State officials hash out health-care pay tweaks

Arkansas Democrat Gazette

3/27/12

LITTLE ROCK — Arkansas Surgeon General Joe Thompson, along with other state officials, met with health-care providers Monday to discuss the state’s plan to begin overhauling how care is paid for in the state and to give more details on how the new system will work.

Through the Arkansas Health Payment Improvement Initiative, the state aims to shift Medicaid payments for some types of care from a “fee-for-services” model to a system where the government pays medical providers for “episodes” of care.

Medicare, as well as private insurers such as Qual-Choice and Blue Cross Blue Shield, have joined the initiative.

Andy Allison, director of Arkansas Medicaid, said one of the goals is to reduce variation in the cost of treatment in the six episode types that have been selected for the introduction of the new process.

“I don’t know how to defend to the Legislature the variation in payment if I can’t explain it. Does it vary by quality? Does it vary by efficiency? By characteristics of the patient? If it doesn’t, we probably need to figure out how to pay differently,” Allison said.

While its planners believe the initiative will make medical care more cost effective, which will help stop the growth of medical costs, Thompson said that the new initiative will not solve the most imminent problem for Medicaid.

“This is not going to fill the Medicaid budget shortfall,” he said.

Medicaid in Arkansas is about a $4.4 billion program. The federal government pays about 71 percent of the cost. The state pays the rest. The state Department of Human Services has said Arkansas could face a $400 million shortfall by fiscal 2014, which begins July 1, 2013.

The program is on track to be launched by July 1 with a “reporting period” that could last three to six months, Thompson said.

During this time, “principal accountable providers” will begin exchanging data that will serve as a baseline later, but their performance will not yet affect payment.

Next will be a feedback period when the new system can be refined. Sometime late this year or early next year, the “performance period” will begin, according to a handout distributed at the meeting.

That’s when the principal providers will be held accountable for spending too much, or rewarded for being efficient.

Target costs for each episode will be established based on data collected in the state. Providers whose costs exceed an “acceptable” threshold will be held responsible for a share of costs above that level. Those who provide the same care for less money than the “commendable” threshold will share in the savings.

Providers will also have to meet some quality metrics such as demonstrating that they perform certain tests, in order to share in gains from cost savings.

“A certain minimum threshold is going to be required in order to be eligible for gain sharing. It’s not necessarily going to be at the A-plus level of care, but we certainly expect people to perform at a C level in order to be eligible to receive gain sharing,” said Bill Golden, medical director of the Human Services Department’s Arkansas Medicaid Enterprise.

Steve Spaulding, vice president of Arkansas Blue Cross and Blue Shield, said the system was designed so that providers can continue submitting claims as they do right now and additional costs or gains will be assessed later on.

“We have changed the focus to one that is not as disruptive” as what was originally planned, he said.

A “principal accountable provider” is the main decision maker and coordinator in an episode, and is ultimately responsible for making sure a patient gets the right care and at the right cost. Who that is depends on the episode, Spaulding said.

Cheryl Arnold, the administrator of Central Arkansas Pediatric Clinic in Benton, said she understood that data would be used to figure out the target cost of an episode, but asked how the range of acceptable costs above and below that target would be set.

Golden said the ranges would not set targets that providers could not meet.

“It’s going to be normative – folks in the middle doing what they should be doing are not going to be affected by these boundaries,” he said.

Arnold said after the meeting that she still had questions about how the ranges would be calculated.

“What are those upper and lower limits going to be, and what’s the method to set those? I don’t feel like that was adequately answered,” she said after the meeting.