United States: Purchasing & Payment Systems

Two states in the United States, Arkansas and Oregon, are applying different reforms to address the same goal of reducing health care costs without compromising the quality of care or shifting the financial burden to patients. In 2012, Oregon launched the Medicaid Coordinated Care Organizations (CCOs) model, a program designed to improve the coordination of care through accountable care organizations. CCOs refer to a network of diverse health providers who agree to collectively work to serve a community of people with coverage under Medicaid and are held accountable for care quality and population health outcomes. Oregon’s CCO model promotes the coordination of comprehensive care by allowing some flexibility to invest in non-medical services that target social determinants of health.123 More information on Oregon’s CCOs model is available here.

Also in 2012, Arkansas initiated the Arkansas Health Care Payment Improvement Initiative (AHCPII), a statewide payment reform model comprising most of the state’s insurance payers, such as Medicaid, private insurers, and large employers.4 The AHCPII model pays providers based on a patient’s entire episode of care rather than for each individual service. This bundled payment model was implemented with the aim to incentivize quality of care and shift away from a system where providers are paid based on the number of services they provide. Alongside this payment reform, the AHCPII reorganized the traditional PHC model into a patient-centered medical home model where the primary care provider acts as the main provider and coordinator of a patient’s care for the majority of their health needs.56 Users can find more information on the AHCPII here.

Both reforms have shown promising results in reducing costs and improving the quality of care. Oregon’s CCO model met its growth targets each year since its launch and generated approximately $2 billion in state and federal savings.123 Arkansas’ multipayer bundled payments and patient-centered medical home models have also reduced costs and demonstrated positive impacts in some quality and outcome metrics.7 These examples illustrate the importance of allowing experimentation and flexibility in order to make reforms work in the specific context of a health system and acknowledging that different contexts may require different approaches to the same problem.8 The co-existence of various reforms in different contexts also creates opportunities for shared learning from the successes and failures of reforms across different settings. To determine the relevance of a reform to a particular context and its capacity for spread, stakeholders will need to assess the intervention through an iterative evaluation and implementation process.


  1. McConnell KJ, Charlesworth CJ, Meath THA, George RM, Kim H. Oregon’s emphasis on equity shows signs of early success for black and american indian medicaid enrollees. Health Aff (Millwood). 2018;37(3):386–93.
  2. Stecker EC. The Oregon ACO experiment--bold design, challenging execution. N Engl J Med. 2013 Mar 14;368(11):982–5.
  3. McConnell KJ, Renfro S, Lindrooth RC, Cohen DJ, Wallace NT, Chernew ME. Oregon’s medicaid reform and transition to global budgets were associated with reductions in expenditures. Health Aff (Millwood). 2017 Mar 1;36(3):451–9.
  4. Arkansas Center for Health Improvement. Arkansas Health Care Payment Improvement Initiative - ACHI [Internet]. [cited 2019 Jun 6]. Available from: https://achi.net/our-initiatives/ahcpii/
  5. American College of Physicians. What is the Patient-Centered Medical Home? (PCMH) | ACP [Internet]. [cited 2019 Jun 6]. Available from: https://www.acponline.org/practice-resources/business-resources/payment/delivery-and-payment-models/patient-centered-medical-home/understanding-the-patient-centered-medical-home/what-is-the-patient-centered-medical-home
  6. Golden W, Thompson J, Olson S, Hill R, Fendrick A, Mathis C, et al. Patient-Centered Medical Homes In Arkansas | Health Affairs. Health Affairs. 2014 May 20;
  7. Centers for Medicare & Medicaid Services. State Innovation Models Initiative: Model Test Awards Round One | Center for Medicare & Medicaid Innovation [Internet]. [cited 2019 Jun 6]. Available from: https://innovation.cms.gov/initiatives/state-innovations-model-testing/
  8. Huelskoetter T. Evaluating State Innovations to Reduce Health Care Costs [Internet]. Center for American Progress. 2018 [cited 2019 Jun 6]. Available from: https://www.americanprogress.org/issues/healthcare/reports/2018/04/06/448912/evaluating-state-innovations-reduce-health-care-costs/