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Redefining how we pay for medical care

Healthcare costs can vary wildly. Take for example total hip/knee replacement surgery, which usually cost between $18,630 and $23,918. This variation depends on a lot of things, like location, specialist and facility availabilities, and the services rendered. As healthcare costs continue to rise and significant quality variations exist, Arkansas Blue Cross and Blue Shield is partnering with other payers to stabilize and standardize treatment costs and incentivize quality care.

The Arkansas HealthCare Payment Improvement Initiative, (AHCPII), a collaborative effort with Arkansas Medicaid and QualChoice, replaces the traditional fee-for-service payment model with an episode-based payment model. The main goal of AHCPII is to transform a volume rewarded system into a healthcare delivery model that promotes high-quality and efficient outcomes for patients.

How it works: The provider with the most influence and responsibility, or the Principal Accountable Provider (PAP), is incentivized for appropriately coordinating an episode of care. An episode of care includes all medical services related to a particular medical problem or situation for a patient. These services, which may involve more than one healthcare provider, must be received during a period of relative continuity.

For example, with total hip/knee replacement surgery, an episode would encompass the 30 days prior to the surgery and follow the 90 days after the surgery. This medical event would include things like inpatient professional services, facility services, rehabilitation services, related labs and diagnostics, outpatient services and medications.

All providers involved in an episode will file claims normally. However, the PAP, who is responsible for the overall success of treating the episode, will be evaluated annually based on quality and cost-effective metrics. A good rating will allow the PAP to share in cost savings; a poor rating may require the PAP to share excess costs. Additionally, providers will receive reports to help identify where there is potential for practice changes, care coordination and improving best practices.

Arkansas Blue Cross has implemented the episodes listed: total hip/knee replacement surgery, congestive heart failure, perinatal or pregnancy events, colonoscopy, cholecystectomy, and tonsillectomy/adenoidectomy. As the payment model is tested and more providers become familiar, more episodes will be added.

Arkansas Blue Cross stands to further strengthen its trusted network by rewarding healthcare providers who consistently deliver high-quality, coordinated, cost-effective care to patients. And by helping restructure the state's healthcare system, unsustainable growth in costs will be alleviated. That makes AHCPII a win-win for everyone.