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State's Medicaid spending falls off; $22 million drop first in officials’ memory

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Photographs by Staton Breidenthal

Arkansas Democrat-Gazette/STATON BREIDENTHAL --3/5/18-- Department of Human Services Director Cindy Gillespie (middle) talks Monday along with Gov. Asa Hutchinson (left) and Centers for Medicare and Medicaid Services Administrator Seema Verma about a waiver to allow the state to implement a work requirement for Arkansas Works enrollees.

Arkansas' Medicaid spending fell by $22 million in the fiscal year that ended June 30, the first annual drop in spending for the program state officials could remember.

The overall decrease came despite slightly higher spending on Arkansas Works, as the expanded part of the state's Medicaid program is known.

Arkansas Works spending rose by less than 1 percent to $1.91 billion. That was more than offset by a $31 million decrease in spending on the traditional Medicaid program, which covers primarily children from low-income families and poor people who are elderly or disabled.

Combined, spending on both parts of the Medicaid program fell by 0.3 percent, to $7.1 billion, according to the state Department of Human Services.

"That is the first time we're aware of that's ever happened in Arkansas history," Gov. Asa Hutchinson said.

He credited lower enrollment as well as the state's efforts to slow the growth of spending on the program.

"This is not a change in services," he said.

From July 31, 2016, to June 30, 2018, enrollment in both Arkansas Works and traditional Medicaid fell from just over 1 million to about 959,000, according to Human Services Department records.

The federal government pays about 70 percent of the cost of the traditional Medicaid program and a larger share of the cost of Arkansas Works.

Under the 2010 Patient Protection and Affordable Care Act, the federal government paid the full cost of Medicaid expansion from 2014-16.

Last year, Arkansas became responsible for 5 percent of the cost. The state's share will increase to 7 percent next year and then to 10 percent for 2020 and beyond.

The expansion extended Medicaid eligibility to adults with incomes of up to 138 percent of the poverty level. This year, for instance, the cutoff is $16,753 for an individual or $34,638 for a family of four.

In the fiscal year that ended June 30, 2017, Arkansas was responsible for about $1.6 billion of the cost of traditional Medicaid and $38 million of the cost of Arkansas Works.

Marci Manley, a spokesman for the Human Services Department, said she didn't have information on Arkansas' share of the costs for traditional Medicaid and Arkansas Works for fiscal 2018.

Under the so-called private option, most Arkansas Works enrollees are covered by private plans offered on the state's health insurance exchange, with the Medicaid program paying the premium.

After surpassing 340,000 in 2017, enrollment in Arkansas Works began falling last year, in part because of efforts by the state to verify enrollees' eligibility. By June 30, about 287,000 people were enrolled.

Despite the drop in enrollment, spending on the program rose because of annual increases in the premiums charged by insurance companies for private option plans.

In January, when the increases took effect, the state's payments to the companies increased more than 14 percent, to $578.27 per enrollee.

In the traditional, fee-for-service Medicaid program, average enrollment at the end of each month fell by about 2 percent from fiscal 2017 to 2018, from 694,000 to 680,000.

Spending on that part of the program over the same period fell by less than 1 percent, from $5.226 billion to $5.195 billion. The drop included a 2.9 percent reduction, to just over $1 billion, in payments for inpatient and outpatient hospital care, and a 7.4 percent decrease, to $417 million, on spending on prescription drugs.

Meanwhile, spending on private nursing home care rose just 0.03 percent to $664 million.

State officials said changes to the Medicaid program helped keep spending down.

For instance, Paula Stone, deputy director of the Human Services Department's Division of Medical Services, credited a limit on reimbursement for group psychotherapy that took effect in October 2016 as well as an overhaul of how the state pays for mental health benefits that started on July 1, 2017, for reducing spending on mental health services.

Spending for those services fell by 6 percent, to $387 million.

Similarly, Melissa Stone, director of the department's Division of Developmental Disabilities Services (who is not related to Paula Stone), cited caps on reimbursement for speech, occupational and physical therapy for the developmentally disabled, which took effect July 1, 2017.

According to the department, spending on those services fell by 3.6 percent, to $164 million.

Hutchinson in 2015 set a goal of slowing the growth of spending on the traditional Medicaid program by enough to save $835 million from fiscal 2017-2021.

In a letter to Hutchinson last week, Human Services Department Director Cindy Gillespie said the state saved $288 million in 2017 and 2018 through changes to the program and an additional $341 million over that period through lower enrollment.

Those figures were based on a comparison of actual spending to what spending would have been if it had grown 5 percent each year from fiscal 2016 to 2018.

The legislative task force had projected savings of $230 million in fiscal 2017 and 2018 through changes that it recommended, Gillespie noted.

"While financial challenges remain, through your leadership, and with the ongoing support of the General Assembly, Medicaid is becoming more financially sustainable while ensuring services for those most in need remain intact," Gillespie said in the letter.

