Coordinated Care Organizations

Lawmakers Take Big First Step in a Busy Health Care Session

Health care issues will play a dominant role in the 2019 Oregon legislative session. One of the most significant health care bills that will help close the budget gap for Oregon Medicaid’s program moved through two committees last week. And a bill to start an analysis of state-sponsored health insurance for all Oregonians was introduced with 40 legislative cosponsors.

Health care issues will play a dominant role in the 2019 Oregon legislative session. One of the most significant health care bills that will help close the budget gap for Oregon Medicaid’s program moved through two committees last week. And a bill to start an analysis of state-sponsored health insurance for all Oregonians was introduced with 40 legislative cosponsors.

Oregon lawmakers took the first step last week to secure funding for the Oregon Health Plan and the state’s reinsurance program that helps pay for expensive health care claims. The revenue plan outlined in HB 2010, which passed out of the Joint Ways and Means Committee last Friday, will generate more than $400 million toward the anticipated hole in the state’s Medicaid budget.

The funding plan, which health care industry officials negotiated and support, extends a 6 percent hospital tax and a 2 percent tax on insurance plans. The plan introduces a 2 percent tax on “stop loss coverage” for large, self-insured companies. The insurance tax is expected to generate $320 million and the hospital tax $98 million.

Unlike in previous legislative sessions, this funding plan will extend for six years, not just a single biennium.

Other components of Governor Brown’s Medicaid funding package not included in HB 2010, but which will eventually face debate in the Capitol, include a $2 per pack increase on the state’s tobacco tax, a tax on employers with employees covered by Medicaid and a state General Fund contribution. Many observers believe the $95 million projected from the tobacco tax could be in jeopardy because it will likely be referred to voters to approve.

Republicans on the House Health Care Committee, which heard the bill earlier last week, offered amendments to exempt K-12 school district, college students and small businesses from Medicaid-related taxes. Chair Mitch Greenlick counseled against the amendments, which he said could upset a delicately balanced funding plan agreement. The amendments were defeated and two Republicans on the policy committee voted for final passage of the measure, sending it to a Friday hearing in the Joint Ways and Means Committee. 

Patching the Medicaid funding gap is one of several major funding proposals the 2019 Oregon legislature will face. Brown has called on lawmakers to unearth $2 billion in additional tax revenue to boost public education funding. The governor and Democratic legislative leaders also are committed to adopt some form of a cap and trade system that will impose costs on manufacturers and the transportation sector as a means to curb greenhouse gas emissions.

The Medicaid funding package is flanked by another health care initiative – the Health Care for All Oregon plan. Under Senate Bill 770, a board would be created to fill in details of what a plan would look like that replaces private and state employee insurance coverage, as well as estimate what such a plan would cost to implement.

Senator James Manning, D-Eugene, chief sponsor of the measure, says, “This is the first step. It’s not going to happen overnight. This bill provides an opportunity to get a fiscal analysis and develop a work group to drill down into the nuts and bolts of how we get there.”

With secure funding, the state Medicaid program, which serves more than 1 million Oregonians, will press for additional reforms carried out by coordinated care organizations (CCOs) throughout the state. Lori Coyner, who has resumed her job as the Medicaid director that she left in 2017, will be responsible for overseeing $5 billion in spending, holding annual cost increases to 3.4 percent and managing what is nicknamed CCO 2.0 over the next five years.

In an interview with the Lund Report, Coyner said her priorities include streamlining business processes, improving health equity, building stronger ties with tribes and addressing social determinants of health such as education, housing and transportation. This might involve spending dollars on non-medical costs, such as home air filters for families with asthmatic children. There also are efforts to tie affordable housing with social services. 

“Another big priority is looking at the behavioral health system,” Coyner added. “We are hoping to get a new behavioral health director and work closely with [CCOs] to advance integration for members with mental health challenges and addiction issues. We made big strides in CCO 1.0 in that area, but there is a lot more that can be done.”


Saxton Exit Adds Drama to Medicaid Funding, CCOs

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

With funding for the Oregon Health Plan facing a referral to voters, the resignation of Lynne Saxton as head of the Oregon Health Authority creates more anxiety for health care stakeholders, including the fate of Coordinated Care Organizations.

The departure of Lynne Saxton as head of the Oregon Health Authority adds more drama to the fate of the Oregon Health Plan, the state’s Medicaid program.

Legislatively approved funding for the Oregon Health Plan faces a potential referral by three GOP Oregon House members who claim the funding plan contained in House Bill 2391 amounts to a sales tax on health care. If the referral makes it to the ballot and voters approve it, Oregon lawmakers could face a budget hole greater than $300 million over the next two years.

