Payment Reforms Paying Off in Arkansas, For Now

Christopher Cheney, April 28, 2014

Payment reform is the glue holding Arkansas' ambitious healthcare reform efforts together, according to top leaders in the state. Some legislative hurdles remain.


Gov. Mike Beebe

This is the third and final part of series on healthcare payment reform in Arkansas. Read Part I. Read Part 2.

An ambitious plan to build the country's first public-private, universal payer, value-based healthcare delivery system is playing out in Arkansas and the preliminary results look promising.

"One of the reasons we have been successful with the legislature is we tackled cost containment first before we expanded insurance," Arkansas Surgeon General Joseph Thompson MD said in a phone interview earlier this month. "We didn't have any votes to spare."

Arkansas' payment reform push started several years before the cliff-hanger votes over the past year that expanded Medicaid to more adults through the state's new public exchange.

"Delivery system costs were going to force the state to do something dramatic [with Medicaid]," the surgeon general said, adding that the existing fee-for-service program faced insolvency unless there were deep cuts to provider payments or patient benefits. "Our private sector carriers were having the same issue."

Payment Reform Naysayers 'Better Wake Up'

Gov. Mike Beebe's administration began designing the Arkansas Payment Improvement Initiative in 2011 and started launching reforms in 2012. The essential elements of the initiative are two-fold:

  • A gainsharing/cost-penalty payment system for physicians with as many as 150 "episodes" of care for conditions ranging from upper respiratory infections to clogged coronary arteries
  • Patient-centered medical homes that bear financial responsibility for the healthcare needs of a population

Arkansas has 15 episodes either established or launching this summer.

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.


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