Shrinking Medicaid Budget Gap A Mystery

Last week, state Medicaid officials disclosed that the funding shortfall in the state’s low-income health care program had shrunk from a November estimate of $138 million to just $61 million.

In a late-afternoon meeting at the state capitol, lawmakers and Arkansas Medicaid Director Andy Allison met to discuss the lower budget gap projection, but Allison explained the results were a little mystifying.

John Lyon with our content partner, the Arkansas News Bureau, reports:

Allison said per-person spending on Medicaid beneficiaries is down, even though enrollment is growing. He said the economy cannot explain the trend, nor can the state’s initiative to move from a fee-for-services system to one in which health care providers are paid for episodes of care and rewarded for efficiency and healthy outcomes.

That initiative was only in effect in two treatment areas and for only three months during the period that it could have contributed to the decline in costs, so it could not have produced the cost savings directly, Allison said.

But he also said that DHS officials have traveled across the state talking to health care providers about what they can expect from the initiative, and he suggested that providers may have modified their behavior to prepare for the coming changes.

“We have demonstrated the legitimacy of the effort, that we were not just talking about it, we were actually doing it. That’s actually unusual for government work,” he said, to laughter from some on the panel.

You can read the full report at this link.  Also, a Division of Legislative Audit report on the state’s Medicaid program, which is expected to be critical, had its release delayed earlier in the week. Legislative auditors now say that the report may not be released until late next week or early the following week.