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Federal health agency raises questions about new financing plan for LSU hospital deals

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BATON ROUGE, Louisiana — Gov. Bobby Jindal's revised financing plan for six LSU hospital privatization deals is running into questions from federal health officials who rejected a previous version.

The state health department on Wednesday released a three-page question letter it received from the U.S. Centers for Medicare and Medicaid Services, or CMS.

Jindal privatized nearly all the LSU hospitals without waiting for federal officials to sign off on financing arrangements that rely on millions of federal Medicaid dollars.

In May, CMS rejected the plans for six hospital deals, saying the agreements don't meet federal guidelines governing how Medicaid dollars can be spent.

So, the state Department of Health and Hospitals sent a new proposal for how the private managers that took over the LSU hospitals would be paid. The new proposal didn't change existing reimbursement rates to the private hospital managers. Instead, it established that hospitals providing services previously overseen by LSU are a new category with a special reimbursement rate.

DHH Secretary Kathy Kliebert said the follow-up questions weren't unusual.

"This is a typical part of the process before a state plan amendment is approved. These questions are a positive sign that CMS is working with DHH to review the new reimbursement methodology before granting approval," Kliebert said in a statement.

The federal health agency is seeking copies of the contracts with the private hospital managers now running the LSU facilities, asked about public response to the financing plan changes and sought a list of further details.

The Jindal administration has 90 days to respond to the questions, but health department spokeswoman Olivia Watkins said DHH has requested a phone call to talk through the questions and answer them quickly.

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