HB 532 and HB 533: Louisiana Hospital Stabilization
Formula & Fund and Other Provider Protections
HB 532 and HB 533 passed both the House and the Senate. They will now go before the public for a vote in 2014.
Because hospitals have been experiencing financial challenges that negatively impact healthcare services, jobs and insurance costs, House Speaker Chuck Kleckley (R-Lake Charles) and House Speaker Pro Tempore Walt Leger (D-New Orleans) filed HB 532 and HB 533 to help stabilize the healthcare delivery system in Louisiana. These two hospital-supported constitutional amendments would greatly improve the ability of Louisiana’s hospitals to generate a stable source of funding, and protect other providers that are currently generating funds for Medicaid, such as nursing homes and pharmacists.
The Louisiana Hospital Stabilization Formula and Fund, which would be created by HB 532, will help give the healthcare delivery system in Louisiana more stability by more effectively funding hospital care for Medicaid and uninsured patients. Currently, there are hundreds of millions of federal dollars that the state is not accessing, and this legislation will allow the state to tap into those funds to use them for patient care.
This legislation is an innovative solution to generate funds for patient care and to ensure communities that their hospitals can continue to provide necessary care to meet everyone’s needs 24/7. Instead of filling in the budget hole for a quick fix, we have found a way to allow federal money to flow into the state with federal match. (Currently, 39 states have similar programs in place to draw down federal funds.) This legislation is a step toward solving some of the more pressing healthcare problems that we are facing in our state, and the best part is, it will not be passed along to patients or businesses.
Why is this important to the public?
After four years of continued Medicaid cuts of approximately 26 percent, hospitals are feeling the financial pressure. Continued cuts make it difficult for hospitals to invest in new technology and to provide other necessary community benefits, like education, outreach, wellness programs, and screenings. Cuts also lead to reduced services and layoffs, which means less access for everyone. If this financial situation continues, hospitals may have to close their ERs or, even worse, their doors, which is a frightening scenario for any community.
In addition, a stable funding source helps businesses and individuals who pay for health insurance. Healthcare costs continue to rise, and this is caused, in part, by the government paying hospitals and providers below what it actually costs to provide care to patients with Medicare and Medicaid. Currently for a Medicaid patient, Louisiana hospitals only receive approximately 60% of what it actually costs to provide care for that patient. Individuals and businesses with health insurance have to pay more in higher healthcare insurance premiums to cover those costs. This legislation will reduce the pressure placed on those with private insurance who are currently subsidizing the cost of care for those who do not have insurance. This is accomplished by providing hospitals with some relief for caring for uninsured and under-funded Medicaid patients. (Approximately two-thirds of all hospital patients cared for are on Medicaid or Medicare, or are uninsured.)
How HB 532 Works:
Specifically, HB 532, which creates the Hospital Stabilization Formula and Fund, is the first step in a two phase process that will establish protections for hospitals so that a provider assessment can be levied. If approved, HB 532 would go before the public for a vote. The second step would require a resolution to be filed and approved by the legislature that would establish the assessment to be used to draw down federal funding and the rates to be paid to hospitals. The federal matching funds would help secure a sustainable source of funding so that Medicaid rates for all hospitals are stable, are predictable and more closely reflect the cost of providing services.