Our View

Our View

A tale of two healthcare plans

We’re already hearing chatter among some Arkansas politicians about the renewed battle over the government subsidy that funds certain high-cost populations in the state’s traditional Medicaid program.

Behind the scenes maneuvering among private health care operations and elected politicians who oppose Gov. Asa Hutchinson’s plan, that would employ a managed care company to push changes for the developmental disability and behavioral health populations, are already gearing up for the upcoming session of the Legislature in January.

Politicians who made a serious effort to derail Hutchinson’s recommendations that, by the way, was supported by the state’s Health Reform Legislative Task Force, during the governor’s special session last April, want to employ an administrative services organization instead of a managed care company.

For the most part, this is the only difference between the governor’s plan and the other plan, dubbed “DiamondCare.”

But, here is something proponents of the so-called “DiamondCare” don’t want to make a big deal over.

While both plans have the same big goals: More care coordination, more focus on primary care doctors, incentives for providers to provide cost-efficient and high-quality care, and a “rebalancing” that would give more options for beneficiaries currently served by nursing homes and other institutional settings to move into home or community-based care if those were more appropriate for their care.

The big difference between the governor’s plan, backed up by the state’s Health Reform Legislative Task Force, has to do with who takes on the risk for potential and expected cost overruns and how providers are paid.

Under the governor’s proposal, the state would negotiate a per-person cost with managed care companies to cover the beneficiaries in the behavioral health and developmental disability populations; if the managed care company beats that number, they would profit, but if costs went high the managed care company would be stuck with those cost overruns.

Now then, under the DiamondCare, the administrative services organizations (ASO) wouldn’t take on the same level of risk if cost targets were not met. The ASO would have to pay a flat fee if benchmarks were not met and could receive a share of the savings if costs were below benchmark; the state’s DHS would be tasked with monitoring the ASO to ensure that quality of care was maintained and would determine whether benchmarks were achieved. But other than collecting the fee from the ASO, if DiamondCare failed to meet its benchmarks, the taxpayers of Arkansas would be on the hook for cost overruns.

The Stephens Group estimated that the governor’s managed care proposal would save $1.439 billion over the course of five years. DiamondCare, meanwhile, would save $1,057 (or $317 million for the state) over the same period.

During the April special session, Gov. Hutchinson did not allow a vote on DiamondCare, infuriating opponents of his managed care plan, including Rep. Deborah Ferguson of West Memphis, Sen. Missy Irwin of Mountain View and Rep. Michelle Gray of Melbourne. The issue boils down to whether we want a private managed care company to push these changes, with no financial risk to the taxpayers and at a savings of $1.439 billion, or have the state’s Department of Human Services take on the responsibility, face financial risk and save $1.057 billion.

The answer is quite simple.