Enrollee ages lifted private-option tab

Firm: Older crowd blew cost forecast

A higher-than-expected average age of enrollees is the primary reason the cost of the state’s so-called private-option Medicaid program is running above projections, a consultant to the Arkansas Department of Human Services found.

Scottsdale, Ariz.-based Optumas, an actuarial consulting firm, said in a report released Wednesday by the department that the average enrollee is about 39 - about two years higher than the firm predicted when it developed its cost estimates for the program last year.

The higher age has resulted in Arkansas’ Medicaid program paying average monthly premiums that are$24 higher than would be expected if the projected age had been accurate, according to the report.

Since coverage began on Jan. 1, the average cost per enrollee has been about $494 per month, according to figures released by the Human Services Department.

The difference in the premium cost is the main reason the program is running above the $477.63 per enrollee per month predicted by the firm last year as the private option’s cost in 2014, according to the report.

Arkansas Medicaid Director Andy Allison said the state will likely use the higher-than-expected age as a basis for requesting a rise in the per-enrollee spending cap established under a federal waiver authorizing the program.

Although the average age of those enrolling continues to fluctuate, “I don’t think we’ll end up as low as the original projection,” Allison said.

Created under a state law passed last year, the private option allows most Arkansans who qualify for the state’s expanded Medicaid program to receive coverage through plans offered on the state’s health-insurance exchange.

The expansion extended eligibility to adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.

Optumas’ monthly per-enrollee cost projection was used to establish the cap on spending during a three-year “demonstration period.”

The firm projected the monthly per-enrollee cost would rise to $500.08 in 2015 and $523.58 in 2016.

The federal government will pay the full cost of providing coverage under the private option as long as the state’s spending is below the cap. If the spending exceeds the cap, the state will owe the difference to the federal government at the end of the three years.

However, the wavier allows the state to revise the projected monthly per-enrollee cost if it has information indicating that its projections “may underestimate the actual costs.”

Allison has previously said the private option’s higher-than-expected cost was due in part to some applicants enrolling in plans offered by St. Louis-based Centene Corp. that include vision and dental benefits and have higher-than-average premiums.

However, he said Wednesday that more applicants than expected have selected or have been assigned to plans that have low premiums, which has more than offset the increase in costs associated with the Centene plans. As a result, after adjusting for the higher average age of the enrollees, premiums are lower than projected, he said.

He said that was due at least in part to the suspension of enrollment in QualChoice Health Insurance plans, some of which had higher-than-average premiums.

Optumas had predicted that 18 percent of the applicants would sign up for or be assigned to QualChoice plans. In early November, however, enrollment in QualChoice plans was stopped after it reached 1,280 people.

As of Feb. 6, the latest date for which the Human Services Department has enrollment information by insurance company that has been released, QualChoice’s total had fallen to 1,220 - less than 2 percent of the 87,061 people enrolled in the private option at that time.

As of March 31, enrollment in the private option had risen to 121,442.

QualChoice Chief Executive Officer Mike Stock has said the company requested a cap on its enrollment because of its pending acquisition by Englewood, Colo.-based Catholic Health Initiatives. The company plans to request that the cap be lifted later this month, after the acquisition is approved by the state Insurance Department, Stock has said.

According to the report released Wednesday, Optumas last year predicted a 47 percent market share for Arkansas Blue Cross and Blue Shield, which has the lowest premiums for “silver” plans in each market area, a 23 percent market share for the national Blue Cross and Blue Shield Association and a 12 percent market share for Centene Corp.

As of Feb. 6, Arkansas Blue Cross had about 43 percent of the market. The Blue Cross and Blue Shield Association had about 36 percent of the market, and Centene Corp. had about 20 percent.

Under the private option, enrollees can choose from any silver, or medium-coverage level, plan on the exchange. Those who fail to choose a plan within 12 days of being approved for coverage are automatically assigned to one.

In addition to paying the premiums for the plans, the state makes upfront payments, based on an estimate of recipients’ expected claims, to reduce or eliminate any required out-of-pocket spending by the enrollee for medical expenses.

Since January, the average premium paid to the insurance companies each month has risen from $342 in January to $356 this month, and the average total payment has risen from $476 to $490.

The Medicaid program also pays directly for certain benefits that are required by federal Medicaid rules but not provided by the private plans.

The monthly payments for those “wraparound” benefits have included about $6 per enrollee to companies that provide nonemergency medical transportation and less than 50 cents per enrollee for vision and dental benefits for 19- and 20-year-olds.

Optumas had estimated the monthly cost of the wraparound benefits at $8.58 per enrollee. Allison said it’s too early to say why the costs for the services are running below the projections.

State Rep. David Meeks, R-Conway, said the cost of the private option is still a concern because it will be borne by state and federal taxpayers. In 2017, the state is expected to begin paying 5 percent of the program’s cost. The state’s share will then rise every year until it reaches 10 percent in 2020.

“Every dollar that the premium rises is another 10 cents Arkansas will have to pay in general-revenue funds when we finally do start paying our share,” Meeks said.

Front Section, Pages 1 on 04/24/2014

Upcoming Events