28 March 2016

Committee action, Mar. 28: SB 358, budget remarks

HB 358 by Sen. Blade Morrish would repeal the MediFund Board and transfer its powers to the Board of Regents. Morrish explained to the Senate Finance Committee that elimination of the Board, which essentially the Regents operate, would streamline government. It hasn’t really functioned as intended nor does its attached fund have any money. The Regents now would control that.

Sen. Sharon Hewitt asked why not eliminate the fund? Morrish said he simply wanted to make government more efficient. Higher Education Commissioner Joseph Rallo said he wanted to keep the fund because it was a tax-exempt receptacle for donations.

After approval of technical amendments, the bill was reported favorably without objection.

Commissioner of Administration Jay Dardenne gave the committee an update on budgetary reductions that occurred to the Department of Health and Hospitals. Among the more interesting points made, he noted savings coming from an unanticipated fall in Bayou Health enrollment, increased scrutiny on client eligibility for programs (which had something to do with Bayou Health enrollment decline), renegotiating contracts with providers including with the partners administering charity hospitals, and some gamesmanship with delaying payments to the partners between fiscal years with the federal government. In all, it represented a $70 million reduction in state and $115 million cut in federal funds.

Sen. Conrad Appel asked whether a good portion of the cuts were recurring. DHH Undersecretary Jeff Reynolds said they were and could be incorporated into next fiscal year’s budgets. He also said better oversight of the Pediatric Day Health Care program also could produce additional savings. Appel pointed out the philosophy behind fiscal policy should focus on restructuring that maximizes efficiency to meet spending targets, which as DHH comprised about 40 percent of the budget could lead to large savings.

Sen. Jim Fannin wondered how accurate the numbers could be for next year, pointing out that Revenue Estimating Conference numbers had not proven that accurate in recent years. Reynolds noted that the unexpected decline in Bayou Health enrollees, for example, could reverse without any warning, leading to a shortfall. Dardenne also expressed hope that some lawsuit settlements could come through to help the general fund.

Hewitt wondered why environment had changed in just a couple of weeks. She noted two weeks previously there seemed to be a crisis atmosphere concerning DHH cuts, but when revealed these seemed easier than that. Dardenne said more time to figure out data trends, a shift in focus with more scrutiny on efficiencies, and the idea of swapping present fees with future fees all manifested in that time period. She echoed Appel’s comment that small changes could yield big savings, with events of the past two weeks demonstrating that, and also that spending had to be by need, not by picking revenue targets and spending up to them.

Sen. Bret Allain wondered whether the partnership arrangements would be necessary under Medicaid expansion, given that, with the recent cuts, partners continued to emit dire statements about low rates. Dardenne and Reynolds both said the beginning of the next fiscal year with the onset of expansion would be an excellent time to rethink the entire concept.

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