News > Press Releases
Feb 22, 2012
Expanding Louisiana’s Economic Opportunity, Reducing Government’s Footprint
Governor Jindal’s FY 14 Budget
Expanding Louisiana’s Economic Opportunity, Reducing Government’s Footprint
FY 13-14 Executive Budget: Introduction from Governor Bobby Jindal
With this Executive Budget proposal, Louisiana continues to chart a path that expands economic opportunities for our people while reducing government’s footprint, not only shrinking its size and cost, but making government more effective and efficient by consolidating functions and applying smarter technologies that save taxpayer dollars.
So far, this path has included sweeping ethics reforms, historic tax reductions for our families and businesses, nationally recognized economic development initiatives, a revamped and more strongly coordinated state workforce development system, and bold education reforms to improve schools and improve student achievement. Each effort has played an important role in our overall mission of improving the state’s business climate, creating jobs and growing the economy, and better preparing our citizens for careers right here at home.
The results have been remarkable and undeniable. Louisiana’s employment performance continues to grow and our monthly unemployment rate has continued to be consistently lower than the national average. In December, Louisiana recorded its 25th consecutive month of year-over-year job growth. While other states continue their slow recovery, Louisiana’s unemployment rate is the lowest it has been in more than four years.
In addition, during the past several years, Louisiana has consistently moved up in major national rankings of state business climates. We have been among the top 10 states for private sector job growth since 2008. Per capita personal income has increased by more than $2,700 in the last four years, resulting in our highest national ranking in 80 years. For the fifth year in a row, more people are now moving into Louisiana than moving out, reversing a trend of more than two decades of out-migration.
We have made great strides toward making Louisiana the best place in the country to live, work and raise a family, but we still have work to do. In order to keep fostering an environment where businesses want to invest, we need to make our business climate even stronger. That’s why the next step along this pro-growth path – and the centerpiece of our agenda for the upcoming Legislative session – is to overhaul our tax code. Our tax code is too complex, littered with loopholes, and too burdensome on our people and businesses. We need to make our tax code fairer, flatter, and simpler for Louisiana families and businesses. Make no mistake – this will not be an effort to raise revenue and grow government. Instead, we must revamp our tax code in a revenue neutral way to spur more private-sector job growth and create more job opportunities for all of Louisiana’s citizens.
Some measure our economy’s success by the amount that state government takes from other people’s pockets. Instead, we believe that the less money the government takes from the pockets of its people, the better off they will be, which will make our state more attractive for businesses looking to invest and create jobs. Nevertheless, simplifying the tax code will also make it easier to estimate government revenues, reducing the uncertainty and volatility in the revenue estimating process, which has increasingly been hampered by more than 460 tax exemptions, some of which change in value dramatically from year to year, even as their utilization often is not tied to our strong economic conditions.
This budget proposal also reflects our belief that Louisiana’s future success doesn’t depend on a larger government that takes more resources away from our private sector economy, nor a larger role for government in the lives of our citizens. Government can and must have a smaller footprint; it must become nimbler, more compact, and more modernized, saving money while at the same time improving and protecting critical services.
By pursuing such initiatives, the FY 14 Executive Budget reflects the strategic reduction of more than 10,000 full-time executive branch positions, a number that, if approved, would bring the total of state government positions reduced since the beginning of our administration to over 26,000. Even before the new position reductions proposed in this budget, the number of state government employees is already at its lowest level in over 20 years.
Along with these strategies for targeted reductions throughout the budget, we are also moving forward with our reform efforts that add value to our investments in education and healthcare. For higher education, when looking at total spending, the Executive Budget maintains spending with no reduction to campuses, while state aid to local K-12 schools through the Minimum Foundation Program will rise to its highest level yet, with total funding of more than $3.46 billion.
Despite Congressional action last July that reduced Louisiana’s FMAP rate to its lowest level in 25 years – dealing a total impact of over $1.8 billion to the department’s budget – the Department of Health and Hospitals will maximize cost savings in order to preserve critical health care services, even expanding the availability of services at the local level around the state.
