Source: Robert B. Leflar, University of Arkansas Research Paper No. 15-5, April 17, 2015
from the abstract:
Spurred by the Supreme Court’s decision in NFIB v. Sebelius, health reform federalism is flourishing as states experiment with various means of implementing the Affordable Care Act. Implementation has been slow, however, in most states with political environments hostile to “Obamacare,” even though those states have much to gain. Among the red states, Arkansas stands out as an exception.
This essay relates the story of two of Arkansas’s innovative health reform initiatives: the “private option” for Medicaid expansion, extending private health insurance to the state’s lower income residents, and the Arkansas Payment Improvement Initiative, re-orienting provider incentives away from wasteful fee-for-service payment structures toward a more cost-effective value-based structure. Early results are promising: the “private option” has resulted in the highest percentage increase in insurance coverage of any state, and preliminary tracking results from the Arkansas Payment Improvement Initiative show cost savings and quality improvements across several categories of health care interventions. The essay explains how the two initiatives work, and describes the delicate political process by which the state’s political and health policy leaders – encompassing Democrats and Republicans, Medicaid officials and private insurers, hospitals and physicians’ groups – collaborated to take advantage of opportunities for state-based innovation.
Five keys in the Arkansas private option debate
Source: David Ramsey, Arkansas Times, January 21, 2015
Well, here we go again. The legislature is once again ready to debate the private option – the state’s unique version of Medicaid expansion, which uses funds available via the Affordable Care Act to purchase private health insurance for low-income Arkansans. Gov. Asa Hutchinson will take a long-awaited position on the policy in a speech at UAMS tomorrow morning. Then it will be up to the legislature. Health insurance for more than 200,000 Arkansans is at stake. Here are some keys to remember as the debate unfolds tomorrow and in the coming weeks.
Arkansas’ model Medicaid experiment in jeopardy
Source: Andrew DeMillo, Associated Press, December 17, 2014
Arkansas became the first Southern state to expand its Medicaid program in a way that many Republicans found acceptable. The state bought private insurance for low-income people instead of adding them to the rolls of the Medicaid system, which GOP lawmakers considered bloated and inefficient. Now Arkansas could be on the brink of another distinction: becoming the first to abandon its Medicaid expansion after giving coverage to thousands of people. A wave of newly elected Republican lawmakers who ran on vows to fight so-called “Obamacare” — including the state’s “private option” Medicaid expansion — has raised doubts about the future of a leading model for conservative states to gradually adapt to the federal health care law. Arkansas’ incoming Republican governor, Asa Hutchinson, is remaining mum on the plan’s fate….
Medicaid Demonstrations: HHS’s Approval Process for Arkansas’s Medicaid Expansion Waiver Raises Cost Concerns
Source: U.S. Government Accountability Office (GAO), GAO-14-689R, September 8, 2014
From the summary:
In approving Arkansas’s Medicaid Section 1115 demonstration, the Department of Health and Human Services (HHS) gave the state the authority to test whether providing premium assistance to purchase private coverage offered on the health insurance exchange will improve access to care for individuals newly eligible for Medicaid as a result of the Patient Protection and Affordable Care Act (PPACA).
In approving the demonstration, HHS did not ensure that the demonstration would be budget- neutral—that is, that the federal government would spend no more under the state’s demonstration than it would have spent without the demonstration. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data from the state to support the state’s assumptions. GAO estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services under the traditional Medicaid program.
Furthermore, HHS gave Arkansas the flexibility to adjust the spending limit if actual costs under the demonstration proved higher than expected, and HHS officials told us that the Department granted the same flexibility to 11 other states implementing demonstrations that affect services for newly eligible beneficiaries. Finally, HHS, in effect, waived its cost-effectiveness requirement that providing premium assistance to purchase individual coverage prove comparable to the cost of providing direct coverage under the state’s Medicaid plan, further increasing the risk that the demonstration would not be budget-neutral.
As of June 2014, HHS has approved one additional state’s—Iowa’s—demonstration to use premium assistance to purchase exchange coverage. Iowa’s demonstration is more limited in scope in that it covers a portion of the expansion population, those with incomes of 101 percent to 133 percent of the federal poverty level. As with its approval of the Arkansas demonstration, HHS gave Iowa the flexibility to adjust its spending limit and waived the cost-effectiveness requirement. According to HHS officials, three other states as of June 2014 had indicated an interest in implementing a similar approach.
