Plan For Medicaid Reform Approved By Legislative Task Force

Dec 15, 2016

File photo of the Health Reform Legislative Task Force. Co-chair Sen. Jim Hendren is at center, on the phone.
Credit Jacob Kauffman / KUAR

A group of Arkansas lawmakers who had been meeting for more than a year to find ways to revamp healthcare in the state, signed off Thursday on a plan to reduce Medicaid spending by an estimated $963 million* over five years.

The Health Reform Legislative Task Force developed the plan out of recommendations from the Stephen Group, a New Hampshire-based consulting firm hired by the state of Arkansas last year. John Stephen, managing partner of the Stephen Group, says the recommendations offer a path for ensuring that the Medicaid program does not turn into a burden on the state’s budget.

“It seems that all of the pieces are lining up together to protect the taxpayers, but also to assure that those who need services get them. And then [we] have to wait to see what happens in Washington with the new administration. So this is a good thing for the state of Arkansas. It is establishing a reform-minded roadmap that did not exist before, no matter what happens in Washington,” Stephen told KUAR News after the task force meeting Thursday.

He says the final report lays groundwork for the legislature to make substantial changes to the way certain aspects of healthcare could be delivered in Arkansas. 

“There are always going to be challenges. These changes are not going to be easy. There’s a lot of reform that will have to go through hearings and (the) legislative process, but at the end of the day there’s a roadmap now and we didn’t have that before,” Stephen said.

The Stephen Group projected Medicaid costs to rise by five percent a year in Arkansas, totaling about $31 billion from fiscal year 2017 to fiscal year 2022. Parts of the recommended Medicaid overhaul would include placing caps on some mental health benefits and therapy benefits for the developmentally disabled. Another recommendation is to utilize managed care companies to provide dental benefits.

Other parts of the report recommend the continuation of Arkansas Works, a program using federal Medicaid dollars to provide health insurance to adults living up to 138 percent of the Federal Poverty Level. Gov. Asa Hutchinson’s administration had requested and recently received federal approval for the program to go into effect on January 1, 2017. Arkansas Works makes changes to what had been known as the “private option.” Changes include implementing further cost-sharing on premiums for recipients with incomes between 100 percent and 138 percent of the FPL.

Arkansas Works currently provides insurance for more than 300,000 people in the state. The program had been completely funded by the federal government, but the state will have to begin picking up some of the cost next year.

The Stephen Group does estimate that by keeping Arkansas Works in place, the state will save $438 million over five years “taking into account cost-shifting, uncompensated care, premium tax and macro-economic effects,” the task force report said.

*The $963 million figure is based on the draft report. However, on Thursday officials indicated they would strike a recommendation that would lower reimbursements to providers of group psychotherapy. With this consideration, the revised total savings in the report would amount to $959 million dollars over five years.

This post was updated on 12/16/16.