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Arkansas facing an increase in Medicaid costs due to federal changes

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(The Center Square) – The Arkansas Department of Human Services will need $55 million more to fund Medicaid services beginning Oct. 1 as the Federal Medical Assistance Percentage will decrease from 72.0% to 71.14%, according to a report released Friday.

The Medicaid Sustainability Review conducted between March 2023 and March 2024 looks at how the program can address the rising costs, according to a DHS news release.

“Medicaid provides health care to more than 850,000 Arkansans, and we have a responsibility to ensure that it is optimally structured and financially sustainable so that these services continue well into the future for those who rely on them,” said DHS Secretary Kristi Putnam. “We appreciate the chance to discuss different paths laid out in this report and look forward to working with our many partners to determine which options make sense, and which don’t.”

The 128-page report outlines how programs could be modified to accommodate the cost increase. Eleven programs are identified in the report, including long-term services and supports, pharmacy benefits and non-emergency medical transportation services. Several options are included in the report to be reviewed by lawmakers, the governor and others, according to DHS.

The report stated Medicaid costs increased 41% between fiscal year 2018 and fiscal year 2023.

“During this same period, Medicaid has grown from approximately 20% to approximately 23% of the State General Revenue fund forecast, causing concern about the sustainability of the Medicaid program and increasing strain on the overall State budget,” the report said.

States were prohibited from removing Medicaid beneficiaries during the public health emergency due to COVID-19. DHS officials reevaluated the roles when the public health emergency ended in April 2023. More than 427,000 people were moved by DHS during a six-month period, according to information provided to The Center Square.

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