The initiative works as follows.102
1. Episode-based Payments
State agencies, insurers such as Blue Cross/Blue Shield and
QualChoice, the Arkansas Hospital Association, and the Arkansas Medical
Society collaborated with national experts to target common care conditions
that exhibited wide clinical practice variation or treatment inefficiencies.103
They selected five “episodes of care”104 the first year, touching several
different medical disciplines, and examined evidence-based guidelines and
Arkansas-specific claims data to determine appropriate practices and
acceptable ranges of costs for those episodes. The first five episodes were
hip and knee replacement, pregnancy, outpatient upper respiratory
infections, congestive heart failure, and attention deficit-hyperactivity
disorder.105 For each episode, a work group including all of the stakeholders
created quality metrics and exclusion criteria, determined risk adjustment
methods, and defined outliers.106 Subsequently, ten more “episodes of care”
have been targeted for inclusion in the reformed payment system.107
Accountability for patient treatment results is assigned in the following
fashion. Each enrollee who has one of the defined episodes of care in which
a payer participates108 is assigned one Principal Accountable Provider
102. See generally ARK. CTR. FOR HEALTH IMPROVEMENT, AN OVERVIEW OF THE
ARKANSAS PAYMENT IMPROVEMENT INITIATIVE (2014), http://www.achi.net/Content/
Documents/ ResourceRenderer.ashx?ID=204; see also ARK. CTR. FOR HEALTH
IMPROVEMENT, Health Care Payment Improvement Initiative: How it Works,
http://www.paymentinitiative.org/howIt Works/Pages/ default.aspx (providing an online
description of the Initiative); see also Dr. Joseph Thompson, Full length video Arkansas
Health Care Payment Improvement Initiative, ARK. HEALTH CARE PAYMENT IMPROVEMENT
INITIATIVE, https://www.youtube.com/watch?v=gLoH8dKA1IA&feature=youtu.be. (22-
minute video by ACHI Director Dr. Joseph Thompson explaining how the Initiative works).
103. ARK. CTR. FOR HEALTH IMPROVEMENT, STATEWIDE TRACKING REPORT 2 (Jan.
2015) [hereinafter STATEWIDE TRACKING REPORT], available at http://
104. Id. at 7. An “episode of care” is defined as “the collection of care provided to treat
a particular condition for a given length of time.” ARK. CEN TER FOR HEALTH IMPROVEMENT,
Health Care Payment Initiative: Episodes of Care, http://www.paymentinitiative.org/
105. STATEWIDE TRACKING REPORT, supra note 103, at 7.
106. See id. at 2 (indicating the collaborative nature of the enterprise).
107. See id. at 9-10 (referencing Table 3). In 2013 and 2014, five more episodes were
deployed: colonoscopy, gallbladder removal, tonsillectomy, coronary artery bypass grafting,
and asthma. Chernew et al., supra note 7, at 34.
108. Arkansas’s Medicaid program payments are based on APII episode-of-care
reviews for each episode that has been deployed. Private insurers are not required to
participate in APII’s payment program for every episode. Of the first five episodes launched,
Blue Cross/Blue Shield is participating in three (pregnancy, upper respiratory infection, and
total joint replacement) and QualChoice in two (pregnancy and total joint replacement).
STATEWIDE TRACKING REPORT, supra note 103, at 9-10.