medical management,
- Use health outcome data to ensure that patients and providers to improve outcomes,
Require the use of electronic medical records,
- Prove quality of care and cost efficiency through performance measures, and
Have adequate reimbursement levels to ensure quality providers.
- Incorporate reimbursement methodologies using features of successful managed care programs.
The third element of Louisiana Health First initiative focuses on modernizing the health safety net by establishing a not-for-profit governance model for the Academic Medical Center in New Orleans, the facility that will replace Charity Hospital. Key elements of the new model include:
- Payments and conditions for the care for the uninsured and residency programs with LSU and Tulane would be negotiated through contracts between the state, LSU, Tulane, others and the not-for-profit entity.
- The new not-for-profit entity would have the ability to issue debt separate from the state. The state would not guarantee this debt and therefore the debt would not affect the state’s current debt cap.
LDH has sought extensive feedback over the past several months from several sources, including legislators, and the health care provider community and the Medicaid Reform Advisory Group - which was appointed by Secretary Levine in August 2008. The Secretary has been meeting with various provider organizations – including medical societies and hospital groups – and has also received input from outside stakeholder groups.
In an August 19, 2008 letter, more than 27 advocacy and community groups wrote, “Over the long term, the citizens of Louisiana should be able to choose between provider networks and community health sites available to them. Therefore, an integral part of health care redesign should be to offer the uninsured population access to a choice of affordable health insurance coverage for care. The most effective approach will be to take full advantage of a better managed Medicaid program, to make available affordable non-public insurance products, and use Disproportionate Share funds to support outpatient and physician services, not simply hospital-based care. It will be essential that these new insurance coverage programs, whether public or private, provide sufficient benefits to be meaningful and encourage the use of primary and preventive care.”