Arkansas will no longer auto-assign new Medicaid expansion enrollees to private plans

State Medicaid officials made a subtle change this month to reduce the number of low-income Arkansans who receive financial assistance to purchase private health insurance.

Previously, those eligible for the state’s expanded Medicaid program who didn’t choose a commercial health plan would be automatically enrolled in one.

But with the Sept. 1 policy change, the state will leave recipients who don’t choose a private plan in the traditional, fee-for-service Medicaid program.

The tweak to the ARHome program — Arkansas’ current Medicaid expansion program — aims to cut costs and remain within enrollment and budget limits.

Officials don’t think the change is a big deal, but experts say they’re concerned about the effects on those entering the program.

Joan Alker, executive director of the Georgetown University Center for Children and Families, said key questions, like whether beneficiaries’ access to care suffers, must be the focus of state health officials.

“When a state makes budget-driven decisions, you have to be really careful that they’re not coming out of care that the beneficiaries need,” Alker said. 

“That’s not to say there aren’t ways to save money in the Medicaid program. But from a beneficiary perspective, it’s really important to make sure these people have access to the care they need, and I’d really worry in a budget driven situation that that’s not going to happen.”

Elizabeth Pitman, director of the Arkansas Department of Human Services’ Division of Medical Services, emphasized in an interview that those affected will be notified that they are still able to choose their own plan at any time.

“From a policy perspective, I don’t see it as a huge deal,” she said. “Only 25% of members are going out and actually selecting a plan. They will still be able to do that, so we’re not taking anyone’s choice away from them. We’re just trying to monitor our overall budget neutrality.”

The larger challenge, Pitman said, is the agency’s implementation of the change. Though early, there haven’t been any snags or complaints yet, she said.

Pitman’s agency is authorized to make the change under the 2021 state law that created the program.

The program

The composition of the ARHome population triggered the change. Recently, enrollment in commercial plans — called qualified health plans, or QHPs — comprised 90% of people in the program.

The other 10% is made up of people eligible for traditional Medicaid, typically those considered “medically frail” or members of certain indigenous groups.

DHS’ target is 80% in QHPs and 20% in fee-for-service Medicaid.

Pitman said auto-assignment into QHPs would resume once the population returns to 80%. 

The federal Public Health Emergency has also contributed to DHS’ budgetary concerns. Under the emergency, states can’t remove Medicaid recipients from the program, except in limited circumstances, even if they become ineligible. The moratorium has contributed to a more than 20% growth of Arkansas’ Medicaid rolls since the start of the COVID-19 pandemic.

There are more than 1.1 million Arkansans who received health coverage through Medicaid. Roughly, 342,000 were enrolled in ARHOME as of Aug. 31, according to DHS.

The number of new enrollees varies each month. In August, total enrollment in the program increased by 1,970, according to DHS data.

The program is expected to cost $2.67 billion this fiscal year. The federal government covers 90%, while the state covers the remaining 10%, or $267 million.

The change

Previously, DHS would automatically assign new enrollees to one of five QHPs 42 days after enrollment. To select a plan, the agency used a round-robin style algorithm that also considered factors like a plan’s market share. 

Enrollees could also pick their own plans, but only a quarter did. They still may, but advocates expect roughly 75% will end up on traditional Medicaid. 

At the population level, everyone agrees this move will likely save federal and state money for several reasons.

First, traditional Medicaid is fee-for-service, meaning there are no insurance premiums and payment is only due when care is received. 

So, a healthy individual who rarely visits the doctor requires less money in a fee-for-service plan versus a typical, premium-driven insurance plan.

Second, the reimbursement rates for providers who treat fee-for-service Medicaid patients is lower than for patients with commercial health insurance. 

For this reason, the change is “not a favorite of hospitals,” according to the Arkansas Hospital Association. 

Lastly, traditional Medicaid’s administrative costs are less than those associated with commercial plans.

Dr. Joe Thompson, president and CEO of the Arkansas Center for Health Improvement, expects the change to save the state money, but it isn’t a sure thing. Thompson, former state surgeon general, was one of the architects of Arkansas’ Medicaid expansion program, initially known as the “private option.”

“It’s a little bit of a gamble,” he said. “If DHS keeps more of the sicker people and they have more expenses, then like a self-insured company they’re going to have to pay more than if they had put them [in QHPs], which would have been an insurance product that spread the risk across the payers in [the] system.”

Concerns

The primary worries some have is that access to doctors and quality care will be worse for those enrolled in traditional, fee-for-service Medicaid. 

Loretta Alexander, health policy director for Arkansas Advocates for Children and Families, noted that in its waiver requests to the U.S. Centers for Medicare and Medicaid Services state health officials have said they expect those enrolled in QHPs to have better access to care than those on traditional Medicaid.

“They make the argument themselves,” she said. 

Pitman, one of the state’s top Medicaid officials, in an interview acknowledged that QHPs are more favorable for providers. However, she said, the fee-for-service Medicaid program has a plan with identical coverage to what is available in the QHPs.

“I don’t think that the coverage plan is better in a QHP, but the perception is that it is,” she said. 

A 2018 study of Arkansas’ Medicaid expansion program did find differences in health care access and quality between those enrolled in QHPs and traditional Medicaid.

Among the advantages for those in QHPs, the Arkansas Center for Health Improvement study found:

• Initiation of care occurred more rapidly for enrollees in QHPs than for those on Medicaid.
• QHP enrollees were able to access primary and specialty care more quickly than those with traditional Medicaid.
• Fewer emergency room visits among those in QHPs.
• QHP enrollees were significantly more likely to receive individual clinical preventive services and were more likely to receive all recommended screenings.

ACHI also conducted “secret shopper” calls, in which trained callers reached out to providers to schedule appointments. The goal was to measure differences in the outcomes of the calls when providers were told a caller was on Medicaid versus a commercial plan. 

The results showed that callers were less likely to secure appointments when they told clinics they were on Medicaid. Furthermore, appointments for those purporting to be Medicaid beneficiaries were more likely to be with nurse practitioners instead of doctors. 

“It looked to us like there was a tiered access,” Thompson said.

Others have concerns about the communication of the change. Some stakeholder groups last week were still unaware of it, and Alexander said it will be difficult to clearly communicate the implications to Medicaid recipients.

“I don’t think most people on Medicaid are aware of their options,” she said. “They go to the DHS office, apply and they take what they get.”

A DHS spokesman said the agency conducts regular evaluations of the access and quality of care for beneficiaries of both traditional Medicaid and commercial plans. 

“This is a CMS requirement and is used to improve services offered both through the QHP and through FFS Medicaid,” spokesman Gavin Lesnick said. 

Additionally, the agency surveys Medicaid recipients twice a year to gauge perceptions about care.

Thompson summed up the change in a way that fits many complex public policy choices.

“I think as a lever to safeguard the state’s budgetary resources, this makes sense,” he said. “I think, like every policy decision, it has implications.”