A chairman of a legislative panel exploring changes to Arkansas' Medicaid program said Tuesday that he supports hiring managed-care companies to reduce the cost of services to the program's most expensive clients: the elderly, disabled and mentally ill.
Rep. Charlie Collins, R-Fayetteville, said the question of whether to hire such companies is the main point of disagreement on the Health Reform Legislative Task Force, which is expected to present its recommendations next month.
A consultant hired by the task force said in October that the state could save $2.4 billion in state and federal funds between 2017 and 2021 by hiring managed-care companies to pay for services for the entire traditional Medicaid program.
"I think we've essentially discarded the full managed-care model," Collins said during Tuesday's task force meeting.
He and some other members favor a "hybrid approach" that would have the state hire managed-care companies to pay providers that serve recipients with expensive medical needs, such as nursing-home residents and the disabled.
The companies would be able to reduce costs more than the state could and would have a better chance of succeeding in changing how providers are paid, Collins said.
But Rep. Michelle Gray, R-Melbourne, and three other task force members -- along with Sen. Missy Irvin, R-Mountain View -- favor a different approach, Gray said.
The group has crafted a proposal that would seek to incorporate Gov. Asa Hutchinson's proposed changes to the state's private-option Medicaid expansion while cutting costs in the traditional Medicaid program and keeping the state in charge of paying providers.
"To me, managed care is not an option because it will directly hurt patient care," Gray said.
The Legislature formed the task force at Hutchinson's request earlier this year to recommend changes to the Medicaid program, including a replacement for the private option.
Under the private option, the state uses Medicaid funds to buy coverage through the state's federally run health insurance exchange for more than 180,000 Arkansans.
The state created the program in 2013 as a primary way to extend health coverage to adults with incomes of up to 138 percent of the federal poverty level: $16,242 for an individual, for instance, or $33,465 for a family of four.
Hutchinson has said the changes recommended by the task force should cut the state's annual Medicaid spending by at least $50 million -- enough to pay for the state's share of the private option in 2021, when it will be responsible for 10 percent of the cost.
Because the federal government provides about 70 percent of the funds for the traditional Medicaid program, reducing the state's share by $50 million would require reducing overall spending by $167 million.
Including state and federal funds, Arkansas' Medicaid budget for the fiscal year that ends June 30 is about $7.3 billion.
In an Oct. 1 report to the task force, The Stephen Group, a Manchester, N.H.-based consulting firm, said that Arkansas could save about $480 million a year from 2017-2021 by paying managed-care companies a fixed amount per Medicaid recipient and making the companies responsible for paying for recipients' medical care.
If Arkansas hired such companies for just the high-cost populations, such as the elderly and disabled, it would save almost $2 billion, or about $391 million a year, over the same period, according to the firm.
If the state implements its own payment changes without hiring managed-care companies, the state could save $708 million, or about $142 million a year, the firm said in its report.
John Stephen, managing partner with The Stephen Group, said Tuesday that the estimates were based on results from Louisiana, which used managed care for some recipients and paid directly for services for other recipients under a "shared savings model" that rewards providers for keeping patients' medical costs low.
His firm hasn't found a state that has cut costs more by implementing its own payment changes than it could by hiring managed-care companies to pay providers, he said.
"If you find one, I'd like to see it," he told task force members.
Hutchinson has said he supports hiring managed-care companies to pay for services for "high-cost populations," such as the elderly and disabled.
For children, pregnant women and other recipients, Hutchinson said he wants to continue with efforts the state has already started to reward providers that keep patients' costs low.
John Selig, director of the Department of Human Services, has said he also supports hiring managed-care companies to pay for services to high-cost populations because the companies would have more flexibility than the state in changing how providers are paid.
Gray, who is in charge of the finances at her husband's family medical clinic, said the proposal she drafted along with Irvin and task force members Rep. Justin Boyd, R-Fort Smith, Rep. Joe Farrer, R-Austin, and Rep. Deborah Ferguson, D-West Memphis, would expand the state's patient-centered medical home program, in which doctors receive upfront payments for implementing measures aimed at better coordinating patient care.
The program also rewards doctors who keep patients' overall medical costs low.
Under that approach, "the physician and the patient would drive the health care and the direction of the health care, instead of an out-of-state, third-party company that doesn't understand the ins and outs of each individual patient," Gray said.
Stephen, whose firm reviewed the legislators' proposal, said the proposed changes would not result in savings beyond what the firm estimated the state could achieve without hiring managed-care companies.
If the state does hire managed-care companies, it can specify rates for providers and include protections for patients in its contracts, he said.
The private-option changes proposed by Hutchinson include subsidizing coverage through employer plans for some enrollees, requiring certain enrollees to pay insurance premiums of up to 2 percent of their incomes, referring unemployed enrollees to job programs and strengthening procedures for verifying recipients' eligibility for benefits.
Metro on 11/25/2015