The Arkansas Department of Human Services announced Tuesday it will delay for six months the initial open enrollment period for a new Medicaid managed care program for about 45,000 people with significant developmental disabilities or serious behavioral health problems.

Beneficiaries who wish to switch managed care companies — called PASSEs, or Provider-led Arkansas Shared Savings Entities — must now wait until October to do so. Open enrollment was previously scheduled for the month of May.


A press release from DHS said the delay would “give PASSEs more time to stabilize and grow their networks of providers. This also will give families more information before they need to decide which entities will best meet their needs.”

The postponement is the latest setback for the state’s troubled efforts to reform Medicaid spending for behavioral health and developmental disability services. In 2017, the Arkansas legislature passed a law, Act 775, that created a new managed care model for beneficiaries who rely on these two high-cost areas of Medicaid. Rather than directly paying doctors and other health providers on a fee-for-service basis, DHS would pay a per-person lump sum — a “global payment” — to the PASSEs, which would then coordinate care for beneficiaries and reimburse providers.


Managed care companies such as PASSEs operate similarly to insurance companies. They enroll members — that is, Medicaid beneficiaries — and assume the risk of paying for those members’ care. Just like in the private insurance marketplace, members can switch from one PASSE to another during open enrollment periods. Most members have been auto-assigned by DHS to one of the three PASSEs now operating in the state. (PASSEs differ from traditional managed care companies in that they are majority-owned by Arkansas Medicaid providers.)

From the state’s perspective, the goal is to save money. The global payment that the state pays the PASSEs for each of these high-cost beneficiaries is less than the amount it would expect to pay in the traditional fee-for-service Medicaid system. (Act 775 specifies that some of those savings be used to pay for at-home services for developmentally disabled people.) Meanwhile, the PASSEs themselves make money if they can reduce overhead costs.


There’s a strong case to be made that the fee-for-service payment model for behavioral health is in need of change. Until recently, the largest behavioral health provider in the state was Preferred Family Healthcare; the Missouri-based nonprofit sold off its assets in Arkansas after a billing fraud scandal prompted DHS to terminate Medicaid payments to the provider. At least seven executives from stand accused of embezzlement, fraud and other charges, including bribing state legislators.

However, the rollout of the PASSE model has been rocky. Last November, the state said it would delay the beginning of global payments to PASSEs until March. Then, earlier this year, one of four PASSEs withdrew from the state, citing concerns about the implementation timeline. (Its members were reassigned to the three remaining companies.)

When global payments finally began on March 1, problems quickly arose. As the Democrat-Gazette’s Andy Davis recently reported, providers have said they’re not receiving timely payment from the PASSEs, disrupting care for patients. A class action lawsuit filed last week on behalf of providers seeks an end to the managed care program, Davis reported.

Marci Manley, a spokeswoman for DHS, said the agency was working diligently to fix the problems.


“Any major program change is going to have issues that need to be worked through at start up,” she wrote in an email. “In this case, there is a new system of billing for a wide range of providers who have varying experience with billing; there are the individual PASSE billing systems that providers are learning to navigate; there are ‘clean submissions’ that must be made, and there have been some issues with getting claims to a ‘clean submissions’ status as PASSEs work with providers to submit their claims and each PASSE is evaluating the requirements to submit billings to its systems. DHS Provider Enrollment is working to streamline its provider renewal processes, which has also created some timeline issues. It is actively working to process pending Medicaid provider renewals to help with these issues.”

Asked whether the decision to delay the open enrollment period was prompted by the lawsuit, Manley said it was “based on feedback from clients, providers, stakeholders, and legislators.”

“In an effort to be responsive to that feedback, these updates were made to the program to allow providers to join networks, for PASSEs to grow their networks, and for clients to have information they need to make the decision on which entity might best serve their needs,” she wrote.

In addition to the delay to open enrollment, DHS is also delaying other planned changes until Sept. 1. “PASSEs will continue to pay for clients’ current plans of care as they are now, including current authorizations for services, through that date,” the press release states. PASSEs will also pay Medicaid providers an “in-network rate” until that date, even if the provider isn’t in the PASSE’s network.

Here’s the full press release from DHS:

(LITTLE ROCK, Ark.) – The Department of Human Services (DHS) is rescheduling open enrollment for the Provider-led Arkansas Shared Savings Entity (PASSE) program from May to October to give PASSEs more time to stabilize and grow their networks of providers. This also will give families more information before they need to decide which entities will best meet their needs. The open enrollment period for November has been canceled.

This change, along with decisions by DHS and the three PASSEs to extend the transition period for client care plans and provider network rates, has been made in response to feedback from providers, families, and legislators.

Open enrollment for the PASSE program will now run from Oct. 1-31, 2019, with an effective date of Dec. 1st. Between now and the open enrollment period, clients can ask to change PASSEs “for cause” by calling the PASSE Beneficiary Support line at 1-833-402-0672. Each for cause request will be reviewed by the office of the PASSE ombudsman. For cause reasons could include a desire to move all siblings or household members into the same PASSE or lack of access to providers experienced in dealing with clients’ care needs.

All three PASSEs will extend the transition period for clients through Sept. 1, 2019. This means PASSEs will continue to pay for clients’ current plans of care as they are now, including current authorizations for services, through that date. During the coming months, PASSE care coordinators will meet with clients to create a person-centered service plans (PCSP). PASSEs must meet with clients before any changes can be made to a client’s PCSP.

“We want PASSE clients and providers to know that we have heard their concerns, and we think these changes will help as we work through the launch of this new program. Allowing the PASSE networks to expand before open enrollment will help clients make the best choice for themselves and their families,” said Paula Stone, DHS Deputy Director of the Division of Medical Services.

On March 1, 2019, the three PASSEs – Arkansas Total Care, Empower Healthcare Solutions, and Summit Community Care – began receiving monthly payments from DHS to manage the complete healthcare of their clients. In this new organized care model, Arkansas Medicaid providers such as primary care physicians, pharmacists, hospitals, and specialty providers can join PASSE networks, and the providers are reimbursed by the PASSEs for services provided to PASSE clients.

The PASSEs also will pay all Arkansas Medicaid providers at an “in-network rate” through September 1, 2019, even if a provider is not in a PASSE’s network. With the additional time for this transition period, DHS encourages providers to join PASSE networks to ensure consistent care for clients.

The PASSE is a model of organized care created by Act 775 of 2017 to manage the services of individuals with significant developmental disabilities and behavioral health needs. To form each PASSE, local Arkansas providers entered into partnerships and chose an experienced organization to perform administrative functions, such as claims processing. These three groups function similar to insurance companies to serve nearly 45,000 Medicaid-eligible individuals.

PASSEs are a Medicaid provider type approved by the Centers for Medicare & Medicaid Services (CMS). They are regulated by the Arkansas Insurance Department (AID) and held accountable to the Department of Human Services (DHS) under federal managed care rules.