Medicaid probe is trouble for Jindal

Ongoing federal and state investigations of the Jindal administration’s handling of a nearly $200 million Medicaid contract threaten to damage Gov. Bobby Jindal’s largely scandal-free record in office.

Already, the probes appear to have led to the resignation of Jindal’s health secretary, Bruce Greenstein, in the middle of sensitive negotiations over the privatization of the LSU hospital system.

The investigations couldn’t come at a worse time for the Republican governor, who ran on the need for ethics and transparency in government.

Jindal’s poll numbers are slipping at home, his tax swap plan is struggling at best and lawmakers are showing new streaks of independence. Meanwhile, Jindal’s trying to position himself as one of the most prominent faces of the national GOP.

The Medicaid investigation makes Jindal, who has used his popularity and the strength of the Louisiana governor’s office to push through his agenda, seem vulnerable just as the regular legislative session began Monday – and just as national media outlets are paying increased attention to him.

The Jindal administration canceled the contract with Maryland-based CNSI two weeks ago after details leaked of a federal grand jury subpoena into the awarding of the contract for Medicaid claims processing.

CNSI, where Greenstein was once an executive, was supposed to take over the Medicaid work next year.

Greenstein is now resigning from his $236,000-a-year job at the state Department of Health and Hospitals on May 1. He offered no explanation for his decision in the two-page resignation letter released by Jindal’s office, but it came a week after CNSI’s contract was terminated.

When the Medicaid contract was awarded two years ago, Greenstein denied any involvement in the selection.

However, he acknowledged under questioning from lawmakers in his 2011 confirmation hearing that a change he pushed in the bid solicitation made CNSI eligible for the contract. He also met with a top CNSI official within days of taking the health secretary’s job.

Greenstein was vice president of CNSI from 2005 to 2006.

The state attorney general’s office has said the 10-year contract for Medicaid claims processing and bill payment was improperly handled, and it is conducting its own criminal investigation into the contract award.

David Caldwell, head of the attorney general’s public corruption unit, said there was inappropriate contact between CNSI and DHH employees, among other issues.

CNSI is challenging the termination of its contract by the state, with a lawyer for the company saying nothing improper was done to get the work.

Jindal critics are using the investigation to strike at the governor.

The leader of the House Democratic Caucus and a candidate for governor in 2015, Rep. John Bel Edwards, said taxpayers should be worried about other contracts approved by the Jindal administration.

“From the beginning, Gov. Jindal knew this contract was a terrible idea. The governor knew Mr. Greenstein’s connections to CNSI, he knew the bidding process was changed and he knew about protests filed by other bidders for the contract,” Edwards said in a statement.

With Greenstein’s departure, Jindal’s lost the chief defender of his opposition to the Medicaid expansion under the federal health care law, as state lawmakers are pushing against the rejection. He’s also lost the central figure in far-from-settled negotiations to privatize the LSU-run public hospitals that care for the poor and uninsured.

Lawmakers who sense vulnerability and who are looking to their next election bids have become far less deferential to the will of the governor, and the federal and state investigations have emboldened them further.

That’s a liability for Jindal, already moving into lame-duck territory and floating a tax system rewrite that seems besieged from all sides.

The investigation also can’t help the governor’s sinking approval ratings, which have fallen steeply in several recent polls.

The longer the investigations linger, the more troubling it could become for Jindal.

EDITOR’S NOTE: Melinda Deslatte covers the Louisiana Capitol for The Associated Press.