Governor Says Private Option Terminations To Be Paused, 10-Day Turnaround Not The Problem

The Department of Human Services will pause for the next two weeks in sending out notices of termination for the private option, and more staff members will be devoted to what Gov. Asa Hutchinson called an “information overload” during a press conference on Tuesday.

The announcement came after 31,501 individuals have had their private option benefits terminated at the end of July. Another 4,167 traditional Medicaid recipients also have lost their benefits as part of a redetermination process involving 600,000 Medicaid and private option recipients. Counting those losing their benefits at the end of August, a total of 48,000 individuals are losing coverage. Of that, 97% lost their benefits because they did not respond to a request to verify their incomes, or their responses were not processed in time.

Recipients whose income appears to have changed 10% in either direction are being sent a notice that they must send verification of their income to the DHS Pine Bluff Scanning Center within 10 days “or your case will be closed,” meaning they will lose their benefits. DHS Director John Selig said in the press conference that the envelope does not include a warning of the letter’s contents.

DHS Director of Communications Amy Webb said that the department emails beneficiaries if it has their addresses explaining the need to provide information. Insurance carriers also have been asked to contact their beneficiaries.

Medicaid is the government health program serving the poor and disabled. The private option uses Medicaid funds to buy insurance for low-income Arkansans not on Medicaid. DHS paid premiums for 218,376 private option recipients in June, its highest amount ever.

Webb said that county offices have notified DHS that they have a backlog and that some offices have received “a great deal of mail come in that just has not been processed.” Anecdotally, DHS is hearing from recipients who claim to have submitted their information, but have been terminated anyway.

Hutchinson announced a number of changes being made to address the backlog. He said 20 DHS staff members are being reassigned to review the paperwork, while staff members are being reallocated to DHS offices in heavily populated areas, where many of the responses mistakenly are being sent. A freeze for hiring 35 employees has been lifted. DHS workers are being asked to work overtime. DHS has contacted the Department of Workforce Services looking for additional staffing support. The state has contacted a private vendor for a call center, but costs may be prohibitive, so in-house employees or temporary workers are being considered, Hutchinson said.

Only the termination letters, and not the verification letters, are being paused. Hutchinson said a reduction of 21,000 recipients would save the program $10 million per month.

“You want to get it right for those that remain eligible to make sure that they continue to receive those benefits, but you also want to get this right for the integrity of the program,” he said.

Hutchinson chose the 10-day deadline as the minimum required by the federal government for income verification, with 30 days being the maximum. Webb said 10 days is a standard response time for DHS beneficiaries, and the envelope is a standard envelope. Hutchinson pointed out that, if they don’t respond, recipients receive a notice that their coverage will be terminated at the end of the month, and then they have 90 days to be reinstated, with medical charges covered retroactively.

He said extending the 10-day deadline would increase costs to the state. “The problem is not the notification. The problem is the processing,” he said.

Asked if he might also discard an impersonal letter he received in the mail, he said, “If I were a recipient of Medicaid from DHS, and I get a letter from DHS, I would presume it’d be a responsibility to open that letter.”

Webb said the DHS has initiated renewals on a little more than 300,000 individuals enrolled in the private option or Medicaid. Renewals have been completed for about 64,000 recipients, and DHS is waiting for responses from 216,000.

House Minority Leader Eddie Armstrong, D-Little Rock, said in an interview that citizens will learn in the pharmacy line or at the doctor’s office that they’re no longer covered. He said that constituents could have been better informed about responding to the letter had the Legislature not cut the private option’s marketing budget in the 2014 fiscal session.

He said more time is needed for recipients to respond to the letters.

“This just leans to the fact that those that have never favored this on the right side of the aisle may now disfavor it even more because of these kind of glitches, and we’ve got to be cognizant of that because those constituents are the same constituents that are going to be holding us responsible as their elected member of the House or member of the Senate,” he said.

Created by the Legislature and Gov. Mike Beebe’s office in 2013, the private option was passed that year and then reauthorized a year later by a coalition of Republicans and Democrats, many seeing it as a way to expand access to health care without increasing the Medicaid rolls. A Gallup poll released last summer found that Arkansas had the nation’s steepest drop in its uninsured adults rate – from 22.5% in 2013 to 12.4% in 2014. Some elected officials see it as a way for the state to reform health care entitlements.

But many Republican legislators oppose it as an expansion of government with unsustainable future costs. While federal funds currently pay for almost all of the program, the state will begin paying 5% of the cost in 2017 and 10% by 2020.

Legislators this year voted to authorize the private option through 2016, when it is supposed to end. Meanwhile, they created a legislative task force to consider overall health care reform, including the private option.