State legislators get bills to alter ‘private option’

Proposals address subsidies, rules on incentive benefits

Arkansans enrolled in the state’s expanded Medicaid program would be required to visit doctors at least once a year to qualify for “incentive benefits” under draft legislation that legislators got their first look at this week.

The 13-page bill would implement changes that Gov. Asa Hutchinson has proposed as part of what he and supporters call the Arkansas Works program.

The draft legislation also indicates that subsidies for employer-sponsored insurance would initially be available only to businesses with 50 or fewer employees.

But the bill directs state officials to “explore and seek any necessary waivers or other authority necessary” to help low-income Arkansans enroll in coverage offered by larger employers. The mentioned waivers refer to exemptions to federal rules the state would have to seek.

“There’s some concern. What if Wal-Mart or J.B. Hunt or one of these companies with thousands of employees who might be eligible in that income band all of a sudden began to participate and asked the state to cover all of those wraparound costs? It could get expensive very quickly,” said Sen. Jim Hendren, R-Sulphur Springs, who is listed as a sponsor of the draft bill.

Making the employer subsidies available is “going to have to be done gradually and in a way that doesn’t bankrupt the state,” he said.

Hutchinson spokesman J.R. Davis said in an email that “larger companies don’t need the help” in providing employer-sponsored cover-

age.

Later Thursday, Hendren also released drafts of legislation presenting alternatives for overhauling parts of the traditional Medicaid program.

Under one bill, the state would pay two or more managed-care companies a fixed amount per recipient to provide Medicaid benefits to the developmentally disabled and mentally ill.

The other bill would direct state officials to hire companies to help reduce the cost of coverage for those populations, but with the state still paying health care providers directly, under a “managed fee for service” approach.

The Legislature is to decide on the changes in a special session to begin April 6.

Continued funding for the expanded Medicaid program beyond June 30 also will require approval of a three-fourths majority of lawmakers during the fiscal legislative session, which begins April 13.

Authorized by the federal 2010 Patient Protection and Affordable Care Act, and approved by the state’s Republican-controlled Legislature and Democratic Gov. Mike Beebe in 2013, the expansion of Medicaid extended coverage to Arkansans 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.

Most of the more than 267,000 Arkansans enrolled in the program are covered by private plans purchased with Medicaid funds under the so-called private option.

Hutchinson’s proposed changes include charging premiums of about $19 a month to enrollees whose incomes are above the poverty level, subsidizing some enrollees’ coverage through employer plans and referring unemployed enrollees to job-training programs.

Employers would be eligible for subsidies if their plans are deemed “cost-effective” and they are willing to submit claims and enrollment information to the Arkansas Department of Insurance, under the proposed legislation.

The Medicaid program would cover part of the employees’ premium and outof-pocket costs for medical care, Davis said.

Under the legislation, state officials will also explore seeking the authority to offer financial incentives to participating employers.

The legislation also directs the Department of Human Services to seek a waiver from the U.S. Department of Health and Human Services to allow the state to stop providing retroactive coverage to those covered under Medicaid expansion.

Currently the program covers medical expenses incurred up to 90 days before enrollment.

Sen. Keith Ingram, D-West Memphis, said he’s concerned about eliminating that coverage.

“I understand, on one hand, what the governor is trying to do,” Ingram said. “But if somebody is in a car wreck, and they’ve not signed up for the private option and they’re in a hospital for two or three days, that individual ought to be able to go back. … There should be some [retroactive coverage] whether it’s a week or 10 days.”

Ingram said he didn’t see anything in the draft bill that was a “deal breaker” that would cause Democrats in the Senate to oppose the legislation, but plenty of Democrats would have questions similar to his.

In addition to having an annual wellness exam, Arkansas Works enrollees would have to pay their premiums to qualify for the “incentive benefits,” which Davis said could include dental and other benefits.

Those who fail to pay their premiums for three months would lose the extra benefits and incur a debt to the state, but they wouldn’t be kicked off the program.

The extra benefits would be restored once the enrollee caught up on the premium payments.

The cost of providing the extra benefits hasn’t been determined and will depend on how many enrollees qualify for it, Davis said.

Like the 2013 legislation creating the private option, the draft Arkansas Works bill specifies that the program will end if federal funding is reduced beyond the levels spelled out in the Affordable Care Act.

Next year, the federal share will decrease from 100 percent to 95 percent. It will then fall each year until it reaches 90 percent in 2020.

Rep. Charlie Collins, R-Fayetteville, said Hutchinson is dotting his i’s and crossing his t’s in his negotiations with the federal government on the details of Arkansas Works.

“The governor has pursued several things with Secretary [of Health and Human Services Sylvia] Burwell, and obviously we need final approval from Washington on a couple of those different things,” said Collins, who along with Hendren is a chairman of a legislative task force that expressed support for continuing the expanded Medicaid program.

Collins also is listed as a sponsor of the draft Arkansas Works bill.

“I think, frankly, we wish [President Barack Obama’s] administration agreed with us more,” Collins said. “For example, we’d like to make work requirements,” instead of just referring enrollees to job-training programs.

Sen. David Sanders, R-Little Rock, a sponsor of the private-option legislation, said the release of the draft Arkansas Works bill is “a crucial point in the process,” but several details have yet to be spelled out.

“There are still a significant number of open questions as to how this would operate administratively,” Sanders said.

House Minority Leader Michael John Gray, D-Augusta, said he and fellow House Democrats also had some logistical questions about how the new program would operate.

“It’s not the [House Democrats’] position that we’re against Arkansas Works, but I don’t think we have a position where we’re supportive yet,” Gray said. “We want to make sure the best product for the people of Arkansas is being put forward.”

Hutchinson has proposed hiring the managed-care companies as a way of creating savings in the traditional Medicaid program to help pay for the expanded part of the program.

The draft legislation would require the companies to establish community advisory committees that include advocates and Medicaid recipients. The companies also would have to reward healthy behavior and offer plans that don’t reduce the types of services and benefits offered by the state.

The companies would be prohibited from limiting medically necessary primary-care doctor visits or restricting the recipient’s choice of primary-care doctor.

The managed-care firms also would be required to pay providers according to “the prevailing Medicaid fee schedule, unless mutually agreed upon by the provider” and would have to pay 99 percent of “clean” claims within 30 days.

A portion of the savings generated by the companies, as well as of the premium taxes collected on the managed-care plans, would be used to reduce the number of people with developmental disabilities who are on a waiting list for home-based services, such as help with daily living tasks. About 3,000 people are on the list.

Nursing-home care also would fall under managed care if a proposal by the nursing-home industry failed to generate promised savings — at least $50 million a year for at least two years between Jan. 1, 2017, and Dec. 31, 2019.

The competing draft bill would also focus on the developmentally disabled and mentally ill but would hire one or more companies to help coordinate care and provide other administrative services with the state still paying health care providers directly.

If a company failed to deliver promised savings, it would be subject to financial penalties.

Both proposals would exempt the state’s human development centers, which serve the developmentally disabled. A committee of the Health Reform Legislative Task Force is expected to study possible changes to the centers.