The Arkansas Medicaid program's average per-enrollee payments to insurance companies continued to fall this month but remained above a target set in a federal waiver authorizing the program, according to figures released by the state Department of Human Services.
On Thursday, the Medicaid program made monthly payments to insurers totalling $77.6 million for coverage this month on behalf of 160,045 enrollees, department spokesman Kate Luck said.
That was an average of $484.92 per enrollee, a decrease of $1.63 compared with the average per-enrollee payment for coverage in July.
The state's average monthly per-enrollee payments to insurance companies have fallen each month after peaking in April at $490.42, but the cost remains above the monthly per-enrollee target of $477.63 set in a federal waiver authorizing the program.
Medicaid officials have said the costs have exceeded projections because the average age of enrollees has been older than predicted, resulting in higher premiums. The cost has fallen as more young people have signed up.
Although the state can ask for the target to be raised, Luck said state officials remain hopeful that won't be necessary.
"Right now, we're feeling really encouraged by the way [the premiums are] going," Luck said.
Under the private option, most people who qualify for coverage under the state's expanded Medicaid program receive the coverage through plans sold on the state's health insurance exchange, with the Medicaid program paying the premiums.
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.
Enrollment began in October for coverage that started in January.
In addition to premiums, the payments to insurance companies include subsidies that reduce or eliminate enrollees' out-of-pocket spending for medical care.
The Medicaid program also pays directly for some services, such as nonemergency medical transportation, required by federal Medicaid rules but not covered by the insurance plans.
The payments for that "wraparound" coverage averaged $4.78 per enrollee in July, down from $5.31 in June.
Through the end of July, the total monthly spending per enrollee for the year averaged $491.20.
Under the terms of the waiver, the federal government will pay the full cost of the private option, including the wraparound costs, through 2016 as long as the state's per-enrollee spending during the three years is below a cap, which will be calculated using monthly per enrollee targets.
The monthly target used to calculate the cap rises to $500.08 in 2015 and $523.58 in 2016.
The terms of the waiver from the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services allow the cap to be adjusted if the state has information that the limits "may underestimate the actual costs of medical assistance for the new adult group."
The deadline for the state to request an adjustment to this year's spending limit is Oct. 1.
A Human Services Department spokesman said last week that Medicaid officials expect this year's costs to be reduced by a provision in the 2010 federal health care law requiring insurance companies to issue refunds if they spend less than 80 percent of the premiums they collect on medical care, rather than administrative expenses or profits.
In the case of the private option, any refunds issued would go to the Medicaid program, offsetting the private option's cost.
If the companies' expenses for enrollees' medical care are below projections, the companies could also have to refund some of the upfront payments they received to reduce enrollees' deductibles and copayments, the spokesman noted.
Representatives of Arkansas Blue Cross and Blue Shield and QualChoice Health Insurance said last week that it's too early to say how spending on enrollees' medical care will compare to projections, but they noted that those who enrolled early tended to have high costs.
John Ryan, chief executive of Centene Corp.'s Arkansas Health and Wellness solutions, agreed Thursday that it's "way too early" to say how enrollees' medical expenses will compare to projections. He noted that the company has had "a material amount of our membership come to us through the private option in the last 90 to 100 days."
"These are people that are new to the health insurance plan," Ryan said. "In many instances, they're new to health insurance as a whole."
Metro on 08/15/2014