Opponents of managed care are unhappy with Gov. Asa Hutchinson‘s announcement yesterday that he will not include their “DiamondCare” plan — an alternative to the governor’s proposal to impose managed care on certain parts of the Medicaid program — in the special legislative session that will convene next week on health care. 

“I’m disappointed,” said Rep. Michelle Gray (R-Melbourne), one of the architects of the DiamondCare plan. “I think that we owe it to the people of Arkansas to let all 135 members decide what they feel is best for the state of Arkansas. I would like to see both plans make it to special session and both be allowed their time.” 


The governor backs a plan to introduce Medicaid reforms to the developmentally disabled and behavioral health populations via managed care companies. Legislative allies of providers vehemently oppose managed care, and developed the DiamondCare proposal as an alternative. DiamondCare would pursue the same slate of reforms as the governor’s plan but use an administrative services organization (ASO) instead of managed care companies to implement the changes, and continue to have the state pay providers directly on a fee for service basis. This approach would protect providers’ bottom lines and DiamondCare backers say that it would be better for patients; the governor counters that it would too risky for the state financially. (Both plans allow the nursing homes to pursue their own reforms for the other big high-cost population — long-term care for the elderly and severely disabled — under threat of managed care down the road if they don’t meet savings benchmarks.)

It is the governor’s prerogative to determine what bills get called for the special session and he announced yesterday that the only health care bills he will call are his own managed care legislation, along with his plan for continuing the private option. Not DiamondCare. That leaves DiamondCare backers with some complicated procedural options to try to get their own bill on the call. Their best bet would be to get two thirds of both houses to extend the session to hear other bills — but this maneuver is only possible after the legislature has taken up and considered the governor’s bills. 


“I’m still hopeful,” Gray said. “I understand the governor’s posturing and positioning on this. It’s his right to do that. I just wish he would let the legislative process make the decision instead of the executive branch.”

Rep. Deborah Ferguson (D-West Memphis), another key backer of DiamondCare, said that she thought Hutchinson was getting “terrible political advice” in employing hardball tactics now.


“Why did he call a task force at all if that’s what he wanted?” Ferguson asked. “All we’re asking is for a vote. I don’t even mind if we vote on managed care first. Why wouldn’t he put DiamondCare on the call second? Vote on managed care and if it fails, then we vote on DiamondCare and go home instead of extending the session and having this ridiculous public political fight.”

Ferguson predicted that the governor would not be able to get the simple majority he needs to pass his managed care bill. 

What would happen at that point is anyone’s guess. Gray and Ferguson would try to run DiamondCare, but that would require two thirds from both houses to even consider. That might be a tough slog as the legislature at this point is probably not that far from evenly divided, and both sides are digging in. 

“I’m not done,” Gray said. “If he has the vote and he can get managed care out then that’s fine, and I’ll stop there. Currently, I don’t think the votes are there. People are nervous about [his bill]. There are a lot of things that totally gut our current system, totally change the way we do things. It makes me nervous.”


Gray said that she was hopeful that if the managed care plan fails in the special session, the governor would work with her on the DiamondCare alternative. Theoretically, Hutchinson would move on to DiamondCare as Plan B. The two plans have the same broad goals. The Stephen Group estimates that the governor’s managed care proposal would save $1.439 billion over the course of five years (the state has to pay for around 30 percent of traditional Medicaid costs, so that would save Arkansas around $430 million). DiamondCare, meanwhile, would save $1.057 billion (or $317 million for the state) over the same period, according to the Stephen Group.

The governor’s decision not to include DiamondCare on the call, however, suggests that he doesn’t think it’s a legitimate backup option. Some Republican backers of managed care in the legislature have suggested that the DiamondCare approach would not actually be able to produce the promised savings. They argue that it fails to put enough pressure on providers to implement cost-effective reforms, leaves too much leeway for legislative (read: lobbying) interference, employs a relatively untested approach, and is unworkable for the state’s Department of Human Services to implement. If Hutchinson has decided that DiamondCare isn’t viable, he and his allies might simply refuse to take it up in the special session even if his own managed care plan fails. At that point, he would be left trying to rally support for his own plan either in the fiscal session or in a future special session on unrelated matters. It would be a mess. 

To some extent, the governor painted himself into a corner of his own making. He told the task force last year that he “agnostic” about whether or not managed care companies were used to implement reforms. All he cared about was his savings target, a number he set at $835 million, dubiously arguing that this was necessary to pay for future private option costs (that benchmark, already fairly arbitrary, has been rendered wholly meaningless by updated figures on PO financials). He would allow provider groups and the DiamondCare backers to offer up their own plans, to be scored by the Stephen Group, and if they met his benchmark, that would do the trick. The DiamondCare team did just that, and according to the Stephen Group, they beat the governor’s benchmark by $200 million. Now, they’re understandably feeling like the governor has pulled the football away. 

