The Louisiana Department of Health Interim Secretary Tony Keck wrote to New Orleans Mayor Mitch Landrieu in reference to a letter requesting state funding for primary care clinics in the New Orleans region.

The text of the letter is below:

August 12, 2010

The Honorable Mitch Landrieu
Mayor, City of New Orleans
1300 Perdido Street, # 2e04
New Orleans, LA ¡¡¡¡70112

Dear Mayor Landrieu:

Thank you for your letter regarding the Primary Care Access and Stabilization Grant (PCASG) clinics operating in the New Orleans region. Utilizing $100 million of funding over the past three years, the network has grown to provide services to many individuals in Orleans, Jefferson, St. Bernard and Plaquemines Parishes. We recognize that the network of clinics in New Orleans is a vital part of the local health care system that is in line with our vision of community-based, coordinated care.

We are especially pleased with the progress that we have made together on the federal waiver to preserve the unique aspects of the PCASG system. This waiver was submitted to CMS last Friday. We appreciate how hard your team has worked to identify the local matching funds necessary to draw down federal disproportionate share funds, which will finance these services.

In a recent meeting with our Medicaid Director, your representatives expressed that the city's preferred method of financing was the use of existing disaster Community Development Block Grant funds and our staff has researched this potential. The Legislature contemplated this strategy in the state fiscal year 2011 appropriations bill Act 11:

For continuation of Primary Care Access Grant funded clinics in the Greater New Orleans area, provided however that this funding is contingent on federal approval of the use of Community Development Block Grant funds for this purpose. In addition these clinics shall be required to make their best efforts to secure Federally Qualified Health Center (FQHC) status or FQHC look alike status and shall bill Medicaid, Medicare, or insurance for services provided as may be appropriate.

Given the pending deadline to provide CMS with our final source of funding, our waiver experts believe that we should continue to pursue this strategy until it is either rejected or approved by the federal government. Should that source of funding not prove viable, we will continue to pursue other sources of local match you have identified such as certified public expenditures, which use existing city spending on Medicaid eligible services and populations to draw down federal funds.

While your letter references the recent federal "FMAP" adjustment signed into law as a potential alternative source of match, these funds cannot be considered available given the state's anticipated mid-year Medicaid deficit and our exposure to upwards of a quarter billion dollars of disallowances which the state will likely begin payment on in the first quarter of 2011. No state appropriation exists for the purpose of funding PCASG and redirecting any state funds would only require cuts in other services and other communities. Furthermore, they are non-recurring. Identifying locally available match for this local network of clinics is clearly the preferable strategy.

Clearly our most important mutual goal is to secure approval of the federal waiver on which the continued funding of these clinics depends. As your office continues to identify alternative match options to CDBG, our staff will continue to work with CMS on approval of the program design included in the federal waiver. We will continue working diligently with you, your staff and CMS to exhaust all possible means of sustainability for the clinic network.

Tony Keck
Interim Secretary, Department of Health and Hospitals