Arkansas' Medicaid director Monday submitted for federal approval proposals to establish "independence accounts" for enrollees in the private option and to limit their access to Medicaid-funded nonemergency medical transportation.
The proposals were included in a request to amend the federal waiver authorizing the private option, a program that uses Medicaid funds to buy coverage on the state's health insurance exchange for adults with incomes of up to 138 percent of the poverty level.
Also Monday, U.S. Sen. Orrin Hatch, R-Utah, and Rep. Fred Upton, R-Michigan, sent a letter to the administrator of the Health and Human Services Department's Centers for Medicare and Medicaid Services requesting more information about how the federal agency will ensure that the private option won't cost more than traditional Medicaid.
They wrote that a report by the Government Accountability Office, requested by the congressmen and released last week, "raises serious concerns about the cost-effectiveness and budget neutrality of Arkansas' demonstration program."
"While we are supportive of states' ability to use premium assistance programs to create innovative designs for individuals in their state, we also have a responsibility to ensure that federal dollars are accounted for in a transparent and accurate manner," the federal lawmakers wrote. "We remain troubled over CMS' apparent disregard of the important details of Arkansas' expansion proposal."
The private option was created under legislation passed last year as the primary means of expanding eligibility for Medicaid-funded coverage to an estimated 250,000 Arkansans.
The income cutoff of 138 percent of the poverty level translates to $16,105 a year for an individual or $32,913 for a family of four.
For most of the newly eligible adults who are approved for coverage, the state Medicaid program pays the enrollee's premium for a plan on the exchange and provides additional subsidies that reduce or eliminate the enrollee's out-of-pocket spending for medical care.
Enrollees who are determined to have exceptional health needs -- about 10 percent of the total -- are covered under the traditional fee for service program.
Under the terms of the waiver, the federal government will pay the full cost of the private option through 2016 as long as the cost stays below a limit based on an estimate of the cost of expanding the traditional Medicaid program.
The report by the Government Accountability Office questioned how the spending limit was calculated. It noted that Arkansas officials assumed that, under a traditional Medicaid expansion, Arkansas would have had to increase its payment rates to doctors and other health care providers to the same level as commercial insurance rates.
Officials with Arkansas' Medicaid program and the Health and Human Services Department have defended the cost estimates, with Arkansas officials saying Medicaid recipients have historically had trouble finding doctors willing to accept them as patients.
State Sen. David Sanders, R-Little Rock, and a sponsor of the law creating the private option, noted that Utah Gov. Gary Herbert, also a Republican, has proposed expanding his state's Medicaid coverage under a program similar to the private option.
Michigan expanded Medicaid through its managed care program.
Sanders also noted that a 1994 consent decree in a lawsuit filed by doctors and other providers requires a federal judge to approve changes in the Arkansas Medicaid program's reimbursement rates.
"The GAO rather irresponsibly passed judgment on Arkansas without fully understanding the legal dynamics and market dynamics that would exist with an expansion," Sanders said.
The special language passed by the state Legislature this year requires the independence account program and the limits on nonemergency transportation to be in place by Feb. 1 of next year. Medicaid officials hope to start the independence account program by Jan. 1.
The independence account program would encourage enrollees with incomes greater than 50 percent of the poverty level to make monthly payments, ranging from $5 to $25, to help pay the cost of their medical care.
The amount of the encouraged contribution would vary according to income.
For each contribution, the enrollees would accumulate up to $15 in an account, which could be used to pay a premium for a non-Medicaid insurance plan when the enrollee leaves the private option. The balance in the account would be capped at $200.
State officials had originally planned for the enrollees to accumulate $15 a month for each monthly contribution by the enrollee, regardless of the size of the enrollees' contribution.
Officials with the Centers for Medicare and Medicaid Services, however, told the state that Arkansas would be responsible for half the cost of the state's match if the state contribution was more than what the enrollee paid, Medicaid Director Dawn Stehle said.
Under the current proposal, federal funds will pay the full cost of the state's contributions, she said.
Enrollees who make a contribution for a given month would not have to pay out of pocket for their medical care for that month. Currently, enrollees have copayments for some services -- $8 for a doctor's office visit, for instance.
Human Services Department spokesman Amy Webb said the department is working on a contract in which Little Rock-based Datapath Administrative Services would administer the accounts.
She and Stehle declined to say how much the Medicaid program expects to pay under the contract, saying it hasn't been finalized.
Arkansas would be responsible for half the administrative costs, and the federal government would pay the other half.
Because of the need to quickly implement the program, Medicaid officials were encouraged by the Department of Finance and Administration's Office of Procurement to award the contract without competitive bidding and received the office's approval to do so, Stehle said.
She said she expects the contract will be presented to the Legislative Council's Review Subcommittee next month.
In addition to authorizing the independence accounts, the waiver amendments limit private-option enrollees to eight Medicaid-funded trips to or from medical appointments each year.
Because private insurance plans don't cover nonemergency medical transportation, the Medicaid program pays for the service directly for private-option enrollees as a "wraparound" benefit.
Private-option enrollees will be able to request additional trips "through an extension of benefits process," according to the proposal.
The Centers for Medicare and Medicaid Services is required to decide on the state's request within 90 days, Stehle said.
"We hope we'll hear something soon," she said.
Metro on 09/16/2014