Is Arkansas’s Medicaid private option a done deal?

Me, Aaron, Adrianna, and Karan kicked this question around by email this morning. We did not agree whether Health and Human Services (HHS) is or is not likely to walk back its “deal” to permit Arkansas to enroll its Medicaid expansion population in the exchanges. Deal is in quotes because it isn’t crystal clear what the terms of the deal are or even if they’ve been specified. In my book, a vague or uncertain deal is not a deal.

The grounds for walking it back  — whatever “it” is — would be cost. The grounds for not doing so is that it may be the only way to secure coverage expansion for very low income individuals in the state (and, perhaps, Florida, and, perhaps, other states to come). Coverage expansion comes with a lot of benefits, for the insured, for providers, for insurers (the way Arkansas wants to do it). Moreover, the larger, automatic stabilizing effect of a bigger Medicaid comes with a macroeconomic benefit. But, yes, coverage expansion comes at a cost, which will be higher for private plans than traditional Medicaid.

I put the question of whether HHS could or would walk back the “deal” to Damon Terzaghi, now with the Marwood Group and former health insurance specialist with the Centers for Medicare & Medicaid Services (CMS). At CMS he was responsible for the review and approval of state Medicaid proposals.

Despite the headlines related to the HHS ‘approval,’ there is still a lot of ambiguity regarding the details of the proposal and its interaction with CMS’ proposed regulations and guidance. CMS and the state [Arkansas] still need to reach formal agreement on issues such as beneficiary cost-sharing, included benefits, and overall cost of the proposal.

I guess my sense of the situation is that there hasn’t yet been a formal proposal presented/approved. CMS put out guidelines in Dec & a proposed regulation in Jan. that allow the option Arkansas requested. My sense of everything I’ve heard/read from AR is that it’s a preliminary idea floated that would serve everyone on the exchanges. HHS’ approval was likely something along the lines of “yes you can provide Medicaid via exchange plans under Sec. 1905 authority.” They’ll still need to work out important details like pricing/benefits/cost-sharing/etc.

So, I guess from my perspective, HHS doesn’t necessarily need to walk anything back. They need to get a fully fleshed out proposal and apply the standard review process to it. When I was at CMS, we frequently got state proposals that were draft/tentative. Our response was generally “yes this could probably work, but we need to see a formal proposal.” Obviously the politics were elevated when the Governor spoke to the Secretary, but I would imagine that the underlying dynamics would be similar.

This certainly sounds like HHS has the scope to narrow the “agreement” with Arkansas or any other state to limit financial exposure. That doesn’t mean HHS will do that, and whether it does probably has more to do with politics than anything else.


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