The Associated Press March 30, 2011, 5:05PM ET

La. plan to use prison sales to plug gaps doubted

Some Louisiana lawmakers on Wednesday chafed at Gov. Bobby Jindal's plan to use nearly $86 million from the planned sale of three state prisons -- as well as millions in federal matching cash that would be generated by the move -- to avoid deeper cuts in the Medicaid program.

If lawmakers refuse to back the prison sales, that could lead to a reduction in what the state pays doctors, hospitals and nursing homes for taking care of Medicaid patients in the fiscal year that begins July 1, budget analysts told the House Appropriations Committee. Their rates would be cut by 2 percent without the money.

The prison sales have generated criticism from House members and state senators who say the contracts could increase state costs in later years. Some disagree with the idea of using one-time money to pay for ongoing expenses and complain that private companies would pay the prison workers less money and reduced benefits.

"What is Plan B, if the prisons aren't sold?" asked Rep. Patrick Williams, D-Shreveport.

Commissioner of Administration Paul Rainwater, the governor's top budget adviser, replied: "It's very simple: We'd have to cut $85.7 million out of the budget."

Rainwater defended the planned prison sales. He said the one-time money would help private health providers make it through a tough financial year, and he said it would cost less for a private company to run the facilities.

"It seems to me like we're selling prisons to cover a hole this year, but we haven't addressed covering the hole next year," said Rep. Page Cortez, R-Lafayette.

The discussion came as the Appropriations Committee combed through the governor's spending recommendations for the health department in the 2011-12 budget year. The Department of Health and Hospitals takes up one-third of the $24.9 billion budget.

DHH Secretary Bruce Greenstein called his budget transformative, saying it would better manage agency money, improve fraud- and abuse-detection and rework Medicaid to emphasize preventive medicine and wellness. It includes the start of a Medicaid revamp that would turn over large portions of the program to privately managed care companies.

To make the numbers work, the Jindal administration budget uses $450 million in one-time money, such as the anticipated prison sale cash, to cover ongoing programs and services, said Chris Keaton, a House fiscal analyst. More than two-thirds needs approval from lawmakers in separate bills, he said.

More than 600 workers would be laid off, coming on top of 980 layoffs in the agency this budget year, Keaton said. As many as 283 additional filled jobs could be eliminated in the LSU-run public hospital system, which is funded separately from DHH, according to House budget documents.

The health department also would use an anticipated $98 million in savings from fraud prevention programs to balance its budget, though lawmakers questioned whether those savings would materialize.

Cuts would fall on local human services districts that provide mental health and addictive disorder services.

Jindal also proposes reductions to the public hospital system run by LSU. The hospital system chief, Fred Cerise, said $62 million in cuts would hit services, including $21 million at the hospital in Baton Rouge and nearly $15 million in New Orleans.

Cerise, LSU vice chancellor for health affairs and medical education, said the hospital system still is working on how to structure the cuts. Outpatient pharmacies for the poor, obstetrics, pediatrics services and general dentistry care are on the chopping block. Some of the services could be picked up by private providers, but officials said some people simply will go without services.

"Obviously, we want to minimize the impact on patients, but as you can imagine, it's impossible to shield them completely," Cerise told the committee.

The hospitals also would start requiring pre-authorizations for imaging and sonogram procedures to save money.


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