Updated: April 10, 2014 at 9:31 pm
BATON ROUGE, La. (AP) — Federal officials have warned Gov. Bobby Jindal's administration that they will withhold $307 million in Medicaid money from the state if no agreement is soon reached on whether the state's financing plans for the privatized LSU hospitals meet federal guidelines.
The U.S. Centers for Medicare and Medicaid Services, or CMS, notified Gov. Bobby Jindal's administration about the payment delay this week. The state Department of Health and Hospitals released the notice when questioned by The Associated Press.
But just when the money will be stalled remains unclear.
The letter says the withholding "will be reflected on your next grant award." A spokeswoman for Jindal's health secretary, Kathy Kliebert, said Thursday that means if any money is withheld, it would be a year or more away.
Kliebert downplayed the significance of the letter, saying the announcement was expected because of continuing negotiations over financing plans for uninsured care at LSU hospitals that have been privatized.
Most of LSU's charity hospitals were turned over to private managers, but federal officials haven't decided yet whether they'll agree to the money arrangements used to pay the new hospital operators.
DHH has requested approval in what are called "state plan amendments" filed with the federal Medicaid office.
"We anticipated a deferral of these funds while the state plan amendments were still pending. It is part of CMS' normal procedure to defer funds that are paid out under a state plan amendment that is being reviewed for approval," Kliebert said in a statement.
Though there may be no immediate cash crunch for the state, the notification is certain to intensify concerns among lawmakers who've worried about federal approval.
Already this week, members of the Senate Finance Committee pressed DHH and LSU officials about how they would handle financing of health care services at the now-privatized hospitals if the deals don't get federal approval.
Kliebert assured lawmakers "we feel very confident" CMS will sign off on all the financing plans. She repeated that assertion Thursday.
"Nothing in the deferral notice calls into question the approval of the amendments," she said.
CMS hasn't explained how far apart the two sides are in negotiating final terms.
Privatization deals have taken effect for eight university hospitals and their clinics, with one more pending. They are pushed by Jindal as a way to cut state costs, improve care for the poor and uninsured, and bolster medical training programs.
The deals are costing the state $1.1 billion this budget year, much of it paid with federal health care dollars.
But only one contractual arrangement has received federal approval so far, a deal that shuttered LSU's Earl K. Long Medical Center in Baton Rouge and transferred most of its inpatient services to a private hospital, Our Lady of the Lake Regional Medical Center.
Negotiations on the other deals dragged on long enough with federal officials that the state health department asked to withdraw its official approval requests with CMS so the clock wouldn't expire on when a decision needed to be made.