Discussions at the Capitol have centered around the Arkansas Private Option these past two weeks. However, our State's other major health-care initiative, created before the Affordable Care Act, continues to produce impressive results. When Arkansas's innovative plan to lower health-care costs and improve the quality of care began in 2012, it was already the object of national attention. Now, we have mounting evidence to show that the Arkansas Payment Improvement Initiative is working as designed.
The initiative rewards health-care providers who furnish patients with high-quality care at appropriate costs. Most of our Medicaid clients are now in a Patient Centered Medical Home where the primary care clinician has assumed responsibility for improving quality and managing costs. For select conditions, performance is measured in different "episodes" of care, which encompass the treatment a patient receives for a particular illness or disease from the time of first diagnosis through recovery. Insurers pay for these episodes of care, rather than for individual treatments per procedure. This shift is intended to reduce duplication of tests and treatments, saving money while reducing patient discomfort and inconvenience.
The program currently consists of 14 different episodes of care, including asthma, congestive heart failure, and hip and knee replacement. Five more specific episodes are in development. The performance review for the first episode, upper respiratory infections, just ended, and the results are encouraging.
More than 40 percent of primary-care providers improved their quality and efficiency, according to the Arkansas Department of Human Services. These medical providers are also trending toward treatments that are more in line with industry best practices. For instance, there was a 10 percent decrease in the unnecessary use of antibiotics to treat the respiratory infections, because most of those were viral. There was also a five percent increase in the use of strep tests to diagnose sore throats.
While the providers who showed improvements will receive incentive payments, other providers now owe money to the State. These penalties were assessed because the providers' average cost for treating these infections was above the range deemed acceptable according to established fee schedules. The money from these penalties will be put back into the Medicaid program.
Our long-term goal is to build a sustainable system that rewards good care outcomes for Arkansans through team-based approaches. When primary-care providers actively encourage patients to use preventive services, patients can better manage chronic diseases on their own or avoid them all together. Serious illnesses and recurring symptoms lead to costly treatments, and can often be prevented. When patients receive appropriate follow-up care after hospitalizations, the likelihood of readmissions can be dramatically reduced, which also results in better health and lower costs for everyone.
Our initiative is the first of its kind in the nation. We addressed the inefficiencies and costs in our healthcare system before considering expanded coverage. Our early success will only increase attention toward this approach as a potential model for other states.
As new episodes of care are added, Arkansas will continue putting a dent in the enormous national cost of unnecessary and/or redundant medical services. These savings will come not only with better health care for Arkansans now, but could help build a path toward better health care throughout our country for the future.