Saxton’s departure could have implications for the coordinated care organizations created in conjunction with Oregon Health Plan funding to act as transformational models for bending the health care cost curve and integrating physical, mental and dental health services.

“With the most prominent visionaries of the CCO development process long removed from office (including Governor Kitzhaber), Saxton was a tether to the old guard at OHA that built the CCO model,” writes DJ Wilson, organizer of the State of Reform effort, in a blog post this week.

Wilson, who advises on health care policy, says Oregon health care leaders are already antsy because of congressional actions that threatened to slash Medicaid funding and the looming Oregon Health Plan funding referral. “Saxton’s removal exacerbates to their anxiety.”

He links the anxiety to what Wilson says is a widespread view that Governor Brown doesn’t consider health care policy one of her top priorities. He quoted one unnamed stakeholder as wondering “who the advocate will be at the state to take the transformation model into the procurement next year, into the legislative session, and make sure the CCO model continues. We may just be heading back to managed care.”

That could be ironic because Saxton resigned in connection with a running battle with FamilyCare, one of 16 CCOs operating throughout Oregon. Jeff Heatherington, CEO of FamilyCare, once accused OHA of acting like a “bully.”

An even more fundamental problem is OHA, according to Wilson. “Since 2013, OHA has had four leaders, two interim and two permanent. Pat Allen is now the fifth.” Allen was named acting OHA director after serving since 2011 as director of the Department of Consumer & Business Services. Wilson says Allen is respected as an effective agency manager, but some health care stakeholders are unsure of his knowledge about CCOs and Medicaid.

Brown told Allen his “highest priority from day one should be restoring trust with the public, legislators, stakeholders and, most important, the clients OHA serves.” In a statement, Brown said, “I have asked Pat to bring his expertise to the Oregon Health Authority and lead the agency into a forward looking and responsible steward of taxpayer dollars.”

Allen responded to Wilson’s questioning by saying, “I’m committed, as is the governor, to the CCO model as the only realistic way to deliver Oregonians improved health through quality care we can afford.”

Straightening out OHA could take time and energy. Dating back to the Cover Oregon fiasco, OHA’s bureaucracy and culture have been criticized. Rep. Mitch Greenlick, in a recent interview, questioned the agency’s dedication “to making sure the most eligible people have access to care” as opposed to “dotting all their I’s and crossing all their t’s.” In the previous session, Rep. Greenlick was the leading legislative voice on the future of CCOs and will continue that conversation in next year's short February session.

Kitzhaber Keeps Pressing Health Care Reforms

Governor Kitzhaber and Kaiser CEO Bernard Tyson agree the health care business model is broken and one major reason why is the separation of care for physical and mental illnesses.

Appearing together at the Portland Business Alliance's annual breakfast, Kitzhaber and Tyson stressed the need to move from a "volume-driven" approach to a model that offers better care at more affordable prices.

The Portland Business Journal quoted Tyson as saying, "There is a mental health challenge we're working on, how to reattach the head to the body." Tyson said physical and mental illness is treated in separate locations, using separate records, even though 45 percent of physical health visits indicate a need for mental health services.

Tyson also said fee-for-service medicine needs to be "thrown out the window."

Kitzhaber touted the benefits being achieved through coordinated care organizations, which he credited for shrinking annual cost increases in care from 5.4 percent to 3.4 percent. The governor noted the 16 current CCOs care for 900,000 lower income Oregonians and are engaged in integrating physical, mental and dental care. He said he next wants to expand CCO cover to public employees and teachers and ultimately to the entire health insurance market.

Kitzhaber Makes National Waves

Governor Kitzhaber went from a face in the crowd in the First Lady's State of the Union box to a news media headliner talking about Oregon's bold venture into transforming the health care delivery system to deliver better quality at less cost.

The former emergency room physician told national audiences this week he couldn't accept budget cuts that forced low-income and working poor families to access their health care in the ER. He told The Washington Post he still vividly recalls an elderly man who was culled for budgetary reasons from the state's Medicaid rolls, but who showed up at his emergency room after suffering a stroke. "These people don't disappear," Kitzhaber said.

Appearing on NPR's Here and Now show, Oregon's third-term governor explained the approach the state is pioneering to "bend the cost curve" of health care by creating incentives to keep people healthy rather than just treat them when they are sick. 

