Jindal must push to reform wasteful long-term care sytem

Louisiana’s Department of Health and Hospitals finally has promulgated new rules in response to budget cuts that started this fiscal year. They address the symptoms but largely miss the disease, an approach that produces inefficiency that Gov. Bobby Jindal has targeted for elimination.

Cuts include reimbursement rates to hospitals, physicians, and home- and community-based providers. These will serve to reduce supply of medical services, of which some may not have been necessary or inefficiently performed which now may become more efficient by this new imperative, but the needed remainder now will be parceled out involving more inefficient use of resources (such as in waiting times) or not at all.

But note one tremendous (roughly 85 percent of their revenues) user of state government money was not affected at all – nursing homes. This is tragic, not only because they perhaps utilize the least efficiently health care dollars yet suffer no penalty for that in hard times, but also because the state largely has set itself up to remove this option from being a solution for tight budgetary times.

For decades, Louisiana has placed way too much reliance on these institutions, culminating in a disastrous law passed in 2006 that locks in a formula that rewards the system some $20 million a year for overcapacity. A Legislative Auditor’s report of 2004 showed that if other rules that determined rates were altered to standards used typically by other states, the state could save almost $100 million a year. Put these two figures together, and that’s half of the $240 million reduction faced by DHH this fiscal year.

At the end of 2008, Jindal made some changes at the margins to slightly improve the situation, but more needs to be both administratively and legislative to correct the imbalance that is needlessly costing the state money. Addressing the former, the state must begin applying its new resource allocation model to nursing homes, as it is doing for other manners of care. Using this, it can identify which patients are improperly institutionalized, i.e. need less intensive services that can be provided in a community home or in their own homes, and move them out to these less expensive yet more appropriate environments.

This would entail transferring money from nursing homes to these other programs – which will make institution operators scream because they deliberately overexpanded to take advantage of the warehousing ethos and now they won’t be getting their payoff. As a safeguard against this, the 2006 law locks in reimbursement for them. Thus, to rectify the situation and to get people into their proper environment of care, this law must be undone. It will take political will – a will that, as a whole, the Legislature may be lacking because of the political clout and donations the nursing home industry can bring.

So it may be up to Jindal. With a huge donor base, he may be the only one to be able to push for this change along the lines of the recommendation of the 2004 report without being held hostage politically by the industry. If this budget situation has made anything clear, it’s that the system must be reformed, Jindal has said he wants to reform it, so now is as good as any time for him to put his money where his mouth is.