Gov. Hutchinson requests private option waiver extension from feds

Gov. Asa Hutchinson has informed U.S. Health and Human Services Secretary Sylvia Burwell that Arkansas will amend its private option waiver so that it can create a replacement, Arkansas Works, that will last beyond the scheduled termination of the private option at the end of 2016.

In a letter dated Dec. 29, Hutchinson said Arkansas will request changes so that the program “promotes personal responsibility, incentivizes work and ensures program integrity.” Hutchinson said Arkansas would submit an application in the spring of 2016.

The current waiver requires the state to notify DHHS a year in advance of continuing or amending the waiver. The state Department of Human Services sent DHHS an extension application.

The private option, officially known as the Health Care Independence Program, uses federal Medicaid dollars to purchase private insurance for individuals with incomes up to 138% of the federal poverty level. It was created in 2013 using a Social Security Act Section 1115 waiver from the federal government, which is paying almost all of the costs. The waiver, which was approved Sept. 27, 2013, expires Dec. 31, 2016. Arkansas begins paying 5% of the costs in 2017, a number scheduled to increase to 10% by 2020.

The private option, which covers about 200,000 beneficiaries, has been controversial since it was created – barely receiving the three-fourths vote in the Legislature it needed for funding in 2013 and 2014.

Supporters say the program has helped Arkansas lead the nation in reducing its percentage of uninsured residents and in reducing the uncompensated care provided by hospitals.

Opponents say it is an unaffordable concession to Obamacare. If the private option continues, Arkansas would begin paying 5% of the costs in 2017, a number scheduled to increase to 10% by 2020.

In 2015, legislators agreed to Gov. Asa Hutchinson’s request to fund the program through the end of 2016 while he works with a legislative task force to consider a next move in the context of overall Medicaid reform.

Hutchinson wrote that he anticipates that Arkansas Works will include all or some of the following:

– Requiring individuals eligible for Medicaid to enroll in employer-sponsored insurance where available, with Medicaid covering employees’ costs that would exceed Medicaid levels and providing benefits not covered by the insurance;

– Implementing work training referral requirements with a continued discussion with President Obama’s administration on specific work requirements. The state would offer enhanced coverage and other incentives for those who comply and meet goals set in Healthy, Active Arkansas, a Hutchinson initiative encouraging wellness.

– Requiring premium payments for beneficiaries with incomes above 100% of the federal poverty level, with a consideration of contributions for those with incomes above 50%.

– Restricting coverage or requiring greater cost sharing by individuals with substantial assets.

– Eliminating the current retroactive eligibility that allows new beneficiaries to be covered for expenses incurred 90 days before they were enrolled.

– Creating a timeframe for terminating the waiver.

– Care coordination for medically frail individuals.

– Verifying beneficiaries’ incomes through enhanced data matches.