SLS 16RS-4024 ORIGINAL 2016 Regular Session SENATE CONCURRENT RESOL UTION NO. 143 BY SENATOR PEACOCK ADMINISTRATION DIVISION. Directs the commissioner of administration to provide for the payment of legacy costs associated with or relating to hospitals. 1 A CONCURRENT RESOL UTION 2 To direct the commissioner of administration to prioritize payment of legacy costs borne by 3 the LSU Health Sciences Center at Shreveport, the LSU Health Sciences Center at 4 New Orleans, and the LSU Health Care Services Division associated with the 5 privatization of state hospitals; and to develop and report to the legislature 6 concerning a plan for permanent funding of such costs. 7 WHEREAS, a sudden reduction in federal funding for the Louisiana Medicaid 8 program was included in a sweeping transportation bill passed by the United States Congress 9 and signed into law on July 6, 2012 and resulted in a net decrease of over eight hundred fifty 10 million dollars in the Medicaid budget; and 11 WHEREAS, pursuant to this dramatic cut to Medicaid funding, the Department of 12 Health and Hospitals (DHH) addressed the shortfall by eliminating funding for state 13 hospitals operated by the Board of Supervisors of Louisiana State University and Agriculture 14 and Mechanical College (LSU); and 15 WHEREAS, DHH developed public-private partnerships for the delivery of health 16 services at LSU hospital facilities operated by private healthcare enterprises, with the terms 17 and conditions for such service delivery set forth in cooperative endeavor agreements among 18 the state, LSU, and private providers; and Page 1 of 3 SCR NO. 143 SLS 16RS-4024 ORIGINAL 1 WHEREAS, although the cooperative endeavor agreements address the delivery of 2 health services as well as $167 million in lease payments to the state for the use of the public 3 hospital buildings and equipment, they did not address the liability of residual hospital 4 expenses, or "hospital legacy costs"; and 5 WHEREAS, hospital legacy costs include Office of Risk Management costs 6 associated with the hospitals for five years after the transfer of the property, termination pay, 7 unemployment pay, retiree health insurance for the life of the retiree, retiree life insurance, 8 medical records for ten years, and property maintenance until the property is repurposed; and 9 WHEREAS, for fiscal year 2014 and 2015, funds were not appropriated to LSU to 10 cover the hospital legacy costs leading to $53 million in funding stripped from the 11 Shreveport medical school operating budget and $94 million in funding from the Health 12 Care Service Division; and 13 WHEREAS, for the current fiscal year 2016, the legislature appropriated sufficient 14 funding to cover the hospital legacy liabilities; and 15 WHEREAS, for the upcoming fiscal year 2017, the executive budget included 16 funding to cover most of the hospital legacy for the Health Sciences Centers in Shreveport, 17 New Orleans and the Health Care Services Division; and 18 WHEREAS, although the hospital legacy cost have decreased by almost half since 19 fiscal year 2014, legacy costs will remain for the foreseeable future to cover the health 20 insurance of all former LSU hospital employees, as well as maintaining the property until 21 said property may be repurposed; and 22 WHEREAS, the privatization of the hospitals has allowed the LSU Health Sciences 23 Centers in Shreveport and New Orleans to refocus on its mission of medical education, it has 24 left the LSU medical schools vulnerable to an ongoing residual hospital liability of $50 25 million, and a state responsibility to its retirees, without a recurring revenue source; and 26 WHEREAS, if these hospital legacy costs are not appropriated in the budget on an 27 annual basis, it would be to the detriment of medical education for the state. 28 THEREFORE, BE IT RESOLVED that the Legislature of Louisiana does hereby 29 direct the commissioner of administration to prioritize payment of legacy costs borne by the 30 LSU Health Sciences Center at Shreveport, the LSU Health Sciences Center at New Orleans, Page 2 of 3 SCR NO. 143 SLS 16RS-4024 ORIGINAL 1 and the LSU Health Care Services Division associated with the privatization of state 2 hospitals. 3 BE IT FURTHER RESOLVED that the commissioner of administration shall 4 develop a plan for permanent funding of public hospital legacy costs, and that the plan shall 5 entail a proposal for the private partners that operate state hospitals to bear such costs. 6 BE IT FURTHER RESOLVED that no later than thirty days prior to the convening 7 of the 2017 Regular Session of the Legislature, the commissioner of administration shall 8 submit a written report addressing the prioritization of payment of public hospital legacy 9 costs and the plan for permanent funding of such costs called for in this Resolution to the 10 Senate Committee on Finance, the House Committee on Appropriations, the Senate 11 Retirement Committee, the House Retirement Committee, the Senate Committee on Health 12 and Welfare, and the House Committee on Health and Welfare. 13 BE IT FURTHER RESOLVED that a copy of this Resolution be transmitted to the 14 commissioner of administration, the chancellor of the Louisiana State University Health 15 Sciences Center at New Orleans, and the chancellor of the Louisiana State University Health 16 Sciences Center at Shreveport. The original instrument and the following digest, which constitutes no part of the legislative instrument, were prepared by Jerry J. Guillot. DIGEST SCR 143 Original 2016 Regular Session Peacock Directs the commissioner of administration to prioritize payment of legacy costs borne by the LSU Health Sciences Center at Shreveport, the LSU Health Sciences Center at New Orleans, and the LSU Health Care Services Division associated with the privatization of state hospitals. Requires the commissioner of administration develop a plan for permanent funding of public hospital legacy costs, and that the plan shall entail a proposal for the private partners that operate state hospitals to bear such costs. Requires that no later than 30 days prior to the 2017 R.S., the commissioner of administration submit a written report addressing the prioritization of payment of public hospital legacy costs and the plan for permanent funding of such costs called for in this Resolution to the Senate Committee on Finance, the House Committee on Appropriations, the Senate and House retirement committees, and the Senate and House committees on health and welfare. Page 3 of 3