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Arkansas's Hutchinson Signs Medicaid Revamp but Hurdles Remain

By Marissa Evans, CQ Roll Call

April 8, 2016 -- Arkansas Gov. Asa Hutchinson signed a bill to carry out his plan to overhaul and extend the state's Medicaid expansion program on Friday, but still faces uphill battles to convince his legislature to fund the program and obtain waivers for some of its provisions from the federal Department of Health and Human Services (HHS).

The Republican governor's so-called Arkansas Works plan would continue expanded Medicaid coverage for 250,000 low-income Arkansans and replace the state's current program, which is slated to end on Dec. 31. The bill would create a voluntary work and job training referral system for unemployed beneficiaries and require those with jobs to enroll in employer-sponsored plans. It would not provide a standard Medicaid benefit: coverage for services provided up to 90 days prior to enrollment.

Hutchinson has pushed the overhaul to reduce the cost of Medicaid and its expansion in the state.

"We have come up with a practical solution for this time in our history and for the people that we serve," Hutchinson said in a news conference.

Under the 2010 health care law (PL 111-148 , PL 111-152 ), states could expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost of covering the additional beneficiaries is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have implemented expansion.

While the Republican legislature approved the plan, it still has to approve a separate bill to fund the state Department of Human Services, which would administer the program. That funding must get three-quarters of the vote in both houses of the legislature; of 35 members of the Senate, 10 who voted against the plan have threatened to block the funding measure. The fiscal session in which the bill will be considered starts on Wednesday.

"You can have a potential for a crash that leads to shutdowns just like in Washington and that's never happened in Arkansas," Hutchinson said of the potential impasse. "It's real to tens of thousands people in Arkansas who rely on these services." 

Even if Hutchinson's plan moves through the budget session, the state still needs HHS' approval. Hutchinson backed away from two elements in the plan that HHS prohibited in other states: that beneficiaries have a job and can establish that they have inadequate assets to pay for health insurance.

HHS Secretary Sylvia Burwell wrote in an April 5 letter to Hutchinson that neither provision would be "allowable under federal Medicaid law nor consistent with the purposes of the program." However, she wrote that she remains "committed to working with you and my counterparts in other agencies to discuss options to make job training and employment more available for Arkansas Works participants."

Burwell also noted concerns about the state's plan to eliminate coverage for beneficiaries who received care 90 days before they were approved for Medicaid. That provision is needed for people who needed medical care before they knew they were eligible. 

Marquita Little, health policy director for Arkansas Advocates for Children and Families, said the state has shown that it can take a long time to approve Medicaid applications, making the 90-day grace period an important element of the system.

"We don't anticipate it's going to be a seamless experience anytime soon," Little said. "To the extent we can protect consumers from issues that are really no fault of their own we want to make sure that's a priority."

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