A bi-partisan group of legislators have released an alternative proposal to Governor Asa Hutchinson’s controversial plan to reduce the State’s Medicaid budget. “DiamondCare” utilizes Administrative Services Organizations (ASO) instead of implementing capitated managed care, which has had numerous problems in several other states. Earlier last week Governor Hutchinson said that he would not allow the DiamondCare proposal to be heard in this week’s special session.
According to a study performed by The Stephen Group, the DiamondCare plan will reduce the State’s Medicaid budget by $1.057 billion over the next five years. DiamondCare sponsors and proponents argue that an ASO model is preferable to managed care because of its speed of implementation and its focus on patient care. DiamondCare builds upon the success of the current Arkansas Medicaid Patient Centered Medical Home model that saved $34 million in its first year. The model would also be friendlier to the patient by utilizing the existing network of Medicaid providers and includes funding to reduce the waiting list for persons with developmental disabilities.
“Patient Centered Medical Homes work to raise quality and lower cost by placing the patient in the center and giving the medical provider incentives to achieve quality care at a lower cost”, said Representative Michelle Gray.
The Governor’s Plan would implement a managed care model in which the State contracts with a for- profit, out-of-state company to function as a manager of cost and services. Opponents of managed care argue that the model saves money by cutting services to the Medicaid population and that any money saved is paid to the managed care company. One of the largest national managed care companies, Centene, collected $22.8 billion dollars in revenue in 2015. Managed care companies in other states have been the subject of FBI investigations, fraud allegations, nepotism complaints, “pay to play” accusations and numerous fines and lawsuits. DiamondCare sponsors claim that most of the savings produced by their model would go back to the taxpayers instead of a managed care company.
"I don't know how to explain to my constituents that I took their tax dollars, sent that money to an out-of- state company, grew their government, and then cut their Medicaid services. From everything I have seen, the only way that managed care saves money is by cutting services. DiamondCare gives us the savings that we need to have a sustainable Medicaid program without sacrificing services to the citizens of Arkansas,” said Senator John Cooper.
A Mercer and Associates study of the Missouri Medicaid program found that the managed care company operated by Centene delivered savings ranging from 0.1 to 2.7 percent from 2010 to 2014. The report stated that managed care will typically result in savings from 3 to 6 percent. In the 2014 fiscal year, the Arkansas Medicaid Budget was $4.89 billion dollars. The $1.057 billion in savings contained in DiamondCare would have yielded a 4% savings without having to cut services or pay a managed care company. The State of Georgia has paid Centene around $4 billion dollars over four years.
Several legislators have expressed their support of DiamondCare because it builds on the friendly working relationship between the legislature and health care providers and allows the State to retain oversight of services and reimbursement rates.
“The medical providers in Arkansas helped us reduce the Medicaid budget in Arkansas by over 20 percent. Right now we are seeing a very harmonious relationship between state government and the providers. DiamondCare embraces that and leaves the door open for more cooperation with providers.
Managed care closes that door,” said Senator Keith Ingram.
DiamondCare is sponsored by Senators Linda Chesterfield, Missy Irvin, Keith Ingram and John Cooper and Representatives Justin Boyd, Deborah Ferguson, Joe Farrer and Michelle Gray. The legislators hope to persuade Governor Hutchinson to allow the proposal to be heard during the special session.
“In order to get the best results for the people of Arkansas, all voices should be heard,” said Senator Linda Chesterfield.
The DiamondCare sponsors will hold a press conference tomorrow, Tuesday April 5th, at 1:30pm in the Old Supreme Court at the Arkansas State Capitol to publicly release the bill, discuss its merits and answer questions.