Members of the Louisiana Rural Hospital Coalition approved a new membership dues structure late last month after the June rejection by the CMS of a controversial state Medicaid waiver plan. That plan would have given the coalition exclusive authority to certify rural hospitals for disproportionate-share-fund reimbursement.
That waiver, known as a state plan amendment, made membership in the coalition compulsory for hospitals seeking disproportionate-share funds and required members to pay $5,000 in annual dues and 5% of their disproportionate-share funding as a "supplemental fee." Louisiana Senate President Donald Hines pushed the waiver bill through the Legislature and the governor signed it in July 2004, pending CMS approval.
The CMS rejected the original plan because it said states are prohibited from delegating responsibility for administering Medicaid plans to nongovernmental organizations they cannot control and cited the state plan amendment for charging excessive payments for the certifications. CMS Administrator Mark McClellan said, "The state has not documented any Medicaid purpose for the required certification." And while most of Louisiana's 48 rural hospitals supported the coalition and many even backed the old plan, some had strenuously objected to paying between $30,000 to $100,000 each to the coalition, which had amassed a $4.6 million surplus.
The protesting rural hospitals said the coalition charged excessive consulting and lobbying fees and expenses and was not accountable for how it spent members' money (March 7, p. 20).
After the CMS rejection and unsuccessfully attempting to find a legal way to leverage its surplus to attract state or federal matching funds, the coalition board refunded $3 million in dues to members on July 14. Late last month members approved a new structure for the coalition that does not require state or CMS approval. Membership once again is voluntary, coalition certification is not required by law, and dues are calculated by a hospital's percentage of adjusted uncompensated-care costs.
Barbara Hollingsworth, administrator of DeQuincy (La.) Memorial Hospital, a 19-bed critical-access hospital, said the proposed dues plan is less onerous. "They came up with a different structure that we like better," she said. "I think we got what we wanted."
Hollingsworth said the coalition does a "fantastic job" of representing the interests of rural hospitals, but the earlier waiver was just too costly. "It amounted to a lot of money. And there they were sitting on a big bank account as we were struggling so hard. It made us unhappy and it turned out we weren't alone."
She said the proposed plan calls for hospitals to pay as dues near 2.3% of the cost of their adjusted uncompensated care to the coalition. "Some hospitals don't like to be tied to that, even though it's a lot less than before. But for the time being we're happy with it. We also will be getting a detailed accounting of how the coalition spends our money," she said.
Robert Davidge, president and chief executive officer of 626-bed Our Lady of the Lake Regional Medical Center in Baton Rouge, the parent of rural, 15-bed Assumption Community Hospital in Napoleonville, said he and his staff felt vindicated by the CMS rejection. "We thought the plan was not valid and ought to be rejected," Davidge said.
"We will continue to cast a skeptical eye on those who brought us the first round of this effort and ensure that whatever is done is in the best interest of the state, not just a few individuals."
Coalition attorney Jack Stolier with the New Orleans law firm Sullivan, Stolier & Resor said coalition members approved the new dues structure by a margin of 38-3.
Stolier said hospitals would save an average of 50% in dues costs under the new plan.
"There was nearly unanimous support for the direction in which this organization is moving," he said. "Rural hospitals need to galvanize now."
Coalition Executive Director Linda Welch said that before Hines' bill only six of the state's 48 rural hospitals refused to pay coalition dues. "For those six hospitals not paying dues we're paying an astronomical price in terms of bad publicity. I wish (the bill) never happened. But I'm grateful this is over and we're moving forward."