The Health Reform Legislative Task Force convenes at the Capitol this afternoon, the first of three days of meetings, with recommendations for the future of Medicaid in Arkansas due by the end of the year. While the health care debate in Arkansas has been dominated for the last several years by controversy over the private option — the state’s unique version of Medicaid expansion — discussion on that issue has been relatively muted on the task force. It appears almost certain that the task force will recommend continuing the private option with a few conservative bells and whistles added on (and a new name). Instead, the fireworks have been over whether to turn over parts of the Medicaid program to managed care

Among the most vehement opponents of Medicaid managed care: the nursing home lobby and their allies in the legislature. More options for home and community-based care, which are typically cheaper and are preferable for some patients, were among the potential savings via more care management identified by the task force consultant, the Stephen Group. That could impact the nursing homes’ bottom line, and they have flexed their considerable lobbying muscle during the task force process. (Of course, managed care companies have lobbyists of their own; Centene, which sells plans on the private option, has shown interest in trying to snag managed care contracts for traditional Medicaid in Arkansas.)


The rumor at the Capitol, confirmed to the Times by multiple lawmakers and others in and out of state government, is that long-term care providers and their advocates in the legislature have struck a deal with the governor to “carve out” long-term care, the program’s largest spending category, from the Medicaid managed care plan likely to be put forward by the task force.  Under the agreement, long-term care providers would agree to make changes on their own that would be equivalent to the savings projected by the Stephen Group for putting long-term care populations in managed care, amounting to more than $200 million over five years. 

That would still leave two categories of high-cost populations that the task force is likely to recommend for managed care: developmental disability and behavioral health. That’s still a significant chunk of the program, accounting for around a fifth of the Medicaid program’s spending. 


UPDATE: The original version of this post reported that the “carveout” for long-term care would include a contract with the state promising to hit savings targets. That’s still a possibility, but it might instead take the form of an informal agreement. The original version of this post reported that the Arkansas Foundation for Medical Care, led by former Arkansas Medicaid Director Ray Hanley, might be the entity that would contract with the state to oversee this process. In fact, while AFMC is the preferred managing entity for lawmakers backing an alternative to managed care, the side deal with the nursing homes likely does not include AFMC. The nursing home providers would come up with their own plan, which must provide the savings demanded by the governor.

At this point, it’s not clear just what the alternative plan put forward by long-term providers to come up with savings on their own entails. But the structure of the deal would not be like a managed care contract, in which the managed care company takes on risk for overall costs by agreeing to per-person costs ahead of time (and providers then may take on risk via fixed per-patient reimbursements). Instead, the contract’s teeth would be the threat of managed care in the future. Basically, the governor would be saying, we’ll try it your way but if it doesn’t work, we’re going to managed care. Crucially from the perspective of the long-term care providers, this would also allow them to take charge of the reform process themselves. They would be answering to state agencies rather than a managed care company. Advocates for managed care have argued that having a strong independent entity overseeing the process would produce better results because otherwise lobbyists and politics will muck up the works. There are real reasons to be wary of managed care, but this political concern around the state managing reform efforts is also real: efforts by the Department of Human Services in recent years to make needed cost reforms via the payment improvement initiative and patient-centered medical home model were dodged by long-term care providers. That wasn’t what DHS wanted, but DHS has to go through legislative committees and subcommittees, the preferred briar patch of the nursing home lobby. 


The governor, DHS Director John Selig, and the task force leadership had previously backed a “hybrid model” — managed care for the high-cost populations such as the aged, blind, and disabled and expansions of the payment improvement initiative and patient-centered medical home reforms for the rest of the Medicaid program. Now it appears they’ll settle for a hybrid of the hybrid, with long-term care slipping out and falling into the patient-centered medical home bucket instead of the managed care bucket. 

Meanwhile, a group of five task force members led by Rep. Michelle Gray that has been strongly opposed to managed care for any part of the Medicaid program is expected to present their own plan today (Gray’s husband is a medical director for multiple nursing homes). 

Most believe that in the end the task force will back the plan negotiated by the governor: managed care for certain high-costs populations — developmental disability and behavioral health — but with long-term care providers carved out. We’ll have to see how the side-deal contract details shake out, but it sure looks like a win for the nursing homes.