“He told us that he didn’t really care where the savings came from, that if we demonstrated $835 million in savings, that he was fine with that,” Ferguson said. “We came back with $1.1 billion.” 

“Politically, I don’t think it sits well for him—the fact that he set up a task force and we’ve gone through almost a year’s worth of work,” Gray said. “In the future, any other task force, we’re going to ask why we would want to invest that amount of time and effort if what we want isn’t at least allowed to be vetted in front of the full legislature.” 

Gray said that she would have dropped DiamondCare if the governor’s plan had gotten a majority vote, but given that neither plan got a majority (managed care got eight votes, DiamondCare seven, with one abstention), she believed the governor owed it to the legislature to present both options. 

“Both sides of this, all sixteen legislators have put in a tremendous amount of time, effort, and research into this,” Gray said. “We’ve produced two approaches that are very similar but they’re very different in their management style. What he told us in December was that his main goal was just to reach the savings target. We did that, plus another $200 million, so I would hope that we could both extend that olive branch to work together.”

Gray said that she didn’t necessarily think the governor’s maneuvering on managed care would impact the debate over “Arkansas Works,” his plan to continue the private option. “I really see them as separate pathways,” she said, accurately noting that despite the governor’s tendentious rhetoric that the Medicaid reforms were necessary to pay for PO costs, the PO actually saves money on net even when the state has to chip in its full share, according to the Stephen Group’s projections. 

Ferguson, however, said that the governor’s approach on managed care could unnecessarily complicate his effort to pass  “Arkansas Works.”

“There are a good number of people that are not going to vote for Arkansas Works if managed care passes,” she said. Ferguson declined to name names and said that she herself would vote for Arkansas Works regardless of what happens with managed care. “It’s the right thing to do,” she said. 

“Virtually every single provider group in the state — hospitals, pharmacy, the medical association — every single provider group, they’re out there opposing managed care,” Ferguson said. “So [the governor] is out there fighting on these two battlefronts when he doesn’t have to — when all of those people that are fighting managed care could be helping him pass Arkansas Works. I don’t get why he’s so adamant that the savings have to come from managed care. A managed care company is going to do exactly what DiamondCare suggests. No matter how you look at it, it’s managing care.” 

Ferguson said that she was skeptical that managed care companies would actually produce more savings than DiamondCare, but if that they did, it would come via practices that harmed beneficiaries and providers. “It’s going to come from delaying care, unnecessary prior authorizations, or denying care,” she said. “I think our bill captures all the low-hanging fruit. We have the support of every provider group. Our bill is the patients’ bill, versus the insurance companies’ bill. All of these provider groups see patients every day and know patients’ needs, know what kind of access to care they need and know what is proper utilization.” 

Legislation for DiamondCare is expected to be released on Friday. Draft legislation for the proposal was released last week by the task force co-chairs; however, DiamondCare backers said they had no input on that bill and disavowed it. 

The irony here is that Hutchinson could have pursued managed care for the high-cost Medicaid populations unilaterally from the executive branch. He wanted legislative buy-in instead. Part of that may have been his hope to tie the effort to the private option issue. Part of it may have been his concern that legislative committees would have blocked managed care contracts and thwarted his effort unless he got the go-ahead from the General Assembly as a whole. In any case, having kicked the question to the legislature, it’s unclear whether Hutchinson likes their answers. 

p.s. The strongest words against the governor’s maneuver came during the task force meeting itself, from Sen. Keith Ingram (D-West Memphis, rumored to be considering a run for governor in 2018): 

We’ve got a task force that was appointed by the legislature to review this complicated issue. We have probably had [more than twenty] meetings. It’s my understanding now that there’s a possibility that the governor would exclude something that we’ve worked on for this long? I’m still trying to figure out how the governor got involved in a legislative task force through a recommendation that we were supposed to make to him that he would take up.

I have not seen any negotiating whatsoever from the governor’s office in including any of the DiamondCare. I’ll go on record, I think the governor is making a terrible mistake with the legislature. He sat down here and said he was ‘agnostic’ to the savings, he didn’t care whether it was managed care or fee for service or whatever. Those were his words. If he was going to put us all through this and have his mind made up that it’s going to be managed care, then this is an exercise in total futility.  

Sen. Linda Chesterfield took a more measured tone: 

I think we’re all conversant with the fact that that’s the way it works – that it is the call of the governor. I think it is incumbent upon us to raise our voices and say that we think it would be in the best interest of the special session, in order for us to get to common ground, to hear both sides. That’s all we have to say. There’s nothing any of us can do to make the governor do anything, but I do believe it is incumbent upon us to use whatever bully pulpit we have as legislators to say to him that in order to get to common ground, we have got to work together and respect both of those documents that have been put forth. That’s all the power we have as the legislature is to ask. … I think in the best interest of compromise, it is incumbent that all voices be heard in this process. 

Support for special health care reporting made possible by the Arkansas Public Policy Panel.