Arkansas could save between $545 million and $765 million a year in state and federal funds by making 32 changes to Medicaid, the health-insurance plan for state employees and teachers and other state programs, a consultant hired by the Republican-controlled Legislature estimates.
The state could save the bulk of the money through the “streamline [of] basic benefit packages,” establishment of private-market health-care packages, and creation of health-savings accounts to cover co-payments and deductibles for Medicaid recipients, according to The Alexander Group consultingfirm’s report to the Legislative Council.
The “private-market health-care transition” for the state’s Medicaid program could save the state from $300 million to $400 million a year - $285 million to $380 million in federal funds and $15 million to $20 million in state funds - the Greenville, R.I.-based consultant said.
The flexibility to enroll Medicaid recipients in free-market health-care plans would allow Arkansas to serve more people and promote personal responsibility and independence, but that would require federal approval, the report said. The report provides few details about its proposed changes.
Medicaid is a $5 billionstate and federally funded health-care program serving about 776,000 low-income Arkansans.
The federal Patient Protection and Affordable Care Act is expected to increase the adult Medicaid population by nearly 220,000 people, according to the consulting firm headed by Gary Alexander, a former health and welfare official in the Republican administration of former Pennsylvania Gov. Tom Ridge and the designer of a Medicaid overhaul for Rhode Island.
“The existing Medicaid system, which is intended to serve as a safety net for our most vulnerable citizens, places an extreme and increasing burden on Arkansas taxpayers,” The Alexander Group said in its 88-page report.
“Without changing the Medicaid paradigm of healthcare coverage, health-care costs would follow the same trajectory [of rising costs], just at a lower level and merely delay the inevitable, unsustainable result,” the consultant said.
The Alexander Group has been paid $220,000 under its consulting contract with the Bureau of Legislative Research, said bureau director Marty Garrity.
Two attempts to reach Alexander by telephone were unsuccessful Friday.
State House Republican leader Bruce Westermanof Hot Springs - who recommended that the Legislature hire The Alexander Group earlier this year over the objections of some Democratic lawmakers - said the consultant’s report provides legislators with good information on the state’s social-welfare programs and good recommendations.
He said it’s difficult to make a judgment on the consultant’s recommendation for “a private-market health-care transition” for the Medicaid program based on the consultant’s one-page summary.
Richard Huddleston, executive director of the Arkansas Advocates for Children and Families, said the consultant’s report is “a big ideological and analytical mess.”
It’s pretty clear that the consultant’s recommendations are aimed at finding ways to cut state government spending and programs serving low-income and vulnerable people without considering the effect on people, he said, adding that the report goes to great lengths to “paint the worstcase picture” about the state’s Medicaid program.
Westerman, who is seeking the Republican nomination in the state’s 4th Congressional District, said the consultant’s report is aimed at “helping people by making these programs better.
“To me, it is looking for ways to make the programs more efficient and sustainable,” he said.
A spokesman for the state Department of Human Services said the consultant’s report has numerous “general recommendations that just about any state could consider, and we’re always open to ideas because we know that every large program has room for improvement.”
Department spokesmanAmy Webb said The Alexander Group report includes many concepts that agency officials have already implemented or are working toward, and the department “has sought its own innovative solutions to bending the cost curve in Medicaid, and we’ve spent the last few years focusing on making the program stronger and more cost-effective.
“We believe the work we’ve done helped Arkansas Medicaid [program] this year see its lowest annual growth rate in more than three decades, and we believe it will result in significant cost savings and better health outcomes for patients, which were key targets outlined in The Alexander report,” she said.
The Alexander Group’s report, dated July 5, is addressed to the Legislative Council’s executive subcommittee. The council released the report earlier this month.
Several key Republican and Democratic lawmakers said they hadn’t read the 88-page report as of late last week.
A spokesman for Democratic Gov. Mike Beebe said no one in the governor’s office had read it either.
Rep. John Burris, chairman of the House Public Health, Welfare and Labor Committee, said he’s only read excerpts of The Alexander Group’s report posted on the Internet by various sources.
“I hope [Alexander] delivered on what we asked him to do, [and] I hope the report is valuable,” said Burris, a Republican from Harrison.
He said he hopes Alexander will present the report to the House and Senate Public Health, Welfare and Labor committees during a meeting of the two committees within the next few weeks.
Among other things, The Alexander Group’s recommendations include: Overhauling thehealth-insurance plan for state and public-school employees to save between $36.1 million and $48.9 million a year - $31.8 million to $43 million in state funds and $4.3 million to $5.8 million in federal funds. The overhaul would “create a transparent, health care plan for state and public school employees” and “connect payer to provider(s) using an administrator that will pay for appropriate level of care without inconveniencing employees or asking for increased premiums.” Relocating more nursing-home patients on Medicaid to home and community-based services to save $40 million to $50 million a year in state and federal funds. Moving 10 percent or about 2,400 people in nursing homes into home and community-based services would cut costs by about$47.7 million a year.
Consolidating contracts that provide similar services in the state Department of Human Services and Department of Health, saving between $15 million and $20 million a year in state and federal funds.
Restructuring programs for people with developmental disabilities to save between $5 million and $9 million a year in state and federal funds. The restructuring would help relocate or divert about 10 percent of the intermediate-care-facility residents into community placements in homelike setting with caregivers.
Making a single agency responsible for improving the coordination of mental-health care to ensure that the services that are provided are medically necessary and in an appropriate setting. The fee-for-service payments also would be converted to bundled or per-person amounts for all “habilitation services” to save between $16 million and $25 million a year in state and federal funds.
Northwest Arkansas, Pages 15 on 09/29/2013