Ex-official: Senior health funds diverted
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A former state agency health official wants an investigation into what he calls the “theft” of dollars intended to fund community-based programs for the elderly and disabled.
Bruce Blaney, ex-chief of the state Office of Citizens with Developmental Disabilities, alleges that, under a federal agreement, one-third of the interest income from a now $762 million health-care trust fund should be going to community services.
That’s not happening, he said, and the state is violating that agreement and could be subject to financial penalties.
According to state health officials, interest earnings from the fund stood at $46.1 million in fiscal year 2009. For the fiscal year that began July 1, the interest earnings are projected to be $49.2 million.
But the head of the state Medicaid program said Blaney is wrong. State Medicaid director Jerry Phillips said the state law setting up the trust fund called for its interest earnings to go to general health-care spending.
While officials engaged in some discussions about a two-thirds to one-third split between nursing home and community care, that plan was never approved, Phillips said.
At issue is use of the Medicaid Trust Fund for the Elderly.
Blaney asked the Commission on Streamlining Government to look into what he claims is “the theft of millions from older adults and people with disabilities and to seek immediate redress.
“Over the years, the nursing home industry has received hundreds of millions from the Fund, including both interest and principal,” Blaney said. “We do not know that even a penny has gone into community-based services.”
The appropriate redress would be allocation of at least $200 million to in-house supports and community waivers, said Blaney who is now coordinator of Support Living Network.
Blaney provided a letter from former state Department of Health and Hospitals Secretary David Hood indicating that the federal Centers for Medicare and Medicaid Services approved the arrangement on the condition that one-third of the trust fund proceeds went to community services for the elderly and the rest to nursing homes.
The January 2001 letter from Hood to U.S. Health and Human Services Secretary Donna Shalala wrote: “The state of Louisiana is committed to using no more than two-thirds of the income from the trust fund created (by law) for enhancing the quality of care in nursing homes and up to one-third for development of additional community-based services and for increasing access to care for the medically underserved.
“In turn, we have a commitment from the Louisiana Nursing Home Association that it will support this division of the income.” Hood wrote.
In a recent interview, Hood said the administration of then-Gov. Mike Foster committed to a two-thirds nursing home to one-third community-based services and primary care formula when the state was negotiating with the federal government over how to use the interest earnings from the trust fund.
“My recollection is they put it in writing and we signed off on it with everybody’s full knowledge,” Hood said.
“The feds said we will agree to this but part of the interest earnings had to be spent on primary care and community based services for the elderly,” he said.
In 2003, the Louisiana Nursing Home Association pushed a constitutional amendment that would have dedicated all the money to nursing homes.
The association backed off the proposal as questions arose about running afoul of a federal agreement and risk losing the trust fund money.
State Medicaid Director Phillips said the advocates are probably getting confused by communication between Hood and Shalala, which indicated the two-thirds, one-third split on interest earnings. But that letter was not binding past the Foster administration.
“The amount of earnings would not support either one of those programs,” Phillips said.
“From my perspective they are being treated equally out of the earnings,” he said. “It pays for services of the state Medicaid program.”
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