The Centers for Medicare and Medicaid Services (CMS) has answered some questions about how Arkansas’s creative plan to expand Medicaid under the Affordable Care Act (ACA). The plan, which Gov. Mike Beebe put forward, would use federal Medicaid expansion money to give premium subsidies for Medicaid beneficiaries to enroll in Qualified Health Plans (QHP) on the Health Insurance Exchanges (HIX). Arkansas officials believe the plan will reduce its administrative burden for Medicaid, reduce churning between Medicaid and QHPs, and provide better consumer access to provider networks. The CMS guidance said it might offer some, though not many, three-year waivers for states who want to follow Arkansas’s lead.

But many important details of the plan remain unclear. A big one is the question of whether QHPs can be as affordable as traditional Medicaid coverage. Having more people enroll in exchange health plans is likely to bring down the cost of those plans. But the Medicaid provider reimbursement rates are far below what private health plans pay providers, with Medicaid usually paying at least 40 percent less. Even with many more enrollees, QHPs are likely to be more expensive than traditional Medicaid and Medicaid managed care.

I came up with an idea for how states such as Arkansas can use CMS’s actuarial value calculator for QHPs to keep Exchange-based Medicaid costs in line with traditional Medicaid and Medicaid health plans. Read that post here: A way to lower premiums under Arkansas Medicaid Expansion Plan.

Many More Issues for Medicaid Expansion Through HIX:

Affordability is not the only unresolved issue for this new approach to the ACA Medicaid expansion. A recent Milliman brief does an excellent job at going through some of the additional considerations for the Arkansas Medicaid plan. Other states are considering whether to follow Arkansas’s lead, such as Tennessee and Ohio, which makes resolving these issues all the more important.

Here are some of the most interesting points the authors – Robert Damler, Kaitlyn Shaw, and Seema Verma – make in the brief:

To read the full brief, see here.