Kitzhaber focused on the care of patients with chronic illnesses who can avoid hospital admissions and additional prescription drugs through more personalized care, often in the form of a Registered Nurse. He said helping to manage chronic illnesses can result in better outcomes for patients and drastic reductions in medical costs. Another cost driver is untreated mental illness, which can result in frequent, costly medical incidents that are treated, but without getting to their root cause.

Reforms Will Push Up Premiums

Implementation of health care reforms in Oregon and America are beginning, but may occur in the backdraft of rising insurance premium rate shock.At the end of the 2011 and 2012 legislative sessions, headlines crowed about the progress Oregon had made on health care transformation as a result of bipartisan legislation from both sessions. In fact, Oregon has become a national leader on the topic with leadership from Oregon's governor, Dr. John Kitzhaber. From the establishment of Coordinated Care Organizations (CCOs) to the establishment of one of the first exchanges nationwide, Oregon took major steps forward in implementing health care reform.

As CCOs have begun to spring up in different communities throughout the state and details of the health insurance exchange have become more clear, a surprise that legislators didn’t anticipate is beginning to bubble-up to the surface: Major increases in health care costs will hit consumers just as the exchange debuts early next year.

Many of the causes of these cost increases are outside the control of Oregon legislators, but they nonetheless have the potential to unravel public support for reform as front-line consumers come face-to-face with the true cost of health care for the first time. 

Oregon Emphatic on Expanding Medicaid

While some states have debated whether to expand Medicaid as part of implementation of the federal Affordable Care Act, Oregon appears not even to have considered the possibility of saying no.

Led by an activist governor, John Kitzhaber, Oregon has proceeded as if health care reform was a foregone conclusion.  In fact, the governor, a former emergency room physician and one of the country's acknowledged health care policy experts, has taken action to put the state ahead of almost all others, contending there is no choice but to reform a system that could threaten to bankrupt the state budget.

Kitzhaber encouraged the state to develop an online health insurance shopping center before there were any federal rules on such health insurance exchanges. He proposed a new approach to delivering health care to Medicaid recipients through "coordinated care organizations" and prodded the legislature to go along with him. In the new budget Kitzhaber unveiled for 2013-15, he continued moving down the road aggressively toward reform.

Lawmakers, even with a nearly even split between Democrats and Republicans in the 2011 legislative session, went along with the governor in large numbers. The vote on the underpinning of reform, Senate Bill 1580, passed on a party line vote in the Senate, but cleared the House by a wide margin, 53 to 7.

Few legislators went on record with statements in opposition to reform, though a couple Republican voices in the Senate asked whether the state wanted to get linked up with Obamacare when so little was known about long-range costs.

Last week, one Republican said he was concerned that the governor had included Medicaid expansion population in his Oregon Health Plan budget recommendation, exposing the state to unfunded costs down the road.

Meanwhile, other states have moved more slowly than Oregon. An Associated Press story this week reported several governors have resisted submitting to the federal directives.

Banking on Health Care Coordination

A lot rides on the success of health reform ventures such as coordinated care organizations (CCOs), but not everybody knows what they are, including some of the people responsible for making them happen.

The Oregon Business Association honored 11 Oregonians this year for their contributions to CCOs, which are just being formed after winning legislative approval in 2011. One of the honorees said the task of CCOs is to fill in the white spaces between existing parts of the health care delivery system.

Senator Alan Bates, D-Ashland, talked about filling in the white spaces to ensure greater coordination in delivering health care services to improve patient outcomes and save money. He gave an example of a man who underwent extensive medical treatment for physical ailments, while his underlying psychological issues weren't diagnosed or addressed.

CCOs call for unprecedented levels of coordination between health care providers that are competitors. People seem to be playing well in the sandbox together now, but how it ultimately works out remains unknown.

Just as important is whether CCOs can help stem the tide of rising medical costs for low-income Oregonians as budget pressures build at the state and federal levels to find cuts in Medicaid and Medicare.

The predecessor term to CCOs — accountable care organizations — was first used in 2006 by Elliott Fisher, Director of the Center for Health Policy Research at Dartmouth Medical School, during a discussion at a public meeting of the Medicare Payment Advisory Commission. The term quickly gained credibility, reaching its pinnacle in 2009 when it was included in the federal Patient Protection and Affordable Care Act.  

What Does Health Care Ruling Mean to Oregon?

There are probably as many interpretations as there are analysts looking at the words that Chief Justice John Roberts wrote for the Supreme Court in a historic 5-4 decision upholding major provisions of the Affordable Care Act.