In commenting on a draft of this report, HHS disagreed with GAO’s findings that HHS’s approval process did not ensure that the Arkansas demonstration will be budget-neutral. GAO maintains the validity of these findings.
GAO: Arkansas Medicaid Plan Not Revenue-Neutral
Source: Kelly P. Kissel, Associated Press, September 9, 2014
Arkansas’ Medicaid expansion plan, in which the state uses federal dollars to buy private health insurance for its poorer residents, will cost taxpayers an extra $778 million over the next three years rather than being “revenue-neutral” to the federal budget, according to a government report released Monday. The plan’s supporters disputed the findings. According to the U.S. General Accountability Office, the U.S. Department of Health and Human Services didn’t ensure that Arkansas’ “private option” Medicaid plan wouldn’t cost the federal government additional money. It said DHHS-imposed spending limits of $4 billion were about $778 million more than what would have been expected under the traditional fee-for-service Medicaid program….
Arkansas: A Leading Laboratory for Health Care Payment and Delivery System Reform
Source: Deborah Bachrach, Lammot du Pont, and Mindy Lipson, Commonwealth Fund, Issue Brief, Commonwealth Fund pub. 1766 Vol. 20, August 2014
From the overview:
As states’ Medicaid programs continue to evolve from traditional fee-for-service to value-based health care delivery, there is growing recognition that systemwide multipayer approaches provide the market power needed to address the triple aim of improved patient care, improved health of populations, and reduced costs. Federal initiatives, such as the State Innovation Model grant program, make significant funds available for states seeking to transform their health care systems. In crafting their reform strategies, states can learn from early innovators. This issue brief focuses on one such state: Arkansas. Insights and lessons from the Arkansas Health Care Payment Improvement Initiative (AHCPII) suggest that progress is best gained through an inclusive, deliberative process facilitated by committed leadership, a shared agreement on root problems and opportunities for improvement, and a strategy grounded in the state’s particular health care landscape.
‘Private Option’ for Medicaid Expansion Would Cut Some Benefits
Source: Christine Vestal, Stateline.org, March 27, 2014
When Arkansas won federal approval to use Medicaid expansion dollars to help low-income people purchase private health insurance, officials on both sides of the aisle applauded the compromise ….. Now, as more states craft their own versions of what is known as the “private option” – and Arkansas seeks revisions to its original plan – advocates are increasingly concerned that the private market approach to Medicaid expansion could erode the effectiveness of the Medicaid program.
‘Private Option’ Bill Fails in Arkansas House, 70-27
Source: Andrew DeMillo, Associated Press, February 18, 2014
The Arkansas House failed Tuesday to renew the state’s compromise Medicaid expansion plan, leaving in limbo the future of a program heralded as a model for Republican-leaning states to implement the federal health overhaul. The House voted 70-27 to reauthorize funding for the “private option,” falling five votes shy of the 75 needed in the 100-member chamber to continue the program. Under the private option, Arkansas is using federal Medicaid funds to purchase private insurance for thousands of low-income residents. The program was approved last year as an alternative to expanding Medicaid’s enrollment under the federal health law. ….
In Arkansas, ‘Private Option’ Medicaid Plan Could Be Derailed
Source: Abby Goodnough, New York Times, February 10, 2014
Last year, the Republicans who control this state’s Legislature devised a politically palatable way to expand Medicaid under President Obama’s health care law. They won permission to use federal expansion funds to buy private insurance for as many as 250,000 poor people instead of adding them to traditional Medicaid, which conservatives disparage as a broken entitlement program. But just as the idea is catching fire in other states with Republican or divided leadership — Iowa has adopted a version of the plan, and New Hampshire, Pennsylvania, Utah and other states are exploring similar avenues — Arkansas may abruptly reverse course, potentially leaving the 83,000 people who have signed up so far without insurance as soon as July 1.
