Oregon Prepares for Innovation Despite Deficit Reductions in Congress

August 4, 2011 -- Dr. Bruce Goldberg is cautiously optimistic that Oregon won’t feel the brunt of those cutbacks now that Congress has alleviated a meltdown by passing a compromise deficit reduction package that’s expected to trim $1.5 trillion in long-term spending cuts.  

“Everyone understands the benefits of a more efficient healthcare system and the need to make some changes,” Goldberg, director of the Oregon Health Authority, told The Lund Report.

“My concerns are that Congress will treat all states equally, and make spending reductions across the board rather than provide some rewards and incentives for states like Oregon that are now efficient and working to become even more efficient," Goldberg continued. "Obviously, we’re very concerned about any change in the Medicaid and Medicare programs, particularly if it happened quickly and without input from the states.” 

In the long run, the cost growth in Medicare and Medicaid needs to be dealt with, Goldberg said. Spending rose 10 percent in the second quarter compared to 2010 and reached a combined annual rate of almost $992 billion, according to data released yesterday by the Bureau of Economic Analysis. The Bureau projected these programs will rise by $90 billion in 2011, reaching the $1 trillion milestone for the first time.

President Barack Obama has also talked about giving states a blended rate for all Medicaid services, including family planning, breast and cervical cancer services, the Children’s Health Insurance Program, Indian Health Services and administrative costs. If that occurs, Oregon could potentially see a drop in federal matching funds.

“If it’s just a way of reducing Medicaid payments to states, that doesn’t sound like a good thing to do,” Goldberg said. “What we need is greater flexibility to lower costs without simply a rate cut.” 

Oregon Can Reduce Its Expenditures 

Oregon is on the road to reduce its Medicaid spending trend by creating Coordinated Care Organizations (CCOs) that are expected to save $240 million in fiscal year 2012.

Goldberg is convinced Oregon can not only reduce expenditures, but, at the same time, increase quality and create a more sustainable system.

“We have the ability to grow at a sustainable rate, and not simply make budget reductions,” he said. These CCOs are expected to get underway in July 2012 and coordinate physical, oral and mental health services.

To reach that goal, Goldberg’s team is having ongoing discussions with the Centers for Medicare and Medicaid Services (CMS) to secure the necessary federal waivers.

“Things are moving along, and we speak with CMS regularly every few weeks, and have a team on our end working through a lot of these issues,” he said.

The waivers being sought are not just for the dual eligible population – those people who receive both Medicare and Medicaid services – but the entire Oregon Health Plan population.

Goldberg’s also been impressed with the new attitude at CMS after meeting with its administrator, Dr. Donald Berwick, in March. 

“There’s certainly been a desire to help states do what we’re trying to do – provide better healthcare at a sustainable cost,” he said. “And, I certainly see a great willingness to cooperate with flexibility and timeliness that we’ve that not seen in quite some time.”

Even if Berwick isn’t confirmed by the U.S Senate in time for Oregon to get the necessary waivers, Goldberg’s confident of success.

“A lot of other people share the same vision, but we’d certainly love for Berwick to stay,” he said. 

Legislature Must Give the Go-Ahead

Until the Health Authority gets the sign-off from the Legislature next February, the CCOs cannot move forward. The Legislature also needs to approve the business plan for the health insurance exchange.

“We’re trying to move in parallel tracks by working with CMS, and not trying get ahead of the February session,” Goldberg said.

As these CCOs emerge, questions are being raised about whether the 15 managed care organizations now in existence can survive or whether they’ll be absorbed by large insurers such as Care Oregon, Providence Health Plans, PacificSource or Kaiser Permanente. 

Goldberg doesn’t expect to see very much consolidation. “We’ve seen Medicaid managed care organizations evolve locally. When the Oregon Health Plan started, we had many large managed care plans, and the market evolved and now we have local plans that we think are the foundation and potential for many of these CCOs.”

In essence, he said, the CCOs are a way to bring the local health plans to the next level by building on a structure of local accountability,  bringing together local doctors, hospitals, other providers and consumers to deliver the best care.

There won’t be a competitive bidding process to select the CCOs, Goldberg said. That was made clear after the Legislature included a budget note in Senate Bill 5508, which requires the Oregon Health Authority to renew contracts with the managed care plans next January within budgetary constraints. 

“We’re going to discuss, in our CCO criteria and global budget work groups more about how we execute the current 11.5 percent budget cuts, and we’ll see many of these managed care plans in the new structure,” he added. “As I indicated, I see many of them as being the foundation for what hopefully will be CCOs and there may be others.”

Ongoing Meetings with Managed Care Plans

For the past several months, Goldberg’s been meeting with the five managed care plans in the Portland area -- CareOregon, Family Care, Kaiser Permanente, Providence Health Plans and Tuality Health.

There’s been no attempt to narrow down the number of health plans. “The issue is how do we create the kind of local accountability we want,” Goldberg said, “and bring about health delivery system change in a marketplace where there are several hundred thousand Medicaid recipients and also have the health plans working together so we have a consistent way of taking care of the Medicaid population in the Portland area.” 

Goldberg acknowledges it won’t be easy to change Oregon’s healthcare delivery system. 

“This kind of profound change is difficult, and I don’t underestimate the difficulty. It’s a huge hurdle to overcome the status quo, and do at a time when state resources are strapped. It’s far easier to make change when you have the dollars to invest in it.”

Nevertheless, Goldberg hopes all the stakeholders can come together and work toward a common vision and a common plan to implement the transformation process.

“This is a great opportunity for us as a state to revise and remake our healthcare system to get the outcomes that we all want -- focused on improving health and not just delivering more healthcare services,” he said. “We won’t totally change the healthcare system in the next few months that’s taken us years to develop, but we are beginning to take a few steps in the long and productive journey, and improve the experience for patients and providers and do that at a rate of growth that’s fiscally sustainable. It’s the triple aim -- better health, better quality and sustainable better cost.”

TO LEARN MORE

For more information about the work of the Oregon Health Authority, go to http://www.oregon.gov/OHA/