Oregon Turns to Coordinated Care in Medicaid

Oregon Turns to Coordinated Care in Medicaid
December 20, 2011

Marc Kilmer

Marc Kilmer (mkilmer@mdpolicy.org) is a Maryland Public Policy Institute senior fellow... (read full bio)

Early in 2011, Oregon lawmakers passed legislation mandating the state’s Medicaid system be reorganized to use coordinated care organizations to provide health care services to recipients. State policymakers tout this transformation of the Medicaid system as a way to save money and improve care, but it’s unclear whether that will actually happen.

Created Statewide System

In June 2011 the Oregon legislature passed legislation that was signed into law by Democrat Gov. John Kitzhaber to create a statewide system of coordinated care organizations (CCOs) for the state’s Medicaid system. According to the Oregon Health Policy Board, “the goal of the legislation is to create a new model of health care that will improve health. The vision is also aimed at beginning to lower the high cost of care by emphasizing prevention, reducing waste, improving efficiencies and eliminating avoidable differences in quality and outcomes.”

A final plan on how these CCOs will work must be approved by the legislature in February 2012. If approved, it will go into effect in July 2012. Oregon officials estimate the change will save the state $249 million in Fiscal Year 2013.

Although details have yet to be finalized, Oregon health care officials envision coordination of care that would help manage recipients’ health through “collaborative relationships” involving preventive care, chronic disease management, and other more flexible and less fragmented approaches than the current Medicaid system.

Concerns About New System

Dr. Douglas Perednia, who writes for Oregon’s Cascade Policy Institute, says many of the problems with the current Medicaid system stem from its reliance on the resource-based relative value scale (RBRVS) to set provider payment rates. Perednia says Medicaid payments undervalue physician time and resources.

“What is most flawed in our existing healthcare system is the misguided and counterproductive RBRVS model that stifles market forces [and] makes it difficult or impossible to know what things will cost, and excessive, unthinking regulation,” said Perednia.

He says Oregon’s Medicaid reform could work, but those implementing them must be careful.

“The CCO approach will fail if it is underfunded or the payment mechanism creates perverse incentives to withhold care like the HMO model did in the 1990s.” 

Perednia says Gov. Kitzhaber shold take a different approach to reform Oregon’s Medicaid program.

“The governor and his colleagues should be focusing on fixing the entire system, not patching it with CCOs here and there,” Perednia said. “Moving toward a far simpler, market-based approach would go a long way, such as asking patients to accept responsibility for their healthcare decisions.”

Marc Kilmer

Marc Kilmer (mkilmer@mdpolicy.org) is a Maryland Public Policy Institute senior fellow... (read full bio)