Competing care savings models headed to Legislature

Two competing draft bills circulating among legislators would provide financial rewards for cost-efficient care and penalties for poor performance, but they would do it in different ways.

One would create a managed care program, the other a “managed fee for service” program.

The bills grew out of discussions by the Health Reform Legislative Task Force, a group that has spent the past year discussing changes to Medicaid. Members split on the two models during their last meeting March 7. Both bills are planned to be presented to legislators when they meet in a special session that begins April 6.

Gov. Asa Hutchinson favors managed care. In that model, a private company or companies would manage parts of the Medicaid program under contract with the Department of Human Services (DHS), receiving a set amount per member. The vendor would make higher profits for cost-efficient care while bearing the burden for failing to meet targets.

The bill, the Arkansas Medicaid Reform Act of 2016, would authorize the state to contract with two or more Medicaid managed care organizations to provide services in these areas:

– Individuals with intellectual or developmental disabilities;
– Individuals with severe intellectual disabilities who live in human development centers;
– Individuals with “significant behavioral health needs”;
– All dental services;
– Individuals requiring long-term care who are at least age 65, blind or disabled.

However, the draft bill states that DHS will not enter into a managed care agreement if it has finalized by June 1 a memorandum of understanding involving payment and implementation reforms that have been negotiated by the Arkansas Health Care Association, which represents nursing homes. Those reforms must generate at least $50 million in savings to the state each of two years between 2017 and 2019.

The draft spells out a bill of rights for both members and health care providers that was based on a similar package in North Carolina. Providers would be entitled to a plan that:

– Pays no less than the prevailing Medicaid fee schedule unless a different rate is negotiated by the provider and the managed care organization;
– Pays 99% of clean provider claims within 30 days;
– Pays pharmacists the prevailing dispensing fee rate unless a different rate is negotiated between the provider and managed care organization;

Member beneficiaries would be entitled to coverage that:

– Establishes community advisory committees;
– Doesn’t reduce state-established types of services and benefits;
– Doesn’t limit the number of medically necessary visits to a primary care provider;
– “Offers member-centric programs” such as those that reward healthy behaviors;
– Provides integrated care for those with multiple chronic conditions or disabilities.

The managed care organization would be required to enter into contract negotiations with any willing health care provider, and it would require the inclusion of all federally qualified health centers, rural health clinics and critical access hospitals. The bill also would establish health care provider advisory committees to consider provider compensation and other issues.

The managed care organization would be required to offer care coordination through staff physically located in Arkansas and would have to demonstrate health outcomes. DHS would create a medical loss ratio to ensure savings are returned to the state. Part of those savings would be used to serve individuals with developmental disabilities. A Community Living and Employment Supports Trust Fund would be created that would provide services to that population and provide other services.

FEE FOR SERVICE
The other bill, the Managed Fee-For-Service Act of 2016, would create a different type of cost-saving system. A vendor would provide administrative services including an independent assessment, plan of care, quality assurance, and outcomes measurement. The Department of Human Services would create a methodology for incentive payments for a contractor that meets benchmarks. If the vendor provides lesser care or fails to meet contracted benchmark savings, it would pay an administrative fee.

DHS would employ that model for individuals receiving developmental disability home- and community-based services; individuals receiving behavioral health services; those receiving state plan rehabilitation option services; and those receiving treatment through an inpatient psychiatric hospital or a residential treatment center.

Individuals residing in a human development center for the severely developmentally disabled or in the Arkansas State Hospital specifically are excluded from the bill.

The bill says the model will offer the best value available for Medicaid beneficiaries, provide choice, and address population health issues.

DHS would release a request for proposals no later than Oct. 1 and select one or more vendors no later than Feb. 1, 2017.