Committee adopts amendment in debate over bill to lift Arkansas hospital reimbursement rates

Representative Wardlaw opened discussion of what he described as a measure aimed at improving low commercial reimbursement rates to Arkansas hospitals, saying "Arkansas health care providers receive some of the lowest reimbursement rates in the country." Wardlaw told the committee the measure would create transparency, set a phased floor for private payer hospital reimbursement relative to a multistate average, and give the insurance commissioner authority to collect necessary data.

Supporters: Beau Ryle, president and CEO of the Arkansas Hospital Association, testified that Arkansas hospitals receive substantially lower average reimbursements than neighboring states and said the differential threatens rural hospitals' viability. Ryle cited RAND and other reports showing Arkansas average reimbursements far below Oklahoma and Texas and said hospitals have needed recurring emergency state support. Wardlaw said the bill would phase in increases over five years with an initial 45% floor for certain commercial reimbursements and then incrementally higher floors in later years; committee members adopted an amendment that changed a draft threshold from 90% to 85% and exempted state plans (EBD) and higher-education plans from the initial implementation schedule.

Opponents and fiscal concerns: Speakers for insurers, including David Mann and Alicia Birkmeyer of Arkansas Blue Cross, said Arkansas's low Medicare and Medicaid reimbursement base complicates comparisons and warned that raising commercial reimbursement could increase employer and employee premiums. Birkmeyer presented an example projecting that, on a hypothetical family policy, expected year-to-year trend of about 5.3% (roughly $911) could become a total increase of about $3,071 under the bill's initial implementation as drafted, depending on plan specifics.

Committee action and status: The committee debated amendments to add reporting and medical-loss-ratio-based safeguards; Representative Lee Johnson explained language to require the Insurance Department to consider additional factors including medical-loss ratios and risk-based capital thresholds before approving premium increases. The committee voted to adopt an amendment (including the numerical change from 90% to 85%) and incorporated transparency language from related proposals. The transcript records that committee leaders did not complete final action on the bill during the hearing and that consideration would continue later; the bill was not finally passed in this session excerpt.

Ending: The hearing produced extensive testimony from hospitals and insurers and an adopted amendment to increase insurer reporting and a phased in reimbursement floor. Committee members and witnesses agreed to continue work; the chair said the committee would reconvene on the item after the adjournment to complete consideration.