The competing Medicaid plans and the DD wait list | Arkansas Blog

Tuesday, April 5, 2016

The competing Medicaid plans and the DD wait list

Posted By on Tue, Apr 5, 2016 at 9:17 PM

Providers' allies in the legislature who oppose Gov. Asa Hutchinson's managed care plan today released draft legislation for their alternative plan, known as DiamondCare. Both plans aim to achieve savings in certain high-cost Medicaid populations. 

Like the governor's plan, DiamondCare promises to devote some of the savings to reducing the waiting list for a Medicaid waiver program that provides services offering home and community-based care for developmentally disabled children. Currently, around 2,600 families are stuck on the wait list, some of them for years. 

DiamondCare commits $15 million per year, beginning in 2018, to reducing the wait list. The governor's plan, meanwhile, commits $25 million per year, also beginning in 2018, to reducing the wait list. 

Both DiamondCare and the governor's plan aim for a similar slate of Medicaid reforms; the governor's plan uses managed care companies, while DiamondCare would continue to pay providers on a fee for service bases. The state's consultant projected that the governor's plan would save a total of $1.4 billion over five years, compared to $1 billion for DiamondCare (in terms of state funds, that means the governor's plan projects to save about $100 million more on net than DiamondCare).

In order to tackle the problem of the DD waiting list, the governor's plan uses a new revenue stream that would be created by his managed care plan — the managed care companies have to pay a premium tax, generating revenues for the state. Hutchinson has committed at least half of those revenues (that amounts to an estimated $25 million per year) to reducing the waiting list, which he says would cut the list in half in three years. 

DiamondCare, meanwhile, would use a small revenue stream from premium taxes from dental managed care (both the governor's plan and DiamondCare use managed care for dental), which likely amounts to around $2-3 million per year. The rest of the $15 million per year commitment would come from general revenue, via the net savings that DiamondCare promises to produce. 

The DiamondCare lawmakers said that significant relief could be provided for families on the wait list with $15 million a year. They pointed to a Stephen Group analysis that suggested some families on the waiting list may primarily need lower-cost services. However, actually removing people from the wait list requires offering them the full range of services that they qualify for, at an average cost of $50,000 per person (the feds pick up 70 percent of those costs) — so $15 million per year would still leave many stuck on the list. 

The governor's team will argue that his dedicated revenue stream is a more reliable funding source (and that his plan saves more on net and makes a bigger annual commitment to reducing the DD wait list). But the big picture here is that both plans at least claim that they will produce dramatic savings. The governor and the Republican-controlled legislature will no doubt want to use a chunk of those savings for tax cuts. But one would hope that a significant portion of savings in the Medicaid program would go back into needed health care services. If either DiamondCare or the governor's plan made good on their billion-dollar promises, legislators would have the choice to prioritize funneling some of that money into reducing the DD waiting list, whether it was $15 million per year, $25 million per year, or more. 

There's another option, by the way. Funding to reduce or eliminate that wait list and provide services that families desperately need is available via the Affordable Care Act's Community First Choice Option, but Arkansas legislators have prioritized symbolic opposition to Obamacare and refused to seek that federal funding stream (certain current stakeholders, such as private nursing homes and human development centers, also oppose CFCO). 

Support for special health care reporting made possible by the Arkansas Public Policy Panel.

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