It is tempting to delay comment because so much of what this landmark ruling means will play out over time, both in Washington, D.C. and around the country in states such as Oregon, where Governor John Kitzhaber has taken the lead in implementing reform measures.

Still, here are a few perceptions:

         *  Regardless of how the Court ruled, Oregon was committed to proceed with a number of reforms that emerged from the last two Oregon legislative sessions. That includes the governor's proposal to create Coordinated Care Organizations (CCOs) as mostly non-profit entities to handle the task of organizing and delivering Medicaid services to low-income Oregonians.

         From the governor's standpoint, the new CCOs — eight of which were approved this week to begin operating August 1 and a number of others are in the queue for a later start — will manage Medicaid closer to where people live, prompt providers to collaborate with each other for the benefit of patients and place a great emphasis on prevention, all (at least in theory) to save money.

         If money gets tighter and the CCO reforms don't work, the tough decisions — cutting recipients off Medicaid, cutting back on benefits or cutting provider reimbursements — will fall into the laps of regional or local CCO directors. In the past, these decisions would have been made on the Capitol Mall.

         *  The ruling does retain momentum toward the day, in late 2013 or early 2014, when Oregonians will have a chance to choose health insurance coverage through an online shopping center called an "insurance exchange."  Oregon already is a long way down the road toward starting its exchange and, arguably, would have continued regardless of how the court ruled. But the endorsement of an individual health insurance purchase mandate means the exchange will have a greater chance to succeed a year or so from now. With a few exceptions, those who now don't buy insurance will have to do so.

Surprise Decision Strains Reform Support

The decision caught almost everyone by surprise last week. The Governor's Office and the Oregon Health Authority said they would not make any of the $2 billion in new federal money obtained by the Administration available for the first year of health care reform in Oregon.

"Members of the new groups (Coordinated Care Organizations, CCOs) are crying foul," reported The Oregonian, "after a directive Thursday that they'll receive no new funds for the additional responsibilities they've agreed to take on — mental health care, prevention efforts, quality measurements and new patient-care staff, among others."

In fact, managers of the new, still-not-yet-approved CCOs have been told they will have to live with last year's rates, which themselves represented an 11 percent cut. Leaders of the new groups say their success relates directly to the new money to fund them. They say it takes money to revamp care for more than 600,000 Oregonians covered by Medicaid, the joint federal-state program that provides care for low-income citizens.

In touting health care reforms such as CCOs and the Health Insurance Exchange, Kitzhaber has stressed the need to control costs through competition and innovation.

For many in the health care reform orbit, all of this conjures up images of the original Oregon Health Plan more than 15 years ago, also designed by Governor Kitzhaber in his earlier service as Oregon Senate President and as governor in his first term. A key tenet of the plan then was that providers would be paid close to their costs for delivering services. The clear objective was to limit the cost shift onto the backs of private health insurance payers.

Well, that tenet apparently has been lost in the intervening years.

Today, those with private health insurance pay about 20 per cent more in premiums as they bear the "hidden tax" of paying for Medicaid underfunding. In a 2008 study, the Milliman Group estimated underfunding of Medicaid and Medicare amounted to more than $90 billion annually.  Though four years old, the study is still applicable today.

Kitzhaber Brings Home Bacon

The big news last week revolved around Governor Kitzhaber's successful, last-minute trip to Washington, D.C. where he negotiated final terms of a deal that will bring Oregon almost $2 billion in federal money over the next four years to finance health care reform. The first installment — $620 million — is expected to arrive in Oregon by July 1.

As The Oregonian put it in its lead story on the successful trip: "Kitzhaber saves Oregon budget and his reputation in health care deal with Obama Administration." Both points are true. Oregon needs the money to fund reform. And, Kitzhaber, a former emergency room doctor who thinks, lives and breaths health care policy, had almost no choice but to succeed in D.C.

What remains is a question about whether the new federal money can be used to fill budget holes or must be devoted to new health care reforms. But that question, as important as it may be to budget analysts, ignores the basic policy point — the money will go to reform and that will mean that the reforms have a better chance for success here.

Retired Law School Dean Reflects on Ruling

Symeon Symeonides pondered a moment, then said he had no idea how the U.S. Supreme Court would rule on the constitutionality of the Obama health care law, especially the individual mandate requiring every citizen to have health insurance. The high court will hear arguments in the case next week.

An internationally renowned constitutional law scholar, as well as one of Salem's best-kept secrets, Symeonides said it might be easier for states like Oregon to impose a health insurance buying mandate than for the federal government to do so. After all, he said, Massachusetts passed a mandate a few years ago and it appears to be working — though Republican presidential candidate and former Massachusetts governor Mitt Romney would rather kick the issue to the background. 

