Health Care Transformation Looms Large in Session End-Game

Now that lawmakers, the governor and interest groups have cut a deal on education bills, including the governor's proposal for a super-board, the Education Investment Board, one of the major issues left to resolve this week goes by a high-sounding name — health care transformation.

Embodied in House Bill 3650, it is a proposal envisioned first by Governor John Kitzhaber to change how health care services are delivered to low-income Oregonians under the joint state-federal Medicaid program. It calls for new delivery organizations, Coordinated Care Organizations (CCOs), which would be created by local initiative around the state, replacing "managed care organizations" that for years have functioned much like insurance companies for Medicaid.

The idea, according to Kitzhaber, is "to create a more coordinated system that focuses on prevention, wellness, and community-based management of chronic conditions, making it easier for all Oregonians to access effective, high-quality, low-cost services."

His state website includes this quote: "Our health care system should be called sick care: Eighty percent of the costs go to treat people with one or more chronic  conditions, like heart disease, diabetes, or cancer. That's why health care costs are growing at double digit rates — and that impacts everyone. Oregonians are paying more money out of pocket for coverage that seems to increasingly provide less; Oregon businesses have fewer dollars to invest in and expand their companies; and the state is forced to put more of its money toward health care, instead of investing it in schools, public safety, and other important services."

But, as with many pieces of major legislation in Salem, the devil is often in the details, with all due respect to the governor who is an acknowledged national expert on health care policy.

First, CCOs do not yet exist anywhere in the state and will have to be created fairly quickly to have any ability to organize health care services for Oregonians. Plus, they will have to bear the risk of the care they provide, so the stakes are high as doctors, hospitals, other providers, MCOs and others decide whether to play in the new game.

Second, HB 3650 has tended to become a magnet for issues advocated by a variety of interest groups. For one, SEIU has sought language to require workers hired by the new CCOs to be SEIU members and be subject to collective bargaining.  When the union could not surmount Republican opposition to forced collective bargaining, it danced around the issue by advocating language requiring certain types of workers to be hired so, presumably, it could bid to represent them later.

Third, a number of Republican legislators wanted to include provisions to control medical malpractice costs.  But certain Democrats and their interest groups bridled at the suggestion and what's left in HB 3650 is only another study.

Fourth — and on a more general point — a number of interests, including hospitals, wanted HB 3650 to provide ultimate room for creativity in putting CCOs together around the state. But HB 3650 still includes a number of rules, regulations and trappings that will make CCO creation more difficult and cumbersome.

Legislators pushing toward adjournment say they will keep a list of needed fixes to the legislation and pledge to consider those issues in the February 2012 short session. While their pledge can and should be taken at face value, some advocates of transformation say it is troublesome to operate for seven months with an inadequate piece of legislation — seven months that should be used productively to put the new CCO structures in place.

The kicker in all of this is the second year of the biennium. The Oregon Health Authority budget, Senate Bill 5529, calls for saving $240 million in 2012-13 by using new CCOs. Some legislators and advocates have said it won't be possible to save that much money so quickly and that, in fact, the $240 million will translate into another cut in Medicaid services.

For his part, the governor has said if HB 3650 is sent to his desk, he will sign it immediately and put together a group of stakeholders to work on implementation.

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Footnote:  The author, CFM partner Dave Fiskum, is up to his eyeballs in the transformation debate as a lobbyist for several health care interests.


Photo caption: Health care transformation discussions were driven by (from left) Oregon Health Authority Director Bruce Goldgerg, Governor Kitzhaber and his health policy advisor Mike Bonetto.