Arkansas Medicaid program eyeing major changes

Gov. Mike Beebe wants to reduce spending by $400 million, but physician pay cuts are not likely on the table.

By Doug Trapp — Posted March 30, 2010

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Arkansas Medicaid Director Eugene Gessow is trying to transform the state's Medicaid program with an eye toward reducing unnecessary spending.

Gessow, at the request of Arkansas Gov. Mike Beebe, has asked Medicaid stakeholders to suggest ways to reduce total program spending by $400 million in fiscal year 2011 to help balance the program's budget. Federal and state spending on the Arkansas Medicaid program doubled to $3.7 billion between 2001 and 2009, Beebe said. It faces cost increases of up to 10% annually.

"This is unsustainable, because we cannot provide the revenue for the state's share of Medicaid costs without cutting critical funding for schools or prisons, or by imposing new taxes," Beebe said during his weekly radio address on Feb. 26.

The state spent $943 million in Medicaid in fiscal 2009, according to the Arkansas Dept. of Human Services. More than 750,000 state residents -- or 26% of the state's population -- are enrolled in Medicaid, including 63% of its children.

Gessow asked physicians, hospitals, patient advocates and others at a Feb. 23 public meeting to send him ideas by March 1 on how to reduce Medicaid spending while maintaining quality. The department received more than 300 pages of recommendations, including suggestions from the Arkansas Medical Society. Gessow published all of the ideas online (link).

Arkansas should consider increasing efforts to prevent Medicaid drug diversion, such as when prescriptions for kids are filled and sold by parents, according to Arkansas Medical Society Executive Vice President David Wroten. The state also should try to determine how often Medicaid enrollees are unnecessarily admitted to emergency departments and how frequently unnecessary hospitalizations of nursing home patients occur, he said.

The state also could improve explanations of Medicaid eligibility on its Web site and offer incentives for physicians and others to reduce emergency department use and minimize certain conflicts of interest, suggested Mark E. Helm, MD, chair of the Pediatric Council of the Arkansas Chapter of the American Academy of Pediatrics.

Beebe offered his own suggestion: Medicaid should move away from fee-for-service payment. "It doesn't provide doctors or patients with any incentive to improve efficiency or quality of care," he said.

Physician participation in the Arkansas Medicaid program is generally high, especially for primary care doctors, Wroten said. Medicaid pays primary care physicians $3 per enrollee per month to manage their patients' care, and many doctors care for 1,000 or more Medicaid enrollees. Also, the program bills electronically, provides real-time eligibility information and pays claims within 10 days, one of the fastest processing rates in the country. "It's a relatively easy program to work with," Wroten said.

Physicians probably have little to fear regarding Medicaid pay cuts. A federal consent decree -- the result of a lawsuit -- requires physicians and others to agree to Medicaid pay changes. Wroten said Beebe doesn't want to limit access to care in Medicaid.

More information about the Medicaid cost-savings effort, including all of the Medicaid stakeholder responses, is available online (link).

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