BATON ROUGE - Department of Health Secretary Bruce D. Greenstein today announced a freeze on Medicaid provider rate reductions for the remainder of the 2011 fiscal year and eliminated an original reduction in the hospital "outlier" program.

Also, Greenstein announced the withdrawal of emergency rules that would have implemented rate reductions in the Medicaid budget effective Dec.1, 2010. The move was taken to ensure clarity for providers over a second set of cost-saving and efficiency-generating rules LDH submitted that took effect Jan. 1, 2011 and remain in effect. 

Secretary Greenstein also withdrew the emergency rule for the hospital outlier program, which provides funding for the care of premature, low-birth weight babies. Greenstein's action comes during the tremendous progress that the Department and the hospital industry have made in reforming that program to ensure sustainability into the future.

"I have said from day one that we are here to work together with the state's health care providers to find the best ways to be good stewards of taxpayer dollars while maintaining critical access to care for our Medicaid patients," Secretary Greenstein. "Today's announcement is a culmination of many meetings where we have listened to providers and sought new ideas. Working together with the hospitals, rather than against each other, I believe is the best solution for the people of Louisiana."

Louisiana Hospital Association John Matessino, as well as other health care providers, applauded recent progress to protect critical health care services

"The announcement today by Department of Health Secretary Bruce Greenstein to rescind the December 2010 emergency rules cutting hospitals; to rescind the January 2011 outlier emergency rule, which would have cut funding for services to some of the most delicate and vulnerable patients; and to declare a moratorium on any further cuts to hospitals this current fiscal year is welcome news," Matessino said. "Any effort by the Administration and Secretary Greenstein to help our hospitals and other providers weather this budget storm is appreciated."

Louisiana State Medical Society President Dr. Pat Breaux, added, "We are extremely pleased by the Secretary's announcement today to further reduce the impact of budget reductions on providers. And, we are encouraged by his willingness to hear feedback and the on-the-ground perspective of providers. We are sensitive to the budget realities faced by the state, but we feel this step will allow for continuity and preserved access in the Medicaid program. We look forward to continued work together on the state's budget picture as well as implementing a pluralistic system of health care for Medicaid."

Tyron Picard, executive vice president of Legal and Government Affairs with Acadian Companies, the state's largest emergency medical transport service said, "As difficult as it is for the ambulance industry to deal with the mid-year cuts, we are very appreciative of the Secretary's hours of time spent with providers and understanding the effect of these cuts and his commitment that there will be no additional rate cuts for the remainder of the fiscal year. The provider community looks forward to continuing the discussion with the Secretary to hopefully solve these cyclical funding issues we face by creating a new delivery model which will not only result in improved health outcomes, but also reduce and contain the costs of care to the state as a result of a healthier Louisiana.

Ricky T. Guidry, RPh, chairman and founder of the Louisiana Independent Pharmacists Association, stated, "Community pharmacists have worked to help improve the health of our patients and to help them manage their prescription drug needs in order to offer them the best health care and maximize affordability. We understand the budgetary restrictions on a household and a small business, and we appreciate the state joining us in helping maintain the delivery of pharmacy health care to the patient. The current level of funding is the minimum necessary to maintain drug delivery."

In addition to the measures announced today, LDH is also working with the hospital industry to provide critical services by accelerating a new Upper Payment Limit (UPL) program. Under this program, UPL agreements transfer health programs for the poor and needy from public institutions to private hospitals, freeing up state general funds.  These funds can then be used to draw down additional Medicaid dollars for the private hospitals in exchange for the provision of these health services. Already, since early December, sixteen hospitals that have entered into such agreements have received $27 million in supplemental payments.

Secretary Greenstein also noted that significant progress is being made in developing a strategy to reform Medicaid. LDH officials have been working closely with stakeholders, like the LHA, to improve the state's Making Medicaid Better initiative. Under the initiative, the management of Medicaid enrollees' care will be transferred to Coordinated Care Networks (CCNs) to ensure a focus on preventive and primary care instead of the traditional fee-for-service payment arrangement Medicaid currently operates. Several key changes have been made to the plan since the collaboration began. They include:

  • The establishment of a rate floor to prevent CCNs from cutting rates to achieve savings.
  • The establishment of a medical loss ratio to ensure a certain percentage of dollars goes directly to patient care and limits the profit a private insurer can make from the program;
  • A limit on the number of CCNs that can operate in the state by setting up a Request For Proposal process to select networks.
  • The implementation of prompt pay requirements for CCNs to ensure providers receive timely reimbursements for services.
  • The carving out of Graduate Medical Education funding paid to hospitals outside the CCNs
  • An enhanced appeals process for denied claims
  • The LHA also indicated they will be offering a coordinated care proposal to cover high-cost populations currently excluded from the CCN program.

Matesino added, "Hospitals across Louisiana are ready and willing to work collaboratively and openly with the Administration, the legislature, LDH and other healthcare providers on viable alternatives in order to protect access to care for our most vulnerable patients and recognize the events today as meaningful progress."

With the measures announced today, a second set of emergency rules that outline rate reductions effective Jan. 1, 2011, remain in effect, except for the previously-mentioned rule related to the outlier payments. The reductions were required after $50 million in unfunded utilization was recognized in October 2010.

The Louisiana Department of Health strives to protect and promote health statewide and to ensure access to medical, preventive and rehabilitative services for all state citizens. To learn more about LDH, visit http://www.dhh.louisiana.gov. For up-to-date health information, news and emergency updates, follow LDH's blog at www.myhealthla.org, Twitter at http://twitter.com/La_Health_Dept and search for the Louisiana Department of Health on Facebook.