In the past year, DHH implemented two landmark coordinated care programs – Bayou Health for Medicaid services and the Louisiana Behavioral Health Partnership for behavioral health services. The State continues to invest in these programs, which provide increased access to services, expand the availability of specialty and critical care at the community level and provide a stronger focus on improving recipients' health outcomes.
In FY 14, the department will optimize these new programs to eliminate duplicative functions and target available resources where they are needed most, mitigating the impact of reductions on the most critical services. Along with its coordinated care approach that has transformed the Medicaid program, the department is also working closely with the LSU Health System to enact a long-needed restructuring of the State's public hospital and graduate medical education system. LSU is establishing a series of locally-driven public-private partnership agreements with community hospitals to keep them open as safety nets in each region, maintaining access to critical services and strengthening the medical training experience for our future healthcare workforce.
Without a doubt, this past year has been a strong one for Louisiana's economy. Unemployment is down, business climate rankings are up, and the private sector is expanding. But we still have work to do. We must continue to reform and restructure government and foster an environment that will make Louisiana the best place in the world for businesses to invest and create jobs and for our people to raise a family and pursue a rewarding career. This budget proposal is another critical step on the path toward that goal.
-- Governor Bobby Jindal
Louisiana’s Economic Performance
Since January 2008, Louisiana’s employment performance has been significantly better than the South and the U.S., and Louisiana has added jobs at a faster rate than the South and the U.S. since the official end of the national recession in June 2009. Louisiana’s unemployment rate in 2012 remained below rates for the South and U.S., just as it has consistently since early 2008.
Louisiana registered a banner year for business development wins in 2012, securing game-changing projects that include GE Capital’s new 300-job technology center in New Orleans; Ronpak’s relocation of its corporate headquarters from New Jersey to Shreveport; the $2.1 billion CF Industries expansion in Donaldsonville; Benteler Steel/Tube’s 675-job seamless steel tube mill and steel mill project at the Port of Caddo-Bossier; and Sasol’s integrated gas-to-liquids and ethylene complex: $16 billion to $21 billion investment in Westlake that will create roughly 7,000 direct and indirect jobs, that ranks as the largest manufacturing investment in state history and one of the largest foreign direct investments in the country’s history.
As the national economy seeks sustained growth in 2013, Louisiana will be positioned to secure a large share of new business investment projects. Moreover, Louisiana’s economy will experience significant job growth stemming from projects announced in 2008 through 2012. In the year ahead, business retention, small business development, recruitment of new growth industries, customized workforce solutions and cultivation of attractive development sites will remain top priorities for Louisiana Economic Development and the state.
Job Creation and Private Sector Growth
Since taking office, Governor Jindal has announced economic development wins resulting in more than 63,000 new direct and indirect jobs, and generating more than $28 billion in new capital investment. To sustain this momentum and to ensure future success, the FY 2014 Executive Budget includes funding for important economic development initiatives that spur job creation; attract, retain, and grow businesses; and further diversify and grow Louisiana’s economy. Recent economic milestones and recognitions of Louisiana’s progress include:
In 2012, LED provided assistance to thousands of Louisiana small businesses, including more than 1,300 small businesses served by LED’s Small and Emerging Business Development program and nearly 12,000 small businesses and individuals served by the Louisiana Small Business Development Center network, or LSBDC, with sustained funding support from LED.
LED and LSBDC small business efforts generated approximately 784 new jobs, retained 482 jobs and helped launch 154 new businesses representing $43.7 million in debt and equity investment for Louisiana small businesses. These activities also generated an estimated increase in sales of more than $15 million. During 2012, the LSBDC network participated in the LED State Trade and Export Promotion (STEP) Program working with more than 900 existing businesses to assess their interest in international trade and referring 75 businesses into the program. In the year ahead, LED will pursue targeted initiatives to enhance Louisiana’s economic competitiveness; retain Louisiana’s existing economic driver firms; support Louisiana’s small businesses; cultivate attractive development sites; offer world-class, customized workforce solutions; and recruit new growth industries to Louisiana.
