Crisis Spurs Healthcare Payment Reform in Arkansas

Christopher Cheney, for HealthLeaders Media , April 15, 2014

A federally backed drive to create a value-based healthcare delivery system in partnership with providers and payers is under way nationwide. Three years ago, an unprecedented financial crisis prompted Arkansas "to bet the farm" on a similar value-based healthcare model.

This is first of a multi-part series on healthcare payment reform in Arkansas. Read Part II.

Soon after the federal Patient Protection and Affordable Care Act became law in 2010, the Arkansas, consistently ranked near the bottom in many US health statistics, faced a healthcare system financial calamity.

Years of skyrocketing costs had pushed the sustainability of the state's healthcare system to the brink and baby boomers had swollen the Medicaid program's rolls. When lawmakers opened the 2011 legislative session in Little Rock, they gazed into the maw of a 2012 Medicaid program gap estimated at more than $300 million. Some estimates were as high as $400 million.

The state's political, healthcare, and business leadership faced a Herculean challenge. "We were hitting a cliff and we had to take dramatic measures," says Arkansas Surgeon General Joseph Thompson, MD.

Payment Reform Naysayers 'Better Wake Up'

"The financial picture for the state was coming into focus," says Andy Allison, Arkansas' Medicaid director, adding "the wave of disability" enrollment in Medicaid programs hits before the age of 65. "We have been receiving the baby boom in disability enrollments through the Medicaid program for several years… The program faced a real question of sustainability."

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