Louisiana Expects to Earn $1B with Medicaid ‘Loophole’

After lobbying efforts by Louisiana Sens. John Breaux (D) and Mary Landrieu (D) and "intervention" from President Clinton, HCFA has approved "extra" Medicaid payments for the state that may amount to $1 billion over two years to provide health care to the poor, the Baton Rouge Advocate reports. Using a "controversial" Medicaid "loophole," Louisiana will pay city- or parish- owned nursing facilities more than the actual cost of health services, receive inflated matching funds from HCFA and then require the nursing homes to return the extra funds. In return "for their trouble," the state will pay the participating nursing homes a small fee. By using the loophole, Louisiana officials expect to "collect huge sums of extra Medicaid money" which will earn interest in a trust fund and be spent on nursing homes, care for the elderly and disabled, preventive and primary care for low income people and the uninsured. Although HCFA and federal officials are working on regulations to close the loophole, the Advocate reports that Louisiana applied for the fund transfer under the old Medicaid rules. Breaux said in a written statement, "The federal officials, quite frankly, did not want to approve Louisiana's application and ... are publishing new regulations to prevent more states from using the loophole. Without President Clinton's personal involvement, we would not have been successful in securing these new funds." Louisiana Health and Hospitals Secretary David Hood said, "HCFA is going to issue rules that would restrict the amounts that could be applied under this program in the future, so within two years or so we would see reduced revenue," Hood said. He added that the state has selected the nursing homes "willing to participate" and the fund transfers will begin "within a few weeks" (McKinney, Baton Rouge Advocate, 1/3).