Meet the author

Erika Ross Gee


Little Rock, AR

Attorney Erika Ross Gee


Attorney Erika Ross Gee

Tuesday’s primary results might constitute a positive sign for Gov. Asa Hutchinson’s version of Medicaid expansion, dubbed “Arkansas Works.” Specifically, eight House and Senate races were targeted by opponents of the private option and the outcomes of those primaries were considered by many as a possible mandate on Arkansas Works.

For that reason, the governor also supported and endorsed candidates in those eight races and, of them, the governor’s preferred candidate won six of the eight seats. Although it is too early to predict the real effect these elections results might have on Arkansas Works, they would certainly seem to provide the governor’s effort with some momentum.

The Health Care Reform Legislative Task Force is scheduled to meet Monday to vote on recommendations for legislation to implement Arkansas Works, which will be considered at a special session beginning April 6. One of the biggest — and most controversial — aspects of the reforms that the task force will consider is the role that managed care will play in the governor’s final proposals. So far, this issue has been overshadowed by larger, more public, aspects of the effort to continue the Medicaid expansion. But behind the scenes, the role of managed care has dominated a great deal of the conversation about reforms.

Although more than half of all Medicaid beneficiaries nationwide receive at least some of their care through a third party managed care organization, Arkansas has not yet embraced this concept. The Stephen Group, which was engaged to advise the task force on this and other aspects of reform, has praised the state’s efforts to make reforms at the Medicaid provider level through establishing “payment improvement” models, such as “primary care medical homes” and “episodes of care”. However, The Stephen Group has also noted that three quarters of Medicaid expenditures are “unmanaged,” and it has strongly and consistently recommended that the state adopt a broader, more comprehensive managed care model.

Models of Managed Care

So, what is managed care? There are different models of managed care, but the dominant models presently in use involve a third-party managed care organization. In “full-risk managed care,” the Medicaid program pays a fee called a “capitated payment” to the MCO to cover all services for defined period of time. In “partial-risk managed care,” the program pays a capitated payment to the MCO to cover a smaller, defined set of services, and the Medicaid program covers the rest under the current fee-for-service model.

In either case, the MCO takes the financial risk that the capitation payment will be sufficient to cover necessary services for each patient. This has the benefit of allowing the state to budget for predictable Medicaid costs. On the other hand, provider groups argue that the capitation model often results in limited patient access to necessary care.

In its report to the task force last October, The Stephen Group recommended that, based on its experience in other states, Arkansas should implement full-risk managed care across all populations. As an alternative to managed care for the entire program, the consultants suggested that the state should implement full-risk managed care for the aged, blind and disabled population — which represents 74 percent of expenditures — and expand the current payment improvement models to cover three especially high-cost populations: the elderly and physically disabled; the developmentally disabled; and those with severe and persistent mental illness.

What the Governor Might Do

As a final alternative, The Stephen Group suggested that the current payment improvement models be expanded to the entire Medicaid population, without incorporating any model using MCOs or capitated payments.

Thus far, the task force has not indicated any interest in a full-risk managed care approach for the entire Medicaid program. Instead, the discussions and the task force recommendations have centered on a using some type of managed care model for particular patient groups, with a goal of saving “at least $835 million,” but without including full-risk managed care.

In order to achieve those savings, the governor is widely expected to suggest implementing some kind of managed care for the behavioral health, developmental disabilities and, possibly, long-term care populations.

We can anticipate that the discussions and votes at Monday’s task force meeting will bring some clarity and public focus on the outlook for managed care and its potentially huge impact on our health care system. It will also be the first real indication of the primary election’s effect on support for continuing the private option in some form and a good preview of what to expect in the April 6 special session.