Task force appears set to move forward with tweaked private option; battle looms over managed care | Arkansas Blog

Tuesday, November 24, 2015

Task force appears set to move forward with tweaked private option; battle looms over managed care

Posted By on Tue, Nov 24, 2015 at 4:57 PM

After hours of meetings and hundreds of pages of reports, the deadline is nearing for the Health Reform Legislative Task Force to offer recommendations to the governor on the future of health care in Arkansas.

The task force had its penultimate meeting today; by law, it must issue a report with recommendations by the end of this year. All indications are that the task force will recommend continuing the private option with a few GOP-friendly tweaks. The governor will be negotiating with the federal government on just what shape the private option (perhaps with a snappy new name) will take in 2017 and beyond, once the state's current agreement with the feds comes to an end. The once hotly controversial issue has been fairly muted in task force discussions. The fireworks, instead, have come with how to handle the rest of the Medicaid program, with the state's consultant, the Stephen Group, suggesting that the state could save hundreds of millions of dollars by moving to managed care. 
On the subject of the private option, little has changed since the task force was created nine months ago. There is only one affordable and feasible way to continue coverage for more than 200,000 low-income Arkansans who have health insurance thanks to the private option: keep on taking Obamacare money. That was obvious a year ago, and it's still true. Whether or not they come right out and say it, that's certainly what the state's consultant, the Stephen Group, found, and — again, whether or not they come right out and say it — that's what the GOP-dominated task force has implicitly concluded too. It's a path that also happens to save hundreds of millions of dollars for the state budget, save hospitals hundreds of millions more in uncompensated care costs, and pumps billions into the state economy. 

The trick is adding enough bells and whistles to gain the support of enough Republicans in the legislature to continue the policy. Again, that was true nine months ago and it's true today. The task force appears set to recommend mechanisms to encourage beneficiaries toward better wellness practices and refer unemployed beneficiaries to job training or work programs (the feds will not allow the state to require beneficiaries to have a job, but work referral or encouragement programs may be allowed). Those who complied with those programs would get an added benefit (dental and vision); at least some beneficiaries who failed to comply would be assessed a small premium. The task force also appears set to create some mechanism for the private option to pay for some employed beneficiaries to be covered by their work plans instead of being covered by private option plans. 

There are still some sticky issues. The Stephen Group has pushed for a punitive six-month "lockout" that would disallow beneficiaries who failed to pay required premiums from getting back on coverage, even if they paid what they owed. The feds might not give the okay on this one and some legislators have questioned whether establishing a policy that would lead to more people being uninsured actually makes sense. The Stephen Group also suggested an asset test that would impose de facto premiums on beneficiaries with substantial assets, likely running afoul of the Affordable Care Act. 

DHS Director John Selig testified today that the state will be alerting the federal government this week that it would like to amend the waiver of Medicaid rules it has in place for the private option. Selig testified that the task force needs to give specifics on just what directions it wants to take soon so that the governor's team has time to develop a request and negotiate with the feds. Selig noted that ultimately, the revised version of the private option can only proceed with legislative approval in the 2016 session, which requires supermajorities in both houses. But the process of crafting the policy details for the "new" private option needs to begin as soon as possible. 

For the last few years, of course, the private option has dominated discussions of the Medicaid program. But three quarters of the state's Medicaid spending goes not to the private option but to the state's high-cost populations, such as the aged, the disabled, and the blind. Today's meeting was mostly devoted to looking at possibilities for containing costs in the traditional Medicaid program, with the looming possibility of managed care raising alarm bells for some lawmakers, lobbyists, and providers. While some version of continuing the private option with Republicanized twists appears to be a fait accompli, the task force is sharply divided over managed care. 

