“Huge, huge cost increases were driving a greater percentage of people into the uninsured category every year,” Beebe told the Pew Center’s Stateline news service.

The governor launched his health care payment improvement initiative at the beginning of October, although the private insurance component won’t begin until January. The program essentially offers doctors financial incentives to improve their efficiency in providing care. The main difference between this plan and similar initiatives in other states is that Arkansas is applying the same billing rules and standards of care to Medicaid and private insurance companies. Medicare is also considering joining the effort. Medicaid has become known for paying its providers the lowest rates, creating a difference between it and private insurance. There is also a large variance between what doctors charge for treating patients with the same conditions from one hospital to another. The combination of these effects creates much financial uncertainty for hospitals, headaches for patients, and high costs for the state.

The new program takes dramatic steps to address several scenarios that tend to systemically lead to increased costs, with each type of insurance focusing on different areas. Medicaid and private insurers will now designate a doctor as the “principal accountable provider” for each time they treat someone who falls into one of these categories. Doctors will receive bonuses for keeping costs under specific thresholds or penalties when they exceed them by too much.

The situations that fall under the new law for Medicaid will include when a patient comes into the doctor’s office with a common cold, a form of attention deficit disorder, or for pregnancy, childbirth or perinatal care. The state’s two largest insurers, Blue Cross Blue Shield and QualChoice of Arkansas, chose perinatal care and hip/knee replacements, as those were the most costly conditions that affect large numbers of their customers. Blue Cross also singled out congestive heart failure for the program.

All doctors in the state received reports from Medicaid and insurance companies in June, informing them how their costs compared to counterparts in other states in the various categories. Doctors have also been informed about the range their costs must fall into over the next year to avoid penalty or gain rewards. This year, doctors will be given reports on the costs of all the services they order for patients, which will give them a much bigger picture of the financial impact. According to Pew, medical services provided directly by doctors account for only seven percent of all medical costs. Most of the costs come from the services that doctors order, which is also the area where they often have the least knowledge about cost.

There has been a large amount of controversy around the bill. The residents of Arkansas, and the larger medical community inside and outside the state will surely be watching the program closely to see if it has a place in the future of health care funding.

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