Arkansas Works bill would codify governor’s recommendations

A draft of the Arkansas Works Act of 2016, which would create the program that would replace the private option, is circulating among legislators and includes recommendations made earlier by Gov. Asa Hutchinson.

Meanwhile, two bills – one meant to produce savings through a managed care model, and one meant to produce savings through a “managed fee for service” model known as “DiamondCare” will begin circulating as early as today, Talk Business & Politics has learned.

The bills will be reviewed by the Health Reform Legislative Task Force when it meets on Tuesday. However, the next votes will occur among the full Legislature in a special session that begins April 6.

The Arkansas Works legislation is sponsored by Sen. Jim Hendren, R-Gravette, and Rep. Charlie Collins, R-Fayetteville, the task force’s chairman and co-chairman. It would create the successor to the private option, which expires by law at the end of this year, and includes elements proposed by Gov. Asa Hutchinson in recent weeks.

The private option uses federal Medicaid dollars under the Affordable Care Act, otherwise known as Obamacare, to purchase private health insurance for adults with incomes up to 138% of the federal poverty level. Created in 2013, it now covers more than 200,000 individuals and has reduced uncompensated care provided by hospitals, but critics say it is an unsustainable expansion of Obamacare.

To be enacted during the special session, Arkansas Works requires only a majority vote. However, its funding will require support from three-fourths of the Legislature during the even-numbered-year fiscal session that will follow starting April 13 – a much higher hurdle.

The 13-page draft bill would require insurance companies to provide silver-level insurance plans that appear on health exchanges where private individuals purchase health insurance. Insurance providers must maintain a medical-loss ratio of at least 80%, meaning they must spend that percentage on claims. Any greater amount would have to be rebated to the Department of Human Services.

The state would have to assure at least two qualified plans are offered in each county, and providers would have to participate in the Arkansas Patient-Centered Medical Home Program, where a single provider coordinates care for a patient.

Among the draft bill’s provisions are:

– Beneficiaries will be referred to the Department of Workforce Services to participate in job training and job search programs. Eligible individuals will be told the program is not a guaranteed entitlement and can end at any time.

– Beneficiaries ages 21 and older must enroll in qualified employer health insurance plans if they are available.

– Beneficiaries must undergo an annual wellness visit with a primary care provider or lose “incentive benefits” for up to a year that would be determined by the Department of Human Services in consultation with the Arkansas Insurance Department. Those benefits would be restored if participants pay all premiums owed.

– Participants with incomes of at least 100% of the federal poverty level must pay a premium of no more than 2% of their income. If they don’t, they owe a debt to the state and can lose their incentive benefits.

– DHS would seek a waiver from the federal Department of Health and Human Services that currently allows individuals to receive benefits 90 days retroactive to when they enroll. Hutchinson has said benefits should begin upon enrollment.

Benefits would be available to adults ages 19-64 who are United States citizens or documented qualified aliens.

The bill would allow Arkansas to end the program within 30 days if the federal government reduces its share of payments to less than 95% in 2017; 94% in 2018; 93% in 2019 and 90% afterwards – the current schedule for the private option.

The program would create an Arkansas Works Program Trust Fund that would collect savings from the program along with increased premium tax collections to pay for future obligations. It would replace a trust fund that already exists with the private option.

The bill calls on the Department of Human Services, which will administer the program, to track any reduction in uncompensated care thanks to Arkansas Works.

Hutchinson has asked the Legislature to produce savings that will help pay for Arkansas’ growing percentage of the cost of Arkansas Works. The legislation he supports would include a managed care model, where a private company would manage parts of the Medicaid program under contract with the Department of Human Services, with incentives for cost-efficient care and penalties for failing to reach targets.

In a town hall meeting Tuesday, Hutchinson said managed care would be limited to the areas of behavioral health and services for the developmentally disabled. It will include a bill of rights that would ensure that provider payments will not be reduced below an agreed upon rate schedule for Medicaid without the providers’ consent.

DiamondCare, which is supported by some legislators on the task force, would use a “managed fee for service” model where a private company would manage some programs under contract, but the state would still bear the risk.