The next Arkansas 1115 waiver

Arkansas is submitting another round of waivers for their private option Medicaid expansion.  There is one thing I don’t see CMS granting, and a couple of fights but the waiver as a whole is fairly straightforward.  The biggest problem with the waiver is that it is unnecessarily expensive.  Straight up Medicaid expansion would have been cheaper than paying providers Exchange rates but that has never been on the table.  As Arkansas needs to pay 5% and then 10% of the total expansion costs, switching back to a straight expansion would get increasingly attractive as a means of reducing the state government cost exposure.

So let’s look at the details:

• Requiring individuals eligible for Medicaid to enroll in employer-sponsored insurance where available, with Medicaid covering employees’ costs that would exceed Medicaid levels

This is straight forward. Medicaid should be the payer of last resort, so if ESI coverage is available, it should be the primary payer. Medicaid will be used as secondary coverage to reduce cost sharing to no more than 5% of total income. Coordination of Benefits is an administrative pain in the ass, but this happens everywhere.

• Requiring premium payments for beneficiaries with incomes above 100% of the federal poverty level, with a consideration of contributions for those with incomes above 50%.

CMS has approved 2% premium requirements for people making more than 100% FPL. This will get approved. Premiums for people making under 100% FPL are solely designed to force people out of the program as the administrative cost of collecting a $3 per person per month premium means there is no net payment by the individual for actual medical care.

• The state would offer enhanced coverage and other incentives for those who comply and meet goals set in Healthy, Active Arkansas, a Hutchinson initiative encouraging wellness.

This is not a big deal, it is a wellness program that CMS has approved in other states. I don’t think it moves the needle all that much on cost or quality outcomes, but it does not hurt as long as participation is not mandatory.

• Care coordination for medically frail individuals

This is a good thing in and of itself.

• Verifying beneficiaries’ incomes through enhanced data matches.

This is an administrative back-end plumbing tweak. It will most likely be used to force marginal cases out of Expansion and onto the Exchanges. The state wants to look at more databases to build an income profile (food stamps, tax records, lottery winnings etc)

Here are some of the areas where I think fights will occur:

• Eliminating the current retroactive eligibility that allows new beneficiaries to be covered for expenses incurred 90 days before they were enrolled.

Medicaid is assumed to be the payer of last resort and there is a presumption of eligibility. Medicaid in most states is not concerned about adverse selection problems as they assume that they are the dumping ground for adverse selection. Medicaid has a bad risk pool. The problem is Arkansas is trying to use an at risk insurance model for Medicaid where presumptive eligibility creates massive adverse selection problems. I could see CMS agree to a 30 day walkback from the date of application but not the elimination of presumptive eligibility.

• Restricting coverage or requiring greater cost sharing by individuals with substantial assets.

Medicaid expansion’s only eligiblity requirements are citizenship (or 5 years of legal residency) and income. There are no asset tests in PPACA. I am having a hard time seeing CMS approving a waiver that institutes asset testing even if the threshold is a million dollars (ie the lottery winner who now does not work and is on Medicaid). If the goal of Expansion is to help the working poor, creating asset tests traps people in a narrow income range as they can’t afford a newer car, or they can not afford to save against expected but unknown shocks.

This is the area of straight up disapproval in my eyes:

• Implementing work training referral requirements with a continued discussion with President Obama’s administration on specific work requirements.

CMS has been vehement against tying eligibility to work requirements. At the most, CMS has told states that they are free to set up and offer voluntary work training programs that are targeted at Medicaid Expansion populations with state money but eligibility is independent of work status.