In a letter to legislators, Gov. Asa Hutchinson said he agrees with a consultant that two of the seven points in his proposal to change the state's private-option Medicaid program should be scrapped.
In the letter to members of the Health Reform Legislative Task Force dated Tuesday, Hutchinson said he no longer supports eliminating a nonemergency medical-transportation benefit for private-option enrollees or requiring that the poorest enrollees be served by the traditional fee-for-service Medicaid program instead of the private option.
Hutchinson also said he supported The Stephen Group's recommendation that the state hire managed-care companies to provide Medicaid benefits, but only for "high cost populations" and with "clear goals and effective oversight by the state."
Rachel Davis, director of the Arkansas Health Care Association, which represents nursing homes, said Wednesday that the organization opposes Medicaid managed care.
"We believe that Arkansas providers can provide positive health care solutions in a more cost effective, high quality manner than Medicaid managed care companies," Davis said in an email.
Providers "work hard every day to ensure that the patients who are able to safely transition home can do so successfully, and the patients who are unable to do so receive the highest quality of care possible," she added.
Created by the Legislature in 2013, the private option pays for coverage on the state's health insurance exchange for more than 180,000 low-income Arkansans who became eligible for assistance under the expansion of the state's Medicaid program.
The expansion extended coverage to adult with incomes of up to 138 percent of the federal poverty level: $16,242 for an individual, for instance, or $33,465 for a family of four.
At Hutchinson's request, the Legislature earlier this year created the Health Reform Legislative Task Force to recommend a program that will replace the private option in 2017, when the federal waiver authorizing it expires and Arkansas will begin paying a portion of the program's cost.
The state's share will start at 5 percent and rise each year until it reaches 10 percent in 2020.
The task force also was directed to recommend changes to the state's traditional Medicaid program, which covers more than 600,000 Arkansans. The recommendations are expected to be issued by mid-December.
Hutchinson has cited the private option's cost and opposition by some legislators and others as a reason changes are needed.
Eliminating the nonemergency medical-transportation benefit would save the Medicaid program $14 million annually, primarily in federal funds, Hutchinson said in August.
Because private plans don't cover such transportation, the state Medicaid program pays for it directly as a "wraparound" benefit.
But The Stephen Group, in its report to the task force this month, said Arkansas has a "very effective brokerage model" for providing nonemergency transportation.
Studies have shown that the service saves money by helping recipients seek care in the doctor's office for health problems before they worsen and become more costly to treat, the firm said in the report.
"Based on the TSG comments and my dialogue with many legislators and health care providers, I am supportive of eliminating this element" of his proposal, Hutchinson said in the letter.
Hutchinson had also proposed limiting private-option coverage to Arkansans earning above a certain income level, such as 20 percent of the poverty level, as a way of rewarding those who stay employed. Those below the income cutoff would be covered by traditional Medicaid.
The Stephen Group said that setting such an income cutoff would reduce the amount of money the state collects in premium taxes on private-option plans and likely would not encourage employment. Hutchinson agreed the idea should be dropped.
"While this proposal was designed to encourage and reward work, I am convinced that it would be difficult to administer and the impact on premium payments is uncertain," Hutchinson said in the letter.
The Stephen Group endorsed the five other elements of the proposal that Hutchinson presented to the task force in August.
Those elements are:
• Subsidizing coverage through employer plans, instead of through the private option, for those with access to job-based coverage.
• Requiring certain enrollees to pay insurance premiums of up to 2 percent of their incomes.
• Referring unemployed enrollees to job programs.
• Strengthening procedures for verifying recipients' eligibility for benefits.
• Finding ways to cut about $50 million from Arkansas' Medicaid spending to pay the state's share of the private option.
The Stephen Group also recommended that Arkansas hire managed-care companies to provide benefits for recipients served by the traditional Medicaid program.
According to the firm's report, if Arkansas hired managed-care companies to provide benefits for all its Medicaid recipients, it could save $2.4 billion in federal and state funds from 2017-2021.
If it hired managed-care companies for just the high-cost populations, such as the elderly and disabled, it could save almost $2 billion over the same time period, the firm found.
Hutchinson said in his letter that he supports hiring managed-care companies only for "limited and targeted populations."
He noted that, under the state's Health Care Payment Improvement Initiative, the Medicaid program has started rewarding doctors, hospitals and other health care providers for keeping patients' costs low.
"These are beginning to show cost savings and should not be abandoned," Hutchinson said in the letter.
The parts of the initiative that have been implemented don't affect payments for long-term services for the elderly, disabled and severely mentally ill.
One part of the initiative awards bonuses and assesses penalties to providers on the basis of their average cost of providing an "episode of care," such as replacing a hip or delivering a baby.
The state should "pause further expansion of the episodes beyond those currently in development," the governor said.
John Selig, director of the state Department of Human Services, said Wednesday that such a pause would allow the state to assess the results of the episodes already in place.
Selig told the task force last week that he supports hiring managed-care companies to provide benefits for nursing home residents, the disabled and other patients with expensive medical needs.
Such companies likely would have more flexibility than the state to change how providers are paid, he said.
Hutchinson's letter also said the Human Services Department should begin conducting "continuous" reviews of Medicaid recipients eligibility for benefits, instead of only checking once a year.
He noted that The Stephen Group report indicated that 22,781 recipients in the traditional Medicaid program and 20,110 private-option enrollees had out-of-state addresses.
He also referred to the recent termination of coverage for about 60,000 recipients, most of which came after enrollees failed to respond to a Human Services Department request for income-related records.
"While there may be various scenarios that explain an out of state address, it seems apparent to me that the reason thousands failed to respond to the request for income information and were subsequently stricken from the Medicaid [rolls] is that they were in fact not eligible," Hutchinson wrote.
Hutchinson also expressed support for a recommendation to establish an "enterprise benefit integrity hub" in the state's Department of Finance and Administration to verify recipients' identities and addresses.
The legislative task force's recommendations should include an element for encouraging healthy behavior, he added.
The changes will be part of a request to the federal Centers for Medicare and Medicaid Services for a "global waiver" from federal Medicaid rules.
He asked task force members for "ideas on any other market-based reforms" to be included in the waiver request.
The state must notify the federal agency of "what direction we intend to take" by the end of the year, Hutchinson said.
"If essential aspects of the waiver are not granted, we should push for additional flexibility with the next presidential administration," Hutchinson said in the letter.
"The political climate may change and be more receptive to further reforms of our Medicaid system; if so, I intend to take advantage of the opportunity to design a health care system in Arkansas that is market-based, innovative, efficient, and fiscally responsible."
Rep. Charlie Collins, R-Fayetteville, and a chairman of the task force, said the governor's letter was "helpful and well-reasoned and a good framework for the path forward."
"For me making sure that we move [the private option] forward is No. 1, and then how can we make it the most personal-responsibility, the most healthy-living and the most work-focused that we can make it," he said.
A Section on 10/29/2015