Feds say state can reinstate $7 million to private option insurance carriers

Arkansas Medicaid has been given approval by the U.S. Department of Health and Human Services to use federal funding to reinstate at least $7 million in monthly premiums to private insurance carriers.

That money, which had covered beneficiaries of the private option, had been mistakenly recouped by the state because of processing problems.

The approval came after Gov. Asa Hutchinson (R) requested it from HHS Secretary Syliva Burwell during a meeting earlier this month about Arkansas Works, according to a news release from the Department of Health and Human Services. Arkansas Works is Hutchinson’s replacement for the private option, the program that uses federal Medicaid dollars to purchase private health insurance for individuals earning up to 138% of the federal poverty level.

DHS Communications Director Amy Webb said in an interview that a lag occurred between the time that private option beneficiaries reported a change in life circumstance that made them ineligible for participation, and the time that change was processed. Arkansas Medicaid was retroactively recouping payments made to those insurance companies because of system problems.

The insurance companies had already made good-faith payments to doctors for care provided. She did not believe the carriers had begun to try to recoup those payments to doctors.

The Insurance Department’s press release said DHS will work with insurance carriers on the details of the reinstatements. DHS has already changed polices to prevent future retroactive closures.