Wednesday, December 16, 2015

Task force recommends revised private option and pursuing $835 million in traditional Medicaid savings

Posted By on Wed, Dec 16, 2015 at 11:18 AM

The Health Reform Legislative Task Force today endorsed proceeding with the private option, the state's unique version of Medicaid expansion, with some GOP-friendly tweaks. The task force voted to give Gov. Asa Hutchinson the go-ahead  to negotiate with the federal government on the bells and whistles Hutchinson would like to add, such as imposing premiums on some beneficiaries. In testimony before the legislature today, Hutchinson went over his ideas for the revised private option, which he wants to re-brand "Arkansas Works." It's the familiar list of conservative changes that we've covered at length, including ideas the federal govenrment will likely approve, as well as a wish list that Hutchinson himself acknowledged will almost certainly be nixed by the feds

The task force also endorsed a benchmark set today by the governor for savings in the traditional Medicaid program — that is, everything other than the private option, including ARKids, behavioral health, disabled populations, long-term care for the elderly, etc. Hutchinson set a savings target of $835 million over five years. The breakdown: long-term care $250 million, dental $20 million, pharmacy $110 million, behavioral health $231 million, developmentally disabled $232 million (that adds up to $843 million total). It's unclear how the governor divided the pie in terms of the targets for each sub-group. 

The governor said that he was "agnostic" about whether managed care companies were used to achieve those savings — all he cares about, he said, was meeting that benchmark. The savings had to be "credible" and ensure high-quality care for beneficiaries, he said. The question of whether to use managed care companies, or some other care management reform, for the program's high-cost populations has divided the task force. The governor today essentially suggested punting on that controversial question, with further task force discussion to come. The task force today agreed on the goal — $835 million between 2017 and 2021. The means to reach that goal? To be determined. 

The governor said that these savings were necessary in order to pay for the gross costs of the private option once the state has to start chipping in to help pay for the costs in 2017 and beyond. However, this argument is absolutely nonsensical. The Stephen Group's report found that the private option saves money for the state on net even when the state has to start paying its full 10 percent share. I'll have more on this in a forthcoming post but Hutchinson's argument that the traditional Medicaid savings are necessary in order to pay for continuing the private option is hogwash. The private option is already revenue positive for the state budget. He simply wants to achieve savings in the traditional Medicaid program because he wants to achieve savings in the traditional Medicaid program. It has nothing to do with the question of continuing the private option. 

How will the savings be achieved? The Stephen Group was tasked with coming up with a plan, likely to include a range of alternatives. The Stephen Group already found that moving to a patient-centered medical home model for high-cost populations would save the state $708 million over five years. PCMH focuses on care coordination centered on a primary care doctor, as well as incentivizing providers toward more cost-effective care. Alternatively, moving high-cost populations to managed care would save the state $2 billion over five years, according to the Stephen Group report. 

Provider groups or others may come up with their own plans in the coming weeks, which would then be evaluated, verified, and scored by the Stephen Group. As I reported yesterday, the nursing homes already negotiated a side deal with the governor that if the state went forward with managed care for high-cost populations, they would be carved out if they could come up with their own plan to save $250 million (their portion of the governor's benchmark based on how he split the pie). The other subgroups of providers will now presumably have that same opportunity. 

Cue the lobbyists. 

Important note on the private option: Once the governor hammers out an agreement with the feds, the legislature as a whole would then have to vote on whether or not to approve the plan. The governor said that a special session would likely be held some time after the primaries in March. And note that the appropriation itself would still be subject to the annual supermajority requirement.

I'll be back with more updates and analysis soon. 

The governor takes a victory lap:

“Today’s unanimous, bipartisan vote by the Legislative Task Force on Healthcare Reform was an important one. It shows the state and the country that we’re united in pursuing waivers from the federal government to have health coverage for Arkansans that emphasizes personal responsibility, incentives to work and responsible management of the program – the foundation of ‘Arkansas Works’.

"Based upon this unanimous support from the task force, we will be pursuing the waivers before the federal government, and while we still have to find $835 million in savings over the next five years, this kind of commitment from the legislature makes me confident that we can achieve that kind of result.”
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