Arkansas Gov. Mike Beebe and officials with Wal-Mart Stores Inc. announced Thursday (Jan. 10) a health-payment system that could create savings of around $15 million during fiscal year 2014 and $65 million during fiscal year 2015.

Wal-Mart said the new system is a “groundbreaking effort to create a more patient-centered and cost efficient health payment system” within the state’s Arkansas Payment Improvement Initiative (APII). The system is unique to Arkansas, according to Beebe and Wal-Mart officials.

Bentonville-based Wal-Mart, which has around 57,000 employees in Arkansas, has agreed to pay $670,000 to underwrite the work.

“We have worked for the past two years to bring the public and private sectors together in order to provide better health care in more cost-efficient ways,” Beebe said in a statement. “It’s critical that large, self insured companies like Walmart be involved in this complex work that has the potential to serve as a model for the rest of the nation. With more than one million people on its health plan, Walmart’s willingness to step forward and lead in this effort shows the company’s continued pursuit of innovation and the initiative’s potential for the future of health care.”

U.S. health care costs are projected to rise 6.3% in 2013. The average deductible for an individual on health plans in the U.S. increased nearly 9% last year, according to Wal-Mart.

The program went live Oct. 1. Now in the first phase of implementation, the APII is designed to reward physicians, hospitals and other providers who give patients high-quality care at an appropriate cost.

Medical services provided in the first phase were perinatal, congestive heart failure, hip and knee replacement, upper respiratory infection, and attention deficit hyperactivity disorder.

Services set to be provided by April 2013 will be colonoscopy, cholecystectomy, tonsillectomy and oppositional defiant disorder.

By October 2013, the following services are planned for addition: percutaneous coronary intervention, coronary artery bypass grafting, COPD exacerbation, asthma exacerbation, neonatal care and spinal fusion.

“We are very supportive of this work that will reward doctors, hospitals and other providers who offer great care at an appropriate cost,” Sally Welborn, Walmart senior vice president of benefits, said. “Governor Beebe is leading a first-of-a-kind payment-reform effort in Arkansas that health experts elsewhere are following closely. We respect the work being done in Arkansas, and we are excited about the opportunity to offer real support to such a meaningful project in our home state.”

Beebe and Wal-Mart have agreed that the long-term goal is to build a “new and sustainable system that provides the best possible health care for Arkansans through team-based approaches and cost containment.” An example noted was quality follow-up care after hospitalization in the effort to avoid costly readmission.

Wal-Mart will have a seat on the newly created APII Employer Advisory Council. The retailer also agreed to pay for the development and distribution of information to the public that explains how payments are being restructured, and help underwrite an annual statewide tracking report that will evaluate the impact and effectiveness of the project.

“Our health care system is at a tipping point brought on by rising costs, an increasingly unhealthy population and a fragmented system of care,” Arkansas Surgeon General Dr. Joe Thompson said. “We need all hands on deck if we are to restructure the health care system to better meet the needs of our citizens. Private companies pay for a large portion of our health care costs. So, it is very encouraging to have an organization of Walmart’s stature join this important effort.”

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