FY 14 Budget: Reducing the Size and Cost of Government
While protecting critical services and restructuring government operations, the FY 14 Executive Budget reflects spending levels as follows:
State Government Workforce at Lowest Levels in a Generation
From the start, this administration has continuously used a variety of tools – departmental historical vacancy rates, hiring freezes, technology and efficiency enhancements, partnering with the private sector, and office consolidations – to strategically reduce the number of executive branch fulltime positions funded in the budget.
These previous budgetary actions, over time, have already made a significant impact on the actual size of the state government workforce even before the new position reductions proposed for FY 14. Based on figures from the Department of State Civil Service, between December 31, 2007 and February 1, 2013:
Addressing the Projected Shortfall
While State General Fund year-to-year revenues are projected to increase modestly over FY 13, in December the Revenue Estimating Conference revised the official FY 14 forecast $207 million lower than was previously forecast, which, combined with various anticipated cost increases, contributed to a projected $1.278 billion General Fund shortfall for FY 14. Following Congressional action in July that reduced Louisiana’s Medicaid reimbursement rate to its lowest level in 25 years, with an impact of over $1.8 billion in total funding, one of the major factors cited at the “continuation budget” stage included $687 million in increased state General Fund costs associated with Medicaid payments in FY 14; there was also $98 million associated with inflationary cost increases statewide; $32 million in increased costs associated with the TOPS program; and $33 million due to the loss of federal funds previously used to support the LA4 Early Childhood Education program.
Addressing the projected shortfall and balancing the General Fund budget required holding the line on certain anticipated cost increases while finding offsetting spending reductions throughout the budget, as well as maximizing all means of finance.
These savings came from $280 million in departmental and statewide reductions (including position reductions, reductions annualized from the midyear deficit, and other departmental and statewide reforms); $350 million from not funding certain cost increases anticipated at continuation; $215 million in General Fund savings from additional revenue resulting from reforms; and $435 million in reductions to General Fund support by maximizing all means of finance.
Reducing Government’s Footprint through Reform, Consolidation, and Modernization
The FY 14 Executive Budget includes numerous, targeted cost-savings measures across all departments to cut spending while protecting critical services. For many departments, these savings came as a result of continuing to reduce operational expenses in travel, supplies, acquisitions, operational services and professional services.
Importantly, the FY 14 Executive Budget also continues to build on past efforts to reform and restructure government, utilizing tools like consolidation, reorganization, and modernization that improve service while saving taxpayer dollars.
The FY 14 Executive Budget continues to advance reform and restructuring initiatives, including:
Education: Protecting Investments, Pushing Forward with Reform
K-12 Education Funding
Minimum Foundation Program
As the state moves forward with school reforms to increase student achievement, K-12 education funding will continue to be protected in the FY 14 Executive Budget, with the MFP increasing from $3.42 billion in FY 13 to $3.46 billion in FY 14, which includes an increase of $39 million to reflect the projected annualized cost of adjustments anticipated at midyear from student counts. Taking into account the new dollars committed to the MFP in this budget, total MFP funding will have increased by $335.5 million, or 10.7 percent, since FY 08.
Higher Education Funding
The FY 14 Executive Budget protects funding to campuses, with no change in total funding for higher education schools after annualizing the savings associated with addressing the FY 13 midyear deficit, non-recurring carryover and one-time expenditures in the current year’s budget, and providing $75 million in additional tuition funds from their tuition authority previously granted through the GRAD Act.
While the proposed budget represents an overall reduction of $9.6 billion, or 28 percent, since 2008, total funding for higher education has been reduced by roughly $272 million, or 9.2 percent. This does not include $705 million in higher education infrastructure investments that have been made across the state since 2008.
Additionally, $32 million in additional funds are provided to fully fund Taylor Opportunity Program for Students (TOPS) awards, Louisiana’s merit-based scholarship program that awards qualifying students tuition payments for up to eight semesters at any eligible Louisiana institution. The projected number of TOPS recipients for FY 14 is 46,914, with total funding of $204 million. The funding includes $60 million in payment the state will receive from the Tobacco Arbitration Settlement and $60 million in savings generated from Refunding Tobacco Bonds that will go to the TOPS Fund.
