Health Care Magazine March/April 2015

Private Option Is On The Clock

March/April 2015 Issue

Sixteen legislators have two years to decide
how to wind down or replace the program.

The private option sailed through the legislature without much of a hitch last month, to the surprise of many who expected some sort of battle, especially politicians who campaigned against the federal Patient Protection and Affordable Care Act, referred to generally as Obamacare.

Hospital administrators, some of whom have found the private option to be a lifeline and all of whom have found financial relief since its inception, are now looking to the legislative task force Gov. Asa Hutchinson said he will empanel to examine health care options for low-income Arkansans and look for a way to end the program before the start of 2017.

The private option, authorized under the federal act in 2010 and approved by the Arkansas Legislature in 2013, allows the state to buy private insurance with federal funds, offering extended eligibility to people with incomes up to 138 percent of the poverty level. This translates to an income of $16,105 for individuals or $32,913 for families of four. More than 213,000 people in Arkansas have been approved so far.

Despite the measure failing four times before passing during the 2014 fiscal session, in the current General Assembly the legislature supported Gov. Asa Hutchinson’s request to re-authorize the private option through December 2016. If the private option continues after that time, costs to the states for the Affordable Care Act will climb in 2020 by 10 percent, an estimated $200 million for Arkansas.

Peter Banko, CEO of CHI St. Vincent in Little Rock, Ark., and senior vice president and group executive officer and chief integration officer of the Catholic Health Initiative’s east/southeast division, applauds the legislators’ decision.
If the private option had been voted down, he surmised, “It would implode the health care system in Arkansas.”
Dr. Dan Rahn, chancellor of the University of Arkansas for Medical Sciences (UAMS), concurs.

“Prior to the enactment of the private option in December of 2013, our hospital had a payor mix of 13.7 percent of our patients being uninsured,” he said. “With the insurance expansion, the combination of the insurance exchanges and the private option, we’re down to about 3 percent uninsured. It obviously has a very substantial effect on the financial sustainability of our hospital and health system, and that is fundamentally important to support our teaching mission for the almost 3,000 health profession students that we have here and also our research. A reversal of that would have a profound effect on UAMS.”

Rahn sees the mission of the 16-member Arkansas Health Reform Legislative Task Force to take a comprehensive look at the entire Medicaid program and to consider ways to improve its efficiency as worthwhile.

“We have offered whatever resources that UAMS has to a task force,” he said. “If we can provide information, knowledge and expertise that we have, we will do that.”

Banko hopes the task force will, indeed, seek input from outside the legislature in tackling the issue.

“I have faith that an all-legislative committee can do it if they get the input from the appropriate forces, from people who have had coverage and expansion — physicians, hospitals, insurance plans like QualChoice or Blue Cross Blue Shield — the folks who are in it day to day. If they get enough input from those groups, I do have the faith that they’ll do the right thing,” he said.

He worries about attempts to limit or reduce enrollment, however.

“That would not be good, depending on where that struck. If I put on my Catholic hat, excluding some people is just not good. Health care is a right, and not including people because of some arbitrary measure does not stand the test for me,” said Rahn.

Banko sees another way.

“There are differences in costs amongst hospital systems in the state of Arkansas today, so I think there are opportunities to take costs out of the system by channeling people to the most cost-effective providers instead of limiting enrollment or cutting what we’re funding,” he said. “That’s not cutting rates to providers, that’s shifting people to more cost-effective settings. Frankly, CHI St. Vincent would love to be at risk for this patient population. We would love to share the risk with an insurer and really focus in on keeping people healthy and taking cost out of the system. I think that would be a great solution.”

DeWitt Hospital is among the state’s small, rural hospitals that have to balance tight budgets while absorbing costs associated with caring for impoverished patients, many with more health issues than their affluent counterparts.
CEO Darren Caldwell said there hasn’t been a marked decrease in the number of patients seen in that facility’s emergency room but there has been an increase in the number of patients seen by some area clinics, and it has changed the demographics of patients seen in the hospital’s emergency room.

“Prior to the private option, people utilized the ER for things that should have been handled in a clinic setting,” Caldwell said. “The proper utilization of the ER here has improved, so if someone is coming to the ER they really are sick, and it was not something that could be handled from 8 to 5.”

Based on the numbers he’s seen since private option enrollment began, he wonders how many people opted not to seek necessary medical treatment because they were uninsured.

“That’s what the private option has done in this area. It has created an avenue for people to get a continuity of care that is being managed appropriately,” Caldwell said. “Also, obviously, it has improved our financial status because we’re now getting paid for treating patients in the appropriate setting, whereas we were not collecting anything for treating patients in the setting that was less desirable.”

He does hope the task force will consider the need to educate low-income residents about their health care options and consider streamlining the enrollment process. Several people who are eligible for coverage under the plan, for example, have no Internet access and, therefore, no email address, which is required to enroll.

“You would be surprised how many people, especially in the Delta, don’t have an email address, so we have to help them set up email addresses so that all the information being promulgated has a location to go to,” said Caldwell. “On a local level, we are having monthly sign-up programs. People who are qualified to sign individuals up come on site and we advertise in the paper, we put flyers out to let people know that those who need help signing up or have questions need to come and be educated about the process. We’re trying to do what we can to help people feel more comfortable with it.”

He fears that some lawmakers see the private option as a stopgap measure that will improve the overall health of the state and cautions that lifestyle changes are slow in coming.

“I hope the governor and the elected officials do not anticipate that by December 2016 that what we put into place now will have a lasting effect on lifestyle changes,” Caldwell said. “There’s no time like the present to get started, but to expect [a person] — whether or not someone has insurance — to totally change their lifestyle choices or to make them more responsible is going to require more than two years.”

And, he said, legislators must remain aware of the importance of the private option — or something similar — to the survival of health care institutions like his.

“Due to the private option, this organization received enough money to cover one of our 26 payrolls, an entire payroll, this year,” he said.

Banko sees politics as a potential barrier to helping those who need health care assistance. Yet he and his counterparts are keeping the faith in their government representatives.

“The private option became so politicized in the election around Obamacare. In my opinion, it’s not a partisan issue,” he said. “And in my new role within the Catholic Health Initiative, I get to travel around the country a little bit more, and other states are looking at this option.”

Banko said Pennsylvania “is doing what we’re doing, and that in New Jersey a modified approach is being taken.

“What we did was pioneering and other states are replicating it and making minor changes to it, so what we did was a good thing,” he said. “We don’t need to dismantle it because it’s an issue that we the public or anybody else associates with Democrats and President Obama. Even some of the Democrats ran on anti-Obamacare. So I think they’re stuck. They ran on a certain platform and they have to answer to their constituencies, and so I think that is going to be a hurdle. I think we have to provide some compromises in there so that people understand that we’re all trying to do the right thing.”

Caldwell agrees.

“I would like to believe that federal officials are going to look out for the greatest good,” he said. “If the greatest good is to maximize federal funds through the private option so that tax benefits can be enacted, then those same greatest goods should probably still be in existence in 2017.”

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