Proposed Facelift For Arkansas’ Medicaid Expansion Sparks “Equal Access” Questions

MM Curator summary


The proposed use of community engagement requirements to get Medicaid managed care (vs fee for service) is being targeted by opponents as a violation of the equal access clause of SSA.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


For the most part, Arkansas has been successful in navigating state politics and the federal waiver process to expand Medicaid coverage for its residents, albeit with that navigation resulting in some dubious policy choices. Arkansas intermittently added waiver features such as work and community engagement requirements, premium obligations for enrollees with household incomes above 100 percent of the federal poverty level, and health independence accounts (a swiftly discontinued feature that was operationally flawed) to achieve the required supermajority vote in both state legislative chambers to continue funding authorization for Medicaid expansion.

However, the major and most innovative feature of the state’s Medicaid expansion has been the use of “premium assistance”—a long-standing option for Medicaid but made feasible by standardization of the essential health benefit. Instead of enrolling eligible individuals in the Medicaid fee-for-service program or managed care organizations, Arkansas used Medicaid dollars to purchase individual market qualified health plans (QHPs) available on the Affordable Care Act’s newly established health insurance Marketplace. By doing so, the state unquestionably met the Medicaid “equal access” requirement—the requirement that payments are “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area” for the expansion population.

Arkansas’ expansion program is currently undergoing another facelift with the passage of enabling legislation for Arkansas Health and Opportunity for Me, or ARHOME . This version of Medicaid expansion still sits on the chassis of premium assistance, but it incorporates incentives for “full-time work and attainment of economic independence” and “encourages personal responsibility for individuals to demonstrate that they value healthcare coverage and understand their roles and obligations in maintaining private insurance coverage.” Failure to participate in so-called “economic independence incentives,” including work and community engagement, does not result in loss of coverage as it did before. Courts and the Biden administration have closed that door. Instead, as initially proposed in the enabling legislation and as previously stated by supporters in remarks to the news media, an ARHOME enrollee in a QHP could be moved into Medicaid fee-for-service for failure to participate.

Evaluating The Premium Assistance Model

Being moved from a QHP to the Medicaid fee-for-service program could certainly be viewed as a penalty. After all, the stigma of Medicaid has been documented and is among the many reasons that Arkansas opted for a premium assistance model in the first place. The federally required evaluation of the Health Care Independence Program—the first iteration of expansion in Arkansas that was also known as the “Private Option”—showed that Medicaid enrollees in QHPs experienced better access—both perceived and actual—and higher-quality care than enrollees in fee-for-service. This is not at all surprising: It follows the mantra, “You get what you pay for.” The evaluation found that physician payment rates for outpatient services were about 95 percent higher in each of the three years under study for enrollees in a QHP compared to their Medicaid fee-for-service counterparts. For inpatient stays, there was a 53 percent difference in payment rates per discharge, inclusive of supplemental payments above the base rates.

These cost-related findings from the evaluation have been used by some Arkansas legislators to argue that the state should save its money by ending the premium assistance approach and moving all of the enrollees into Medicaid fee-for-service. In fact, a group of legislators filed a bill to do exactly that. Fortunately, the majority of the Arkansas General Assembly has not been tempted to move in that direction, confident that the premium assistance approach has not only improved quality and access for expansion enrollees but has also benefitted the individual insurance market by promoting enhanced competition and stabilizing premiums. Equally if not more attractive are the fiscal benefits to the state budget and providers from higher QHP reimbursement rates, which have shored up the state’s rural hospitals (only one has closed in Arkansas in recent years, compared to 57 in surrounding states that did not expand).

Medicaid Premium Assistance Versus Fee-For-Service

The ARHOME waiver application appears to have walked back on “reassignment” of QHP enrollees to Medicaid fee-for-service for failure to participate in economic independence incentives as originally proposed. The application indicates both a delay in implementation until 2023 and a regulatory process for defining what it means to be an “inactive” beneficiary for purposes of reassignment. Regardless, the waiver feature as originally proposed has sparked a debate about the Medicaid “equal access” requirement and whether compliance is in question.

