An advisory group studying Arkansas' Medicaid program should explore alternatives that include giving up the more than $1 billion in federal funding the state receives annually to provide coverage to more than 200,000 low-income adults, Gov. Asa Hutchinson said Thursday.
"You might have to swallow hard there, but I think it is important that we look at options and create options" that don't involve the enhanced Medicaid funding that pays for coverage under the so-called private option, Hutchinson told members of the Governor's Advisory Council on Medicaid Reform during their first meeting.
Finding a solution that doesn't involve the federal funding "might be what is political reality," Hutchinson said.
"It might be a good solution for Arkansas, and we don't know exactly what's going to happen totally at the federal level down the road," he said.
In an executive order he issued Thursday, Hutchinson directed the council, headed by state Surgeon General Greg Bledsoe, "to explore and offer recommendations to modernize the Arkansas Medicaid programs, particularly in light of increasing general revenue expenditures and federal mandates and regulations."
According to a roster provided at the meeting at UAMS Medical Center in Little Rock, the group's 40 members include representatives of health care industry and advocacy groups ranging from Arkansas Advocates for Children and Families to the conservative group Americans for Prosperity.
Other members include state agency officials, UAMS Chancellor Dan Rahn and three "citizen representatives."
The executive order directs the council to provide recommendations to Hutchinson and "serve as a forum for stakeholder issues, concerns and ideas to be heard and to be communicated to the Legislative Task Force on Healthcare Reform."
The 16-member task force is studying options for replacing the private option after Dec. 31, 2016, when a federal waiver authorizing the program expires. In calling on the Arkansas Legislature to create the task force in January, Hutchinson cited both concerns about the private option's cost and opposition by some legislators and others.
As authorized under the 2010 Patient Protection and Affordable Care Act, the federal government is paying the full cost of extending Medicaid coverage to Arkansas 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.
The state provides the coverage primarily through the private option, which uses federal Medicaid funds to pay the premiums for plans on the state's health insurance exchange.
More than 205,000 Arkansans were enrolled in the private option as of March 31. An additional 24,000 newly eligible adults were assigned to the traditional Medicaid program because they were considered to have exceptional health needs, and 11,000 others had been approved for coverage but had not yet completed enrollment.
In 2017, Arkansas and other states that have expanded Medicaid will be responsible for paying 5 percent of the cost of covering the newly eligible adults. The states' share will then rise every year until it reaches 10 percent in 2020.
Under Arkansas' traditional Medicaid program, which covers low-income children, the elderly and the disabled, the state generally pays 30 percent of the cost, with the federal government picking up the rest.
According to estimates in January by Optumas, an actuarial consulting firm hired by the state Department of Human Services, Arkansas' share of the cost of covering the expanded Medicaid population in 2020 would be $175.9 million.
That cost would be offset by $75.8 million in savings from reduced spending in the traditional Medicaid program, $40.2 million in savings in providing care to the uninsured and $43.8 million in state premium-tax revenue generated from the Medicaid-funded private plans, according to the firm.
That would leave a net cost to the state of $16 million, the firm found.
Hutchinson said Thursday that the advisory council should focus on "expanding the range of options" for improving the state's Medicaid program and replacing the private option.
That could include continuing to use federal Medicaid expansion funds for an "innovative program" that would generate enough savings to cover the state's share of the cost of covering the expanded Medicaid population and that would be "sufficiently private sector-based, perhaps employer-based," Hutchinson said.
He noted that the council's members include Rep. Josh Miller, R-Heber Springs, who has consistently voted against funding for the state's expanded Medicaid program, and Sen. Missy Irvin, R-Mountain View, who voted to fund the program in 2013 and this year but against funding last year.
"Everybody comes to this council with firm ideas as to what we need to do, and sometimes you need to have your determined point of view and your convictions tempered with political reality," Hutchinson said.
State Department of Human Services Director John Selig, also a council member, credited changes in the way the state pays health care providers for helping slow the growth of spending in the traditional Medicaid program to less than 3 percent a year over the past three years, compared with increases of 6 percent to 10 percent in earlier years.
Within the next two weeks, he said, the state plans to solicit information from managed-care companies about whether they could improve how the state provides services to people with mental illness and the disabled.
The department also plans to solicit bids from companies that could help it identify savings by improving "payment integrity," Selig said. That could include cases in which the Medicaid program pays for a service that should have been covered by private insurance or another government program, he said.
Bledsoe, the surgeon general, referred to the 2010 book Where Good Ideas Come From by Steven Johnson. According to the book, Bledsoe said, most innovations in science and technology spring from incremental improvements.
"We're not asking you guys as a council to come up with some lightning bolt of an idea that quantum-leaps us 100 years ahead," he said.
Keith Vire, chief executive of the Arkansas Support Network, a Springdale nonprofit that provides services to the disabled, said that often when policymakers try to cut costs, "we hurt people."
"I want us to keep in mind that there are people who will not -- not only will they not thrive, but they won't live if they don't have the supports that we need to provide," said Vire, who also is president of the Arkansas Waiver Association, which advocates for the disabled.
The executive order issued Thursday replaced a March 12 order that created the council. Hutchinson issued Thursday's order to clarify language in the original one, Hutchinson spokesman J.R. Davis said.
In addition to Bledsoe, Selig, Rahn, Miller, Irvin and Vire, members of the council are Sen. Joyce Elliot, D-Little Rock; Rep. Vivian Flowers, D-Pine Bluff; Department of Health Director Nate Smith; Arkansas Minority Health Commission Director Micheal Knox; governor's office staff members Josh Curtis and Betty Guhman; citizen representatives Dr. Jack Sternberg of Hot Springs, Dr. Carl Johnson of Little Rock and Sandy Stroope of Harrison; Robin Raveendran of the Alliance for Health Improvement; David Ray of Americans for Prosperity; Herb Sanderson of AARP Arkansas; Carla Coleman of the American Academy of Family Physicians; Aimee Olinghouse of the American Academy of Pediatrics; Rich Huddleston of Arkansas Advocates for Children and Families; Jerry Mitchell of the Arkansas Association of Area Agencies on Aging; Angie Lassiter of the Arkansas Behavioral Health Council; Joe Thompson of the Arkansas Center for Health Improvement; Marcella Doderer of Arkansas Children's Hospital; Ray Hanley of the Arkansas Foundation for Medical Care; Rachel Davis of the Arkansas Health Care Association; Ray Montgomery of the Arkansas Hospital Association; David Wroten of the Arkansas Medical Society; Rhonda Finnie of the Arkansas Nurses Association; Mark Riley of the Arkansas Pharmacists Association; Billy Tarpley of the Arkansas Dental Association; Mary Leath of the Community Health Centers of Arkansas; Judy Watson of the Developmental Disabilities Providers Association; Darrell Pickney of the Families and Friends of Care Facility Residents; Nancy Elphingstone of the HomeCare Association of Arkansas; Dianne Skaggs of the Mental Health Council of Arkansas; Sylvester Smith of the National Federation of Independent Businesses; Kurt Knickrehm of the Arkansas State Chamber of Commerce; and David Deere of Partners for Inclusive Communities.
Metro on 05/01/2015