Health & Human Services

Oregon Medicaid Model Covers More but Costs Less

Through a combination of coordinated care and performance pay, the state's unique Medicaid program has lowered ER visits and hospitalizations while expanding its population covered.
by | July 8, 2014
Patients wait to be admitted in the emergency room.
Patients wait to be admitted in the emergency room. AP/Gary Kazanjian
 

The largest and arguably most ambitious recent attempt at injecting greater accountability into Medicaid significantly lowered emergency room visits and hospitalization, according to a report.

In 2013, the 15 regional medical organizations providing care for about 90 percent of Oregon’s Medicaid population decreased costly ER visits by 17 percent and the hospitalization rate for several chronic diseases by as much as 32 percent from 2011 levels. Over that same period, spending for primary care and preventive services increased by 11 percent and 20 percent, respectively.  

“I think there’s a good possibility that they are [linked],” said Lori Coyner, the director of accountability and quality at the Oregon Health Authority, the department overseeing a broad spectrum of programs.

The latest numbers indicate that a study showing increased emergency room use among the state's limited 10,000-person expansion in 2008 can be reversed. But with another 350,000 people entering the system from the latest Medicaid expansion, sustaining that improvement isn't a certainty.

The 15 medical systems, known as coordinated care organizations (CCOs), launched in 2012. They're part of a movement of what's called Accountable Care Organizations (ACOs), which the Affordable Care Act has encouraged with grant money. ACOs take on different forms, but the basic idea is to band together primary care doctors, hospitals and specialists and pay them based on their ability to provide quality care and lower costs. The federal government put forth about $2 billion over five years to launch Oregon's overhaul in exchange for cutting costs by two percent each year -- a target the state is on track to meet, according to Coyner.

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Unlike the many ACOs operating on a fee-for-service basis, which is widely considered inefficient, Oregon pays each organization a set monthly amount per Medicaid beneficiary and withholds a portion of the CCOs pay until the end of the year, at which point each organization is compensated based on meeting objectives like reducing hospital readmissions. The state witheld two percent this year, but that number will edge higher in later years.

Eleven of Oregon’s 15 CCOs earned 100 percent of their withheld performance pay in 2013, with some earning even more through an extra pool of funding that targets other objectives like boosting primary care enrollment and controlling blood sugar levels in diabetes patients. 

“It’s a different approach than many states are taking,” said Rob Houston, a program officer at the Center for Health Care Strategies who focuses on payment and delivery system reform. “Others have Medicaid ACOs up and running but are primarily operating on shared savings [and fee-for-service].”

At 27 percent, Oregon has the largest percentage of its total population covered by ACOs, according to the journal Health Affairs. And that number is bound to go up as 350,000 have people entered the system from the state’s Medicaid expansion since January.

Because the state already initiated a limited Medicaid expansion in 2008 through a lottery system, academics used it to study Medicaid's impact by comparing those who were selected with those who missed out. Contrary to the recent report, one study published in the journal Science found a 40-percent surge in emergency room use in Oregon, but it used data from 2007 to 2009 -- prior to the launch of Oregon's ACO initiative. Coyner said the latest figures show the results of that study can be avoided with an emphasis on getting patients enrolled in primary care that addresses needs earlier and directs patients to other avenues of treatment.

Oregon set out to get 100 percent of patients into a primary-care home, which includes a general practitioner often working within a team that could include behavioral specialists, care coordinators and home health workers who are all responsible for meeting a patient's needs or ensuring that patient gets services the team can't provide. Although none of the 15 CCOs met the 100-percent target in 2013, nearly all of them made progress -- some by as much as 60 percent.

But for CCOs that had to rapidly expand their service area, particularly in rural areas, that was a challenge. The Eastern Oregon Coordinated Care Organization went from four counties to 12 and went from 3.7 percent of patients enrolled in a primary-care home to 63.3 percent. What started off as a single medical and dental plan called Moda Health led to the addition of behavioral health providers, two systems of medical providers and four hospital systems spread out over a land mass that’s about 50 percent of the state, said Sean Jessup, Moda’s director of Medicaid.

To bring on providers across the 12 counties, Moda held summits and offered incentives in the form of enhanced payments. Now with another round of Medicaid expansion -- which more than doubled Eastern Oregon’s enrollment --  Moda has brought more providers into the fold who opened a new clinic, according to Jessup.

“One of the huge challenges is really trying to understand the unique needs and who the players are, the movers and shakers, and how we’ll engage the providers in that particular area,” he said.

With that expansion, the health policymakers in Oregon will also be monitoring activity in the areas where they made the most progress in 2013, Coyner said.

“I think that focusing on getting members enrolled in a place of care that has team-based care early on can keep emergency department use down,” she said. “But we’ll be watching carefully what happens this year with the expansion.”

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