The ‘Arkansas plan’ for Medicaid moves forward

Medicaid expansion “is dead,” Rep. Charlie Collins (R-Fayetteville) told a hometown audience on Friday (March 22), but the framework for a phoenix plan is alive, under construction, and receiving a lot of attention.

State lawmakers have been debating parameters and language to capture on paper its agreement with the federal government to use Medicaid expansion dollars to subsidize plans for low-income workers in a forthcoming health insurance exchange.

Earlier in the week, House Speaker Davy Carter, R-Cabot, called on his leadership team to provide “something in writing” by week’s end as means for racheting up discussions on the complex health care reform debate. Since receiving permission from the feds to be flexible with its Medicaid expansion money earlier this month, legislators have been trying to structure a bipartisan “Arkansas plan” that has garnered immense national exposure.

A Department of Human Services analysis earlier this week, which has been modified to correct some calculations, still shows that shifting newly eligible Medicaid recipients into a subsidized private insurance plan through the exchange could add less than 15% to the costs of straight expansion and “in some realistic scenarios, there could be no additional federal costs at all,” DHS said.

THE PROCESS
Lawmakers will have to pass an appropriations bill – which will require a three-fourths supermajority vote in both chambers – to allow the money for the effort to be spent starting in 2014.

There still is not a definitive dollar amount on what that appropriation might allow to be spent by the state, but it is likely to be in the hundreds of millions of dollars, if not more.
The second part of the “Arkansas plan” equation is to draft a comprehensive bill that outlines how the state’s flexibility from the feds in the exchange will be deployed.

Gov. Mike Beebe (D) circulated an 8-page draft bill on Friday that defines that framework. Calling it the “Health Care Access Assurance Program Act of 2013,” the draft language spells out a number of goals, definitions, and mechanics. Administration officials and lawmakers were cautious to note that it is just a starting point in the discussions.

Among the numerous purposes of the legislation, one goal is to “reduce the size of the state administered Medicaid program,” the document states.

“The State of Arkansas shall take an integrated and market-based approach to covering low income Arkansans through new coverage opportunities, stimulating market competition, and offering alternatives to the existing Medicaid program,” it adds.

The Beebe draft incorporates a number of Republican legislators’ calls for moving Medicaid populations into the subsidized exchange plans. Draft highlights include:
• The intent of the the subsidy payments is to “increase participation and competition in the health insurance market, intensify price pressures and reduce costs for both publicly and privately funded health care.”;
• To the extent allowable by law, DHS will pursue strategies that promote insurance coverage of children in their parents’ or caregivers’ plans including children eligible for the ARKids B program;
• The program shall include cost sharing for eligible individuals in certain instances.
Calls on enrollees in the program to acknowledge that the program is “not a perpetual federal or state right, guaranteed entitlement, and is subject to cancellation upon appropriate notice.”;
• The creation of a pilot program to test the viability of Health Savings Accounts, Medical Savings Accounts, or “other innovative new approaches encouraging consumer responsibility.”; and,
• Charges the state Insurance Department to assure that at least two qualified health plans are offered in each county in the state.

IMPROVEMENTS
Republican lawmakers expressed general satisfaction with the initial framework in the Beebe draft, but emphasized that many improvements are still being discussed.

A key component is to greatly increase legislative oversight of the initiative. Beebe’s initial framework calls for semi-annual reports to the General Assembly. State lawmakers want to increase the frequency of that public accountability.

Per Speaker Carter’s request, a core group of lawmakers that he and Senate President Michael Lamoureux, R-Russellville, have tasked with leading health care reform efforts have put on paper a working document of important reform measures they want incorporated in the eventual legislation.

Beyond some elements of the Beebe draft, the GOP input calls for providing dedicated revenue streams to enhance the state’s match in the federal Medicaid program.

Currently, they call on dedicated premium tax collections in current and newly eligible Medicaid populations to be steered into the Medicaid Trust fund, a potential $25 million revenue stream for the state. They also predicate assumptions that reductions in uncompensated care for hospitals and other treatment facilities as well as transitioning certain populations off Medicaid could result in around $115 million in savings.

Republican leaders also want the legislation to define thresholds for Medicaid reductions. They include:
• Holding the DHS grant line-item to $850 million or less in FY 2015;
• Establishing a goal of reducing DHS administration costs by 5% in FY 2015; and,
• Reducing total Medicaid enrollment by 5% in FY 2015 and an additional 5% by FY 2016.

Interestingly, Republican leaders are wanting legislation to shape insurance carrier competition on the forthcoming exchange. For now, they are floating the idea of capping carrier market share for the newly eligible Medicaid population that will shift into the subsidized exchange plans starting next year. The possibility of limiting one carrier to no more than 65% of market share is part of the discussion.

Also, they want to remove any restrictions currently in place that will prevent carrier competition in the exchange.

Link here for a list of other Arkansas Medicaid reform proposals noted in Brock’s analysis.