Dive Brief:
- The Government Office of Accountability released a report Monday noting its concern for the way the Department of Health and Human Services has dealt with section 1115 demonstrations—the part of the Social Security Act that gives HHS the authority to approve experimental Medicaid programs like the Arkansas private option. The report focused specifically on the fact that in giving Arkansas its waiver, HHS did not ensure that the project would be budget-neutral, a requirement of section 1115.
- HHS allowed Arkansas to determine whether or not offering premium assistance under the exchange would improve access for individuals newly-eligible for Medicaid. According to the GAO, HHS did not ensure that the federal government would spend no more under the demonstration than it would have without the project in place. The spending limit for the demonstration was based on hypothetical costs and the GAO estimated that the approved $4-billion spending limit was $778 million more than the government would have spent under traditional Medicaid.
- HHS has granted similar flexibility to other states creating projects for new Medicaid recipients. In June, HHS approved a demonstration in Iowa that would use premium assistance for purchasing coverage. Other states are considering a similar approach.
Dive Insight:
The GAO makes no recommendations in its report, but does cite ongoing concerns with HHS' process in awarding waivers: "GAO has had long-standing concerns with HHS’s policy, process, and criteria for reviewing and approving section 1115 demonstrations, including the lack of transparency in the basis for approved spending limits," the GAO said on its website.
To date, more than 194,000 people have signed up for Arkansas' Medicaid program. The program was created as a compromise in a state with a Democratic governor and Republican legislature and is considered a flagship. It was the first "private option" in the nation, using Medicaid funds to buy private health insurance—from the state insurance exchange—for people eligible for Medicaid.
Arkansas experts have said the numbers are off and that the GAO did not take increased enrollment into account. The Arkansas plan has been hailed as a success and has been looked at as a national model, particularly in red states. But if the numbers do not prove to be budget neutral, these waivers may end with Arkansas and Iowa, and most recently, Pennsylvania, where the Obama administration announced August 28 that it had reached a waiver agreement with governor Tom Corbett. Pennsylvania's plan is not a "private option" in the same way that Arkansas' plan is: Beneficiaries will receive Medicaid coverage, not a marketplace plan.
Want to read more? You may enjoy this story about the impact of Arkansas' private option on providers.