The proposed waivers enabling the “Private Option” are open for public comment and we’ve heard from the usual suspects opposed to the policy — but the loudest complaints have come from a group strongly in favor of the Private Option plan for Medicaid expansion: the state’s community health centers. Nine of the 11 letters submitted to DHS, and a substantial portion of the commentary at the public meetings, have come from Arkansas’ twelve federally qualified heath centers (FQHCs), which operate 83 health center sites serving more than 160,000 patients. At issue is a proposed change in reimbursement that the centers argue would put them out of business. With both Republican lawmakers and health-center leaders digging in their heels, the controversy has the potential to pose trouble for the implementation of the Private Option.
The hubbub is a bit complicated — dive in to the policy weeds after the jump...
Currently, the health centers, by law, are reimbursed for Medicaid recipients at an enhanced rate known as the prospective payment system (PPS). Under the Private Option plan, Medicaid expansion will be achieved via the government paying for the premiums of low-income Arkansans, who will shop for private plans on the state’s Health Insurance Marketplace. DHS is requesting permission from the feds to let the private carriers negotiate their own rates for this new expansion pool, rather than paying the PPS rate (the centers would continue to get the PPS rate for existing Medicaid eligibles and for the medically frail, who will go to the traditional Medicaid program rather than the Private Option).
“We want to let the private market work on its own, and let the private carriers pay the private carrier rates,” DHS spokeswoman Amy Webb said. “We want to be consistent across the board. We don’t want to be making exceptions. … The bottom line is we don’t want to be telling private insurance carriers who they have to contract with and how much they have to pay those providers. That’s for the carriers to work out.”
The reimbursement waiver is “really critical,” said Rep. John Burris, one of the key Republicans behind the expansion plan. “It goes straight to the heart of the Private Option.”
Located in underserved areas, federally qualified health centers offer comprehensive primary and preventative care, and by law must offer their full range of services to anyone that walks in the door, regardless of insurance status or ability to pay. The FQHCs charge a sliding-scale fee based on income. They offer coordinated and holistic care using a “patient-centered medical home” model, said Sip Mouden, Chief Executive Officer of the Community Health Centers of Arkansas, and they provide services that are in many cases more intensive than what the plans on the marketplace will be required to provide. “We take exception to trying to be put inside of a box to look like everybody else when we’re not,” she said. “Our model of care, our provision of services, is different.”
Currently 40 percent of the state’s FQHC patients are uninsured and another 28 percent are on Medicaid. Because of their mandate to serve everyone regardless of ability to pay, the centers receive federal grants to help cover the cost of treating the uninsured. Congress created the special enhanced PPS rate for the FQHCs because Medicaid reimbursement rates weren’t covering the cost of treating Medicaid patients; if the centers were going to continue their unique mandate of serving everyone that came through the door, they couldn’t shift the money allotted to covering the uninsured to cross-subsidize Medicaid patients. According to Mouden, even with the enhanced PPS rate, the average reimbursement for FQHCs is 80 cents for every dollar spent.
Mouden says that by law, if the centers get private reimbursement rates for the Private Option pool, it’s up to the state to make up the difference between that rate and the PPS rate (the private rate is likely to be significantly lower than the PPS rate — the centers project that private carriers may average a reimbursement of 59 cents on the dollar). Likewise, she said that if a carrier doesn't include the centers in its network, Private Option recipients should still be covered to go to the centers. Regulations released from the federal Centers for Medicare and Medicaid (CMS) this month appear to indicate that access to the centers is a mandated Medicaid service and that the centers must be reimbursed at the PPS rate. Prior CMS guidance was clear that “private option”-style plans would need to cover the cost of mandated services not covered by the private plans (commonly called “wraparound services”). On the surface, it would seem that DHS’s request runs afoul of CMS rules, but DHS and CMS officials have been working closely — I’ve got a line in to DHS asking whether they’ve gotten word that a private rate at FQHCs for the new population is kosher.
If the state was required to make up the difference up to the PPS rate, it would likely increase costs, though it’s hard to say just how much. The feds pay 100 percent of those costs for the first three years, which covers the entirety of the Private Option demonstration waiver, but Arkansas still has reason to be concerned. The state has to ensure that the Private Option maintains budget neutrality versus a traditional Medicaid expansion, and if the policy continues beyond three years, the state would eventually have to pick up some of the tab. That said, Mouden argues that FQHCs are cost-effective in the long run, pointing out that they currently provide services to 6 percent of Medicaid beneficiaries, but take up only 0.5 percent of Medicaid expenditures.
Mouden believes that if the proposed waiver went through, centers would be hit with unsustainable losses and many would be forced to close. Burris countered that in fact the centers will see a net gain because many of the currently uninsured will be gaining coverage. Part of the funding challenge that led to the PPS rate in the first place is serving large numbers of uninsured people. Even a private rate lower than PPS, Burris argued, is better than nothing in the form of uncompensated care.
“We’ve got to reassess the whole system because uncompensated care is going to go away,” Burris said. “[The health centers] are critical, but their whole model needs to change. Their whole model is built around treating an uninsured population. Well obviously that’s changing.”
It’s not that simple, according to Mouden. “We will never achieve 100 percent coverage,” she said. “I wish we could. But realistically, I know that we won’t. We’re always going to be the safety net.”
Inevitably, some people will remain uncovered even after the healthcare law goes into effect. Some will simply choose not to enroll in health insurance, even if it’s subsidized, even if that means paying a fine. Some populations, such as the homeless or the mentally ill, may prove difficult or impossible to enroll.
Still, a significant portion of the centers’ currently uninsured will move to coverage under the Private Option. However, the FQHCs predict that this won’t put much of a dent in the number of uninsured that they serve because they’ll be gaining new patients too. They point to the experience of Massachusetts; when it moved to near-universal coverage, as Arkansas aims to do, many other providers stopped doing charity work, leaving the centers as the provider of last resort. Even as Massachusetts has dropped all the way down to 2 percent uninsured, the percentage of FQHC patients in the state that are uninsured remains at 21 percent. Mouden argues that when the healthcare law goes into effect in Arkansas, centers are likely to see a similar number of uninsured patients and an increase in Medicaid patients; since they’ll be losing money on each Medicaid patient, they’ll be facing a massive hit if the reimbursement on many of those new patients is even lower.
Just what the impact of the Private Option expansion will be on the centers — whether Burris is right, or Mouden — is not a simple equation. There are a number of moving parts, and it’s largely dependent on factors we currently don’t know, such as how many uninsured will remain in the state and what rates the private carriers will pay. Burris, along with Sen. David Sanders and Sen. Jonathan Dismang, have requested projections from Mouden; Burris told me that one of his main frustrations was the lack of numbers and analysis to back what strike him as counterintuitive assertions. Mouden is preparing projections and has been meeting with lawmakers from both parties, including the governor, this week.
Burris expressed concern about a lawsuit, and said “if they sue, it’s over” — he believes that the legislature would balk at proceeding with the Private Option if this policy question was tied up in litigation. Mouden declined to comment on any possible legal action and said she was focused on trying to educate lawmakers and stakeholders about the role of FQHCs. “I’m going to focus on how we can make this right within the process and system that’s been established,” she said.