The 3rd Annual Tracking Report from the Arkansas Center for Health Improvement finds that the state is having success with a new health care business model that puts the focus on improved outcomes and cost savings.
Unlike fee-for-service, the model used by the vast majority of health care providers, the Health Care Payment Improvement Initiative offers no financial incentive for ordering unnecessary tests. Providers instead earn bonuses for improved outcomes for patients and for reducing costs.
It’s already saved the state some $54 million in Medicaid costs, according to Mike Motley, assistant policy director at ACHI. The tracking report found that total Medicaid costs predicted at $660.9 million came in at $606.5 million in 2015, due to cost avoidance. The savings were then shared between the state and the providers who helped avoid unnecessary costs.
Motley said the value-based model benefits patients as well by emphasizing outcomes and putting them in closer contact with their caregivers.
“Maybe they were going to go to an emergency room on a Sunday night, but now they can call their primary care doc and speak to them and maybe just schedule a check-up the next day,” he said.
He also cited a 30 percent reduction in unnecessary antibiotic use for upper respiratory infections.
Brandi Hinkle, deputy chief of communications for the Arkansas Department of Human Services, said she was particularly gratified that the tracking report found that a patient-centered medical home program is reducing costs and increasing coordination among
multiple providers, which might include a primary care doctor, a heart specialist and a pharmacist.
“So that everybody is kind of reading from the same playbook and making sure that individual, that patient, is receiving the best care,” she said. She said hospitalizations are down 16.5 percent for patients enrolled in a Medicaid PCMH, while emergency room visits are down more than 5 percent.
“Arkansans are receiving better care that is more effective and efficient in use of Medicaid dollars,” she said.
“In traditional fee-for-service, the incentive is to do more services to be reimbursed more,” said Motley. He said Arkansas’s success switching to value-based payments is serving as a model for other states and even the national government.
But not every group that’s seeking to improve the American health care system agrees that fee-for-service is the root cause of high cost and low efficiency. In “Fee-For-Service is Not The Problem,” Dr. Stephen Kemble wrote that exorbitant and unnecessary administrative costs are a far bigger problem and that value-based models tend to give doctors a financial reason to avoid the sickest patients.
“There are only a few U.S. health reform programs that have actually achieved significant cost savings without relying on ‘cherry picking’ healthier populations and avoiding sicker ones,” he wrote.
Dr. Steffie Woolhandler, a practicing physician who also teaches at the CUNY School of Public Health, agreed that fee-for-service is not the culprit.
“Fee for service is a predominant mode of payment for physicians in Canada, and they have costs that are about half of what the health care costs are in the U.S.,” she said.
She said that paying for value over volume may sound good on paper while not actually achieving the promised savings or other benefits.
“I guess there’s no good way to pay doctors, but there’s a variety of bad ways to pay them,” Woolhandler said, adding that her preference as a practicing physician herself would be a straight salary system.
The federal government seeks to follow a value-based system by aiming to have half of all Medicare payments made through an alternative payment model similar to Arkansas’s by 2018.