Hospital service districts were established under the provisions of Louisiana Revised Statute 46:1051, et. seq.; and are created by the parish governing authority in which each district is domiciled. Hospital service districts are governed by a board of commissioners who are appointed by the parish governing authority. They are considered to be
local auditees 
for purposes of reporting to the Louisiana Legislative Auditor (LLA).
Revenues for hospital service districts include charges for services to patients, payments from insurance companies, and receipts from other governmental agencies in the form of reimbursements and grants. Medicare and Medicaid reimbursements make up a large part of these reimbursements. Hospitals are reimbursed for services rendered to Medicare and Medicaid patients at tentative rates, with final settlement determined annually after a cost report is submitted to and audited by Medicare/Medicaid program officials.
Some hospital service districts contract with a management company for the operations of the hospital. If this occurs, the hospital service district still has a reporting requirement to LLA. The management company may also have a reporting requirement to LLA, depending upon the terms and conditions of the agreement – whether the management company is acting more in the capacity of a vendor; or is instead responsible for the types of revenues and expenditures that normally would be reported in the hospital service district’s audit.
The
Louisiana Compliance Questionnaire requires hospital service districts to provide statements or representations to their auditor regarding their compliance with certain provisions laws and regulations. Auditors are required to test the hospital service district’s compliance with these laws and regulations.