Governor Jindal has worked with the Legislature to implement higher education policy reforms, including GRAD Act 1 and 2, which provide more flexibility for colleges and universities in return for improved student outcomes. These reforms are working, but more work remains to be done.
Higher Education Reforms to Improve Outcomes
As a Result of Reforms Higher Education Institutions are Making Gains
Funding Per Student Higher than the National Average for the Past Several Years
Protecting Louisiana Health Care by Reforming and Restructuring Delivery of Service
Congressional action in July reduced Louisiana’s Medicaid funding match rate to the lowest it has been in 25 years, dealing an impact of more than $1.8 billion to the Department of Health and Hospital’s budget. In spite of this, DHH is continuing to protect critical health care services in the coming fiscal year by operating more effectively and strategically. For FY 14, DHH’s total budget will go from $8.93 billion to $8.88 billion, an overall reduction of $54 million, by offsetting increased Medicaid costs through strategic reductions throughout the department.
Although the lower FMAP rate remains in effect, after annualizing its midyear reductions the department is not making any further provider rate reductions, and will continue to invest in Bayou Health and the Louisiana Behavioral Health Partnership, highlighting the success of reforms designed to better manage services and ensure better health outcomes.
A major part of this strategic effort is shifting service delivery to the community level, such as human services districts, which manage behavioral health, developmental disability, and other medical-social support services in different regions of the state. In FY 14, the State will continue investing in local-level services in human services districts, and will continue the transfer of services with the creation of four new human services districts, so that, by the end of the upcoming fiscal year, each region of the state will have a fully functioning and independent local governing entity to more effectively deliver services at the local level.
DHH will annualize midyear reductions to Medicaid optional programs in ways that optimize the newly implemented coordinated care programs to eliminate duplicative efforts and make more efficient use of contracts, rates, and staffing availability within the department.
In the upcoming fiscal year, DHH will continue to provide Medicaid hospice services but will reform the program with a focus on providing services for people who are seeking end-of-life care in their homes/communities, rather than individuals who already receive around-the-clock care and comprehensive medical and social support services in nursing homes, to better control costs, reduce duplicative services, and ensure the most efficient and effective use of taxpayer dollars.
Strategically reducing Medicaid expenditures following Congressional drop to Louisiana’s FMAP rate
In response to the unexpected Congressional FMAP reduction, DHH developed a plan that reduced the budget to offset funds the State lost, applying these reductions in a strategic manner across the entire department in order to sustain critical services and capitalize on the newly implemented coordinated care programs to contain costs.
Ongoing Collaboration to Transform the LSU Hospital System
One major outcome of the FMAP reductions was accelerating a restructuring of the LSU public hospital and graduate medical education system. LSU officials in October announced a plan that maintains critical services and keeps all hospitals operational, including the medical home-model clinics that provide much of the care to recipients in the public hospital system today.
LSU has been working to accelerate a system redesign through community-driven public-private partnerships over the past several months in response to the federal FMAP reductions, which eliminated $126.9 million in State General Funds from the LSU Health System's budget, which amounts to a total reduction of $329.2 million when federal funds are considered. Historic partnerships were announced for Interim LSU Hospital and its successor University Medical Center in New Orleans with Louisiana Children's Medical Center; Leonard J. Chabert Hospital in Houma with Ochsner Health System and Terrebonne General Medical Center; University Medical Center in Lafayette with its neighbor, Lafayette General Medical Center; and Walter O. Moss Regional Medical Center with Lake Charles Memorial Hospital and its partner, West Calcasieu Cameron Hospital.
As a result of these partnerships, the hospitals are receiving $191 million more in funding than they were anticipated to receive as a result of the Congressional FMAP change.
The first such partnership for the LSU System was the landmark agreement between Earl K. Long in Baton Rouge with Our Lady of the Lake Regional Medical Center, which is now on an accelerated timeframe to transition services to Our Lady of the Lake in April 2013, which will also include Our Lady of the Lake operating the network of outpatient clinics throughout Baton Rouge that are currently operated by LSU.
