ARKANSAS HEALTH PLAN PRAISED

Hi Forum,

It was uplifting to read this editorial praising innovation in health care in AR:














September 5, 2012, 9:17 pm



The Arkansas Innovation



By EZEKIEL J. EMANUEL

Philadelphia
MENTION medical innovation, and you might think of
the biotech corridor around Boston, or the profusion of companies
developing wireless medical technologies in San Diego. But one of the
most important hotbeds of new approaches to medicine is ... you didn't
guess it: Arkansas.
The state has a vision for changing the way
Arkansans pay for health care. It is moving toward ending
"fee-for-service" payments, in which each procedure a patient undergoes
for a single medical condition is billed separately. Instead, the costs
of all the hospitalizations, office visits, tests and treatments will be
rolled into one "episode-based" or "bundled" payment. "In three to five
years," John M. Selig, the head of Arkansas's Department of Human
Services, told me, "we aspire to have 90 to 95 percent of all our
medical expenditures off fee-for-service."
The change will
encourage doctors and hospitals to work together to provide patients
with the highest quality care, while at the same time lowering costs by
eliminating unnecessary tests and treatments. It has been done before,
in small-scale experimental pilot programs. But as the Arkansas
officials make clear, this change will now be made in every corner of
the state, for every hospital, and physicians in almost every specialty:
surgeons, anesthesiologists, obstetricians, pediatricians, primary care
physicians. For policy makers and the public, the Arkansas experiment
is fascinating.
This is how it will work: Medicaid and private
insurers will identify the doctor or hospital who is primarily
responsible for the patient's care - the "quarterback," as Andrew
Allison, the state's Medicaid director, put it. The quarterback will be
reimbursed for the total cost of an episode of care - a hip or knee
replacement; treatment for an upper respiratory infection or congestive
heart failure; or perinatal care (the baby's delivery, as well as some
care before and after).
The quarterbacks will also be responsible
for the cost and quality of the services provided to their patients, and
will receive quarterly reports on those metrics from the state (for
Medicaid patients) or private insurers. If they have delivered good care
based on agreed-upon standards, and if their billings come in lower
than the agreed-upon level, they can keep a portion of the difference.
If their billings come in above an acceptable level - usually because
they have ordered too many unnecessary tests, office visits or
inappropriate treatments - they will have to pay money back to the state
or insurer.
Arkansas may seem an odd place for such a bold
experiment. It has the sixth-highest poverty rate in the country, and
ranks near the bottom in everything from the percentage of pregnant
women getting prenatal care and the infant mortality rate to obesity,
diabetes and life expectancy. It doesn't have enough doctors; all but
two of the state's counties are designated as either entirely or
partially medically underserved. And until recently, it was way behind
on the adoption of electronic health records.
Yet Arkansas also
has certain advantages. It has a governor who understands the issues
very well. And it has doctors and hospitals who - faced with a State
Legislature resistant to raising taxes, an imminent shortfall in state
Medicaid funds and the threat of imposed managed care - agreed to
support the scheme. Finally, it helps that Arkansas is a small state;
when everyone knows everyone, it's easier to work out implementation
problems.
Still, it will be a challenge. Bundled payments for hip
and knee replacements, which have similar costs for all patients, have
been previously tested. But for other conditions, not every patient's
needs are the same. Some pregnant women are healthy while others have
diabetes. The state and insurers will have to provide "risk adjustment"
payments - in which providers are reimbursed more for treating sicker
patients - and some patients with especially complicated illnesses may
need to be excluded from the bundling system.
Even some low-cost
conditions, like upper respiratory infections, are treated at widely
varying costs, mainly because physicians prescribe different tests,
numbers of office visits and medications (in 14 Arkansas counties, over
50 percent of patients with upper respiratory infections receive
antibiotics, even though national guidelines say they should rarely be
prescribed because most infections are viral).
But this is exactly
what the new program will work to change, by providing standards for
appropriate care linked to the costs of treatment and the quality of the
doctor's performance compared with that of other doctors.
Maybe
Arkansas's biggest challenge was getting the state's insurers to work
together. On that, it has succeeded. Arkansas's two biggest private
insurers, Blue Cross Blue Shield and QualChoice, are on board with
Medicaid. But there is one big player missing: Medicare. To really make
this innovation effective, the federal government should join in.
In
the meantime, even as the state is working on implementing bundled
treatments for a first round of medical conditions, it is gearing up
with the second round. If Arkansas succeeds - even partly - it will show
the way for the rest of the country.