Symeonides and I, along with Willamette Law School's development director, Mike Bennett, sat down for a drink last week to reflect on the Supreme Court case, which stands to be one of the most significant in years, perhaps even rivaling the abortion or desegregation decisions. It was only about a week before Symeonides headed off to Brussels, where he will be working for several months to advise the European Union on how to draft a new constitution.

If states found the political wherewithal to impose an individual mandate — and Symeonides, ever an astute observer of political winds, thinks that could be a tall order — it might be easier legally because it wouldn't run up against the U.S. Constitution's commerce clause. Under Article 1, the clause gives Congress "the power to regulate commerce with foreign nations and among the several states, as well as Indian tribes."  The outcome of the court case rests, at least in part, on how current justices interpret the commerce clause and whether regulating commerce "among the several states" allows for an individual health insurance mandate.

The New York Times published an article last week, with the headline,  "At Heart of Health Law Clash, a 1942 Case of a Farmer's Wheat."

"If the Obama Administration persuades the Supreme Court to uphold its health care overhaul law, it will be in large part thanks to a 70-year-old precedent involving an Ohio farmer named Roscoe C. Filburn."

Seems that Mr. Filburn sued to overturn a 1938 law that told him how much wheat he could grow on his property and imposed a penalty on him if he grew too much. The Court ruled against Mr. Filburn, and that ruling serves as the pivot for what the justices will begin considering next week. The Times says interpretations of the Filburn case may form the basis for decisions by the two current-day justices who are considered the swing votes in this case, Anthony Kennedy and Antonin Scalia.

Huge Issues Loom in 2013 Session

The short 2012 session just ended and there are nine months until the 2013 legislature convenes, but it is still timely to look ahead at the issues that need resolution or are just ripening for action.

At the top of the list is how Governor Kitzhaber's health care transformation strategy will work and whether newly forming coordinated care organizations can squeeze out cost savings in serving Oregon's Medicaid population. The health insurance exchange will get up and running, just as the federal health care reform measure lands in the U.S. Supreme Court, which could toss some or all of the controversial reform legislation.

Despite a slow economic recovery, many parts of Oregon still feel the after-effects of recession and could benefit from state efforts to boost employment. Strong differences exist between Republicans and Democrats on how to stimulate job growth, especially in rural Oregon.

As a result of education reform measures pushed by Kitzhaber, K-12 school districts are signing achievement compacts to promote improved student learning. A question remains whether this reform will under-perform or have unintended consequences as have previous reforms such as No Child Left Behind and Race to the Top.

Lawmakers in February approved a measure that deals with home foreclosures. However, consumer advocates felt it didn't go far enough, while bank and title company officials said it might not work as expected.

Kitzhaber, who will be entering the last two years of his third term, has vowed to give tax reform another shot. This has proven to be as elusive as the pot of gold under the rainbow. While a majority of Oregonians feel the state's current tax system isn't sustainable, there is no clear consensus on how to refine or replace it. A state sales tax is certain to make another stage appearance, with a few clapping and others throwing big red tomatoes. 

Local governments are pressing for expanded access to property tax revenues. They are looking for authority to exceed property tax rate limitations for voter-approved levies. The temporary state hospital tax expires and hospital interests may be less willing to go along with an extension after proceeds were diverted from their original purpose.

Words Matter as Much as Policies

Will Oregon Governor John Kitzhaber convince the federal government to give money back to the state because of progress here on health care reform?As a person who likes and uses words, I have noticed that the health care debate — both heading toward the U.S. Supreme Court and the 2012 Oregon Legislative session — has been marked by words apparently designed to get the attention of those involved.

Consider these examples:

  • Regarding the "you-have-to-buy-health-insurance mandate" that is heading to the U.S. Supreme Court, a health economist at the Massachusetts Institute of Technology, put it this way:  "Health reform without an individual requirement is the spinach you need to get the chocolate you want."
  • On the same issue, a former health care policy advisor to President Bill Clinton was quoted last week as saying that "health reform without an individual mandate is like driving a train without tracks; you can still move, but you can't get to your destination and it will be a tougher and far more costly trip."
  • Or, consider this quote used last week in an update for Oregon legislators on the Health Insurance Exchange: "Our assumption is that the exchange is being born in a political battlefield. Half of Oregon never wanted you to exist and other half wanted much more than what you are. It seems your biggest challenge will be to gain the trust from both sides that you are an honest broker of information and opportunity — not the purveyor of a political agenda."