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Senate hears extensive presentation on Medicaid waiver reauthorization and proposed changes to work requirements, pharmacy rebates and medical loss ratio
Summary
Senate Bill 527 would reauthorize the state's Section 1115 Medicaid waiver (the ARHome program) and propose pharmacy rebate tracking, a raise of the medical loss ratio to 90%, and optional work/volunteer provisions contingent on CMS approval, sponsors said.
Senate Bill 527, described by Sen. Missy Irvin as a reauthorization of a Medicaid Section 1115 waiver (the state’s ARHome program), drew extended committee discussion on pharmacy‑rebate transparency, a proposed rise in the medical loss ratio (MLR) from 80% to 90%, and a work‑and‑volunteer requirement that would be implemented only if approved by the Centers for Medicare & Medicaid Services (CMS).
Irvin said the bill would capture pharmacy rebates for the state, change the MLR metric from 80/20 to 90/10, and add eligibility for federally qualified health centers to act as CBOs for maternal homes. “The definitions that are included…medical loss ratio is a definition that's new…Pharmacy rebate definitions…are directly taken from the pharmacy benefit managers licensing act,” she said.
Committee members pressed for detail on how the MLR works and the effect on premiums and carrier refunds. DHS officials said the MLR requires carriers to spend a target percentage of premium on medical claims; if the carrier misses the target, reconciliation occurs and funds are returned according to federal/state match rules. DHS said it is preparing the waiver submission to CMS and that a work requirement would have to be approved by CMS before it could be imposed.
John Vincent, CEO of the Arkansas Pharmacists Association, and other stakeholders explained that rebates in traditional Medicaid are governed by federal law and that in private‑insurer models rebates are negotiated between PBMs and manufacturers; the bill seeks to bring transparency and allow the department to ensure discounts are used to lower premiums or program cost. Committee members raised concerns about PBM opacity and referenced national examples where increased transparency yielded recoveries in other public plans.
Senators asked about volunteer hours as an alternative to employment, the program’s prior court challenges, suspension versus condition‑of‑eligibility language, and the reconciliation timing for rebates. Sponsors emphasized that language is intended to align with federal requirements and to preserve the ability to negotiate terms with CMS; no committee vote was taken during this session.
