Arkansas received great news this week regarding our state's groundbreaking initiative to improve the quality of health care while reducing its costs. After two years of discussions with federal officials about our innovative ideas to revamp health care, Arkansas will receive a $42 million State Innovation Model grant from the U.S. Department of Health and Human Services. We were competing against other states for this grant, and Arkansas was one of only six states selected to receive this funding.
While the money will be important for our work in the coming years, this grant is also an announcement to the country that Arkansas is building a model that the federal government believes will work. The system we are creating in Arkansas will reward physicians for providing high-quality care with good patient outcomes, and will provide those patients with more personalized services. They will receive the types of services that our current fee-for-service payment system is not built to include. We think patients, particularly those with chronic conditions, should have more individualized care that will reduce the need for repeated hospital admissions and will create better health outcomes for them.
As we've begun putting the initiative into place, we have focused on finding the most successful and cost-effective practices in treating a small number of diagnoses. Physicians who see good episode-of-care outcomes with such practices will be eligible for incentives from the State. As 2013 progresses, we will add more areas of care to the initiative.
Over the next few years, another part of our payment-reform initiative will focus more directly on helping certain patients avoid costly conditions while helping others manage chronic diseases. This concept is called a "medical home," with different providers coordinating to present a comprehensive, team-based approach to care. In the current fee-for-service system, there are no incentives for providers to follow up with a patient who has been recently released from the hospital. Phone consultations can be difficult to obtain because of the nature of physicians' schedules and because the payment system doesn't compensate for them.
The medical home model encourages these measures. A nurse can follow up with a patient recovering from surgery to ensure that they are taking their medications and not experiencing adverse symptoms. A doctor can more easily take a call from a concerned patient to determine whether or not an office or hospital visit is needed before the patient travels to a medical facility. This can help prevent unnecessary hospitalizations and re-hospitalizations, and is often more convenient and less costly both to patients and to taxpayers. These are just a few examples of how the medical home model can help improve health-care needs and outcomes.
This federal grant is a big step forward in our Payment Improvement Initiative, but just one step of many more to come. It will bring that much more attention to the work we are doing in Arkansas and may inspire other states to adopt similar ideas for their citizens, too. We will continue working closely with providers and insurers toward our common goal of improving care for our people while building a payment system that is more sensible and more affordable for everyone.