Clock ticking, legislators consider managed care proposal

Members of the Health Reform Legislative Task Force are considering two options for changing how Arkansas administers its Medicaid system, said the task force’s chairman, Rep. Charlie Collins, R-Fayetteville, during a meeting Tuesday. One would be an extension of the current physician-managed, “patient-centered medical home” model. The other would be a hybrid where higher cost patients would be administered through a privately operated managed care model.

Those were two of the three original proposals by The Stephen Group, a consultant hired by the task force to help it produce reforms to the state’s Medicaid and private option programs. It issued its report in October.

The Stephen Group’s third proposal – administering the entire Medicaid program via managed care – does not appear to have much legislative support.

“I think we’ve essentially discarded the full managed care model, and we’re really down to those two options,” said Collins, who supports a hybrid managed care model.

The task force was formed this year as part of a legislative compromise regarding the Medicaid private option. Medicaid is the program administered by the state and funded mostly by the federal government that pays for health care services for the poor, the disabled and the aged. The private option uses federal Medicaid dollars to purchase private insurance for Arkansans earning up to 138% of the federal poverty line.

The private option has been controversial since it was created in 2013. Supporters say it has reduced the number of Arkansas’ uninsured residents, while opponents say it is a costly extension of Obamacare. The task force was formed as part of an agreement that funds the private option through 2016 while it and the rest of the Legislature reform the overall Medicaid program, including the private option.

The task force has been gathering information all year and will vote on its recommendation at its next meeting Dec. 16-17.

Under the managed care model, private vendors manage all or part of a state’s Medicaid program with a profit incentive to control costs. Under the patient-centered medical home (PCMH) model, a primary care physician takes the lead in managing a particular patient case, with financial incentives to provide care efficiently.

Traditionally, health care has been based on a fee-for-service model, where medical providers simply bill for services rendered and are paid according to a schedule.

John Stephen, lead consultant with The Stephen Group, told legislators that model isn’t working.

“At the end of the day, you have a problem here in your program: It is unmanaged,” he said. “We know that. You have got to bring some coordinated management structure to this program, or it is going to, in our opinion, continue to grow at rates that will be unsustainable. … Whether you go down the road of PCMH or managed care, you have to, in our opinion, do something.”

Stephen said a hybrid model combining managed care for high-cost recipients with the patient-centered medical home model for lower-cost recipients would save the state’s Medicaid program about $2 billion from 2017-21. A managed fee-for-service model, which would include an expanded use of patient-centered medical homes, would save $708 million.

Stephen asserted that a managed care model would be the most effective way to reduce costs and improve services. About 40 states have either a full managed care model or a hybrid model. Using data from 38 states, managed care saved $6.4 billion, about 2.7% of overall costs, in fiscal year 2016, he said. Among the states that have been particularly successful have been Texas, Tennessee and Kansas.

“We can’t find a state, cannot, that has a PCMH shared savings model that saves more than a managed care,” he said.

Other states have adopted managed care programs and then after problems returned to the fee-for-service model, including Oklahoma and Connecticut, he said.

Experiences like those states, and the fee that Arkansas would pay to a managed care company, have led some legislators to question the wisdom of moving to that model.

Five of those legislators have met with Gov. Asa Hutchinson and offered a plan that would build on suggestions he has made regarding the private option. Those legislators are Rep. Michelle Gray, R-Melbourne; Rep. Justin Boyd, R-Fort Smith; Rep. Joe Farrer, R-Austin; Sen. Missy Irvin, R-Mountain View; and Rep. Deborah Ferguson, D-West Memphis.

“We’re trying to figure out a way to take the governor’s recommendations, some of our ideas, and then some of The Stephen Group’s ideas for the PCMH model and combine them into one viable model that could be voted on,” Gray said afterwards.

During the meeting, Gray asked Collins to schedule another meeting before Dec. 16 where those legislators would present those ideas, but Collins was noncommittal. Afterwards, Gray expressed frustration about the lack of task force meetings.

“I got on this task force for real reform, and not just to take managed care for what it is,” she said. “That’s not reform. To me, that’s the easy way out. That’s paying someone 15 to 18% to manage health care for the state of Arkansas without truly giving your state and your state employees and your policymakers a chance to do it themselves, to do it better, to do it more cost-effective.”

More agreement exists when it comes to the private option, the controversial issue that led to the task force’s creation, Collins said. He said there is more support for Hutchinson’s recommendations that would expand requirements for beneficiaries to work, take personal responsibility and engage in healthy behaviors as part of the program, which would be renamed “Arkansas Works.”

Those changes would require the state to request a change to the federal waiver granted by the federal Centers for Medicare and Medicaid Services. Department of Human Services Director John Selig told legislators Tuesday that the state will have to inform CMS of its intentions to change its waiver next week.

It’s unlikely CMS would allow all those changes, but the state intends to ask for them, Collins said afterwards, adding that some of the changes may have to wait for a new presidential administration.