LA still not doing enough to stop wasteful health costs

While the Louisiana Legislature is making some progress on getting control of costs in its single biggest area of expenditure outside of education, it still may not be enough as potentially far larger expenditures and deficits loom.

Last week, the House Health and Welfare Committee heard HB 959 which as originally filed would have had the practical effect of removing the state’s tool in trying to control costs, the Resource Allocation Model employed currently to evaluate clients receiving Medicaid waiver services. These allow disabled individuals to receive services from the state in home- and community-based settings rather than be shunted into nursing homes. In many cases, this would provide superior care at a lower cost to taxpayers.

Unfortunately, the waiver program grew in an uncoordinated fashion so that for some costs exceeded what would be paid in a nursing home, where federal regulation dictates that the average waiver cost cannot exceed the average nursing home cost. Thus, the state implemented the RAM, but in a problematic fashion.

One shortcoming was that it may have done so imprecisely, causing inaccurate evaluation. The state admitted as much when it recently agreed to increase services for a man and was dropped subsequently from a lawsuit filed on his behalf. But worse, despite promises to do so, to date the state has yet to implement the RAM with those it pays for in nongovernmental nursing homes. If it would do this, money could be saved as those with less-intense needs could be placed outside these larger institutions at reduced cost. And it’s not like the state doesn’t do something like this already – for months, it has been with its own Supports and Services Centers.

Unfortunately, the nursing home lobby is powerful. Only a few years ago it wrote into law standards which allowed it last year to charge to the public a subsidy it receives that allows about 20 percent of its capacity to remain unused – around 9,000 empty beds costing taxpayers $23 million annually. That alone could provide waiver services for over 700 individuals at the highest level of support.

HB 959 as originally written would have proposed the draconian solution of cutting off use of the RAM to force the state into more flexible use of it and to apply it in all settings. However, the committee expressed lukewarm support which made author state Rep. Walker Hines first propose to put it in the form of gathering statistics and then watering it down further by his shelving of it in favor of a vague directive amended onto HB 1185 by state Rep. Rickey Nowlin that would require reporting of these statistics and application of the RAM by Jul. 1, 2012.

This bill does no harm but it does not specify that the state apply the RAM or something like it to nursing homes, nor does it address the money-for-empty-beds problem. Unless these are done, savings will be minimal and Louisiana will continue to waste money. The bill passed the House last week; the Senate needs to make changes to address this issue if the state really wants to improve service delivery and to get a handle on controlling Medicaid costs, which promise to spiral upwards in the wake national Democrats’ enforced health care provision changes that will add hundreds of millions more dollars to Louisiana’s tab.