Arkansas Sees Lowest Medicaid Cost Growth in 30 Years

Medicaid spending in Arkansas, which has undertaken the most ambitious performance pay plan for the program in the country, grew at a historically low rate in fiscal year 2013, the state Medicaid agency reported last Friday.
July 15, 2013
 

Medicaid spending in Arkansas, which has undertaken the most ambitious performance pay plan for the program in the country, grew at a historically low rate in fiscal year 2013, the state Medicaid agency reported Friday.

Arkansas's Medicaid spending increased by 1.5 percent, or $68 million, to $4.7 billion during the last fiscal year, roughly half of what state officials originally expected. It was the lowest record growth rate since 1982.

Officials were careful not to attribute the slowdown entirely to the payment initiative, which Governing covered earlier this month. The inititiave sets cost standards for different episodes of care, and health care providers are either rewarded or penalized for delivering care below or above that standard. The initiative launched in July 2012, right at the beginning of FY 2013.

“We’re cautiously optimistic about the numbers we’re seeing. They show that providers are aware of the program changes and are beginning to transform their practices,” Arkansas Medicaid Director Andy Allison said in a statement. “It’s now critical that we continue our progress so that we can sustain the momentum.”

The Medicaid office attributed the $68 million growth to increased average enrollment and investments into the payment initiative.

Overall U.S. health care spending grew at a historically low rate in 2011, the federal government reported earlier this year, so broader trends could also have contributed to the slowdown in Arkansas.

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