Arkansas Center for Health Improvement

Arkansas Health Care Payment Improvement Initiative (AHCPII)

The Arkansas Health Care Payment Improvement Initiative (AHCPII) is designed to transition Arkansas to a “patient-centered” health care system that embraces the triple aim of (1) improving the health of the population; (2) enhancing the patient experience of care, including quality, access, and reliability; and (3) reducing, or at least controlling, the cost of health care.

At its core, the multi-payer, statewide system is being built around patient-centered care delivery models focusing on what the patient needs, rather than being designed around any particular delivery system structure. AHCPII is led by the Arkansas Department of Human Services’ Medicaid Program with substantial input from technical development workgroups, stakeholders, and the two largest private payers in the state (Arkansas Blue Cross and Blue Shield and QualChoice of Arkansas). AHCPII is designed to reward physicians, hospitals, and other providers who give patients high-quality care at an appropriate cost.

ACHI has been a full partner and participant in developing the AHCPII since its inception. Our staff has worked closely with Arkansas Medicaid senior leadership to design the initiative. Through cross-agency leadership meetings ACHI has been an advisor on how design element decisions of the AHCPII will intersect with the other Arkansas Health System Transformation efforts inclusive of the Arkansas Health Information Exchange, Arkansas’s Workforce Strategic Plan, and Arkansas’s Health Information Technology advancement activities. ACHI has helped coordinate the interface of public and private payers to support the long-term sustainability of the AHCPII. ACHI has also played a key role in facilitating public meetings, ongoing provider engagement, and meetings with federal officials to further the progress of the AHCPII. As the initiative progresses, ACHI will compile a statewide tracking report to compare data across payers for episodes and medical homes to optimize the impact of the AHCPII.

Information is provided below about:

  • Overview of AHCPII
  • Patient-centered Medical Homes
  • Health Homes
  • Episodes of Care—Financial Incentives and Support for Providers


Arkansas began work on AHCPII in 2011 and implemented the first components in 2012 with a goal of fully developing this system in 3–5 years. This will be accomplished by adopting two complementary strategies for promoting clinical innovation on a multi-payer basis across the entire state:

·         Population-based care delivery through medical homes, health homes, and other care delivery models that bear responsibility for the complete needs of a population

·         Episode-based care delivery with coordinated, team-based management of services provided to a patient frequently spanning multiple encounters with the delivery system, such as hip replacement or pregnancy and delivery.

The new system will provide Arkansans with easy-to-access, evidence-based preventive care, chronic care management, acute /post-acute care, and supportive care where needed. It will also significantly increase the use of health information technology to deliver patient care, facilitating better coordination and quality outcomes.

The coordinated statewide, multi-payer approach ensures that providers need not operate under conflicting systems nor shoulder the complexity of different business rules and reporting requirements for different patient populations. The multi-payer approach also creates sufficient “critical mass” to make incentives substantial enough to support changes in provider infrastructure, clinical decision-making, and operational processes.

The AHCPII also has significance beyond Arkansas. Like many states, ours includes a significant rural population and is characterized by a large number of independent providers, with 60 percent of physicians in practices of 5 or fewer physicians. Successful implementation could present an important model not only for other states in the Delta region, but also for states across the country that do not have high levels of provider consolidation.

Patient-centered Medical Homes

By 2018 (5 years after implementation of AHCPII), most Arkansans will have a patient-centered medical home (PCMH) that offers local access to preventive care and proactively manages their health. The PCMH concept involves team-based care and coordinates the efforts of physicians, advanced practice nurses or physician assistants, pharmacists, medical assistants, lab and x-ray technicians, care managers, dieticians, financial counselors, mental health providers, developmental disabilities providers, long-term care providers, and home health workers to best serve each patient’s needs. Care coordination facilitates patient care plans within the medical home and provides linkages to community resources for patients’ underlying social needs, such as transportation to appointments or help in overcoming physical limitations. Enhanced access for patients will be achieved through extended hours of operation and electronic communication. Provider performance will be enhanced through real-time access to patient disease registries and individual patient records – positively impacting each patient’s quality of care and leading to improved health outcomes. Medical homes also actively promote prevention services and empower patients with the education they need to stay healthy. 

The first wave of Arkansas’s PCMH implementation was accelerated last year when the state was selected as one of seven markets to participate in the Centers for Medicare and Medicaid Innovation’s Comprehensive Primary Care Initiative (CPC). In all, 69 primary care practice sites throughout Arkansas were chosen by CMS to participate in CPC. As a common design structure of Arkansas’s broader PCMH model, these sites have been receiving enhanced per-member-per-month payments to support practice transformation and care-coordination necessary to meet specific performance metrics and transformation milestones. To achieve these goals some CPC practices have used per-member-per-month payments to hire additional staff for improved care coordination, and/or reorganized their practice environment to improve workflow and team cohesion, among other strategies.  Practices also have the potential to share in system savings by achieving improvements in the total cost of care of their patient panel.

