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September 2012 St@teside

Arkansas Begins Implementation of Payment Reform Initiative

Arkansas is currently rolling out a new payment reform initiative, the Health Care Payment Improvement Initiative, with a goal of shifting payment from pure fee-for-service models that reward volume of care to models that support and reward effective care coordination and superior outcomes with respect to quality and cost effectiveness. Episodes are created to address a specific condition or set of procedures within a set time frame. Providers will be paid fee-for-service as they are today, but a pre-determined Principal Accountable Provider (PAP) is at risk for how the “team” performs. After consultation with stakeholders, the state initially launched five episodes in July 2012: hip/knee replacement, perinatal care (non-NICU related), ambulatory upper respiratory infections, acute/post-acute congestive heart failure, and attention deficit hyperactivity disorder.

Each episode will have an identified Principal Accountable Provider (PAP), also referred to as the “quarterback.” The PAP is the coordinator and leader for all care delivered by the team of physicians and other providers involved in the episode of care. The PAP is the only provider for that episode who is eligible for financial savings or who is at risk for financial penalties. Physician practices, hospitals, or other providers are eligible for designation as PAPs. For example, for a hip/knee replacement episode, an orthopedic surgeon could be the PAP; for perinatal care that role could go to the practitioner who performed the delivery.
The initial phase of the initiative (running from July through September 2012) involves no payment changes. It serves as a preparatory period in which providers can familiarize themselves with the new processes and quality reporting requirements. Currently, all providers who are part of a treatment team for an episode will file claims as usual, and will be reimbursed as usual. Based on the claims data related to the episode, the payers will identify that episode’s PAP. 
The next phase of the initiative will run from October 2012 through January 2013. Starting in this phase, every quarter, PAPs will receive a report about all of the episodes of care delivered to their patients. Reports on Medicaid beneficiaries will be produced by the state while commercial carriers will submit reports for the privately insured. The report will include information about the average cost per episode of care for that designated PAP over the quarter. That average amount is calculated and then compared to pre-determined “acceptable” and “commendable” cost and quality thresholds, based on evidence-informed cost and quality metrics. Those PAPs who deliver care with higher than “acceptable” average costs across their episodes will pay a portion of excess costs. PAPs who deliver care that meets quality requirements and is delivered for costs below the “commendable” levels share in the savings. If the average cost falls between the “acceptable” and “commendable” levels, the payment to the provider is not affected.
Arkansas hopes to continue to launch new episodes of care over the next three to five years, and will continually work with its stakeholder groups to ensure that the initiative is achieving the goal of delivering more coordinated, higher quality care for Arkansans at a lower cost.
Resources for this article:
Emanuel, Ezekiel. “The Arkansas Innovation.” The New York Times Opinionator Blog. September 5, 2012. 

Health Care Payment Improvement Initiative Website: 

National Institute for Health Care Management (NIHCM) Webinar. “Payment Reform: State and Private Sector Collaborations.” Presentation by Steve Spaulding, Vice President, Enterprise Networks, Arkansas BlueCross BlueShield and John Selig, M.P.A., Director, Arkansas Department of Human Services. August 6, 2012.