Health hub slashes its paycheck from state

A state agency projected in June that it would earn $18 million from the state this year for helping manage part of the Arkansas Works Medicaid program -- more than five times what the agency now says it expects to earn all the way through the end of next year, records show.

In a June 23 report to the federal government, Arkansas Health Insurance Marketplace officials also projected earnings of more than $9 million in 2017 and 2018 each and more than $8 million in 2019 and 2020 each for its work on the Medicaid project.

But at a Wednesday meeting of the Arkansas Health Insurance Marketplace Legislative Oversight Committee, marketplace Director Cheryl Gardner said the agency expects to earn $3.2 million on the project through the end of 2017. She didn't mention the earlier projections or the report to the federal government.

The payments would come from the Department of Human Services under a new contract that would pay the marketplace agency to manage a program to help small businesses provide Medicaid-supported insurance to low-income employees.

During Wednesday's meeting, Sen. Jason Rapert, R-Bigelow, said lawmakers were told when they created the Health Insurance Marketplace in 2013 that it would not receive state tax money.

He also asked Gardner whether her agency expected to receive "tens of millions of dollars" from the agreement with the Human Services Department.

Gardner said the agency didn't, but she didn't mention the earlier projections.

On Friday, Alicia McCoy, a marketplace spokesman, said the estimated cost of the project has dropped since the report was submitted to the federal government.

"AHIM used the best information we had at the time to develop cost estimates at [the state Department of Human Service's] request," McCoy said. "Since that time, DHS and AHIM have been able to successfully work together to identify ways to reduce the scope and, thereby, the cost."

The Health Insurance Marketplace's board will review an updated version of the report with revised projections on Wednesday, she said.

If the federal government approves, the marketplace's role in the program would begin next year. It is a key part of the Arkansas Works law the Legislature passed this year to make changes to the so-called private option Medicaid program that covers more than 258,000 Arkansans.

The marketplace released the June revenue estimate report to the Arkansas Democrat-Gazette on Friday afternoon in response to a request on Thursday under the Arkansas Freedom of Information Act.

A tentative agreement, released to the Democrat-Gazette by the state Human Services Department this week, calls for the department to pay the Health Insurance Marketplace $135,200 in October and up to about $2.8 million during the first half of next year.

On Friday, Rapert said he's disappointed that the marketplace director didn't mention the June progress report during this week's meeting or provide committee members with copies of the report or the agreement with the Human Services Department.

He had specifically asked Gardner about the report in Wednesday's committee meeting: "Have you not submitted some things on this discussion in writing that have some projections about your contracting?"

On Friday, he said he was "concerned that AHIM personnel knew exactly what they filed, they knew exactly the tens of millions of dollars that I was talking about, but yet they acted as if they were not understanding the question and could not articulate that."

"That's a problem for me because it shakes my trust that we're getting all the information we need to properly fulfill our duties," he said.

Rapert said he had been shown the projections by a source, whom he declined to name, before the meeting.

The day after, he published several pages from the report through Twitter.

"What we were told in committee yesterday definitely is NOT what was reported in the filing with the federal government," Rapert tweeted to radio talk show host Dave Elswick.

McCoy didn't respond to an emailed question about why Gardner didn't mention the June report during the committee meeting.

On Friday, Rapert also questioned why the Human Services Department didn't seek bids from other entities on the Arkansas Works project.

Human Services Department spokesman Amy Webb said her department didn't have time to competitively procure a contract before Jan. 1, when the department hopes to begin enrolling businesses in the program.

Gov. Asa Hutchinson signed the law creating Arkansas Works on April 8. Human Services Department officials didn't complete a detailed plan for the program the Health Insurance Marketplace will manage until June, Webb said.

"The procurement process at a minimum is six months, and really often longer than that, and you really can't start the process until you have a detailed and designed plan," Webb said.

She added that the Health Insurance Marketplace was "a natural fit."

"They know the Arkansas insurance market, and they know small businesses, so it really worked out well for us," Webb said.

Sen. David Sanders, R-Little Rock, and chairman of the oversight committee, said he has requested a copy of the June report to distribute to the committee.

He noted that the agreement with the Human Services Department will be reviewed by the Legislative Council and it's Performance Evaluation and Expenditure Review Subcommittee.

"It's going to receive a high level of scrutiny, and quite frankly, should," he said.

The agreement, dated Aug. 17, calls for the Health Insurance Marketplace to verify the eligibility of employers and employees and help them enroll, dispense the Medicaid subsidies to employers, operate a call center to answer questions from employers and employees, and establish an internet portal for employers and employees.

The agreement also says the Human Services Department may direct the Health Insurance Marketplace to market the program to insurance agents.

Gardner said she will present the agreement to her agency's board for its approval next week.

Using money from a $99.9 million federal grant, the Health Insurance Marketplace set up a health insurance exchange for small businesses last year.

But, at the request of Hutchinson, the agency has held off on plans to spend millions more establishing an Arkansas-based exchange for individual consumers.

Instead, the Health Insurance Marketplace plans to take over responsibility for the individual consumer exchange while continuing to rely on the federal enrollment system.

Under the 2010 Patient Protection and Affordable Care Act, exchanges in every state allow consumers and small businesses to shop for coverage and apply for subsidies to help pay for it.

Money from the grant can't be spent on operations next year, but the Health Insurance Marketplace expects to receive about $5 million from a fee it will begin collecting next year on plans sold on the exchanges as soon as Dec. 1.

The fee will be equal to 3 percent of the plans' premiums. About half will go to the federal government and the rest will go to the Health Insurance Marketplace.

That fee will replace a 3.5 percent fee now collected by the federal government.

In the June 23 report, the Health Insurance Marketplace said it expected to collect a 2 percent fee, with an additional 1.5 percent fee going to the federal government.

The report says Health Insurance Marketplace officials expect the fee and money from the Medicaid project to be enough to pay for the agency's operating expenses.

"Possible additional revenue streams include selling ancillary projects via the AHIM Marketplace, selling advertising on the website, or other methodologies to be determined at a future date," the report says. "In addition, AHIM will consider cost-cutting measures as needed in order to ensure that AHIM's operations are revenue neutral."

At the oversight committee meeting on Wednesday, Gardner said the Medicaid contract with the Human Services Department isn't essential to her agency's financial sustainability.

"It's not a moneymaker for us," Gardner she said.

A Section on 09/17/2016

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