DiamondCare supporters present bill; consideration in special session unlikely

Hours after Gov. Asa Hutchinson announced the Legislature would consider only his Arkansas Works legislation in a special session that begins Wednesday, legislators publicly released a bill they say will help the state’s Medicaid system save more than a billion dollars over five years.

The 30-page bill would create DiamondCare, which would use private administrative services organizations that would contract with the Department of Human Services to manage some Medicaid services, rather than those services being managed entirely by DHS.

Hutchinson earlier on Tuesday (April 5) announced that the special session would consider only Arkansas Works, which is his bill to reform the private option. The private option uses federal Medicaid dollars to purchase private health insurance for adult Arkansas with incomes up to 138% of the federal poverty level. As of the end of January, 267,590 Arkansans had been deemed eligible for the program. It expires at the end of this year.

Hutchinson decided to limit the special session’s “call” to Arkansas Works the day after Senate President Pro Tempore Jonathan Dismang, R-Beebe; and Speaker of the House Jeremy Gillam, R-Judsonia, informed him in letters that a majority consensus exists with Arkansas Works but not with his managed care program.

The DiamondCare model would apply to the following Medicaid programs: developmental disabilities services, behavioral health services, rehabilitative services for persons with mental illnesses, and inpatient psychiatric hospital and residential treatment services.

The Department of Human Services would be required to monitor the private administrative services organizations to ensure standards of quality are maintained. ASOs would be required to pay a fee if the quality drops or if savings are not realized. The bill would increase the number of Medicaid patients served through a patient-centered medical home, where care is coordinated for each patient by a single provider.

In a Tuesday press conference, sponsors of the DiamondCare bill declined to say if they would try to fit their proposal into the governor’s special session call. However, the call is very specifically tailored to Arkansas Works, and other legislators were getting their first look at the bill the day before the three-day special session was set to start.

Sponsors of the DiamondCare bill are Rep. Michelle Gray, R-Melbourne; Sen. Linda Chesterfield, D-Little Rock; Sen. Missy Irvin, R-Mountain View; Sen. Keith Ingram, D-West Memphis; Sen. John Cooper, R-Jonesboro; Rep. Justin Boyd, R-Fort Smith; Rep. Deborah Ferguson, D-West Memphis; and Rep. Joe Farrer, R-Austin.

DiamondCare differs from a model supported by Hutchinson that would administer many of those same services through a managed care organization. In that model, the private organization faces more risk because it is paid a set fee per beneficiary and can lose money if it does not manage care efficiently. DiamondCare supporters fear a managed care program would produce savings only by cutting services too much and that those private managed care companies could demand more money from the state.

They presented their bill at a meeting of the Health Reform Legislative Task Force Tuesday. Sen. Jim Hendren, R-Gravette, the task force’s chairman and a supporter of the managed care concept, asked consultant Stephen Palmer with The Stephen Group if other states have implemented a concept like DiamondCare. Palmer said other states have implemented similar programs, but the trend is toward managed care.

The bill would make changes to other parts of the Medicaid program. For example, it codifies into law that the Department of Human Services will enter into a managed care contract for all dental services, a move favored by Arkansas dentists. DHS is already in the process of submitting a request for proposal for a managed care company.

The bill also would create a trust fund for individuals with developmental disabilities that would be partly supported by premium taxes collected under the Arkansas Medicaid program. It would raise up to $15 million annually in state funds. That money would be combined with federal matching funds to erase a list of 2,640 Arkansans with developmental disabilities who are waiting to receive services. However, those services would be capped.

In other business, Palmer told legislators that, even with the private option, hospitals will bear a $744 million burden in uncompensated care from 2017-21. Without it, they’ll be responsible for $1.816 billion, a difference of $1.072 billion.

Palmer said 71 rural hospitals nationwide have closed since 2010, 52 of them in states that did not expand Medicaid under the Affordable Care Act. According to an analysis by iVantage Health Analytics, of the 673 financially vulnerable hospitals in the U.S., 19 are in Arkansas.