These historic public-private partnerships will preserve patient services and strengthen graduate medical education programs, while providing opportunities for increased access to specialty care and enhanced medical training. In each partnership, the partner hospitals will lease the hospitals and their affiliated outpatient clinics from LSU, assuming responsibility for facility upkeep and operations. Because of these lease payments from the partner hospitals, LSU will maintain patient services at the public hospitals while these partnerships progress toward completion. LSU estimates that at least 90 percent of employees will be hired for jobs with the private hospitals assuming operations. DHH continues to work with the LSU Health System to help develop and sustain the partnerships, and ensure optimal use of health care financing.
Restructuring Prisoner Care
The FY 14 budget transfers $50 million from the LSU hospitals to the Department of Corrections to continue prisoner care in a three-part model:
Restructuring State’s Health Care Delivery Footprint to Community-Based Model
Another part of DHH’s efforts in the past year has been restructuring the State’s footprint in health care delivery. By shifting away from direct management of large-scale institutions toward a model of community-based service delivery, DHH is able to focus on and strengthen its role of oversight and quality monitoring. DHH has privatized many of the intermediate care facilities for people with developmental disabilities and mental health institutions in recent years, which allowed the State to continue providing high-quality services at traditional locations while containing State budget costs. In these locations, experienced private organizations have assumed responsibility for day-to-day operations of these centers while the department continues to closely monitor services to ensure recipients receive quality care.
For FY 14, DHH’s budget approach continues to focus on maximizing available resources to minimize the impact to critical services, investing in the programs that are most needed.
Maximizing Bayou Health and Louisiana Behavioral Health Partnership to contain costs
In the past year, the State implemented two landmark coordinated care programs – Bayou Health for Medicaid services, and the Louisiana Behavioral Health Partnership for behavioral health services – which provide increased access to services, expand the availability of specialty and critical care at the community level, and provide a stronger focus on improving recipients' health outcomes. In the upcoming fiscal year, the State continues to invest in these programs while optimizing them to eliminate duplicative services and target available resources to where they are most needed.
Bayou Health represents the largest transformation of Louisiana’s Medicaid program since it was implemented in the 1960s. The legacy Medicaid fee-for-service model was not sustainable, and it failed to promote health outcomes despite spending billions of dollars a year. The State has now contracted with five health plans – Amerigroup, Community Health Solutions, LaCare, Louisiana Healthcare Connections and United Healthcare – that are responsible for making measurable improvements in their members’ health while providing services like disease management.
More than two-thirds of Louisiana Medicaid and LaCHIP recipients are now enrolled in one of the five health plans’ networks. The coordinated care approach is reining in Medicaid costs by ensuring better access to primary and preventive care and decreasing higher-cost services, such as emergency room visits to treat basic health needs. In November, the program was expanded in scope by the inclusion of pharmacy services in the three prepaid health plans.
The Louisiana Behavioral Health Partnership was implemented in March 2012, and coordinates all behavioral health care services for Medicaid enrollees and individuals without insurance statewide. Through the Partnership, eligible individuals can more readily access community-based services for addiction treatment, mental health counseling and other needs. Anyone can call a central hotline number 24/7 and be referred to the appropriate treatment source for his or her needs. Though the Partnership began less than one year ago, DHH has already seen increased use of community-based services such as Assertive Community Treatment (ACT) Teams, availability of inpatient beds when needed, and more diverse practitioners available to provide these services at the local level. The State’s behavioral health care system is now the strongest it has been since Hurricane Katrina, thanks in part to a 30 percent increase in mental health services funding in the past four years.
One specialized component of the Partnership is the Coordinated System of Care (CSoC), a family-focused behavioral health intervention program for children and youth who have complex behavioral health needs and are in or at-risk of being in an out-of-home placement, such as foster care, group home, or juvenile justice facility. CSoC is currently active in five regions helping young people remain at home and in school.
