Payment Reforms Paying Off in Arkansas, For Now

Christopher Cheney, for HealthLeaders Media , April 28, 2014

"The system you have out there right now, you add 250,000 people to it and you're going to have a bottleneck. That's why the state is pushing so hard to get those medical homes up and running."

Early Results Promising
"We're starting to see improvement in quality and efficiency of services that is generating savings," Thompson said. "We have some clinics that are knocking the ball out of the park."

The Arkansas Center for Health Improvement, which Thompson leads as director, recently began analyzing payment data from the first episodes of care launched in October 2012, he said. Data for upper respiratory episodes from October 2012 to September 2013 shows more physicians had to pay back than gained a share of cost savings, the surgeon general said.

Gainsharing for treatment of upper respiratory infections during that period was about $60,000 and cost-penalties were about $92,000. "We've had remarkably little provider pushback to date," he said.

Thompson says the new payment system features rational incentives and simplicity for physicians because Medicaid and commercial payers are playing by the same rules. "What we're not doing is putting a new management system on top of a provider's delivery system. We are highlighting for the provider the inefficiencies in the system."

Andy Allison, Arkansas' Medicaid director, says the new payment system is already bearing fruit. "What we've achieved in the last two or three years is, in my view, without precedent. We've heard multiple stories of providers who didn't believe the numbers… Once you start paying that way and showing providers what actually is going on, the providers are very willing to make a change. History tells us payment drives change."

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