A proposal to add three “episodes of care” - tonsillectomies, gallbladder removals and colonoscopies - to the state’s health-care payment overhaul is set to go before the Arkansas Legislative Council on Friday after it cleared a subcommittee on Monday.
The episodes are part of the state’s Health Care Payment Improvement Initiative, in which Arkansas’ Medicaid program and two private insurers financially reward doctors who keep the cost of providing an episode of care below a range considered acceptable or penalize them for exceeding it.
The proposal to add tonsillectomies, gallbladder removal and colonoscopies to the initiative went to the Legislative Council’s Administrative Rules and Regulations Subcommittee on Monday after clearing the Legislature’s House and Senate Public Health committees last month.
Marilyn Strickland, chief operating officer for the state’s Medicaid program, told rules subcommittee members on Monday that she hadn’t heard of any objections from doctors about the addition of the episodes.
In addition to reducing costs, the initiative should help reduce the variation in what the program spends to treat the same condition indifferent patients, Department of Human Services Director John Selig said.
“We’ve found that we pay significantly different amounts,” Selig said.
With no lawmakers objecting, Rep. Kelley Linck, R-Yellville and a co-chairman of the subcommittee, deemed the additions of the episodes “reviewed.”
According to the Human Services Department, the Payment Improvement Initiative is expected to save the Medicaid program more than $800,000 in the fiscal year that began July 1 and just over $1 million the next year.
Human Services Department officials also have credited the initiative with prompting doctors and other health-care providers to lower the costs of other procedures, helping slow the growth of spending in the nearly $5 billion health insurance program for the poor.
About 70 percent of the Medicaid program’s costs are paid by the federal government, and the state pays for the rest.
The payment initiative began in October with three episodes of care: upper respiratory infection, maternity care and attention deficit hyperactivity disorder. Congestive heart failure and total joint replacement were added in February.
Later this month, the Human Services Department plans to present an additional episode - oppositional defiance disorder - to the House and Senate Public Health committees. That episode was initially presented to the health committees in May, but its approval was delayed because of questions from lawmakers.
Along with the Medicaid program, Arkansas Blue Cross and Blue Shield and Little Rock-based QualChoice are using the episode-of-care payment model for some of the episodes.
Last year, an average of 680,000 people, including children in low-income families and the disabled, were covered by the state Medicaid program.
Under an expansion of the program approved by the Legislature in April, about 250,000 adults with incomes up to 138 percent of the poverty level - $15,860 for an individual - will be eligible for coverage in the program starting Jan. 1.
Medicaid will purchase the coverage on behalf of enrollees by paying the premiums for private insurance plans that will be offered through an exchange, or marketplace, being set up by the federal government with input from the state.
Five companies have applied to the Arkansas Insurance Department to offer plans on the exchange.
The private plans won’t initially be required to pay providers according to the episode-of-care model, although Selig said last week that the requirement could be added at some point in the future.
For the first year of the exchange’s operation, state officials wanted to encourage as many insurance companies as possible to participate, Selig said.
“We obviously don’t want to put a requirement in place until we’re clear what the impact is,” Selig said.
Arkansas, Pages 7 on 07/16/2013