Progressing Toward a More Sustainable Role in Health Care Service Delivery
Restructuring services offered through parish health units
DHH’s Office of Public Health (OPH) will restructure administration of the Vaccines for Children program. OPH is also strategically reallocating its sexually transmitted disease (STD) treatment resources to health units that provide the most services, ensuring that each region of the state will have a health unit-based STD Service Center, with a net savings of $416K in General Fund.
Enhancing local control and governance through Human Services Districts
As part of the phase-in of its operations, DHH will transfer funding from the state to local level for services offered through the Acadiana Human Services District, the newest of the State’s Human Services Districts. Human Services Districts operate as independent local governing entities (LGEs), moving control over services closer to the people receiving these services. In FY14, the State will continue investing in local level services by shepherding four emerging LGEs toward autonomous operation, which will further streamline service availability at the local level. After FY 14, each region of the state will have a fully functioning LGE to more effectively deliver services at the local level.
Nursing Home Reforms
In FY 14, DHH will restructure nursing home admissions to better identify people who do not require long-term nursing care and help them transition back to the community faster, decreasing nursing home lengths of stay and generating $4 million in General Fund savings.
DHH will also restructure payments under the Bed Hold/Leave Day Policy for nursing homes to more accurately adjust the daily per-diem rate paid to the homes; make its annual rebasing of nursing home rates to better align them with current costs; and will annualize the rebasing reimbursement rates from the midyear reductions for the Program of All-Inclusive Care for the Elderly (PACE).
Realigning Medicaid Eligibility Programs
Beginning in 2014, changes at the national level will provide subsidized health insurance options for some adults who are currently eligible for Medicaid coverage in Louisiana. To achieve more than $24 million General Fund savings in the coming Fiscal Year, Medicaid will synchronize its eligibility standards with these new, heavily subsidized health insurance options. Individuals will continue to have access to comprehensive, affordable health coverage that meets federal essential health benefits standards and caps individual out-of-pocket costs.
These changes, effective Jan. 1, 2014, include:
Performance Measures for Community-Based Recovery Programs
DHH will transfer services within the Access to Recovery (ATR) to Louisiana Clinic Services (LCS). LCS will continue to provide services to all people currently served through ATR, which provides community level services for individuals who have alcohol and/or drug abuse problems. DHH will closely monitor the contract with LCS to ensure services are provided as needed.
Restructuring of the Resource Centers
Two Resource Center Offices, which are both community-based service centers for people who have developmental disabilities, will achieve lease savings of $175K by transitioning staff from one office to working out of their homes, and staff from the other office relocating to the grounds of Pinecrest Supports and Services Center. Individuals in the communities served by these centers will still access services.
Privatization as a means to reduce costs and still provide quality services
DHH will realize annualized savings from the privatization of the dietary program at the East, Central and Villa Feliciana, which was already implemented in the past fiscal year. There will also be annualized $2.9 million in General Fund savings from the already implemented privatizations of intermediate care facilities for people who have developmental disabilities.
DHH will transfer services for all people currently enrolled in the Family Flexible Fund and the Individual and Family Supports Funds to a private entity, Louisiana Clinic Services (LCS). LCS will continue to provide services to all people currently served through these programs, which offer home and community-based services to people who have developmental disabilities. DHH will closely monitor the contract with LCS to ensure services are provided as needed.
More Effective Resource Management with Property and Workforce
DHH will achieve savings in the Medicaid program by purchasing diagnostic services ($1.4 million General Fund savings) and durable medical equipment and supplies ($800K General Fund savings) from sole source providers. Contracting with a single provider for these covered Medicaid services allows the state to negotiate better rates and generate savings. Upon receiving approval from the federal Centers for Medicare and Medicaid Services, DHH will use a competitive bid process to select the sole source providers.
The department will achieve maintenance savings of $398K in General Fund from unoccupied property at Pines Campus, Southern Oaks Addiction Recovery and Greenwell Springs -- all previously OBH-run facilities that are being reverted back to original owners or in the selling process.
