Mike Bonetto Talks About Implementing Healthcare Reform

September 7, 2011 -- Oregon has long been a health reform pioneer. In 1989, the state established the Oregon Health Plan (OHP), a way to expand Medicaid coverage by explicitly prioritizing certain conditions while providing fewer services.

Earlier this year, Gov. John Kitzhaber (himself a physician) and the Legislature approved another groundbreaking round of reforms. House Bill 3650 will move nearly one million OHP enrollees, teachers and government employees into so-called coordinated care organizations (CCOs).

Guiding the effort is Mike Bonetto, Kitzhaber's top health adviser. In 1995, Bonetto went to work for the St. Charles Health System in Bend, where he helped start HealthMatters of Central Oregon, a regional coordinated care network that serves as the model for Oregon's current reform effort.

I recently spoke with Dr. Bonetto about this initiative to revolutionize the delivery of health care in this edited and abridged transcript.

You are trained as a health policy researcher. How did you get involved in state politics?

I got a Ph.D. in health policy from Oregon State in 2005 and then developed some connections with our state Legislature. Once I saw how policy was put together, it absolutely fascinated me. I saw that this was just one of the fundamental ways you could achieve macro changes in the system. But I also saw how many big policy decisions were made without much research or data behind them. That's what I always had a passion to do -- make sure that policymakers really understood the pros and cons and had all the information in front of them. When they do, they can make better decisions, instead of just making them based on some emotions or anecdotal evidence they hear from a constituent.

Kitzhaber has cited your work with HealthMatters of Central Oregon as a model for the state. Could you explain it?

I became the vice president of community and business development [at St. Charles] and began to really look at the building of an integrated delivery system that delivered care differently. About five, six years ago, we created a nonprofit called HealthMatters of Central Oregon. It's been the neutral convener that's brought all of the main entities in central Oregon to the table to look at key initiatives that are going to improve health and transform health-care delivery.

Could you tell me about some of the specific initiatives HealthMatters has undertaken?

One was a coverage initiative for low-income employees. It's really a national model. Only about 10 places in the nation right now run these. They're called multi-share programs. The ["alpha"] one started in Muskegon, Mich., back in 1999. It's a three-share, where a portion of this coverage product is paid by the employer and the employee and then a third is paid by the community. We got our [program] running last year and it's been very successful.

We are also developing care coordination models that make use of community health workers. We have partnered with our local community college to train community health workers. We are now getting them out in the field and embedded into certain clinics where they're dealing with high-risk, high-cost folks and helping them deal with all kinds of issues (housing, transportation) [to make] sure that they get to appointments on time.

Our effort was based (in a lot of ways) on the Pathways care coordination model that Drs. Mark and Sarah Redding developed in Ohio. They've just been amazing pioneers. What they've done is they developed a really innovative approach to care coordination using community health workers. They look at it in terms of a pathway.

They started out dealing with uninsured, low-income pregnant women. What they found was that at any given point in time, these women could be touched by seven different caseworkers, providing services paid for by over 10 funding sources. But there was no coordination.

They flipped that around and created this community hub where they had one health worker dedicated to serving one individual. That community health worker is incentivized by being tied to certain outcomes. It's not just making sure that individuals were getting to their appointments on time. Did that individual give birth to a healthy weight baby?

You have an incentive program that really holds the whole system accountable. They have had tremendous success. We've mimicked that here. When we first started this, we did some piloting on some high-cost, high-risk people. We did the analysis from the hospital perspective and found that we had individuals accessing the emergency room over 50 times a year. The majority of these folks were on Medicaid. Nobody was incentivized to manage them properly.

You had all this misalignment. We were able to bring a broad group of the health plan providers together. We had this very amazing partner in the health plan called the Civic Source Health Plan. They've been instrumental in helping develop the shared savings model, so that everybody's now incentivized to do the right thing. That's really been the cornerstone of a lot of our thinking. It really comes into just a realignment of all those incentives.