Evaluation of the premium assistance model in Arkansas established that the QHPs provided beneficiaries with enhanced access and quality. Ideally, state officials would have used the evaluation findings to acknowledge and address what led to the disparities in access and quality—that is, the insufficiency of Medicaid fee-for-service payments. Instead, the ARHOME waiver application now proposes to evaluate “whether beneficiaries enrolled in a QHP recognize and value the health coverage as insurance above and beyond Medicaid medical assistance.” Federal officials should vigilantly examine compliance with Medicaid “equal access” requirements before considering waiver proposals from any state that would reassign a beneficiary to a care delivery strategy with lower provider payments.

To be fair, Arkansas Medicaid officials have launched a systematic review of reimbursement rates in response to a 2019 executive order issued by the governor, and the review must consider “the availability and access to care in each area of the state.” Prior to the executive order, there was no schedule or standardized process for rate review, despite the state’s being subject to a consent decree that requires court review of rate changes. In place since 1993, the consent decree is the result of a lawsuit brought by provider groups, and, while intended to ensure sufficient Medicaid payment rates, rates have actually stagnated under court oversight, with some providers not seeing rate increases in more than a decade.

Consent decrees resulting from “equal access” lawsuits have been at risk of being dissolved since the US Supreme Court held in 2015 that health care providers have no right to sue to enforce the terms of the federal Medicaid statute. To date, Arkansas Medicaid officials have not moved to dissolve the consent decree, but recent legislation passed by the Arkansas General Assembly requires the state to seek reconsideration of the consent decree in light of the 2015 Supreme Court decision.

Back And Forth On “Equal Access” Monitoring

Following the 2015 decision, the Obama administration issued regulations requiring states to regularly submit reports documenting their monitoring of access for Medicaid enrollees and to prospectively submit for federal review any proposed rate reductions or changes that could result in diminished access. However, as documented in this Health Affairs blog post, in 2019 the Trump administration proposed regulations that would have abandoned efforts to ensure some level of state-based monitoring. What is more, the proposal fully retreated from prospective federal review of Medicaid provider payment reductions. Interestingly, the Trump administration’s proposed regulations were never finalized, which means that the Biden administration could rescind the proposed rule and reexamine whether the Obama-era regulations are effective at ensuring access.

Such an examination should consider the following questions at minimum:

Are State-Based Assessments Of Payment Rates And Monitoring Of Access Rigorous Enough To Determine Compliance With The Law?

As has been the case with demonstration waiver evaluations, the administration should be clear about the data collection, methodological, and measurement expectations for state reporting. It should also consider requiring an independent assessment.

How Do Medicaid Rates Compare To Both Medicare And Commercial Insurance Payment Rates?

Data to enable these types of comparisons are increasingly available. Both states and the federal government have invested in state-based all-payer claims databases, and they should use them as an available tool to enhance the assessment.

Should The Administration Establish A Standard Rate-Setting Methodology And Network Adequacy Requirements For Medicaid, Irrespective Of The Care Delivery Strategy?

Clearly Arkansas’ fee-for-service rates fall short of meeting the Medicaid “equal access” provision, and many other states report similar disparities, despite federally required access monitoring and reporting requirements. While offering the opportunity for more comprehensive measuring and stringent monitoring of access and quality contractually, managed care strategies similarly disappoint on the payment front. State requirements for managed care plans to offer minimum provider reimbursement—if there are requirements—are often tethered to Medicaid fee-for-service rates. The use of Medicaid premium assistance through QHPs by definition meets the “equal access” standard. Should we not expect more of other Medicaid delivery strategies?

The “equal access” quandary might not be at the top of the Biden administration’s policy priorities, but Arkansas’ waiver proposal is certain to provoke questions about how the administration can possibly square approval of a reassignment feature while advancing broadly applicable equal-access regulations. As the administration negotiates with states on one-off waiver features, it should be careful not to send mixed messages and erode long-established—albeit ill-defined and tepidly enforced—beneficiary protections engrained in Medicaid law.  


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