Louisiana health department failed to oversee parts of state Medicaid program, audit says (2025)

The Louisiana Department of Health failed to properly oversee some $2.4 billion in Medicaid spending aimed at improving the health of the state’s neediest patients, according to a new report from the Louisiana Legislative Auditor.

The report, released Monday, found that over the past five years, the state's Managed Care Incentive Program, which turned to Ochsner Health and a consortium that includes LSU Health New Orleans, LCMC Health and Franciscan Missionaries of Our Lady Health System to run the program,spent more than half the money on administrative expenses and other costs that did not have a measurable impact on patient health outcomes.

“The sole focus of this program was to improve the health outcomes of Medicaid beneficiaries but that’s not happening,” Legislative Auditor Mike Waguespack said in an interview Monday. “The funds are not making it all the way down to the hospitals that are doing the work.”

The issues identified with the Managed Care Incentive Program, or MCIP, which was designed to increase Medicaid patients' access to preventive medical care, improve management of chronic diseases and offer other services, underscored the challenges Louisiana faces as it tries to improve the health of its lowest-income residents.

The state ranked 49th in health outcomeswhen the program went into effect in 2019 and has since slipped to 50th.

Federal and state Medicaid funding in Louisiana was nearly $15 billion in 2024. While the MCIP program represents only 4.8% of that total, the report raises questions about how to effectively use the federal funding provided through Medicaid at a time when the safety-net program, which was expanded under former Gov. John Bel Edwards, has since been targeted for potential cuts by Republicans in Congress and Gov. Jeff Landry.

“We have continued to look at Medicaid because Louisiana has spent a lot of money over the last eight years on Medicaid expansion, but we never can seem to get off the bottom,” Waguespack said.

Dueling networks, questionable spending

The report highlighted several problems with the incentive program since its inception in 2018. Among them, auditors said the dueling networks of competing hospital systems tracked different “milestones” and health outcomes, making it impossible to compare the performance of the two.

More than 18% of the program expenditures between 2019 and 2024 — approximately $437 million — went to “non-milestone” activities, such as submitting annual reports, holding annual meetings and other administrative tasks that “do not improve the quality of services for Medicaid beneficiaries.”

Additionally, around 63% of program expenditures over five years — some $1.5 billion — went to “non-measurable” milestones that are not directly associated with quality health outcomes, the audit said. Among the examples cited was $7.3 million the Ochsner-run network received to “identify ideas to improve prenatal health care services,” and $4.9 million the LSU Health-run network received to hold an awards ceremony and conference.

The report, while critical of the program overall and LDH’s lack of oversight, specifically cited problems with the network of Ochsner hospitals and affiliates, called the Quality Outcome and Improvement Network, and raised questions about a lack of documentation relating to $46 million in program money it spent on “administrative and management” and other costs.

The audit suggested that the network’s failure to account for those funds could violate the state constitution.

In its lengthy response to the audit, the network’s executive director Lane Sisung disputed its conclusions.

Sisung said the audit"omits critical information, regarding the MCIP program, reflects a fundamental misunderstanding of applicable federal law, and includes many inaccuracies and conclusions not supported by evidence."

He disputed the auditor's position on the $46 million, saying that “any suggestion that QIN’s payments are unconstitutional is contradictory to both the facts and Louisiana law.”

"Ultimately, the report will likely result in misunderstandings by the Legislature and the public, both of which are inconsistent with the Report's goals," he said.

In its response to the audit, the LQN, which is headed by LSU Health Vice Chancellor Ben Lousteau, said while there are aspects of the Medicaid incentive program that can be improved, “the design and implementation has been accomplished in good faith, a compliant fashion and has been integral to preserving and improving health care in our state.”

The state health department, in its response to the audit, agreed with the findings and said it is already making changes to the program.

In a statement Monday afternoon, LDH spokesperson Emma Herrock said that even before the audit, “LDH leadership reviewed the MCIP program and recognized that significant improvements needed to be made, such as a critical need for increased oversight and reevaluation of protocols to ensure that funding is correlated with improved health outcomes.”

The department began making those changes last year, restructuring the program and designing two new incentive arrangements for behavioral health and maternal health, she added.

Different milestones

The MCIP was established by the legislature in 2018 and went into effect one year later, offering to pay the six managed care companies that administer the state’s Medicaid program an additional 5% a year if they could improve patient access to care and health outcomes.

The program was supposed to improve health outcomes by reducing emergency room visits, increasing checkups with primary care doctors and increasing preventive care screenings like mammograms and blood pressure monitoring.

According to the audit, however, those companies, which include Blue Cross, Humana and United Healthcare, have had little to do with the program, which, instead, has been run by two “quality networks” — the Ochsner-run QIN, and the Louisiana Quality Network, which is run by LSU Health.

The audit faults LDH for allowing networks of competing hospital systems that, since the program’s inception, have not wanted to work together and have used different “milestones” to measure performance.

The Ochsner network, for instance, is measured on the outcome of its diabetic members while LQN is measured on increasing the number of breast cancer screenings. The report found this approach was intentional and, it suggests, wasteful because it prevents “disagreements regarding the payments each network should receive based on their performance.”

LDH responded that it is changing the program to have a uniform set of milestones that both networks will be measured against.

The report took particular aim at the Ochsner-run QIN, questioning $38.2 million in administrative and management expenses the network incurred and another $8.4 million paid directly to Ochsner Health for “other costs.”

Auditors, who spent months researching and preparing the report, “asked QIN and Ochsner for documents such as invoices” to support both payments but the health system refused, “stating that the documentation supporting these costs is protected under attorney-client privilege.”

Sisung said that “QIN disagrees with the report’s recommendations and urges the state to exercise caution before taking any action.”