The second wave of PCMH rollout will begin in early 2014, with a focus on early adopters in practices serving a majority of pediatric patients. Further enrollment will be supported in phases, as additional primary care practices including family practice and internal medicine are enrolled throughout 2014. Wave 3 of PCMH implementation will bring along remaining primary care practices, with the goal of all primary care practices in Arkansas operating in a PCMH model.

ACHI has worked with Arkansas providers, public and private payers, and other stakeholders to develop the Arkansas PCMH model component of the APII. In an effort to gain stakeholder input to PCMH model design, ACHI staff has helped facilitate public workgroups throughout the state and has partnered with the Arkansas Department of Human Services to host monthly Provider Advisory Group meetings. ACHI has continued in the role of cross-agency convener to gain PCMH input and participation of new payer groups including the Arkansas State and School Employees (EBD), as well as interest of self-insured groups including the University of Arkansas System, as well as Walmart and other companies operating in Arkansas.

Importantly, ACHI’s leadership assistance helped the multi-payer CPC efforts come to fruition in late 2011. ACHI staff helped coordinate a multi-payer state collaborative application effort to best facilitate a coordinated and integrated PCMH platform for the state—complete with alignment on quality metrics, program monitoring, and practice recruitment strategies.

Health Homes

Health homes are a more specialized extension of the PCMH model and are set up for people who need an increased level of care coordination or face greater challenges in navigating the health care system, such as those with developmental disabilities or behavioral health challenges and those living in long-term care facilities. A health home promotes high-quality care, an improved patient experience, and more efficient care. As with PCMHs, providers are responsible for proactively considering the needs of their patients or clients, independent of where they are seeking care, and will receive incentives for promoting wellness and achieving health outcomes.

Health homes serve not as gatekeepers for medical care, but rather as a hub from which the patient may connect with a full array of providers who together form the patient‘s health services team. Most individuals eligible for the health home are those who are dually eligible for Medicaid and Medicare (duals) and/or receive most of their services for behavioral health (BH), long-term services and support (LTSS), and/or developmental disabilities (DD).

ACHI has worked with the Arkansas Department of Human Services on preliminary development of the Arkansas health home model. This component of APII is in a planning phase and expected to be launched in July 2014. To help develop an optimal and efficient model and to understand the needs of those who will likely make use of a health home, ACHI is conducting ongoing analyses of Arkansas populations using both Medicare and Medicaid (dual eligibles), including those with developmental disabilities, specialized behavioral health needs, and those needing long-term services and support. ACHI’s analytical findings on Arkansas’s dual eligibles over the next 12 months will be posted on the website as they are developed.

Episodes of Care—Financial Incentives and Support for Providers

AHCPII shifts away from fee-for-service payments that reinforce fragmented care and overuse of services to value-based payments, such as episode-based payments, that reward effective care coordination, quality, and cost-containment. An episode of care is focused on all the care provided to treat a particular condition for a given length of time. Arkansas’s approach is clinically based, contains efforts to affect reimbursement and effectiveness of care, and is transparent to patients and providers.

Providers share in the savings or excess costs of an episode depending on their performance for each episode. The participating payers identify the principal accountable providers (PAP) for each episode through claims data. For each episode, all providers continue to file claims as they have previously and are reimbursed according to each payer’s established fee schedule. Providers input some basic information related to the care they provide into a Provider Portal. Then, through this portal, providers access reports that show the overall quality of care they delivered during a set time period—typically one year—and at what average cost. 

At the end of the set time period, each PAP’s average cost per episode is calculated and compared with “acceptable” and “commendable” levels of costs. If the average cost is above the acceptable level, the provider will pay a portion of the “excess” costs. If the average cost is acceptable but not commendable, there will be no payment changes. If the provider offers high-quality care below the commendable level, then he or she will be eligible to share in the savings with the payer.

During the first phase of the payment initiative, Medicaid and the private insurers initially introduced five episodes of care: upper respiratory infections (URI), total hip and knee replacements, congestive heart failure (CHF), attention deficit/hyperactivity disorder (ADHD), and perinatal. In 2014, approximately ten more episodes will be in production, including colonoscopy, cholecystectomy (gallbladder removal), tonsillectomy, oppositional defiant disorder (ODD), coronary bypass grafting (CABG), percutaneous coronary intervention (PCI), asthma, chronic obstructive pulmonary disease (COPD), ADHD/ODD comorbidity, and neonatal care.

ACHI has collaborated with the core AHCPII leadership team and supporting consultants to develop the first wave of episodes. ACHI staff participated in a series of public workgroups targeted for specific episode development. In the months preceding the initial launch of the first episodes, ACHI helped facilitate a series of public “town hall” meetings throughout Arkansas to gain feedback and educate providers about the episode component and the AHCPII overall. As providers begin to experience the impact of the episodes, and as more episodes of care are developed and implemented, ACHI will continue to work with the Arkansas Department of Human Services and the core design team to educate and gain feedback from a range of providers and other stakeholders.


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Arkansas Center for Health Improvement
1401 West Capitol
Suite 300 (Victory Building)
Little Rock, AR 72201