Oregon Medicaid shifts to global payments, coordinated care

August 1, 2011

Oregon Governor John Kitzhaber signed legislation that will transition the state's Medicaid fee-for-service to care coordination

SALEM, ORE.-Last month, Oregon Governor John Kitzhaber signed legislation that will transition the state's Medicaid fee-for-service health plan to one that incentivizes care coordination and primary and preventive care.

Dubbed the "healthcare transformation bill," HB 3650 provides for the creation of coordinated care organizations (CCO)-community-based not-for-profits-comprised of regionalized managed care plans that currently administer the Oregon Health Plan for more than 590,000 low-income residents. At a glance, the program sounds similar to Medicare Accountable Care Organizations (ACOs). The Oregon Health Plan is currently operating under Medicaid waivers.

Under the new design, CCOs would take responsibility for coordinating mental health, physical health and dental care. The state would approve each CCO, and each must create a new delivery model that improves health and lowers costs by emphasizing prevention and improving efficiencies. The CCOs will contract with providers.

"The focus is on transforming the delivery system," Speight says. "That's going to be fascinating to watch because it's hard to do."

While Kitzhaber was determined to craft the CCOs by the end of this legislative session, Erin Fair, senior manager of state and federal regulatory policy for CareOregon, says the legislature "kicked the can" on the issue. Instead, the Oregon Health Authority will convene work groups to focus on CCO criteria; global budget methodology; quality and efficiency metrics; and Medicare-Medicaid integration. Their recommendations will be released in 2012.

"It's too early to tell what it will look like, the details, even who will qualify," Fair says.

CareOregon, a Portland-based non-profit health plan serving Medicaid and Medicare, is now trying to forecast who it will partner with to become a CCO. She says managed care plans can either establish partnerships with outside organizations to develop capacities needed-such as coordinating care with mental health, long-term care management or transitional care services-or bring those services in-house.

"A lot of people are comparing it to speed dating because all the healthcare organizations are having meetings about what they're all doing, as in, 'how do we look to you?'" she says.

Groups will also have to take on the financing, information and marketing roles.

"We're quite interested in the concept of transforming the delivery system through purchasing policy and what can happen between organizing delivery systems and their financing partnerships," Speight says.

More than 80% of Oregon Health Plan clients receive care through managed care organizations. Under the CCO model, a community-based network of providers will care for patients under a global budget with incentives to control costs.

Fair says the model will require health plans to coordinate care. It will require providers to talk to each other and organize services around the member. And it will require navigation assistance to help members move through a complicated system.

Speight speculates that discussions on Medicare ACOs and community care networks will "sharpen the imagination" on how the delivery system at the community level can become more organized and integrated. He sees opportunities for virtual organizations through partnerships and common participation in community-based, not-for-profit organizations.

BUDGET SAVINGS UNCERTAIN

Fair says she is skeptical coordinated care teams will save Oregon the $239 million in the first year of implementation, as projected by advocates of the bill. Oregon, like many other states, is facing a $735 million budget deficit in the next biennium and is looking to existing players in the system to help save money.

A criticism of the bill is that it provides protections to existing managed care organizations, which must meet the criteria of a CCO but do not have to change their business operations until 2017. Because some rural areas will be unable to establish a CCO, the provision allows continued access to current systems for an extended period.

Fair says some think that protection might, in some ways, hinder development because managed care organizations have no incentive to make the kind of changes the state is seeking for several more years.