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LA must investigate fund use for legality, efficiency's sake

The greater the reform, the more time and effort it will take, and one step in the process of overhauling Louisiana’s incredibly inefficient long-term health care system should begin with discovering the proper disposition of investment gains from a key health care account.

Last week, the former head of the state’s Office of Citizens with Developmental Disabilities Bruce Blaney, who now runs a nonprofit agency, called for an investigation into the disbursal of funds from the state’s Medicaid Trust Fund for the Elderly. The account holds funds for eventual disbursement to Medicaid providers, and the balances before being used are invested.

Blaney claims that these earnings, in the neighborhood of $50 million annually, should be apportioned so that two-thirds go for nursing home reimbursement and a third to reimbursement of home- and community-based providers. Instead, he asserts that it all may have gone to nursing homes, a violation of an agreement between the state and federal government that was providing funds. Not only does the former head of the overseeing department, Health and Hospitals, confirm this split, but written documentation of it exists, in the form of a letter signed by both state and federal officials.

However, the current overseer of the fund insists that the agreement lapsed with the end of Gov. Mike Foster’s second term. But unless the letter specifically states this, that seems an incredulous interpretation. Blaney has asked the Legislature to look into this, arguing that perhaps $200 million or more was misallocated over the past several years as a result of this. At the very least, something like the Legislative Audit Advisory Council needs to investigate this before the end of the year.

Bolstering Blaney’s claim is that lobbying by the nursing home industry in 2003 tried to get a constitutional amendment adopted that would have dedicated all funds to the industry’s reimbursements. Why would this be necessary unless it was generally understood that the division as described in the letter was in place?

But if Legislature does not act, or it does and finds the facts do support Blaney’s view and it then does not provide redress, then those supporting the integrity of the agreement need to go further and bring suit against the state. Perhaps knowledge of this may focus the Legislature, which has a notorious bias on favor of institutionalizing care of the resource-poor elderly and of the disabled.

That bias is indicated already in many ways, such as by the extremely favorable funding formula that, years ago, was costing the state almost $100 million extra a year according to the Legislative Auditor (and which could be much higher now) which rather than changing, the Legislature subsequently put into law. Also, the Legislature has tolerated giving the industry $20 million a year for empty beds.

Some recent favorable signs have been coming that the Gov. Bobby Jindal Administration, facing huge potential future budget deficits in part caused by Medicaid spending, is ready to stop the gravy train for institutions in the area of long-term care. It needs to add this resource to its efforts to increase efficient use of taxpayer dollars in this policy area, a move that likely will improve care and quality of life for program clients.

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