Legislators heard testimony Monday about a study they commissioned that claims dozens of recommended reforms could squeeze more than $100 million in annual savings from the state’s public welfare programs.
Lawmakers voted during this year’s legislative session to pay The Alexander Group, a Pennsylvania-based consulting firm, $220,000 to conduct a study of the state Medicaid program and other parts of the state’s public welfare system. Owner Gary Alexander and other representatives of the firm presented a report on the study Monday to the House and Senate committees on public health, welfare and labor.
The report includes 32 recommendations for short-term and long-term initiatives. It claims the short-term initiatives could save the state between $65 million and $98 million a year and that the long-term initiatives could save the state between $46.8 million $63 million a year.
Alexander told the legislative panel Monday that in addition to those initiatives, the firm believed Arkansas "should pursue a global and comprehensive redesign of its Medicaid program."
"Implementing a global redesign would synthesize and streamline service definitions across populations and would allow more flexibility of funds to be able to move around. We believe that an option like that would improve performance for employees (and) contractors, outcomes for recipients and realize significant savings well beyond the 32 initiatives," he said.
Alexander told the panel that the per-capita cost to Arkansas of its public welfare programs has quadrupled over the last 30 years and that Medicaid and other forms of public assistance have grown in that time from 13 percent to 24 percent of the state’s budget, "with growth far outpacing revenue and squeezing other important budget priorities like transportation and education."
Alexander also said that spending on public assistance has not stopped poverty in the state from worsening and that "the existing welfare system … creates negative economic incentives that weaken middle-class norms of work and family formation."
Recommendations in the report include, among other things, establishing performance goals for programs and metrics for measuring performance; requiring state agencies to include cost-saving initiatives in their budget proposals; consolidating contracts; monitoring high-cost cases to identify excessive or ineffective use of Medicaid money; and relocating a larger proportion of nursing home residents into home- or community-based care.
Alexander said the state should realize some savings from the Payment Improvement Initiative, a program already in the process of being implemented, in which health care providers in certain areas of treatment are paid for episodes of care rather than for every service provided.
Alexander, a former Rhode Island human services director and former secretary of public welfare for Pennsylvania, obtained a global Medicaid waiver for Rhode Island while employed by that state and is known for implementing controversial reforms there that included a cap on total Medicaid spending.
He was selected to conduct the study for the Arkansas Legislature by House Majority Leader Bruce Westerman, R-Hot Springs, a Medicaid reform advocate.
Several Republican legislators praised the report Monday, with some saying they favored continuing to use The Alexander Group’s services.
"I think this information that we’ve received was really money well spent," said Rep. Kim Hammer, R-Benton, adding that he thought the Legislature should look at extending the contract with the firm.
Some Democratic legislators questioned why there was no open bidding for the contract and whether the $220,000 expense was worthwhile.
"I’m not saying it’s money well spent or not yet," said Rep. Reginald Murdock, D-Marianna. He asked state Department of Human Services officials for their opinion.
"I personally don’t have any sticker shock at the price of a contract like that. We run really, really large programs," said state Medicaid Director Andy Allison. "I think a second opinion, an outside and independent voice, is valuable. I think it’s one of the things that a large program, a public program, needs to have."