Arkansas health reform report to include ‘out of the box’ ideas

The consultants who are preparing a report that will guide Arkansas’ health reform efforts are “absolutely in writing mode” as they near an expected Oct. 1 completion date, the firm’s founder told legislators Wednesday.

John Stephen of The Stephen Group told the Health Reform Legislative Task Force that the report will come in three volumes: an assessment of the state’s current health care offerings; a set of recommendations regarding Medicaid and the private option; and a set of ideas and initiatives such as potentially changing the state’s “any willing provider law.”

The task force is considering ways to reform Arkansas’ overall health care system. It was created this past legislative session as part of a compromise funding the controversial private option through the end of 2016. The private option uses federal Medicaid dollars to pay for private health insurance for lower income individuals.

Stephen told legislators the recommendations will include a decision tree for what the state should do about the private option. He said everyone his firm has interviewed agrees that the program cannot continue in its current form. The report will describe the impact of the program being cancelled and will also describe various alternatives if legislators decide to keep the program in some form. Some proposals will be “within the box,” meaning the federal government has already accepted them or at least indicated it would consider them. Other options will be “out of the box” and require a more extensive approval process.

He said the report will do the same for traditional Medicaid. Among the alternatives is a managed care model where a private company would manage parts of the state’s Medicaid program with oversight by government officials.

He said the state should create incentives where Medicaid providers are penalized for poor management and rewarded for success.

“The states around this country have seen this program for a long time now and have decided you’ve got to have skin in the game. You’ve got to have more risk. And if you do well and help this population and provide good quality, we’re going to reward you,” he said.

Stephen said legislators should consider a system that creates benchmarks and targets that legislators can consider on a monthly basis. Legislators also considered whether the state should move to a managed care model. John Selig, director of the Department of Human Services, said that if legislators don’t do that, his department will need more resources to better manage the state’s Medicaid program.

“If we don’t go to managed care for some of these populations, and we’re going to manage them ourselves, DHS, I just think we’re going to have to have more capacity to do that,” he said. “We do not have the strength in our staff and the numbers at the right levels to do what a managed care company can do in terms of making sure that the resources are used wisely…

“I just think we have to do something with these high-cost populations. I’m not saying managed care is the ideal way to go, but it is one way to go that I think we have to consider.”

A managed care model would still require DHS to administer the contracts. Rep. Michelle Gray, R-Melbourne, questioned whether the department is capable of doing that given its recent cost overruns and delays in creating a enrollment and eligibility verification system.

Selig also expressed support for the state taking advantage of the community first choice option, a feature of the federal Affordable Care Act that would increase the state’s federal medical assistance dollars by 6%. That would allow the state to eliminate a list of 2,800 individuals with developmental disabilities who are currently on a waiting list. But only six states are participating in the program, and legislators worried it would create a new entitlement and come with additional strings attached.

Julie Meyer, director of policy for the Division of Behavioral Health Services, told the task force that 5% of Medicaid’s behavioral health clients are responsible for 52% of the total costs, and the top 20% of clients are responsible for 81% of the total costs. In Arkansas, 110,000 Medicaid beneficiaries receive behavioral health services, including $152.64 million spent on inpatient psychiatric services in 2014 and $302 million spent on rehabilitative services for persons with a mental illness.

She and Charlie Green, director of the Division of Behavioral Health Services, said the system does not have adequate substance abuse treatment services; that there is a lack of access to continued crisis services; and that residential treatment for children is overutilized.

Robin Raveendram, executive director of the Alliance for Health Improvement, offered a range of proposals that could save the state money, include ending the state’s “episode of care” model as applied to patients with attention deficit hyperactivity disorder, which Raveendram said has cost the state $200 million with limited return on investment. The episodes of care model pays medical providers a bonus if their average costs for a particular medical issue are below what is considered an acceptable rate, or levies a penalty if costs are too high.

Dr. Max Baker said research has shown that childhood abuse leads to lifelong problems that include requiring Medicaid services. He said research suggests that childhood abuse even affects brain structure and potentially even genetic structure, thereby imperiling future generations.