Beebe asks U.S. help to fill Medicaid gaps

Waiver would let state access federal cash

Gov. Mike Beebe, speaking Wednesday at the Arkansas State Chamber of Commerce’s annual meeting in Little Rock, said Medicaid expansion is the best way to avoid cuts to nursing care for 10,000 to 15,000 senior citizens and disabled people. Article, 3A
Gov. Mike Beebe, speaking Wednesday at the Arkansas State Chamber of Commerce’s annual meeting in Little Rock, said Medicaid expansion is the best way to avoid cuts to nursing care for 10,000 to 15,000 senior citizens and disabled people. Article, 3A

— Gov. Mike Beebe has asked the federal government for a wide-ranging Medicaid deal that would allow Arkansas to access federal funds to help plug the $4.6 billion program’s estimated $138 million deficit, quicken its payment overhaul and pave the way to expanding its rolls by up to 250,000 people.

The most immediate advantage to the state would be greater flexibility, especially in getting more “upfront” federal money that would help lawmakers in tackling the impending Medicaid shortfall. The Section 1115 waiver could also allow the state to implement co-payments for some Medicaid services.

Beebe and other Medicaid expansion supporters also hope that the loosening of federal oversight on Medicaid will attract enough Republican voters to approve expansion — 75 House votes and 27 Senate votes are required to authorize the change.

Last month, Beebe spoke with U.S. Department of Health and Human Services Secretary Kathleen Sebelius about obtaining a “global waiver” over an eight-year period that would allow the state to receive a fixed amount of federal funding based on historic rates of growth in the program that provides medical care for about 780,000 people.

It’s too early to pinpoint a dollar amount of any deal, said Arkansas Department of Human Services Director John Selig, but the broad outlines would look like this: The state and the federal government would agree on a specific sum. If the state is able to wring savings out of the deal through greater efficiency, it would keep the extra money. If those savings don’t materialize or unanticipated costs arise, the state would be left on the fiscal hook.

On Oct. 29, Beebe sent Sebelius a three-page letter outlining the state’s goals.

So far, the federal government hasn’t responded, but Selig said Wednesday that he hopes that Washington will signal its openness to the idea within the next few weeks.

He hopes a waiver agreement would be in place before lawmakers make their budget decisions early next year.

Beebe’s letter stated that the waiver would allow the state to “minimize the impact of our shortfall,” accelerate the payment overhaul and “secure support” for the federally-assisted expansion of the program.

“I am asking that we meet in the immediate future to determine if this broad outline to an approach is acceptable. If so, we will pursue it with vigor...if it is not feasible, we must announce and immediately prepare to make the program cuts described above,” Beebe wrote.

On Tuesday, Selig told state lawmakers that $460 million in cuts would have to be made for services to elderly and disabled Arkansans if the state didn’t pursue expansion. That expansion would be completely paid for by the federal government until 2017. But a June decision by the U.S. Supreme Court allowed states to decide if they wanted to expand their rolls.

By 2020, the state would pay for 10 percent of the expansion costs. The federal government will contribute about $900 million per year for expansion.

Any waiver deal would likely include a state commitment to expand Medicaid, said Amy Webb, a Department of Human Services spokesman.

“They would want something in return and expansion is something that they’re very interested in,” she said.

Getting wide-ranging Medicaid waivers has been a Republican goal. With the GOP now a majority in the House and Senate, Selig said that such a deal with the federal government could “secure support from some members who have said, ‘A global waiver is very attractive to us.’”

Senate President Pro Tempore-elect Michael Lamoureux, R-Russellville, said he was encouraged by Beebe’s action, but that it was “too early to be pinned down to certain details.”

Lamoureux said he was confident that Beebe would strike a “favorable” deal with federal officials after the governor reaches an agreement with state lawmakers about Medicaid. But he said for the Legislature to base its decisions on federal promises would be “building on foundations of sand.”

The details of the waiver remain undecided, Selig said.

Arkansas also wants more flexibility in federal rules and regulations to quicken its payment overhaul, which began Oct.1. That overhaul changes the way Medicaid pays providers based on a yearly cost threshold linked to statewide statistical averages. If provider costs are below the cost ranges, they receive half of the savings. If their costs exceed those ranges, they are charged for half of the cost overruns. If they fall within the acceptable cost range, they break even.

Judith Solomon, vice president for health policy at the Center for Budget and Policy Priorities, a liberal research and advocacy group in Washington, D.C., said Arkansas’ waiver proposal seemed similar to a recent waiver granted to Oregon and one being pursued by New York. Rhode Island also received a waiver in 2009.

A waiver of this sort differs from a block grant in that future growth in the program is taken into account, she said.

“It’s sort of rearranging the money you have,” Solomon said.

She said that if the state moves quickly, it might be possible to have a clear indication before the end of the legislative session whether the state would gain enough federal flexibility to avoid Medicaid cuts. The waiver process itself requires a “transparent” process of public comment at both the state and federal level, she said.

But the federal government has a vested interest in working with the state to encourage a key component of President Barack Obama’s health-care law: expanding Medicaid to currently uninsured adults making up to 138 percent of the poverty level.

“They want to help states get to yes on this,” Solomon said.

One advocate for Medicaid recipients expressed concern that a waiver could “open the door” to restrictions on services.

“I guess, big picture, we’ll say the governor deserves a lot of credit for thinking outside the box,” said Anna Strong, health-care policy director for Arkansas Advocates for Children and Families. “But when it comes to a global waiver, the devil is in the details.”

Strong said the state could accomplish many of the goals stated in Beebe’s letter without a waiver.

“We want to make sure that the long-term impact on kids and families is not a negative one,” she said.

The Little Rock-based advocacy group is a strong proponent of Medicaid expansion, and Strong said she hopes Beebe will be able to persuade Republicans to support it without sacrificing the well-being of Medicaid recipients.

“Medicaid expansion is a good plan for the state of Arkansas. We realize that during the upcoming session there will be a lot things in play and we will take things as they come,” Strong said.

Selig said that the Department of Human Services is confident that the state’s payment overhaul — estimated by the agency to save billions over the next decade — will save enough Arkansas enough money to avoid being stuck with a huge bill on the back end of any deal.

But, he acknowledges nothing was guaranteed.

“Any time you lock yourself in for a longer period of time, you do take some risk,” Selig said.

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Front Section, Pages 1 on 11/15/2012

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