Medicaid plan uses exchange

State gets OK for blending federal cash, private coverage

— Expanding Medicaid to all 250,000 eligible Arkansans can be done by funneling them through the state’s insurance exchange under a plan unveiled Tuesday by Gov. Mike Beebe.

The plan, approved by U.S. Health and Human Services Secretary Kathleen Sebelius, would likely be a boon for private insurers and embraces Republican ideas for implementing a key part of the federal Patient Protection and Affordable Care Act in Arkansas.

“Basically they’ve agreed to give us about everything we’ve asked for,” Beebe told reporters after an hour-long meeting at the Capitol with leading lawmakers that focused on enlarging the $5 billion program that covers about 780,000 poor Arkansans.

The plan means the federal government would shoulder a greater burden of expansion by allowing federal Medicaid dollars to purchase private health coverage on the state’s exchange for everyone earning up to 138 percent of the federal poverty level, or $15,415 a year for an individual.

Sebelius’ decision is the first publicly announced expansion deal in the nation that would allow all of those earning up to 138 percent of poverty to buy private insurance with Medicaid dollars on the exchange.

The deal also allows the state to develop copayments for some services, such as charging the higher-income portion of the expansion population for nonemergency uses of emergency rooms, an idea long advocated by both Beebe administration officials and Republicans.

Beebe and lawmakers said the details of any expansion deal still needed to be worked out.

But state Department of Human Services Director John Selig said after Tuesday’s meeting that the idea under discussion involved the entire expansion population covered through the exchange.

The viability of the deal is contingent on the state continuing to partner with the federal government on the exchange, Beebe’s spokesman said. If Republicans continue to seek to cede control of the online marketplace for the uninsured to buy health coverage, the federal flexibility on expansion might vanish.

“Basically, we would have to start over and go back to the feds and ask again,” said Matt DeCample.

Initially, the federal government would pay the premiums for the federally subsidized coverage offered on the exchange.

Under the new health-carelaw, which goes into effect in January 2014, the federal government would pay every Medicaid dollar for expansion until 2017. By 2020, the state would be responsible for 10percent of the costs.

A “sunset” provision, in which the Legislature would vote to continue the expansion after the end of 100 percentfederal funding in 2017, was also discussed at the meeting. Florida Gov. Rick Scott advanced a similar proposal last week.

House Speaker Davy Carter, R-Cabot, said a sunset clause was necessary for any such expansion.

“From my perspective, it has to be,” Carter told reporters after the meeting. “I don’t see any scenario where we don’t have some sort of sunset.”

The deal with the federal government that Beebe announced was a “180-degree” change from the previous expansion debate, Carter said. Previously, discussion focused on how many poor Arkansans would be covered by the state’s Medicaid program.

“That only supported the rationale for waiting a few weeks to start taking this issue up,” Carter said.

It’s too early to tell whether 75 members of the House needed for approval of the deal would go along, Carter said, but the plan “moved the ball down the field.”

“I think it’s much more appealing to membership under this scenario,” Carter said,adding that members had given him “generally positive feedback” when they learned the news.

Senate President Pro Tempore Michael Lamoureux, RRussellville, said the news was a “a positive step” for expansion.

“This confirms that we actually have a chance,” Lamoureux said.

Without the federal government’s decision to allow the state “maximum flexibility,” Lamoureux said, “it would have been nearly impossible to get an agreement.”

The idea to give a far greater role to the exchange in expansion was first floated by Sen. Jonathan Dismang, RSearcy.

“Now we have a set of parameters that we can work from. Is it encouraging? Absolutely,” Dismang said. “I think it’s something that is very favorable to Arkansas. The work starts now.”

The new plan also has made irrelevant a GOP plan to have an outside consultant examine Department of Human Services estimates about the benefits of expansion, Carter said.

“It’s a whole new ballgame,” Carter said.

A question raised by some lawmakers in the meeting involved limits on insurance companies’ profits for the expansion population on the exchange.

The Affordable Care Act already limits insurance company profits, said state Surgeon General Dr. Joe Thompson. Those rules would apply to the expansion group, he said.

At least two plans designed for the expansion population would be on the exchange,Thompson said. They would be structured to also include higher-income consumers so that people whose incomes rose above 138 percent of poverty wouldn’t have to change doctors or go to another plan.

Eliminating the “churn” between Medicaid and the insurance exchange could make the expansion run more smoothly, Selig said.

Hundreds of thousands of new customers would “theoretically” benefit insurance companies, Beebe said.

With a large pool of exchange customers, more insurance companies might enter the Arkansas market, DeCample said.

Doctors, hospitals and other providers would also gain from the deal because private insurance traditionally pays better than Medicaid, Beebe said.

The financial loser likely would be the federal government, he said.

“It will probably cost the feds a little more money to do this,” Beebe said.

The scenario on the table would require the state to continue with its federal-state partnership on the exchange. Arkansas is one of seven states that is planning a hybrid exchange. The deal approved by Sebelius is contingent on the state continuing with that model, DeCample said.

Some Republicans, led by Sen. Jason Rapert of Bigelow, have said they prefer the stateto cede control of its exchange to the federal government as many GOP-led states have done.

Hearings on the fate of the exchange are set for today at the Senate Insurance and Commerce Committee. Rapert is the chairman of that committee.

Expansion supporters voiced support for the plan. Expanding health coverage for low-income Arkansans is the primary goal, they said.

“If the way we can get it done, quite frankly, politically, is through the exchange, then we’re okay with that,” said Rich Huddleston, executive director of Arkansas Advocates for Children and Families.

Carter said he wanted to get the expansion debate settled during the regular session.

He said the latest developments improved chances for something to be decided by mid-April when lawmakers are expected to finish their work.

But some Republicans, while encouraged by the news, emphasized that lawmakers should reserve judgment on the new scenario for now.

Sen. Cecile Bledsoe, RRogers and chairman of the Senate Public Health, Welfare and Labor Committee, said she still prefers a special session to deal with Medicaid expansion.

“It sounds good, but I always like the details,” Bledsoe said.

“I think we almost need to set aside a special time for it now.” Information for this article was contributed by Sarah D. Wire of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 02/27/2013

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