Ark. House passes ‘private-option’ Medicaid funds
Source: Associated Press, April 16, 2013
The Arkansas House on Tuesday approved a plan to use federal Medicaid funds to buy private insurance for low-income residents, with many Republicans saying the approach is the best way to maintain some control over provisions of a new federal healthcare law they still oppose. The private-option plan was presented to legislators in two parts, with one part including language authorizing the plan and a second part setting up the funding. The funding element finally won its needed three-fourths vote in the House, though it still needs to be approved by the same margin in the Senate.
Arkansas wants to privatize its Medicaid Expansion: Is this the start of a trend?
Source: Robert I. Field, philly.com, Field Clinic blog, April 7, 2013
..The Beebe plan would have the state pay for private policies for residents with incomes below 138% of the federal poverty level. They would purchase the policies on the new insurance exchanges that will operate under Obamacare starting next January 1. This would avoid the need to expand the existing Medicaid program directly….
Editorial: Using Medicaid Dollars for Private Insurance
Source: Editorial, New York Times, March 31, 2013
The Obama administration and Republican officials in several states are exploring ways to redirect federal money intended to expand Medicaid, the main public insurance program for the poor, and use it instead to buy private health insurance for Medicaid recipients. The approach could have important benefits for beneficiaries and for the future of health care reform. But the idea also carries big risks. Federal officials will need to enforce strict conditions before agreeing to any redirection of Medicaid dollars that were originally intended to enlarge the Medicaid rolls.
So you want to privatize Medicaid? Has HHS got a guide for you
By Sarah Kliff, Washington Post, March 29, 2013
States have lots of questions about whether they can use Medicaid expansion dollars to buy private insurance coverage, the so-called Arkansas option. Now, they have a few more answers. The Centers for Medicare and Medicaid Services on Friday issued a Q&A to address some of the questions posed by states. It’s not comprehensive—it includes three questions that span two pages—but it has a few new details that might help states make up their minds….
Privatizing the Medicaid expansion: ‘Every state will be eying this.’
Source: Sarah Kliff, Washington Post, March 8, 2013
Arkansas has turned heads with its plan to expand Medicaid using the private insurance market. The idea — which is still preliminary — would be to use Medicaid dollars to buy private insurance coverage for the expansion population. For health policy experts, this has raised a huge number of questions: Will private plans guarantee the same benefits that Medicaid does? How will states pay for the private insurance, which generally costs more than the public program? And does HHS even have the legal authority to do this? George Washington University’s Sara Rosenbaum, an expert on Medicaid policy, recently dove into the regulations to answer these questions. She wrote an excellent policy primer here and, on Thursday, we had a lengthy conversation about it. What follows is a transcript of that discussion, lightly edited for clarity and length.
Private Medicaid Plans Get Push
Source: Ana Campoy, Louise Radnofsky, Wall Street Journal, March 11, 2013
A pair of states are proposing to use new Medicaid funding to help the poor buy private health insurance, a new twist in how to implement the 2010 federal health-care law that is winning support from some Republicans. Arkansas Gov. Mike Beebe, a Democrat, wants U.S. health regulators to let the state use federal dollars intended to expand eligibility for the Medicaid program to instead buy private insurance policies for low-income people. Ohio Republican Gov. John Kasich is pushing for a similar deal. The new option could appeal to conservatives, who argue that the private sector could provide care more efficiently than the government-run Medicaid program. It would also meet the Obama administration’s goal of coaxing into the expansion several states that have signaled they would pass on it, citing problems with Medicaid and concerns about increased government spending….
Medicaid Expansion Is Rejected in Florida
Source: Lizette Alvarez, New York Times, March 11, 2013
Rebuffing Gov. Rick Scott’s support of Medicaid expansion, a Florida Senate committee on Monday rejected the idea, all but ending the possibility that the state would add more poor people to Medicaid rolls. But the Senate panel debating the expansion proposed a compromise: to accept the federal money but use it to put low-income people into private insurance plans. Accepting the money would please the governor and a number of Floridians, while steering people away from Medicaid, which many lawmakers and residents view as troubled. … It is unclear whether the Obama administration would accept such a proposal. Several states, including Arkansas, Indiana and Ohio, are exploring using private insurers to enroll uninsured patients. …