Earlier this year, the Oregon Legislature passed HB 3650, known as the health transformation bill. One of the things that it aims to do is to shift Oregon Health Plan members away from conventional Medicaid managed care-style plans into coordinated care organizations.

What exactly does the legislation seek to accomplish?

Right now, a lot of fragmentation exists because of the way that we've organized payments and service delivery. To give you an example, in the Oregon Health Plan today, we have roughly 40 managed care plans. Some provide physical health services; some are dental; some are mental health. The problem is we have very little, if any, coordination between them. You could have a Medicaid client who's on all of those, maybe receiving some chemical dependency services through a county and then potentially be receiving what we call "open card" or "fee for service" insurance through the state. There's no alignment right now.

What we're talking about is a bigger picture around managed care. We've got to bring all of this under one umbrella and work within a global budget. You can start to realign those incentives and have some accountability at the local level. So far, there's been a lot of interest in this idea from legislators. They know that our budget situation is not going to get any better in the near future and we've got to live within our means. Living within our means does not mean that we are going to be held hostage by medical inflation.

We've got to be able to get that under control and get our arms around caring for this population differently. We need to have a lot more accountability at a local level, and tie that accountability to Triple Aim metrics. What [metrics] are we going to hold these entities accountable to around quality, patient satisfaction, population health and per capita cost?

Is it correct to think about the coordinated care organization as Oregon's version of an accountable care organization?

I think it's similar. There's no question about it. I think we're looking at it just a bit differently in terms of the scale. We're also looking at this from a state purchaser perspective. We are purchasing health insurance today for about 900,000 Oregonians.

About 600,000 of those are on Medicaid. We've got about 120,000 to 130,000 public employees and 130,000 to 150,000 [educators]. When you bring all that together, you really have some leverage in the marketplace to drive delivery system reform. That's at the core of Kitzhaber's plan. We don't want to get in this game of twisting arms on rates and contracts. We want to see what are the incentives we can put in place to restructure the way care is delivered.

What is your timeline for implementation?

We have gotten approval from the Legislature to develop the framework. We are not really doing anything more than that. We're not getting ahead of the Legislature. But what we are doing right now is getting into more detail on the specific criteria that need to be defined for a coordinated care organization. We're also thinking about how we are going to develop a global budget and what outcomes and quality metrics we're going to be looking at.

We've got these work groups from across the state starting to convene, and they'll be meeting monthly through November. We'll then be consolidating that and developing more of a business plan around the CCO. Then we'll look at what implementation from the legislation will be needed, developing that and then handing it off to our Legislature in February.

They'll deliberate and hopefully give us a thumbs up that will allow us to move forward and launch the implementation phase, which would then lead us to ask [the Centers for Medicare & Medicaid Services] for approval of any waivers that we may need. We're hopeful that by the late spring or early summer of next year, that's the position we'll be in.

What kind of cost savings do you hope to achieve with this?

I think the way I've framed it, cost savings are in the eyes of the beholder. What I mean by that is that there's been some heartburn in terms of just how people interpret that whole discussion around cost savings. There's a strong documentation that anywhere from 30 to 40 percent of care in the U.S. is either inefficient or duplicative. What we're saying is, "Listen, what if we were just to capture a very small portion of that [inefficiency] and begin to hold ourselves accountable, we'd save a huge amount. Can we do that?" That's really what we talk about when we put down cost savings.

What that means, though, is that if we were to set up a system that actually decreased emergency department use or decreased utilization in general, some may see that as cost savings. Others are going to see that as a revenue cut. But when you talk about a global budget in terms of identifying shared savings and being paid on the quality and the outcomes of your work, that isn't necessarily the case.

If we actually do a better job of curbing costs, it's better for everybody. Should that really be seen as a cut? We're arguing that it shouldn't. Part of our message is, "Gosh guys, the sooner that we can get to this level of transformation, the better for everybody." The longer that we hold onto this old system of fee-for-service and the same payment methodology, I think the worse [it is] for everybody.