UAMS’ Rahn: Change Incentives To Reform Health Care

The Health Reform Legislative Task Force Thursday took a break from talking about health finance to talk about health.

Dr. Dan Rahn, UAMS chancellor, said that Arkansas ranks 49th in overall health, including 44th in diabetes; 48th in obesity; 46th in cancer deaths; and 47th in cardiovascular deaths.

Rahn said the health care system is designed to respond to acute illnesses, not address the drivers of health problems. That situation has been occurring for decades and won’t be changed overnight, he said.

“We really are at a crossroads,” he said. “Either we change the game, or we don’t, and if we don’t change the game, then we’ll be back here next year looking at the same kind of statistics, and the next year, and the next year, and the next year.”

The task force was created by legislation this year to consider overall health care reform as part of a compromise that funded the private option through the end of 2016. The private option uses federal Medicaid dollars to purchase private health insurance for individuals with household incomes of less than 138% of the federal poverty level.

Rahn said as chancellor, he has a fiduciary responsibility to make a profit, so any system should create incentives where providers share the benefits of cost savings.

He outlined several strategies, including increasing the use of patient-centered medical homes, which is a model where primary care providers coordinate care and maintain open communication with patients. He said patients must be helped to understand their role in the health care process. At UAMS, health situations should be explained to patients at a fifth grade level.

Another reform is the state’s episode of care model, where providers receive financial rewards or penalties if they keep the costs for particular episodes, such as knee and hip replacements, below certain total amounts over time. All 15 episodes currently used in the model have resulted in cost reductions or reductions in cost of what was projected, he said.

Rahn said new strategies are needed for special populations, such as people with genetic diseases, or high-cost patients with behavioral health issues. He also said telemedicine can be used as a tool.

“It is a fact that where you live is as important as your genetic composition today in determining what your opportunities are for good health,“ he said.

Rahn’s remarks came as the task force was in the middle of its second day of meetings this month. Nine managed care organizations are making presentations about their services. Managed care organizations are private companies that administer some Medicaid benefits.

Managed care organizations say they can increase efficiency because they have a financial interest to do so.

Michael Scarbrough, Amerigroup’s senior vice president, Medicaid Business Development & Specialty Products, told legislators that Texas had saved $3.8 billion from 2010-15 through managed care.

On Monday, the Arkansas Health Care Association, which represents nursing homes, testified that the same objectives in long-term care could be accomplished without the costs of the managed care organizations.

Rep. Michelle Gray, R-Melbourne, pointed to a news story about insurance companies in Florida asking for rate increases after facing losses of more than $500 million. Scarbrough said the story points to the need for rates to be set correctly initially by actuarial firms.