LITTLE ROCK — Ending Medicaid expansion in Arkansas could have a "substantial cost" for the state, according to a consultant’s report.

LITTLE ROCK — Ending Medicaid expansion in Arkansas could have a "substantial cost" for the state, according to a consultant’s report.

Representatives of The Stephen Group appeared Wednesday before the state Health Reform Legislative Task Force to discuss a report the panel hired them to produce containing recommendations on reforming health care.

The task force is charged with recommending a model that could replace Arkansas’ Medicaid expansion program, known as the private option, which uses federal Medicaid money to subsidize private health insurance for Arkansans earning up to 138 percent of the federal poverty level and is slated to end on Dec. 31, 2016. If Arkansas continues with some form of Medicaid expansion in 2017, it will begin paying a share of the cost that will increase gradually to 10 percent by 2021.

As The Stephen Group first said in a preliminary report in August, ending Medicaid expansion and reverting to traditional Medicaid programs could cost the state $438 million between 2017 and 2021, the New Hampshire-based consulting group’s final report states.

That estimate assumes the shifting of costs to traditional Medicaid and the restoration of funding to hospitals for uncompensated care. The impact on the state budget might be less if the state did not renew some optional programs or fund uncompensated care, the report notes.

The report offers numerous recommendations for modifying Medicaid expansion, including three "fundamental recommendations": shifting the focus of the program to being transitional, with the goal of moving people into jobs and off of public assistance; shifting toward managed care; and enhancing eligibility verification and fraud detection to ensure services are not being accessed by people who do not deserve them.

Managing partner John Stephen told the task force the No. 1 consideration in deciding what should replace the private option should be "the people that you’re asked to serve."

Among the report’s recommendations is requiring beneficiaries to sign "wellness agreements" that would call for them to follow certain wellness practices and, if unemployed, search for work.

Beneficiaries’ use of medical services could be tracked on a "wellness report card," and people who fail to comply could be required to pay premiums and co-pays, the consulting group said. People who do not pay could be locked out of services.

The group also recommended mandatory referral to job skills training for adult, able-bodied beneficiaries who are unemployed. About 40 percent of people enrolled in the private option have zero income, and 54 percent have income levels below 50 percent of the federal poverty level, according to the report.

A current rule that coverage is retroactive for the 90 days preceding enrollment should be eliminated, the group said.

The report also includes recommendations for strengthening and streamlining the eligibility verification process and enhancing efforts to detect fraud. According to the report, for 20,110 people enrolled in the private option, the best available address is not in Arkansas.

Stephen said some people may have moved out of Arkansas and may be continuing to take advantage of services under the private option. For others, the state may be making payments to insurance carriers even though no services are being used, he said. It is also possible that some people may have moved into the state and may be using the program appropriately, he added.

"The lack of real-time checks on applicants’ identity, assets, addresses could lead to the possibility of ineligible individuals receiving Medicaid," he said.

Workers should be offered premium assistance to help them obtain employer-sponsored insurance when available, the group said.

Stephen told the task force the state should not end coverage for non-emergency medical transportation, which Gov. Asa Hutchinson has proposed, saying it is a money saver in the long run.

The Healthcare Independence Account program has not worked and should be eliminated, the group said.

Other recommendations in the report include enhancing community-based care; providing dental and vision coverage, which is not provided now under the private option; doing more to educate beneficiaries about health care; and providing more resources to the Department of Human Services.

"Any replacement of the private option must be looked at to address health-care disparities and education and making sure that there is a ladder of opportunity for individuals that are not working and could be working with a little help," Stephen told the task force.

Rep. Charlie Collins, R-Fayetteville, co-chairman of the task force, said the panel will study and discuss the report and make its recommendations before the end of December.