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Federal Officials Give Arkansas Medicaid Waiver

By Rebecca Adams, CQ HealthBeat Associate Editor

September 27, 2013 -- Arkansas recently became the first state to get federal permission to require adults on Medicaid to get their medical care through the health care law's marketplaces. It's a move that could reinvigorate conversations in some other states that have considered asking the Obama administration for a similar waiver.

A number of other states, such as Ohio, are weighing whether to adopt the same type of approach as Arkansas. Others, including Florida and Tennessee, have expressed some interest in the past and could explore the idea further in the future. States such as Iowa and Pennsylvania have already said they want to use similar approaches for at least some of the adults who will qualify for Medicaid under the expansion called for in the health law.

A public comment period on a proposal in Iowa that mirrors the one in Arkansas closed last week. Centers for Medicare & Medicaid Services (CMS) officials are currently in the final stages of reviewing the Iowa plan.

The Arkansas waiver will apply to roughly 225,000 adults with incomes up to 138 percent of the federal poverty line—$15,280 for an individual—who will be eligible to sign up for Medicaid under the health law expansion. These adults will get their insurance coverage through the new marketplaces and their benefits will be paid for with federal Medicaid dollars.

Medicaid recipients in Arkansas are not now enrolled in managed care plans. That means this change will be a more abrupt departure for consumers in that state than it would be in the many other states where Medicaid beneficiaries are already enrolled in managed care plans. The program will require most beneficiaries to be in managed care, although people who are considered medically frail will still be allowed to use fee-for-service Medicaid services without a network.

Emphasis on Flexibility

Federal officials said the approval is an example of how they are trying to encourage states to expand Medicaid through non-traditional ways if that's what it takes.

"We encourage states to come to us with their delivery system ideas, and look forward to continuing to work with states on these," said Cindy Mann, CMS director of the Center for Medicaid and CHIP Services.

"Arkansas and CMS worked together to find flexibilities that gave the state the tools to build a program that worked for them and their residents," said a CMS spokeswoman.

Health and Human Services Secretary Kathleen Sebelius called Democratic Gov. Mike Beebe late last week to tell him his waiver had been approved.

"Arkansas came up with its own plan to expand Medicaid using the private-insurance market, and Secretary Sebelius and her team worked to ensure that we had the flexibility to make that plan a reality," Beebe said in a statement. "Our actions have drawn positive attention from across the country, and now we will focus on getting this insurance to the Arkansans who need it to lead healthier, more productive lives. Hopefully, this bipartisan, intergovernmental achievement can be an example for Congress as the government shutdown looms."

Under the three-year demonstration program that the waiver approves, depending on where in the state they live, Medicaid beneficiaries will be able to choose from three to 11 plans at the silver tier of coverage in the marketplaces.

In Arkansas, people in Medicaid will not pay a monthly premium, but those with incomes that are at least at the federal poverty level ($11,490 for an individual) will be responsible for such cost sharing as copays and deductibles. The cost sharing will be capped at 5 percent of a beneficiary's annual income in both Arkansas and in the proposal put forward in Iowa.

Some consumer advocates are concerned about the level of cost-sharing that people will pay. In future years in Arkansas, cost-sharing will be required for people who have income above 50 percent of the poverty level. In Iowa, state officials want to charge a monthly premium, which advocates worry could discourage people from enrolling.

The Iowa plan focuses on a smaller group of people—about 36,000 people. Its proposal would affect newly-eligible people with incomes between 101 percent and 138 percent of the federal poverty level who do not have affordable employer-sponsored insurance.

Joan Alker, the executive director of the Georgetown University Center for Children and Families, said that her organization is pleased that the Arkansas waiver was approved. But she is still waiting to see a few documents that are expected to be released in the next couple of months, such as a state plan to evaluate the demonstration and the details of the benefits package.

"There are some important details we don't have yet," said Alker.

Benefits for the newly eligible Medicaid population will begin on Jan. 1.

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