The Stephen Group recommends that the state move toward some form of more intensive care management for all Medicaid beneficiaries in the state. The task force is in broad agreement on this point—simply continuing with straightforward fee-for-service Medicaid, currently in place for about three quarters of Medicaid services, will likely become too costly in the coming years. The question for the legislature: should that management happen via expanding current ongoing efforts by state officials or via contracting with a private managed care company? The Stephen Group report offered three paths forward:

1) Moving the entire Medicaid population to managed care companies. Under Medicaid managed care contracts, outside companies are paid an agreed upon per-person, per-month amount based on expected costs, and attempt to find inefficiencies and deliver more cost-effective (and, in theory, higher quality) care. The managed care company makes money if it finds a way to provide the care at a lower cost than the agreed-upon rate. The devil is in the contract details — both in terms of the potential risk and revenues for the company and the state, as well as what protections are in place for beneficiaries. 

2) Expanding the state’s payment improvement initiative and patient-centered medical home programs to the entire Medicaid population — this is a mechanism to manage care run by the state’s Department of Human Services, focusing on care coordination centered on a primary care doctor, as well as incentivizing providers toward more cost-effective care. 

3) Using outside managed managed care for the high-cost populations such as the aged, disabled, and the blind, while expanding the payment improvement initiative and patient-centered medical home programs to the rest of the Medicaid program. This was the route endorsed by Gov. Asa Hutchinson and also by outgoing DHS director John Selig

Task force co-chair Rep. Charlie Collins said that at the next meeting, in December, the task force will vote on whether to pursue a reform strategy focused on managed care or on patient-centered medical homes (realistically, this will be a choice between #2 and #3 above).

Either way, this will amount to a major overhaul—again, as it stands, three quarters of the Medicaid program is straightforward fee-for-service care. The Stephen Group report states it “identified that the long-term care, developmentally disabled and behavioral health populations within the program are losing opportunities for better care coordination, better placement in setting preferred by the beneficiaries and better assessment of need, all while costing taxpayers far more than is necessary.”

The Stephen Group found that the state could save hundreds of millions, or even billions, by moving in the direction of more care management, either via patient-centered medical homes or via Medicaid managed care. According to their report, option 1 above (managed care for the entire program) would save $2.4 billion over five years; option 2, the governor's choice (managed care for high-cost populations, patient-centered medical home programs for the rest of Medicaid) would save $1.9 billion; option 3 (patient-centered medical home programs for all of Medicaid, no managed care companies) would save $700 million. 

The elephant in the room here: the nursing home lobby. Nursing home utilization in Arkansas is significantly higher than national averages. In some cases, nursing homes are sucking up massive amounts of Medicaid dollars in situations in which the patients themselves might prefer an alternative. Whatever option the state takes, the Stephen Group found that Arkansas should be able to save hundreds of millions of dollars on long-term care for the elderly and disabled, all while maintaining or improving quality of care. That money has to come from somewhere; the nursing homes and their providers could be the ones to take a hit. 

The governor has framed this discussion around supposedly finding money to pay for the private option expansion, but that's a ruse. In fact, the Stephen Group found that the private option saves the state hundreds of millions of dollars on net, and the savings continue even when the state has to start chipping in ten percent of the costs. The real issue here is that the governor wants to save money, period, and if the state wants to bend its Medicaid cost curve, it's going to have to address the high-cost populations that make up the bulk of its spending. (Cutting the private option would be going in the wrong direction in terms of state costs).

The next task force meeting in December is likely to be heated. Plenty of lawmakers have already made it clear they will fight tooth and nail against any move to managed care, and they will be backed by the powerful nursing home lobby (which has fought any attempts to bring cost-effective reforms to long-term care in the state). Of course, the managed care companies have lobbyists of their own, and the governor and his allies will be pushing hard in that direction. 

Once upon a time, you might have guessed that a fierce battle at the final task force meeting would be over Obamacare. But the continuation of the private option seems to be a foregone conclusion. What remains to be seen, with billions of dollars at stake, is just what the rest of the Medicaid program in Arkansas will look like. 

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