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A win-win in Medicaid.

IN A MARCH 2011 CENTER ON Budget & Policy Priorities report, some 44 states and the District of Columbia are projecting budget shortfalls for 2012. Only two states, Montana and North Dakota, have not reported budget shortfalls in recent years. Two other states, Arkansas and Alaska, faced shortfalls in 2010 but have not projected gaps for subsequent years.

Gov. Mike Beebe has masterfully led our state through an unprecedented period of economic uncertainty. As we look ahead, we see continued uncertainty across the globe, national health reform that doesn't quite fit Arkansas, and a Medicaid system that will turn our entire state budget upside down. With considerable foresight, in mid-February Gov. Beebe laid out a proposal to Secretary Kathleen Sebelius of the U.S. Department of Health & Human Services for a new framework for health care.

Although titled "Transforming Arkansas Medicaid," this is much bigger than that. This is a statewide payment reform initiative--dubbed the first of its kind in the country--that will, most likely, encompass Medicaid, Medicare and private insurance plans.

One of the tenets of the plan is moving to a medical home model for care. The "medical home" has as many definitions as an "accountable care organization" or ACO. In various forms, it is already being piloted around our state. The medical home essentially puts the patient and primary care physician together to better coordinate care.

The second tenet is shifting reimbursement from fee-for-service to payment for episodes of care (including behavioral health, maternal and child health, and long-term care). Episodes of care, also called bundled payment, are a single payment for physician, hospital, home health agency, outpatient center, etc., for specified outcomes for a medical condition for a defined period of time.

This proposal encourages care coordination among health care providers, promotes evidence-based practice, eliminates over-utilization, aligns incentives among payer, provider and patient, and reduces costs to the individual, employer and state. To line up against this is like arguing against baseball, hot dogs, apple pie and (insert your favorite car dealer here).

This moves health care more than ever before--to truly focus on delivering measurable quality, service and safety to the patient, making it affordable and coordinating relationships among physicians, payers, hospitals and other providers. It is about time we did. Just about every other industry already has.

OK, July 2012 is a short timeframe to get this rolling, but there is something bigger at stake: the financial health of our state. Talk to your friends in health care (or higher education) in one of the 44 states underwater and they will tell you to take something like this in a New York minute. Yes, the medical home sounds like the 1990s "gatekeeper" primary care model that no one liked and didn't work. Spend some time with the Tenzing Health medical home model (being piloted in San Antonio), which is transformational and does work. Bundled payments have been piloted elsewhere for more than a decade, and it can work for the patient, payer, physician and hospital. We should start trying it here at home.

The elephant in the room (I'm already prepared for emails from my colleagues and stakeholders) is that this is really about money and control. Who gets the dollar from Medicaid (or Medicare) and who controls the ACO and who decides how the bundled payment is going to get distributed? From where I sit, the money is going to be less not more, and control is an illusion (plus, we actually gave up control decades ago). If we continue to make this about money and control, we risk becoming irrelevant or extinct.

I've been underwhelmed by our ability, as an "industry" of experts, to do something other than "win-lose" deals, let alone develop meaningful alternative solutions to truly overhaul the system. Gov. Beebe put on his pads and helmet, ran onto the field and has taken his share of hits while we've been hanging out with our friends in the stands playing Monday-morning quarterback. I'm ready to get in the game and I'm ready for a win-win. Who's with me?

Peter Banko is president and chief executive officer at St. Vincent Health System, based in Little Rock. He can be reached at
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Title Annotation:Commentary
Author:Banko, Peter
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Apr 18, 2011
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