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Louisiana Medicaid Waiver: Redesigning New Orleans' Health Care System, and Expanding Coverage Across the State

On October 20, Louisiana submitted a concept paper to CMS outlining a proposed redesign of New Orleans' health care system that would address the state's high uninsured rate, improve quality of care, and create a more stable infrastructure in the aftermath of Hurricane Katrina. The plan involves using a federal waiver under Section 1115 of the Social Security Act to expand Medicaid coverage statewide to children up to 300 percent of the federal poverty level (FPL), and to pregnant women not otherwise eligible for Medicaid and individuals with serious mental illness up to 200 percent of the FPL. Within the New Orleans area, parents and childless adults up to 200 percent of the FPL would be eligible. In addition to the coverage expansion, there are three broad elements to the waiver:

  • a health insurance "connector," modeled after one being implemented in Massachusetts, that would help individuals find affordable coverage options and certify health plans that offer a medical home providing "accessible, integrated, community-based ambulatory care." Only plans that receive this certification would be offered through the connector. The connector would facilitate the entry of Medicaid-eligible individuals into the private market, and serve as a resource for information on health plans promoting transparency in plan design, costs, and benefits;
  • a Louisiana Health Care Quality Forum, which would develop certification criteria for medical homes based on standards developed by the Institute of Medicine, the National Quality Forum, the National Center for Quality Assurance, HEDIS, the Leapfrog Group, AHRQ, and CMS; and
  • a focus on health information technology to improve patient safety and make the system more efficient and stable in the face of emergencies. Over time, the state will require physician practices to use approved electronic medical record technology in order to be certified as a medical home. Ultimately, practices will be required to develop the capacity to exchange information with other providers through the Louisiana Health Information Exchange.

In keeping with the federal government's interest in using states as laboratories for public–private collaboration, the concept paper includes a plan to expand the private insurance options available to current Medicaid enrollees, and to create incentives—premium subsidies tied to income—for enrolling in private insurance.

Leading the charge on these proposals was the Louisiana Health Care Redesign Collaborative (LHCRC), which was created by legislative resolution in response to the impact of Hurricane Katrina on the health care system in the Greater New Orleans area and its implications for the state. [1] According to Fred Cerise, M.D., secretary of the Louisiana Department of Health and Hospitals, the initiative aims to "establish a different set of expectations and incentives so that as the health care system in the New Orleans region is rebuilt, it is done so in a modern, patient-centered, outcome oriented, and affordable way."

The LHCRC completed work on its short- and long-term proposals in October. Subsequently, the state made a number of requests and recommendations to CMS that would support their strategies for rebuilding the New Orleans regional health care system. Short-term requests include: $120 million for a "Louisiana Health Service Corps" demonstration project to improve workforce recruitment and retention in the area; a three-year adjustment to the Medicare fixed payment method for providers to account for increased labor costs and length of stay; a waiver of funding restrictions for institutes for mental disease so that inpatient mental health services for individuals ages 22 to 64 can be supported with federal financial participation; and a one-year $30 million grant to support uncompensated care costs.

In the long term, the state proposes to expand coverage as described above, using private insurance whenever possible, through the use of the health insurance connector. The state hopes that individuals will enroll in an existing employer-sponsored plan, or in an insurance plan that is connector-certified.

State officials are designing a waiver proposal based on the concept paper, working closely with CMS. A number of issues remain to be worked out, including whether the new initiatives should be implemented statewide or just in the New Orleans area.

[1] The Greater New Orleans area includes Orleans, Jefferson, Plaquemines and St. Bernard's parishes. Louisiana Health Care Redesign Concept Paper Submittal to HHS, Center for Medicaid and Medicare Services, October 20, 2006.

For More Information
Contact: Melisa Byrd, Louisiana Department of Health and Hospitals, [email protected].

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