Arkansas Health Care Independence Program

STATE APPROACHES TO MEDICAID EXPANSION:
ARKANSAS
Last Updated: September 12, 2014
Arkansas Health Care Independence Program
Background
In April 2013, Arkansas enacted the Health Care Independence Act to expand Medicaid using
Medicaid funds to provide premium assistance for newly eligible “Private Option” beneficiaries to
purchase coverage in the health insurance marketplace (Marketplace). Individuals newly eligible for
Medicaid under the Arkansas premium assistance demonstration program include childless adults
ages 19 to 65 with income below 133 percent Federal Poverty Level (FPL) and parents ages 19 to 65
with incomes between 17 percent and 133 percent FPL. Arkansas submitted a Section 1115
demonstration waiver application to the Centers for Medicare and Medicaid Services (CMS) for
approval to implement the Health Care Independence Program. In September 2013, CMS approved
the waiver for a three-year demonstration period.
Eligibility and Enrollment
The Arkansas Medicaid program currently covers parents with income below 17 percent FPL, but
adults without dependent children are ineligible for Medicaid regardless of income. Under the Health
Care Independence Program, individuals newly eligible for Medicaid in Arkansas will include:
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Childless adults ages 19 to 65 with income at or below138 percent FPL, and
Parents ages 19 to 65 with incomes between 17 percent and 138 percent FPL.
Arkansas will exempt medically frail individuals American Indian/Alaska Native Individuals, unless
such individuals choose to opt into the demonstration and accept coverage pursuant to the terms and
conditions of the demonstration. Arkansas estimates that approximately 200,000 beneficiaries will
enroll in the demonstration.
Benefits
Individuals who qualify for the Private Option will be required to receive coverage through Qualified
Health Plans (QHPs) offered in the Marketplace. QHPs will cover the same benefits and services
provided in the state’s Medicaid Alternative Benefit Plan (ABP). All services will be provided through
QHPs, except for certain services not fully covered under the QHP benefit package but that must be
included in the ABP. The State will provide wrap-around coverage for: (1) non-emergency medical
transportation; (2) Early Periodic Screening Diagnosis and Treatment (EPSDT) not otherwise
covered by the QHP for individuals under age 21; and (3) family planning services. Long-term
services and supports will not be provided through the demonstration, since the ABP set forth in the
State Plan does provide for this coverage. Private Option beneficiaries will be permitted to choose
between at least two silver level plans offered in their geographic area or will be automatically
assigned to one if they do not choose a plan. Private Option eligible individuals who decline coverage
through QHPs will not be permitted to receive benefits through the traditional Medicaid State Plan.
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State Approaches to Medicaid Expansion: ARKANSAS
Cost Sharing and Premium Assistance
Cost-sharing requirements for the ABP will be the same regardless of whether benefits are delivered
under the State Plan or the demonstration program. Private Option beneficiaries with incomes
below 100 percent FPL will be exempt from cost-sharing obligations in the first year of the
demonstration program. Arkansas plans to submit amendments to the waiver to implement costsharing for demonstration participants with incomes between 50-100 percent FPL beginning in
years two and three of the demonstration. Beneficiaries with incomes between 100-138 percent FPL
will have cost-sharing obligations consistent with the Medicaid State Plan and Marketplace QHP
rules, and aggregate annual cost-sharing will be capped at 5 percent of monthly or quarterly income.
Arkansas will not require cost-sharing for beneficiaries who are exempt under federal Medicaid law.
Premium assistance will be provided to purchase QHPs in the individual market, and the state will
pay the full cost of plan premiums for demonstration beneficiaries. Demonstration participants will
not be required to pay a deductible prior to receiving coverage. Providers will collect all applicable
co-payments at the point of care. QHPs will monitor Private Option beneficiaries’ aggregate amount
of co-payments to ensure that they do not exceed the annual limit.
Payment and Delivery System
All Arkansas Marketplace QHPs will be required to participate in the Arkansas Health Care
Payment Improvement Initiative (AHCPII). The AHCPII comprises a comprehensive approach to
payment reform phased-in over the next several years. By assigning enrollees a primary care
provider (PCP), supporting patient-centered medical homes, and accessing clinical performance
data, providers caring for Private Option beneficiaries will be eligible to receive payments under
applicable components of the AHCPII. Providers will be reimbursed for care provided to Private
Option beneficiaries at the rates the providers have negotiated with the QHP. The State anticipates
that provider payment rates under QHPs will be at least as high as provider payment rates offered
under the State Plan. Providers who can successfully provide high-quality care while controlling
costs will be eligible to receive payments in excess of their ordinary reimbursement. Arkansas
Medicaid will not make supplemental payments directly to providers through the demonstration.
The State will provide wrap-around benefits that are required for the ABP but not covered by
qualified health plans (non-emergency transportation, EPSDT services) through its fee-for-service
(FFS) Medicaid program. Additionally, for Private Option beneficiaries accessing family planning
services through an out-of-network provider, those services will be reimbursed through FFS
Medicaid. Arkansas will also use the FFS delivery system to provide retroactive coverage for the
three months prior to the month in which an individual is determined eligible for Medicaid.
Arkansas Medicaid also intends to develop an alternative payment methodology to reimburse
federally qualified health centers (FQHCs) and regional health centers (RHCs) for serving Private
Option enrollees. During 2014, FQHCs/RHCs will be reimbursed for services provided to Private
Option enrollees by QHPs at commercial rates consistent with Arkansas law and market dynamics,
with supplemental payments made by the Arkansas Medicaid. Arkansas Medicaid will require
FQHCs to provide historic and prospective cost and utilization data to enable the development of an
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State Approaches to Medicaid Expansion: ARKANSAS
alternative payment methodology that moves away from a flat FFS toward a methodology that
accounts for the intensity of the services provided, and the delivery of cost-effective, quality care to
Private Option enrollees. The State intends to implement this alternative payment methodology as
early as possible after initiation of the demonstration.
Financing
Arkansas’ waiver application estimates that the costs of covering the demonstration population will
be cost-neutral, with expenditures of:
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$118.0 million in DY 2014;
$126.4 million in DY 2015; and
$135.4 million in DY 2016.
In September 2014, the Government Accountability Office issued a report indicating Arkansas’
waiver plan is not budget neutral and will cost $778 million (24%) more than if the state had
expanded the traditional FFS program. The report criticizes the use of hypothetical costs –
increased provider reimbursements – to justify the cost-neutral determination made by the CMS. At
this time it remains unclear if Arkansas’ waiver program will prove to be budget neutral as a result
of savings from reduced churn between Medicaid and private insurance or better health outcomes.
ABOUT THE MISSOURI FOUNDATION FOR HEALTH
This nonpartisan fact sheet was prepared by the Health Policy Staff at the Missouri Foundation for
Health. The Missouri Foundation for Health is an independent philanthropic organization dedicated to
empowering Missourians to achieve equal access to quality health services. The Foundation provides
research, education, and analysis of topics of importance to policymakers and the community.
www.mffh.org
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