The U.S. Department of Health & Human Services for the first time approved a private option as an allowable form of expanding Medicaid. Arkansas is the first state to use Medicaid funds to buy private insurance for consumers eligible for the state-federal health program.
The Arkansas private alternative involves a three-year demonstration program that allows Medicaid members to choose from three to 11 plans available on the health insurance exchange. The private plans won't include a premium but will contain copays and deductibles, which would be no more than 5 percent of a member's annual income, reported CQ HealthBeat.
"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," Emma Sandoe, spokeswoman for the Centers for Medicare & Medicaid Services, told the Associated Press. "We appreciate the collaboration with Arkansas throughout the process and applaud their commitment to providing Arkansans with access to high, quality health coverage."
CMS Administrator Marilyn Tavenner said the Arkansas plan includes a "strong evaluation component" to test whether the model actually improves medical care and costs, she said in a letter to Arkansas Gov. Mike Beebe, according to Bloomberg.
The approval could pave the way for other states, including Iowa, Florida, Ohio and Pennsylvania, that also have expressed interest in using a private model to expand their Medicaid programs. Arkansas spearheaded the private option as a Medicaid expansion alternative, and submitted an official proposal to HHS after state lawmakers passed legislation to use federal dollars to pay private insurance companies to expand the Medicaid program.