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Arkansas agency backs health insurer's bid for smaller rate rise

by Andy Davis | September 29, 2016 at 5:45 a.m.

The Arkansas Insurance Department has recommended approval of a request by QualChoice Health Insurance to increase the rates for plans offered by the company on the state's insurance exchange by less than the amount the department approved last month, a department spokesman said Wednesday.

Under the proposal, the rates for the Little Rock-based company's plans, covering about 60,000 Arkansans, would increase by an average of about 11 percent, instead of 13.5 percent, in 2017, Insurance Department spokesman Ryan James said.

The smaller rate increase, James said, would allow QualChoice to continue to participate in the private option, which uses Medicaid funds to buy coverage in exchange plans for low-income Arkansans.

Since the premiums for QualChoice plans tend to be higher than those of other participating insurance companies, allowing QualChoice to continue offering private-option plans likely would mean higher costs for the state's Medicaid program.

But even if the smaller increase is approved by the federal Centers for Medicare and Medicaid Services, QualChoice's plans will be too expensive to qualify as private-option plans in two of the state's coverage regions, the company's chief executive, Mike Stock, said.

He said about 10,000 private-option enrollees are in QualChoice plans in the two regions, which include 18 counties in western and southwestern Arkansas.

Amy Webb, a spokesman for the state Department of Human Services, said private-option enrollees in those two regions will be given an opportunity to enroll in a plan offered by another participating insurance company before Jan. 1.

Enrollees who don't choose a qualifying plan will be assigned automatically to one, she said.

Arkansas created the private option in 2013 as a primary way of expanding Medicaid 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 294,000 Arkansans were enrolled as of Aug. 31.

The enrollees make up more than 90 percent of the customers in QualChoice plans in the individual market, Stock said.

To be available to private-option enrollees, a company's plans must be offered on the state's insurance exchange and provide only benefits that are required by state law and the 2010 Patient Protection and Affordable Care Act.

The plan also must be the cheapest or second-cheapest plan that meets the requirements in its coverage region or have a monthly premium that is within 10 percent of the premium for the region's second-cheapest plan.

This year, QualChoice, Arkansas Blue Cross and Blue Shield, and Centene Corp. of St. Louis have plans in each region of the state that meet the requirements.

Minnetonka, Minn.-based United Health Group has plans that meet the requirements in the state's central region, which includes 13 counties.

United does not have plans that are available to private-option enrollees in the state's other six regions, because its premiums in those regions are too high.

The company has announced it will stop offering plans on health insurance exchanges in Arkansas and several other states next year.

Stock said it wasn't feasible for QualChoice to keep its premiums low enough in the state's western and southwestern regions to meet the private-option requirements.

He said the company asked to modify its requested rate increase because of a "clerical error" that was discovered in the calculations the company used to set the rates.

James said the error, combined with Arkansas Blue Cross and Blue Shield rates that were lower than expected in some areas, resulted in the premiums for QualChoice's plans to be too high to meet private-option requirements.

"They basically priced themselves out of the market," James said.

During a meeting Wednesday held via phone conference, the Arkansas Health Insurance Marketplace board of directors, which is taking over responsibility for the state's exchange for individual consumers, granted approval for the Insurance Department to submit the revised rates to the Centers for Medicare and Medicaid Services.

James said he hadn't heard late Wednesday afternoon whether the federal agency had approved the requested change.

In five of the state's seven coverage regions, the premiums for QualChoice's private-option plans this year are higher than those of the other participating companies.

In the central and southeastern regions, the premiums for QualChoice plans are the second-highest. United has the highest premiums in the central region. The premiums for national Blue Cross and Blue Shield Association plans, which are offered by Arkansas Blue Cross and Blue Shield, are the highest in the southeastern region.

And even the reduced rate increases requested by QualChoice are bigger than the increases that have been approved for Arkansas Blue Cross and Blue Shield, and Centene.

Arkansas Blue Cross and Blue Shield initially requested an increase of 14.7 percent for its plans, including those it offers on behalf of its national affiliate, but agreed last month to a 9.7 percent increase.

Centene initially proposed an 8.1 percent increase but was approved for a 4 percent increase.

QualChoice initially requested a 23 percent increase before agreeing to the 13.5 percent increase last month.

The federal government has paid the full cost of the expanded portion of Arkansas' Medicaid program, including the private option, since the expansion took effect, but Arkansas will start paying a portion of the cost next year.

The state's share will start at 5 percent and increase every year until it reaches 10 percent in 2020.

In the fiscal year that ends June 30, Arkansas' share is expected to be about $42 million, Human Services Department officials have said.

Arkansas has applied for federal approval for changes to the private option that Gov. Asa Hutchinson has said would encourage enrollees to stay employed and take responsibility for their health care.

The program would become known as Arkansas Works when the changes take effect Jan. 1.

A Section on 09/29/2016

Print Headline: Agency backs insurer's bid for smaller rate rise


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