Private Medicaid expansion plan would pay doctors more

Arkansas physicians would be paid at rates set by private plans in the state’s exchange, if the plan is approved by CMS officials.

By — Posted July 22, 2013

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Arkansas physicians are encouraged that a state initiative to enroll newly eligible Medicaid populations in private exchange plans shows the potential for reducing the number of uninsured while paying doctors at rates higher than what they would receive under an expansion of traditional Medicaid.

The state is forging a different path than others to expand Medicaid under the Affordable Care Act. Earlier in 2013, Arkansas’ governor approved a plan to expand Medicaid using a premium assistance model, an approach seen by state leaders as a more efficient way to cover its uninsured, expand access to doctors and other health care professionals, and promote continuity of coverage. Arkansas would leverage federal Medicaid funds to enroll newly eligible populations in its health insurance exchange rather than the traditional Medicaid program. The exchange will be administered jointly by Arkansas and the federal government.

With a goal to enroll people in this “private option” by Oct. 1, the date when exchange enrollment begins for everyone else, the state needs the federal government’s stamp of approval to carry out the alternative expansion plan. The new option requires the Centers for Medicare & Medicaid Services to waive a number of requirements of Title XIX of the Social Security Act. Andrew Allison, the Arkansas Medicaid director, said the state was working closely with CMS to ensure that a Section 1115 waiver request was approved prior to open enrollment season.

“Since coverage and payments under the waiver wouldn’t begin until January [2014], we believe Oct. 1 is an important, but not statutory, deadline,” he said.

Allison said participation in the first year would be limited to newly eligible individuals, such as parents whose incomes are between 17% and 138% of the poverty line and childless adults up to 138%. The state’s initial waiver application estimated that 225,000 individuals would enroll in the private option, but the addition of existing Medicaid populations in subsequent waiver amendments “will push that total much higher,” he said.

Physicians will receive private rates

Because Medicaid would subsidize private coverage for participants in the Arkansas private option, Allison said physicians and other health care professionals in the state will be paid under commercial schedules — not the Medicaid schedule.

The Arkansas Medical Society had supported Medicaid expansion, so how this would be accomplished “didn’t really matter to us,” said Omar Atiq, MD, an oncologist and the society’s president. But because Medicaid pays only a fraction of what private insurers pay for the same services, the private option definitely is a preferred alternative to expanding traditional Medicaid at this time, he said.

In the medical society’s view, expansion holds benefits not just for patients but also for the state’s economy, Dr. Atiq said. By expanding Medicaid eligibility to an effective rate of 138% of poverty, Arkansas still receives a 100% federal match rate to cover the newly eligible for the first three years of expansion. In addition, taxes are going to be paid on the revenue to doctors and other health care professionals, he said.

Assuming that the private option is approved and moves forward as planned, it clearly should have a favorable impact on reducing the numbers of uninsured, said Lonnie Robinson, MD, immediate past president of the Arkansas Academy of Family Physicians.

What physicians remain concerned about is the long-term viability of expansion, Dr. Robinson said. States eventually take on up to 10% of the costs once full federal support expires. As the subsidies are scaled back, questions may arise as to whether the state can maintain expansion from a budgetary standpoint. “Will this be a permanent fixture or just a temporary fix?” Dr. Robinson asked. It also is unknown whether there will be enough physicians and other health care professionals to take care of all of these newly covered patients, he added.

Much remains to be seen about this expansion alternative, Dr. Atiq said. “We are cautiously optimistic, but we have to make sure that we don’t take our eye off the ball. We’ve been working very hard with the state governor’s office and everyone else involved to achieve what we want to achieve with this private pay option.”

Others may follow lead

Arkansas isn’t the only state that has looked at pursuing alternatives to expanding traditional Medicaid.

Indiana, for example, continues to wait on federal decisions to extend its Healthy Indiana Plan by three years, and also to use it as the vehicle to expand Medicaid. The program covers low-income uninsured adults who don’t have access to employer-based coverage, and it emphasizes cost sharing and preventive care.

At a June meeting of the state’s Health Finance Commission, Debra Minott, secretary of the Indiana Family and Social Services Administration, said that in talking with CMS, the first priority was to continue HIP’s waiver for current beneficiaries. Discussions on expansion will take place at a later date, she said.

The American Medical Association has advocated that state governments be free to test and develop different models to improve coverage options for low-income patients.

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Medicaid’s “private option”

Arkansas in early August plans to submit a Section 1115 waiver to the Centers for Medicare & Medicaid Services to expand Medicaid in 2014 under a “private option” alternative. The state would use Medicaid funds to enroll newly eligible populations in its private health insurance exchange.

  • Eligibility: First-year participation would be limited to newly eligible individuals, such as parents with incomes between 17% and 138% of poverty, and childless adults up to 138% of poverty. Arkansas plans to amend the waiver in future years to include existing Medicaid populations, such as nondisabled adults and children.
  • Federal funding: Arkansas would use the Affordable Care Act’s enhanced matching funds to cover new eligibles in the private option starting in 2014, then use regular matching funds to cover existing eligibles (who may or may not be enrolled now) in 2015 and beyond.
  • Participation: 225,000 newly eligible individuals are expected to be covered in the private option, but the addition of existing Medicaid populations in subsequent amendments may push that total much higher.
  • Payment: Health care professionals will be paid under commercial schedules, because Medicaid will be purchasing private coverage for participants under this option.
  • Savings: The state estimates it will lower its spending by $670 million over 10 years.
  • Timeline: Oct. 1 is the date at which the state plans to enroll eligible participants. Arkansas hopes to gain federal approval for implementing the private option before exchange open enrollment begins.

Source: Arkansas Dept. of Human Services

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External links

“Medicaid and the Affordable Care Act: Premium Assistance,” Dept. of Health and Human Services, March (link)

“The Economic Impact of the Affordable Care Act on Arkansas,” RAND Corp., January (link)

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