An Unlikely State Schools Nation on Healthcare Payment Reform

Christopher Cheney, April 23, 2014

With a head start on most of the country, Arkansas is pioneering a series of system-wide payment reforms designed to create a value-based healthcare delivery system.

When you think of fiscally progressive, trend-setting states, Arkansas probably is not the first to come to mind.

But the home of the Razorbacks is on the cutting edge of healthcare reform efforts nationwide, with the state building the country's first public-private, universal-payer, value-based healthcare delivery system.

In 2012, state officials launched the Arkansas Payment Improvement Initiative, a gain-sharing/cost-penalty payment system for healthcare providers. The first payers to enter into the new system were the state's Medicaid program and the dominant commercial-insurer duo, Arkansas Blue Cross Blue Shield and Humana.

"Medicaid almost has to lead the way," Andy Allison, the state's Medicaid director, told me earlier this month. "Medicaid typically adopts the policy changes first, then the private payers adopt later."

Governor Details Healthcare Payment Reform Path in Arkansas

Arkansas' universal payer system is so innovative, that federal officials are studying whether Congress would have to pass a new law for Medicare to fully participate, Joseph Thompson, MD, the state's surgeon general, told me earlier this month. "We have stimulated debate in the federal Department of Health and Human Services," he said. "They may be concerned they don't have statutory authority."

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.

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