Because of the rising cost of prescription drugs, a consulting firm hired by the state now expects the Arkansas Works program to cost about $9.4 billion over the next five years, about $300 million more than the consultants predicted in an estimate published in May.
The revised projections were included in a formal request the state submitted Thursday to U.S. Secretary of Health and Human Services Sylvia Burwell to extend the waiver authorizing the private option, which would officially become known as Arkansas Works, through 2021.
The application also seeks approval for changes that Gov. Asa Hutchinson has said will encourage enrollees to stay employed and take responsibility for their health care.
Those changes, which would take effect Jan. 1 if the waiver is approved, include:
• Charging premiums of up to $19 a month to enrollees with incomes above the poverty level.
• Providing coverage to some enrollees through subsidized employer plans and offering an extra benefit, such as dental coverage, as an incentive for enrollees to pay premiums and receive annual wellness exams.
• Eliminating retroactive coverage for enrollees to "better align" the program with commercial insurance coverage, according to the extension application.
The Medicaid program now covers up to 90 days of medical expenses incurred by an enrollee before the date of the initial application.
The state Department of Human Services said in a draft waiver extension request released in May that coverage under Arkansas Works would begin when an application is submitted.
In the final request submitted Thursday, it clarified that coverage would begin on the first day of the month when an applicant applies for coverage.
Eliminating retroactive coverage has drawn objections from some health care industry and advocacy groups who say it could leave patients saddled with debt and providers with unpaid bills.
The department stuck by the proposal, however, saying in the extension request that "the State believes that the need for retroactive eligibility is limited."
State Human Services Department spokesman Amy Webb said in an email that discussions with federal officials about eliminating the retroactive coverage have been "positive so far," but that the officials have raised questions about the capabilities of the state's computerized enrollment system and "could put conditions on this aspect of the request."
In a letter to Burwell, Hutchinson called Arkansas Works "a new approach to health coverage for Arkansans" that would build on the success of the private option, the common name for the expansion of Medicaid approved by the Legislature in 2013.
"We appreciate the longstanding partnership with your department, and we look forward to your continued support as we develop innovative approaches to providing high quality coverage and encouraging progression up the economic ladder," Hutchinson wrote.
The department expects the application to be approved by this fall, Webb said.
Under the private option, the state uses Medicaid funds to buy coverage on the state's federally run health insurance exchange.
The state created the program as a primary way of extending Medicaid coverage to adults with incomes of up to 138 percent of the poverty level: $16,394 for an individual, for instance, or $33,534 for a family of four.
More than 238,000 Arkansans had completed enrollment program as of March 15.
The federal government has paid the full cost of the expanded Medicaid program, including the private option, since the coverage started in 2014.
Next year, Arkansas will be responsible for 5 percent of the program's cost.
The state's share will then grow every year until it reaches a maximum of 10 percent in 2021.
If federal officials approve the waiver extension, its terms will require the state to pay extra if the total cost of the program exceeds an estimate of what coverage under the traditional, fee-for-service Medicaid program would have cost.
The state's waiver request estimates that traditional Medicaid coverage would cost about $339 million more over five years than coverage under the private plans.
Arkansas' share of the cost of Arkansas Works next year is expected to total $79.5 million, an increase of about $1.3 million from what Scottsdale, Ariz.-based Optumas, an actuarial consulting firm hired by the Human Services Department, predicted in the draft extension request released for public comment on May 18.
Over five years, Arkansas' share is expected to total $730 million, about $25 million more than the draft extension request's estimate.
The earlier estimates didn't account for double-digit percentage increases in prescription drug costs experienced by states across the country, the Human Services Department said in the revised request.
The revised figures predict that per-enrollee drug costs will increase 11 percent next year, 9.5 percent in 2018, 7.75 percent in 2019, 6 percent in 2020 and 5 percent in 2021.
Other per-enrollee costs are expected to increase 4.5 percent each year, according to the application.
The total cost also accounts for an estimated 2.5 percent annual growth in enrollment.
The cost is expected to grow at the same rate under either Arkansas Works or traditional Medicaid, but the overall cost of Arkansas Works is predicted to be lower because the costs of the private option have been below the spending cap under the current waiver.
Arkansas' share of the cost during the fiscal year that begins today and ends June 30, 2017, is expected to be $42 million, Webb said.
The money will come from state taxes on insurance premiums collected from private option plans, state general revenue and "future savings from traditional Medicaid as we make reforms."
Marquita Little, health care policy director for Arkansas Advocates for Children and Families, said she's disappointed that the Human Services Department still hopes to eliminate retroactive coverage for enrollees.
She also objected to a request by the department to eliminate Medicaid-funded nonemergency medical transportation for enrollees who receive subsidized, job-based coverage through Arkansas Works.
The department responded in the extension request that most people with such coverage already have access to transportation, since they "need transportation to get to and from work."
Little said the state should publicly release details of its plan to educate private-option enrollees about the changes under Arkansas Works.
She cited the confusion that ensued last year, when the department started an effort to check the incomes of private option enrollees and other Medicaid recipients who had been enrolled for at least a year.
That effort resulted in the termination of coverage for tens of thousands of enrollees, including some whose coverage was restored after they belatedly submitted pay stubs or other records that had been requested by the department.
"We can't handle another situation as difficult as what we experienced with that," Little said.
A Section on 07/01/2016