Highlight on Arkansas: Medicaid norm needs reform, expansion isn’t the problem

A report commissioned by the Arkansas state legislature determined that a decision to end Medicaid expansion in Arkansas could result in “substantial costs” to the state. The Stephen Group report contained recommendations on health care reform for the state. The goal of the report was to inform an Arkansas Health Reform Legislative Task Force, which was charged with recommending a model to replace Arkansas’ Medicaid expansion program: the Health Care Independence Program (HCIP), also known as “the private option.”

Medicaid expansion

Arkansas uses federal money from the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) Medicaid expansion to subsidize private health insurance for Arkansas residents earning up to 138 percent of the federal poverty level. However, the private option program is slated to end on December 31, 2016. The program will generate added costs for Arkansas if it continues into 2017, with a share of the program cost that will increase to 10 percent by 2021. However, an earlier preliminary report released by the Stephen Group in August 2015 found that a reversion to traditional Medicaid could cost the state up to $438 million.


The most recent report from the Stephen Group, released in October 2015, makes recommendations as to how Arkansas should modify its Medicaid expansion program. The recommendations of the October report are premised on a continuation of the Medicaid expansion program. The report made three “fundamental recommendations” to improve care quality, reduce taxpayer burdens, and make Medicaid service delivery more efficient. The report recommended that the Arkansas legislature should: (1) make efforts to turn HCIP into a transitional program that helps beneficiaries find work, improve their health, get off of aide, and move “up the ladder of opportunity;” (2) bring managed care to all Medicaid beneficiaries; and (3) improve eligibility and program integrity efforts to ensure that Medicaid is only received by the truly eligible.

Specific recommendations

Specific recommendations made by the report included ideas to require beneficiaries to sign “wellness agreements,” which would mandate certain wellness practices, and job searching for the unemployed. Another suggestion was based upon the idea of a “wellness report card,” which would lead to premiums and co-pays for those that failed to meet wellness objectives. For individuals unable to pay, failure to meet certain wellness objectives could lock them out of certain services—vision and dental—until compliance with the report card is obtained. The report also recommended a 20 hour per week work requirement, premiums for individuals above 100 percent of the poverty line, and work training referrals for the unemployed. The report labels the work requirement recommendations as “out of the box” in recognition of the fact that federal officials have rejected a work requirement component of Medicaid eligibility.

Program integrity

The report also focused on ways that the existing program can be fortified to reduce losses. For example, the report identified opportunities to strengthen the eligibility verification process and better detect fraud. The report indicates that for as many as 20,110 people enrolled in the Arkansas Medicaid program, their best available address is not in Arkansas. In other words, many individuals may have moved out of Arkansas but are continuing to take advantage of private option services. Or, in some cases, the state may be making payments to insurance carriers even though no services are being used by the individual the payments are being made for. The report also discovered that Arkansas lacks the ability to make real-time checks on applicant’s identity, assets, and addresses.

The private option’s future

The task force will review the report and intends to make recommendation’s regarding the future of the private option by the end of December 2015.