Enrollees in the state’s private option have been slightly older than expected, resulting in the state paying higher than expected premiums, the state’s Medicaid director said Tuesday.
The average payment to insurance companies for each enrollee last month - $483.15 - was above the maximum average annual cost per enrollee set in a federal waiver allowing Medicaid coverage to be provided through private insurance plans.
But state Medicaid Director Andy Allison said in an email that the state won’t necessarily end up owing money to the federal government to cover the difference.
“If the age mix of enrollees continues to be slightly higher than predicted, the reason we are slightly above the average premium target in February, we will simply get the waiver budget cap changed, which the waiver terms specifically allow for,” Allison said in the email.
Under the private option, most adults with incomes of up to 138 percent of the federal poverty level - $16,105 for an individual or $32,913 for a family of four, for instance - can sign up for a private plan on the state’s health insurance exchange and have the premium paid by Medicaid.
The premiums vary by age, with older people paying more.
Of the 87,000 people enrolled in the plans as of Feb. 6, the latest date for which demographic information has been released, about 55 percent of enrollees were younger than 40, while less than 25 percent were 50 or older.
The Medicaid program also makes additional payments to the insurance companies to reduce or eliminate any required out-of-pocket spending by the enrollee for medical expenses. Through “wrap-around” coverage, the Medicaid program also pays for certain services required by federal Medicaid rules that are not covered by the private plans.
In its application to the U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services for the waiver allowing the private option, the state Department of Human Services estimated the total monthly cost per enrollee in 2014 would be $472.19.
That’s the same amount that the Human Services Department estimated would be required to provide coverage under the traditional fee-for service Medicaid program.
In granting the waiver, the federal agency limited the average monthly enrollee cost for 2014 to $477.63. That limit rises to $500.08 in 2015 and $523.58 in 2016.
Arkansas’ first payments to the insurance companies, for about 59,000 Arkansans who had signed up for coverage as of Jan. 1, averaged $476.48 per enrollee, Human Services Department officials have said.
The payment for February coverage totalled $33.8 million on behalf of 69,905 enrollees, or an average of $483.15 per enrollee.
As long as Arkansas’ costs are under the limits set in the waiver’s terms, the federal government will pay the full cost of the program through 2016.
If Arkansas’ cost exceeds the limits, it will owe the difference to the federal government at the end of the three years. But the terms of the waiver also allow the state to request that the cap be adjusted if it has information indicating the spending caps“may underestimate the actual costs of medical assistance for the new adult group.”
In a report Tuesday, Jonathan Ingram, research director for the conservative Foundation for Government Accountability highlighted the higher-than-expected cost.
“Given the inherent unpredictability of the Private Option’s design, it is likely Arkansas will continue to exceed this cap in the coming months and years,” Ingram wrote.
Allison has said the state can end the private option if it appears it will be in danger of owing money to the federal government.
The state will get an idea of the cost for next year when insurance companies file their proposed premiums with the state Insurance Department. The companies are expected to file their plans with the department by May 30.
Front Section, Pages 6 on 03/05/2014