Medicaid Releases Episode Thresholds

The Arkansas Medicaid program has released the cost threshold targets for its initial set of treatment episodes under the episode of care payment model. Those thresholds are:

DHS has filed the appropriate paperwork to begin the process of obtaining legislative review of the episode of care payment model. The filing includes a full description of the concept, definitions for each of the episodes, description of the selection criteria for principle accountable providers (PAPs), exceptions, outliers, and risk adjustment process for each of the target episodes.

Beginning in July, PAPs will begin receiving reports on their historical average costs for each of the episodes listed above. If approved by the legislative committees, October 1st will be the start of the official “performance” period, likely to last for 12 months, during which time actual performance on each of the episodes will count towards a PAP’s potential gain/risk sharing. Gain sharing begins when a PAP’s average cost per episode is below the low range of the threshold. Risk sharing occurs if a PAP’s average cost per episode is above the upper limit of the threshold. PAPs and Medicaid will share equally in any gain sharing or risk sharing (i.e. 50-50 split).

Who are the PAPs? For the URI episodes the PAP is the first person to diagnose the condition and file a claim. For perinatal, it is the physician who performs the delivery, provided that the physician has managed the patient for at least two months of prenatal care.   For ADHD, it is the provider who submits the most claims for an individual patient.

The upper limit threshold for each episode is based on Medicaid’s historical average costs for each episode. For the Acute URI episodes, the upper limit is the 75th percentile of historical costs; for perinatal, it was set at the 85th percentile; for ADHD Level 1, the 95th percentile of physician costs and ; for Level II, the 75th percentile of RSPMI provider costs.

In each of the episodes, the PAPs that appear likely to be subjected to risk sharing, are those that have a historical cost profile substantially higher than their peers, and make no effort to alter their practices during the performance period. Examples include an above average antibiotic prescribing rate and/or routine use of the higher level office visit codes for URIs; abnormally long length of stay (compared to peers) for perinatal; and for ADHD, the RSPMI providers are most likely to be impacted due to a high rate of various types of therapy considered not necessary for Level I ADHD (well controlled with only medication).

Next Steps – During the months of July and August, Medicaid will launch a statewide education effort consisting of materials posted on their webpage, webinars, regional provider meetings, and individual mailings to those considered PAPs. PAPs will receive detailed reports on their historical performance for any of the episodes. These will be available electronically and sent by regular mail.

Arkansas Blue Cross and Blue Shield as well as QualChoice of Arkansas plan to implement their initial rounds of episodes later this year, with performance periods expected to begin in 2013. ABCBS has indicated it will set threshold levels for hip/knee replacement, CHF, and perinatal. QualChoice plans to implement hip/knee replacement and perinatal, while also offering an optional “bundled payment” approach.

AMS will continue to provide information on the episode of care model and will continue working with DHS and others to address any issues that come up that might negatively impact physicians and their patients.

For more information you can visit a special website set up for the initiative, or do not hesitate to contact AMS.