Governor Agrees To Cut Managed Care From Session, Focus On Arkansas Works

Gov. Asa Hutchinson (left) as AARP Arkansas state Director Herb Sanderson speaks Tuesday in support of continuing the state's Medicaid expansion program.
Credit Michael Hibblen / KUAR News

Gov. Asa Hutchinson will limit the call in the upcoming special legislative session to his continuation of the private option, which he is calling Arkansas Works, and will not ask legislators to consider his managed care savings plan.

Hutchinson announced his intentions during a press conference at the Capitol Tuesday, the day after Senate President Pro Tempore Jonathan Dismang, R-Beebe; and Speaker of the House Jeremy Gillam, R-Judsonia, informed him in letters that a majority consensus exists with Arkansas Works but not with his managed care program.

“As governor, I’ve learned a couple of things. One is that you need to work with the Legislature, and the second thing is you need to listen,” Hutchinson said.

Hutchinson issued a proclamation that calls legislators into session at 10 a.m. Wednesday, with a narrow focus on Arkansas Works, which would continue the private option with changes. The private option uses federal Medicaid dollars to purchase private insurance for adult Arkansas with incomes up to 138% of the federal poverty level. As of the end of January, 267,590 Arkansans had been deemed eligible for the program.

Arkansas Works must achieve a majority vote in the special session, which is not expected to be a problem. However, it requires a three-fourths vote for funding in the following fiscal session that begins April 13 – a much higher bar.

The newly narrowed call ends for now what was shaping up to be a divisive debate over Hutchinson’s managed care proposal, which had been defined in a separate bill. Under that model, a private company would be paid a set fee per beneficiary to manage parts of the Medicaid program under contract with the Department of Human Services. The company could lose money if it fails to provide cost-efficient care.

Hutchinson has said the model is needed in order to produce savings when the state would begin sharing in the cost of Arkansas Works – 10% by 2020. The managed care bill would have limited that model to behavioral health services and to services for the developmentally disabled, excluding the state’s human development centers for more seriously disabled residents.

Hutchinson called the managed care bill “the most comprehensive reform piece of legislation in terms of Medicaid that we’ve seen in decades and decades.” He called it “dramatic reform legislation that is historic in proportion” and said legislators need more time to digest it. He did not offer a timeframe for when the proposal will be considered.

“I think one of the things that I’ve learned is that everybody doesn’t go at the same pace I go at,” he said.

He said the debate has generated discussions about saving money in Medicaid and has already created $250 million in long-term care savings. Also, a request for proposal will soon be released to create a managed care model for Medicaid dental services. He said the effort to find savings will continue.

Asked if he could implement managed care through executive action, Hutchinson said he does have authority to make changes – an example being a managed care proposal for dental services that is moving forward without legislative action. However, he said the Legislature should be involved and that it has the power to review contracts.

Asked if he would later consider taking executive action, Hutchinson said, “I will continue to create savings and work toward that goal and with the Legislature.”

House Minority Leader Michael John Gray speaking to reporters Tuesday at the Capitol.
Credit Michael Hibblen / KUAR News

Rep. Michael John Gray, D-Augusta, the Democrats’ House minority leader, said that, as to the narrowing of the call, the governor was right that legislators “don’t need to get mired down in some of the details when we’re discussing such an important policy.”

However, he expressed concern about the governor possibly being able to enact managed care policies through executive actions. “I fear that we as a Legislature might have been better off with the devil we know, and maybe we could have had time to look at that legislation and see what modifications we can make,” he said.

Other legislators, in both parties, are presenting a competing proposal known as DiamondCare, where administrative services organizations would manage those same areas for a fee but would not face as much risk as a managed care company. According to a study by The Stephen Group, a consultant hired by legislators, that model would save $1.057 billion over five years – less than the $1.4 billion the governor’s managed care effort would save according to The Stephen Group’s projections.

Hutchinson said he could not support the DiamondCare model because it offers more risk to the state, would produce less savings, and hasn’t been tried before.

Prior to Hutchinson’s remarks, Herb Sanderson, director of the state’s AARP chapter, expressed his association’s support for Arkansas Works. He said 93,000 Arkansans between the ages of 45 and 64 are served by the private option, and he presented 6,500 postcards from AARP members expressing support for Arkansas Works.