Arkansas House Passes Premium Assistance Alternative to Medicaid Expansion Previously Endorsed by CMS
April 16, 2013 03:49 PM
On April 16, the Arkansas House passed a bill incorporating premium assistance as an alternative to Medicaid expansion. This follows a Q & A released March 29, in which Centers for Medicare & Medicaid Services (CMS) stated that it would consider Arkansas’ and other states plans to expand Medicaid via premium assistance. Therefore, CMS will give federal matching funds to states that expand health insurance coverage to 133 percent of the federal poverty level via premium assistance, so long as the premium assistance demonstrates cost effectiveness and other stipulations. Premium assistance refers to when a state uses Medicaid funds to pay for private insurance premiums for adults and children otherwise eligible under Medicaid.
State Plan Or Demonstration
CMS gives states the option to adopt premium assistance via either a state plan or a section 1115 demonstration project.
CMS stipulates that premium assistance must be “cost effective,” i.e. that the total cost of the premium, additional services, and cost sharing assistance is “comparable” to traditional Medicaid costs. For premium assistance demonstration project proposals, CMS would take into account not only cost-effectiveness, but also “actuarial, economic, and budget justification (including budget neutrality).”
“Wrap Around” Private Coverage
In addition, CMS requires that states have “mechanisms” to “‘wrap around’ private coverage” when such private coverage has less benefits and greater cost sharing requirements than Medicaid.
FCMS also requires that the beneficiaries have the ability to select an alternative to private insurance. CMS requires that all premium assistance demonstrations provide at least two qualified health plans (QHPs) for beneficiaries to choose from.
Much remains to be seen with premium assistance programs. Despite the recent passage of the Arkansas bill promoting such a model – known as “the Arkansas Model” - in the Arkansas House, full details of the Arkansas Model have yet to emerge. Additionally, the Obama Administration has yet to formally approve the Arkansas Model, and specific private insurance carriers have yet to be named. It also remains unclear whether home health services will be covered.
Despite all the uncertainty surrounding the Arkansas Model, home health providers can look to premium support as a potential opportunity for increased reimbursements that may surpass Medicaid rates. However, commercial plans may also negotiate lower rates than Medicaid, as done in the past, in order to achieve budget neutrality.
Home health providers should continue to monitor the status of Medicaid expansion in their states. The traction that the Arkansas Model has already garnered, especially given its recent passage in the Arkansas House, may be an indication of things to come. Home health providers are encouraged to contact NAHC with any questions or concerns.
To see CMS’ full Q & A on premium assistance, click here.
To see the relevant section in the Arkansas bill, see the Health Care Independence Act of 2013, beginning on page 16, here.