The overhaul of the state’s Medicaid system will move a little more slowly than earlier anticipated, but it’s still moving.

That was one of the takeaways from a question and answer session in Little Rock attended by hundreds of medical providers and led by State DHS Director John Selig, Medicaid Director Dr. Joe Thompson, Medicaid Medical Director Dr. Bill Golden, and Steve Spaulding, vice president of enterprise networks for Blue Cross.

DHS and the Beebe administration have proposed replacing the state’s fee for service system, in which Medicaid keeps paying as long as doctors keep treating, with concepts such as “bundled payments” for “episodic care.” The state has gotten a waiver from the federal Department of Health and Human Services to try to implement the idea as a pilot project.

In other words, the state would pay a certain amount to all the providers (bundled payments) for an episode, such as an appendectomy, and no more. The idea is to give medical providers a financial incentive to provide only necessary care.

How that system will work is a topic of big concern and debate in the medical community. As originally planned, providers would decide how to divide the money for each patient. That’s still being talked about, though Selig did indicate to one questioner that Medicaid could be the decision maker. Still, it could be a mess. As David Wroten, director of the Arkansas Medical Society told me, a state is a pretty big pilot project.

The plan was to start going into effect in July 2012, and that’s still the timeline, but the presenters said the state may begin by trying to pick low-hanging fruit and roll out the changes over time. For example, an early focus area could be early delivery of babies, which data show is being done too often for convenience instead of medical necessity.

The idea is being considered because the state faces a $200 million shortfall in Medicaid in 2013, with future deficits looking even scarier. Thompson pointed out that a 5 percent savings in Medicaid’s $4 billion budget would equal $200 million.

Medicaid is the program that pays for care for the poor, the disabled, many nursing home residents and others, and you can’t reform health care without it. In Arkansas, 750,000 people are on it, and it pays for 60 percent of all childbirths.

Spaudling said Blue Cross wants to participate so it won’t be at cross purposes with the state. “The whole idea is to share information and find ways that we can both push on the same side of the rock,” he said.

I talked with Selig (above) after the meeting to get his thoughts. I have no idea why his head is so flat in the video. I promise he does not look like that in real life.