State reform update: Ark. Medicaid alternative in spotlight as other states mull similar plans

Arkansas lawmakers gave final approval Wednesday night to the governor's plan to use new federal Medicaid funding to buy private coverage in the coming insurance exchanges.

The bumpy advance of the unusual proposal is continuing to get notice in other conservative-leaning states. Now it's likely to draw intense federal scrutiny.

The plan gained passage Tuesday in the Republican-led House, 77-23, after it failed in the same chamber a day earlier. The Senate passed the measure late Wednesday.

Democratic Gov. Mike Beebe is expected to sign the bill. "It's taking something that most Arkansans would never have approved and making it better," Beebe told reporters Wednesday, according to the Associated Press. "And making it fit for Arkansas."

Success in the Arkansas legislature will "allow other states to evaluate what they're going to do on the expansion, including states like Ohio,” said Edwin Park, vice president for health policy at the liberal Center on Budget and Policy Priorities.

State legislators have discussed similar ideas in Florida and Texas. And Marilyn Tavenner, acting administrator of CMS, said last week that her agency is in discussions with “a handful” of other states about using approaches similar to Arkansas to expand their programs.

The Arkansas plan also was notable for spurring the CMS to issue some of the rare guidance it has provided states looking for flexibility (PDF) to meet the provisions of the reform law and still garner the support of more conservative legislators. Those details—issued March 29—may help other Republican-led states looking to use a similar approach, Park said.

Despite the CMS' strong interest in the Arkansas approach, Tavenner emphasized to senators at her April 9 confirmation hearing that the CMS has yet to approve any aspect of Arkansas' plan.

Federal regulators are expected to look closely at the plan, said Denise Rodriguez, a healthcare attorney at Foley & Lardner. “The question will be whether it's cost-effective,” Rodrigues said.

Cost effectiveness is a CMS requirement. Estimates from the state concluded that Arkansas' approach, compared to a standard expansion of the state's Medicaid program, carried a relatively small cost for Arkansas taxpayers and would reduce federal costs. However, policy experts are uncertain whether CMS officials will consider other financial and coverage details in their own cost analysis.

Other state legislatures are dedicating considerable attention to the Medicaid dilemma:

• A Florida Senate panel passed two competing Medicaid expansion plans on Wednesday.

  One plan would use federal funds to expand coverage to about 1.1 million residents, while the other would rely on state monies to cover only about 115,000 residents, according to the Associated Press.

  The smaller expansion is backed by House leaders, who remain strongly against accepting federal funds under the Affordable Care Act. However, Senate Republicans have tried to advance a plan similar to the broad expansion urged by Republican Gov. Rick Scott.

  Both chambers voted against a straight Medicaid expansion early in the session.

  Keeping the two different options alive would allow further negotiations during the legislature's final three weeks, according to some senators.

  The broader plan, endorsed by Republican Sen. Joe Negron, would give the federal money to Medicaid beneficiaries in the form of vouchers and allow them to choose a private insurance plan on the coming federal health insurance exchange. It unanimously passed the committee and received support from businesses, labor advocates and healthcare providers.

  A bill similar to Negron's measure was rejected in a House committee Monday, while the narrower expansion was approved.

• North Dakota Gov. Jack Dalrymple, a Republican, signed legislation to extend Medicaid eligibility to about 20,000 more residents on Tuesday, according to the AP.

  North Dakota's Medicaid program now covers about 65,000 people each month. The new enrollees are expected to comprise mostly adults without children.

  The state's Republican-led legislature reluctantly voted last week to expand Medicaid and sent the bill to the governor.

  GOP lawmakers in both chambers said they felt forced to vote to expand Medicaid because they were concerned residents would face added costs for lacking insurance if they did not grow the program.

Follow Rich Daly on Twitter: @MHrdaly