Consultant’s report supports need for private option
By Roy Ockert Jr.
Oct. 13, 2015
A company hired by the Arkansas Legislature to study the state’s unique “private option” Medicaid program has produced its million-dollar report, totaling more than 300 pages. No doubt to the disappointment of some lawmakers, the consultant recommended keeping the plan with some modifications.
One of those would be to change the name of the program from Health Care Independence Program to Transitional Health Independence Program, or T-HIP.
When it comes to politics and public perception, what’s in the name can be critical. Ask 100 people what they think of the Affordable Care Act, and you’ll get a number probably on the positive side. Ask the same people what they think of Obamacare, and you’ll get a much lower number.
The Stephen Group of Manchester, N.H., earlier had projected that Arkansas would see a net benefit of some $438 million between 2017 and 2021 by keeping the private option intact. That in itself should stifle some of the political rhetoric.
The consultant’s report includes three fundamental recommendations for the Legislature’s decision-making:
• “Bring personal responsibility, wellness and accountability to HCIP, with the goal of a greater commitment to work and opportunity in 2017.” The idea is to require people with more assets to pay more for participation and push all recipients to find jobs that would provide health-care insurance.
• “Expand patient-centered medical home or bring managed care for all Medicaid beneficiaries.” That means better coordination to reduce the cost and increase the quality of medical care for the aged, blind and disabled populations.
• “Enhance eligibility and program integrity across the entire Medicaid enterprise.” That would involve improving the front-end eligibility system and developing a more robust fraud detection system to hold beneficiaries, providers, carriers and vendors accountable.
The Stephen Group found 42,891 beneficiaries with an out-of-state address — 16 percent of the total in traditional Medicaid and the private option — as well as others who might not have been eligible. However, the consultant told legislators some with out-of-state addresses may now live in Arkansas.
Hospitals report a substantial reduction in uncompensated care visits and costs since the beginning of the private option, according to the Stephen report. Uninsured admissions dropped 49 percent between 2013 and 2014, uninsured emergency department visits by 39 percent and uninsured outpatient visits by 46 percent.
The consultant pointed out those numbers could have been aided by a drop in the state’s unemployment rate and the state of health insurance policies, sometimes subsidized, through the state health-insurance exchange.
However, a Stephen Group survey of health-care providers found much stronger support for the private option among hospital officials than among either primary-care physicians or specialty physicians.
That’s rather curious since doctors and hospitals usually work hand in hand, and in fact some physicians have a financial interest, either as as owner or an employee, in their local hospital.
Since the implementation of the private option, hospital officials have consistently reported brighter financial conditions as the cost of caring for uninsured patients has declined.
The Arkansas Hospital Association reported that through the first six months of 2014 its member hospitals had $69.3 million less in losses due to uninsured patients — a 56.4 percent reduction —and attributed that to the private option.
Between 2013 and 2014 those hospitals reported significant reductions in admissions, emergency room visits and outpatient visits by uninsured patients. At the same time the hospitals overall had a slight increase in admissions.
Unfortunately, that trend doesn’t help the 22 Arkansas counties that have no hospitals. But it’s important to note that many other struggling rural hospitals may have been saved.
One of those is the Pocahontas hospital, now called the Five Rivers Medical Center, which nearly closed in 2007 following many years of financial trouble. In 2013 the hospital, now owned by the City of Pocahontas, reported a net loss of $2.4 million, its worst year ever.
That came in spite of a 1 cent city sales tax, passed in 2007 with support of almost 97 percent of the voters, and a subsequent bond issue. The tax provides about $700,000 annually to the hospital.
In a recent interview with Arkansas Business Five Rivers Chief Executive Officer Luther Lewis credited federal health-care reform with a dramatic improvement in the hospital’s financial picture. He said patients who had obtained insurance through the private option were responsible for about $700,000 in revenue for the hospital in 2014.
That, along with cost-cutting measures, allowed the hospital to post net income of $651,000 on patient revenue — a turnaround of some $3 million in a year. Lewis said 2015 looks the same.
Nearby, the Lawrence Memorial Hospital at Walnut Ridge has had similar results. After posting a net loss of $1.5 million in 2013, the hospital now is operating in the black, too.
Although much larger medical centers are available in neighboring Jonesboro, those small rural hospitals can be the difference in life or death by providing care quickly to local residents struck down suddenly by illness, accident or disaster.
If local politicians are paying attention to the Stephen Group study and the hospitals’ reports, they will quit sponsoring foolish legislation to end the private option and focus on improving it.
Roy Ockert is editor emeritus of The Jonesboro Sun. He may be reached by e-mail at royo@suddenlink.net.