Arkansas Administrative Code
Agency 016 - DEPARTMENT OF HUMAN SERVICES
Division 06 - Medical Services
Rule 016.06.16-006 - Episodes of Care 1-15 and Section 1 3-15

1. An "episode" refers to a defined bundle of related Medicaid-covered health care services provided to a specific Medicaid beneficiary.

2. An "episode type" is defined by a diagnosis, health care intervention or condition during a specific timeframe (or performance period).

3. "Thresholds" are the upper and lower reimbursement benchmarks for an episode of care.

4. A "valid episode" is defined as any episode that meets criteria for inclusion in a calculation of cost and quality measures for which a PAP is accountable during a performance period.

5. An "invalid (excluded) episode" refers to an episode in which the services or the patient do not meet standard criteria for inclusion set by the definition of each episode type. (Refer to the Episodes of Care Medicaid Manual for episode-specific criteria.)

6. An "incentive" can either be positive (gain-share) or negative (risk-share).

1. Performance will be aggregated and assessed over a specified period of time ("performance period"). For each PAP, the average reimbursement across all valid episodes completed during the performance period will be calculated, based on the set of services included in the episode definition. Please refer to the Episodes of Care Medicaid Manual for information about specific Episodes of Care.

2. Some episodes may be excluded based on clinical factors derived from paid claims. Other exclusions may be determined from coverage factors for each individual patient.

3. Reimbursement for some episodes may be adjusted as described in the definition of each episode. The average adjusted reimbursement of all episodes for the PAP during the performance period will be compared to thresholds which are established by Medicaid in consultation with providers.

4. If a PAP's average adjusted episode reimbursement is lower than the commendable threshold and the PAP has met the quality measures established by Medicaid for each episode type, the PAP is eligible for gain share and Medicaid will make a positive incentive to the PAP. This will be equal to the difference between the average adjusted episode reimbursement and the commendable threshold, multiplied by the number of episodes included in the calculation and multiplied by a gain-sharing percentage for the episode. Where necessary, a gain-sharing limit will be established to avoid incentives for underutilization. PAPs with average adjusted episode reimbursement lower than the gain-sharing limit will receive an incentive calculated as though their average adjusted episode reimbursement were equal to the gain-sharing limit.

5. If the average adjusted episode reimbursement is higher than the acceptable threshold, the PAP will incur a negative (risk-share) incentive. This incentive to Medicaid will be equal to the difference between the acceptable threshold and the average adjusted episode reimbursement, multiplied by the number of episodes included in the calculation and multiplied by a risk-sharing percentage defined by Medicaid for the episode.

1. The threshold process aims to incentivize high-quality clinical care delivered efficiently and to consider several factors including the potential to improve patient access, the impact on provider economics and the level and type of practice pattern changes required for performance improvement.

2. The acceptable threshold is set such that average cost per episode above the acceptable threshold reflects unacceptable performance, which could result from a large variation from typical performance without clinical justification (e.g., individual provider variation) or from system-wide variance from widely accepted clinical standards.

3. The commendable threshold is set such that outperforming the commendable threshold represents quality care provided at a lower total reimbursement, which would result from care at meaningfully better than current average reimbursement in Arkansas, consistent with good medical outcomes. Medicaid may take into consideration what a clinically-feasible target would be, as demonstrated by historical reimbursement variance in Arkansas.

4. The gain-sharing limit is set to avoid the risk of incentivizing care delivery at a cost that could compromise quality.

5. The gain- and risk-sharing percentages aim to recognize required provider investment in practice change and will be set at a sustainable level for Medicaid.

1. Incentives for each PAP take into account provider-level adjustments, which may include stop-loss provisions, adjustments for cost-based facilities, adjustments or exclusions for providers with low case volume or any combination thereof.

2. Stop-loss protection: Unless provided otherwise for a specific episode of care, a provider's net negative incentive adjustment (total positive adjustments minus total negative adjustments) for all Episodes of Care adjustments made during any calendar year shall not exceed ten percent (10%) of the provider's gross Medicaid reimbursements received by the provider during that calendar year.

3. Temporary stop-loss provisions may apply when necessary to ensure access to care.

4. Providers that receive cost-based or PPS-based reimbursement are reimbursed as specified in the corresponding provider manual(s), but are subject to positive (gain-share) and negative (risk-share) incentives in order to achieve statewide improvement in quality and efficiency. For episodes including services furnished by providers who receive at exceptional reimbursement levels, reimbursements attributed to PAPs for the purpose of calculating performance are computed as if the provider did not receive exceptional reimbursement.

5. Each episode has a designated minimum case volume that must be reached in order for the PAP to be eligible for incentives. PAPs who do not meet the minimum case volume for an episode type will not be eligible for positive (gain-share) or negative (risk-share) incentives for that episode type.

1. For each episode type, there is a set of quality measures "to pass" and/or a set of quality measures "to track." These quality measures are based on paid claims data or based on additional data when specified by Medicaid and which PAPs are required to report through the Advanced Health Information Network (AHIN) provider portal.

2. To qualify for positive (gain-share) incentives, PAPs must report required data and meet specific quality measures "to pass."

3. Providers who do not report data or who do not meet minimum quality measures may still incur negative (risk-share) incentives if their average adjusted episode reimbursement exceeds the acceptable threshold.