Oregon To Increase Medicaid Spending In 2019, Will Miss Spending Goals

Coordinated care organizations will receive an average of 4 percent more each month than in 2018, overshooting the 3.4 percent growth target.

The Oregon Health Authority will pay coordinated care organizations 4.2 percent more for Medicaid patients in 2019 than in 2018, missing its goal of keeping cost increases to 3.4 percent or less. 

Missing the target is largely a result of the state adjusting rates after an assessment of patients showed a generally sicker, more high-risk pool than previously anticipated, health authority Director Patrick Allen said.

The failure of Cover Oregon, the state program meant to administer the Affordable Care Act, left the state with a backlog of patients whose eligibility needed to be assessed. The people who got taken off the system as a result of the reassessment tended to be healthier than those left in the pool, Allen said.

A sicker pool resulted in more risk and therefore, higher costs.

Pharmacy costs and fluctuations in rural hospital costs also contributed to the increased spending, Allen said.

The health authority will reduce the annual bonuses it gives coordinated care organizations by at least 0.75 percent in 2019 to keep overall Medicaid spending down.

The bonuses, known as quality pool payments, are awarded to coordinated care organizations who meet certain metrics related to quality of care. The quality measures include child immunization status, kindergarten readiness, depression screening, cancer screening, timeliness of prenatal care, developmental screening and others.

The amount of Medicaid dollars the state pays each coordinated care organization per patient each month is known as a capitation rate. Oregon will pay an average monthly rate of $449.69 in 2019. The state expects to pay coordinated care organizations a total of more than $5 billion next year.

Columbia Pacific Coordinated Care Organization, which serves Columbia, Clatsop and Tillamook counties,  will receive the most per patient -- $535.94 a month -- and AllCare in southern Oregon will receive the least at $411.36. The estimated cost per patient depends on the size and health of the group of patients each coordinated care organization serves. One that serves a smaller community might see higher spending per patient on average if one of their patients has a chronic or complex condition.

"Containing health care costs has gotten harder the deeper we dig into the system, but many of our CCOs are proving that it can be done," Allen said in a statement.

Coordinated care organizations in the central/eastern region of the state succeeded in collectively containing costs to less than 3.4 percent growth. The state rewarded the organizations in this region by increasing their monthly payment within a predetermined range. The region still had the lowest percentage of increase in costs, Allen said.

"To incentivize cost containment, we are putting rewards in place for those who are bending the cost curve,” Allen said in a statement.

As part of a set of policy proposals known as “CCO 2.0,” the health authority is working to address the health care system’s major cost drivers. They plan to encourage positive results by working towards a new payment system that pays for outcomes rather than per procedure.

An evaluation of the first five years of Oregon’s Medicaid waiver found that Oregon’s coordinated care model lowered per-member costs compared with Washington’s Medicaid program.

Eric Hunter, CEO of coordinated care organization CareOregon, said he is happy with the process and the health authority’s willingness to work with them.

“We look forward to trying to do the best we can with the monies we have, and we’ll work with (the health authority) and the governor and the Legislature to see if we can’t keep this program going,” Hunter said.