Highlight on Arkansas: State forced to pay $224K to transfer public employee health savings accounts

The Arkansas State and Public School Life and Health Insurance Board agreed to pay fees to ensure that state employees’ health savings accounts (HSAs) are available for the new year, but is not happy about it. On December 21, 2016, the Board voted to pay the $224,000 to the Bank of New York Mellon (the bank) “under protest” to facilitate the transfer of 14,000 health savings accounts, but may pursue litigation to recover the fees that the state says were not clear when the contracts were signed. These accounts are also available to public school employees.

Contract debacle

Without involvement from the board, state officials decided to terminate its contract with the former HSA manager, WageWorks (located in California) and issue an emergency contract to DataPath, based in Little Rock. Officials made this decision due to another fee dispute between WageWorks and the bank. WageWorks had originally stated it would charge an administrative fee of $1.90 per account each month. Then in late February, the bank, acting as account custodian, notified state and school employees that accounts with less than $5,000 would be subject to an additional $2 monthly fee and that employees would be charged $16 if they transferred to another bank.

An attorney with the finance department noted that the contract with WageWorks require the company to absorb fees not listed in the original bid, and that it is fully liable for all subcontractor services. Although WageWorks agreed to cover the added $2 fees for 2016, an agreement was not reached for 2017. DataPath, which had previously administered the accounts before the state switched to WageWorks, agreed to charge administrative fees of $2.25 per account, with no other fees imposed.

Transfer fees

The 2017 DataPath contract, which includes administration of flexible spending accounts, did not put an end to surprise fees. The bank is making good on its notification of the $16 transfer fee, which totals $224,000. The board was reluctant to approve the fees, but did so (in spite of a board member’s assertion that state law does not require such an approval). A finance department manager expressed concern that paying the fees would undermine the state’s position that the fees were improperly imposed. Although the state attorney general’s office is unsure if litigation would be successful, it believes that there is a potential lawsuit.

Future preparation

Employees will not see any charges to their accounts upon transfer, as the fees will be paid by the Employee Benefits Division. The board also voted to try to obtain a written commitment from DataPath not to charge fees to close or transfer accounts if another company wins the management contract in the future. The 2018 bidding process will begin in August.

Geographic Markets Selected for Comprehensive Primary Care Initiative

Market selections have been made for certain areas to become some of the first participating payers in the Comprehensive Primary Care (CPC) initiative. On April 11, the CMS Innovation Center announced seven areas from a pool of applicants to represent their selected markets as part of this CPC demonstration, which is a public-private partnership to enhance access to primary care services by establishing medical homes supported by multiple payers.

CMS directed the solicitation for the Comprehensive Primary Care Initiative to public and private health care payers to respond individually to the Innovation Center and the markets were selected in places where there is sufficient interest from a number of payers to support a comprehensive model of primary care. Individual payer applications were collected by CMS to evaluate the degree to which they align with CMS’ approach in the initiative. High scoring payer applications proposing overlapping market areas were aggregated to assess the expected market share of enhanced support for comprehensive primary care. No more than two markets in an HHS region were eligible to participate, and CMS aimed to include at least two markets with significant rural areas.

These markets are multi-payer and may include private health plans, state Medicaid agencies, and employers and include: Arkansas, statewide; Colorado, statewide; New Jersey, statewide; New York, Capital District-Hudson Valley Region; Ohio, Cincinnati-Dayton Region; Oklahoma, Greater Tulsa Region; and Oregon, statewide.

These selected participating payers in each market will be entering into a “Memorandum of Understanding” (MOU) with CMS. Once the participating payers in each market have agreed to the terms and conditions of this MOU, the Innovation Center will then release a solicitation to primary care practices in these geographic areas wishing to participate in providing comprehensive primary care as part of this initiative. The Innovation Center will also invite local practitioner representatives and local patient and consumer representatives to participate in these discussions with Medicare.

The White House has indicated that funding of up to $322 million is available to support 75 practices in seven states beginning this year with plans to serve up to 330,750 Medicare and Medicaid beneficiaries over the course of this four-year initiative. The practices involved will receive a new care management fee on behalf of Medicare fee-for-service beneficiaries to support enhanced primary care services for their patients. The enhanced services will include: improved care coordination; increasing patients’ access to care; delivering preventive care; engaging patients and caregivers in managing their own care, and providing individualized, enhanced care for patients living with multiple chronic diseases and higher needs.

Two models will be tested simultaneously: a service delivery model and a payment model. The service delivery model will test comprehensive primary care, which is characterized as having the following five functions:

  • risk-stratified care management;
  • access and continuity;
  • planned care for chronic conditions and preventative care;
  • patient and caregiver engagement; and
  • coordination of care across the medical neighborhood.

The second type, known as the “payment model” includes a monthly care management fee paid to the selected primary care practices on behalf of their fee-for-service Medicare beneficiaries and, in years 2-4 of the initiative, the potential to share in any savings to the Medicare program. Practices will also receive compensation from other payers participating in the initiative, including private insurance companies and other health plans, which will allow them to integrate multi-payer funding streams to strengthen their capacity to implement practice-wide quality improvement.

The Comprehensive Primary Care Initiative was developed under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and the American Recovery and Reinvestment Act of 2009 (Recovery Act), as a multi-payer initiative fostering collaboration between public and private health care payers to strengthen primary care and is one of the ways the Obama Administration has made the recruitment, training and retention of primary care professionals a top priority.