As part of a more effective workforce restructuring, DHH will merge OPH’s Bureau of Emergency Medical Services with the Louisiana Emergency Response Network (LERN) to eliminate duplicative efforts and share similar responsibilities, resulting in a General Fund savings of $225K.
Containing Costs to Support Critical Programs
Contract consolidation and cost reductions to achieve savings
DHH will reduce an OCDD psychiatric services contract ($75K General Fund savings) due to changes in designated usage, with no impact to services. DHH will also reduce Medicaid contracts for Application Centers, Certified Language International, SRI, Optional Medicaid Services, the LSU Dental School, the Molina contract for processing claims, which are now handled primarily through the Bayou Health plans, and Third Party Liability. Medicaid will also reduce Interqual IT software costs, operated through Molina (Medicaid Fiscal Intermediary).
EarlySteps Family Cost Participation
EarlySteps is an OCDD program that provides therapeutic, medical and social support services to children ages birth to three years who have a developmental delay or disability, or a condition that puts them at high risk for one. Families participating in the program will begin contributing to the cost of care based on a sliding fee scale that is adjusted according to the family’s income and services accessed, generating General Fund savings of $1.7 million in FY 14. Families above 250 percent of Federal Poverty Level (an annual income of more than $57,000 for a family of four) will be asked to participate in the cost. Until now, EarlySteps has offered services at no cost without consideration to income, but this model is not sustainable if DHH is to continue providing EarlySteps services. Family Cost Participation is an increasingly common occurrence in other state early intervention systems.
Redirect Children’s Special Health Services care coordination and clinical care
OPH will eliminate duplication of direct clinical services and care coordination at the regional OPH clinics from the Children’s Special Health Services program for children with special medical conditions, by ensuring that children are provided care coordination through their Bayou Health plans. The Bayou Health network adequacy requirements ensure there are available pediatric specialists to assume care of these children around the State. This transition will result in $794K in General Fund savings.
Streamlining Funding Sources
As part of efforts to create a more sustainable system of state health care delivery, DHH is examining ways to use available funding in the most effective way, preserving critical health care services.
DHH will eliminate state match funding for the OPH Bureau of Primary Care and Rural Health Grant Match, which provided staff support to health care providers working on grant applications or other development activities. This transition will saving $250K in General Fund without affecting patient care.
Medicaid will reduce Rural Hospitals’ Upper Payment Limit (UPL) payments for a $3.4 million General Fund savings. Even with this reduction, Rural Hospitals will still receive higher payments than non-rural hospitals, having Medicaid claims paid at 110 percent of cost as required by the Rural Hospital Preservation Act. Rural Hospitals are funded for medical inflation, as they have been in past years. Through enhanced Medicaid rates, medical inflation and UPL program, Rural Hospitals should still be paid to allowable cost for providing care to Medicaid recipients and the uninsured. DHH does not anticipate this reduction to rural hospitals will impact uninsured patients’ access to care, or Medicaid recipients’ access to care, because the Bayou Health plans are responsible for ensuring hospital access through their networks.
Medicaid is also reducing Disproportionate Share Hospital (DSH) payments to the Villa Feliciana Medical Complex because this facility no longer participates in the State Uncompensated Care program, generating $400K in General Fund savings. Medicaid is also eliminating the Public Hospitals Uncompensated Care Costs/Disproportionate Share Psych Pool, as many of the services previously offered through hospitals in that funding pool are now available through many provider types under the Partnership. This represents $780K in General Fund savings.
DHH is not making any new provider rate reductions in the FY 14 budget. Medicaid will annualize the midyear reductions to the High Medicaid DSH Pool funding.
DHH will also annualize two emergency ambulance rate reductions announced in July 2012, in response to the FMAP reductions. As with hospitals, Bayou Health plans are responsible for providing both emergency and non-emergency transportation to their members.
East Louisiana Mental Health System (ELMHS)
DHH’s Office of Behavioral Health (OBH) will achieve an overall 10 percent ($1 million General Fund) reduction to the ELMHS contract budget. Additional efficiencies in pharmacy, professional services contracts and food service will realize another $979K in savings.