A Section on 08/06/2018

Comments

Whippersnapper says...

...and yet Arkansas' Medicaid spending is still far higher than it would have been had they not passed the "Private Option."

Posted 6 August 2018, 8:32 a.m. Suggest removal

titleist10 says...

The work program is good if you are able bodied you should not get govt assistance stupid/laziness should not be rewarded

Posted 6 August 2018, 9:03 a.m. Suggest removal

3WorldState1 says...

He credited lower enrollment as well as the state's efforts to slow the growth of spending on the program."This is not a change in services,"
Sounds like the spending is lower because we kicked 60k off. Am I missing something? Maybe we should kick another 60k poor people off. My guess is our spending would go down again. But I'm no math mathematician.

Posted 6 August 2018, 9:18 a.m. Suggest removal

GeneralMac says...

In one year enrollment went from 340,000 to 287,000.

"due in part to efforts to verify eligibility"
That is a drop of over 53,000
That means that over 15% of those receiving it last year were......ineligible.

Typical welfare.
Hand it out like candy and ask no questions.

When the amount seems high, check and find out over 15% of those getting the taxpayer funded welfare were ineligible.

Posted 6 August 2018, 9:20 a.m. Suggest removal

JiminyC56 says...

The spending is lower because they eliminated fraud. 53k people were removed from the program because they were not elgible.

Posted 6 August 2018, 9:48 a.m. Suggest removal

GeneralMac says...

Only a misguided liberal like 3WorldState would complain about kicking off 15% who were INELIGIBLE .

Posted 6 August 2018, 10:25 a.m. Suggest removal

GeneralMac says...

jIMMYC56 says......."eliminated fraud"

A few years back a small county in Minnesota debated hiring a full time Fraud Investigator.
Salary + benefits were not cheap.

Liberals like 3WorfldState cried" there is no fraud"

Soon after the weekly newspaper started publishing in their court results the list of people convicted of welfare FRAUD and the amounts $$$$$$$$$.
The lists were long !

At the end of a year the county discovered the fraud amounts assessed against the welfare cheaters was OVER TWICE the amount of the entire wages/benefits of the Fraud Investigator.

The real benefit was the DETERENT .

Welfare cheaters were starting to think twice if the risk of getting caught and their names made PUBLIC was worth it.

Liberals were proven wrong in their original concerns about " wasting money ".

Posted 6 August 2018, 10:34 a.m. Suggest removal

Goad says...

Looks like traditional Medicaid had the reductions in cost. As long as we are paying ins. Cos. To administer P.O., their costs wii increase. Shift everyone to Medicaid since we have the bureaucracy in place. Cut out profits & overhead of ins. Cos

Posted 6 August 2018, 12:01 p.m. Suggest removal

dunk7474 says...

Privatemac: You love the word liberal, but you can never name a conservative. Are you unable to name just one?

Posted 6 August 2018, 1:55 p.m. Suggest removal

arky12 says...

I believe that enrollment is down due to lack of informing people timely and the shortening of the enrollment period. People aren't just quitting they are systematically being cut off. I agree with another comment on this page that the "private option" is part of the increase in costs because to go private means adding the profit margins in on top of costs. The private option is that we pay the private insurance companies, Blue Shield, to insure the children and other's which they of course take a portion of for their profit margins rather than all of the tax funded $'s going directly to healthcare which is the only way Republicans could be convinced to even take the Medicaid expansion to begin with because after all, gotta give a little to the corporations can't just let well enough alone even when it's cheaper.

Posted 6 August 2018, 2:45 p.m. Suggest removal

GeneralMac says...

DUNK7474............Yes, I would call " conservative" the County Commissioners who authorized a fraud investigator to be hired in order to crack down on welfare fraud, require reimbursement, and get the benefits of a deterent by assessing fines, assessing reimbursement of welfare received fraudently, and publishing the names and amounts those welfare cheaters collected fraudently .

Posted 6 August 2018, 4:08 p.m. Suggest removal

dearlo says...

Yes just kill grandma and grandpa as well as poor and it will go down even more. Gezzz were at the bottom now seeing, teeth, hearing oh my health care should not be for those rump idiots. I predict that there will be a lot of changes in our next election we will and can make Our country great again. My favorite color is blue so that is will be the color I wear that day.

Posted 6 August 2018, 9:19 p.m. Suggest removal

LContreras says...

Ark and dearlo

Our brothers and sisters, the homeless and poor people are being pushed away from Medicaid paid by the federal government. Asa is not saving Arkansas funds, when the homeless and the poor show up at an Emergency Hospital or a Funeral home, Arkansas will pay the full cost

Virginia dropped the work restrictions. They have a smart Republican Gov.

Posted 9 August 2018, 2:27 p.m. Suggest removal

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