CCOs, Lawmakers Push Back On New Medicaid Revenue Rules

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Clouds hover over the Oregon Capitol building.

A law designed to help the state capture excess revenue or profits from the contractors tasked with administering the Oregon Health Plan is generating tensions, three years after it was passed.

In 2018, the Legislature approved House Bill 4018, intended to increase transparency around the coordinated care organizations, or CCOs, which oversee the state’s $6.5 billion Medicaid-funded program for low-income Oregonians.

The part of the law that is now becoming contentious is the clause known as the “SHARE initiative.” It’s intended to divert excess profits or revenue into programs that address social determinants of health, meaning the non-medical factors — like housing — that affect a community’s health. But CCOs say it is poorly crafted and doesn’t account for all the work they do.

Two influential state lawmakers, assistant majority leader Sen. Kate Lieber, D-Beaverton, and Rep. Rob Nosse, D-Portland, recently sent a letter to Oregon Health Authority leadership stressing the concerns CCOs had been raising with the agency and asking OHA to pause or amend its work on the program. The lawmakers followed up with a meeting on Tuesday with top OHA officials, after which Lieber said officials were responsive.

“There is a real willingness to work with the CCOs to try to get it right, and a promise to relook at the situation if need be,” she told The Lund Report. “I thought that was a good result.”

Before the meeting, the health authority’s chief financial officer, Dave Baden, told The Lund Report that the agency would listen carefully to CCOs concerns, but did not think it appropriate to further delay the new rules. Previously, the program operated on what amounted to a voluntary basis, in which CCO contributions did not match their size or profits.

“The thing that seems important to me is to try to set up the rule, which will establish a fair, equal playing field,” Baden said. “I feel that that is an important step for the agency to get finalized now. Because otherwise, you have a voluntary system where in some cases, the biggest players aren't contributing.”

He said, however, that the agency is committed to working with the CCOs and seeing where the rules need tweaking.

Rules Took Time

H.B. 4018 was spearheaded by the late Portland lawmaker Rep. Mitch Greenlick, former head of the House Health Care Committee.

Greenlick was one of the lawmakers most intimately involved in the crafting of the Oregon Health Plan reforms that led to creation of the CCOs. Using state and federal Medicaid funds, Oregon pays them to provide free health care to most of the plan’s 1.3 million members. 

While Greenlick’s attempt to require the CCOs to be nonprofits failed, H.B. 4018 succeeded in requiring the boards heading CCOs to hold public meetings.

It also included a clause that gave birth to the SHARE initiative, which is short for “Supporting Health for All through Reinvestment.”

The SHARE initiative works as follows, according to the Oregon Health Authority: “After meeting minimum financial standards, CCOs must spend a portion of their net income or reserves on services to address health inequities and the social determinants of health and equity.”

But while the concept is simple, the complexity of CCOs makes it hard to apply. Each organization has its own structure and for some, the profits generated from the Medicaid program are clearer than others.

Baden said Health Share of Oregon, the CCO serving the Portland region, is a good example. It’s led by several separate health systems and nonprofits, including CareOregon. While the organization overall did not report profits last year, the groups that compose it did, Baden said.

Looking past the umbrella corporation of Health Share to the component entities “shows a very different picture, to where there was a lot of profit in those (entities),” Baden said.

Letter sparked conversation

The lawmakers’ letter, sent shortly before Thanksgiving, was addressed to Baden and Director Pat Allen at OHA. It noted CCO concerns about SHARE, adding, “As we understand it, SHARE is a program derived from HB 4018 (2018) requiring CCOs to spend a portion of their net income or reserves on social determinants of health. We support this concept but have concerns about the complexity of the program that has been developed, and the changes being proposed.”

The lawmakers’ letter listed the specific concerns the CCOs have, including how the law would affect their finances and whether it would hurt their efforts to work with smaller nonprofits or increase reimbursements for behavioral health. They also wondered how it would fit with the state’s effort to modify and renew Oregon-specific rules for the Medicaid program, known as its waiver application, which is still under way. Among other things the state is hoping to give CCOs more flexibility on spending from a “global budget,” a core concept of the Oregon program that has faced stiff federal resistance. The CCOs felt their concerns were not being heard, the lawmakers said.

“If you feel the SHARE rule making needs to happen more quickly than ‘The Waiver’ approval from CMS please explain why, and share how you see SHARE fitting in with or evolving with (the waiver),” the lawmakers wrote. “Please share your response to the listed concerns, and your thoughts on pausing or amending the process.”

In a conversation before the meeting this past Tuesday with Baden and OHA Director Pat Allen, Nosse said the letter stemmed from the regular meetings he and Lieber have with the CCOs. “They’re the key entity in the delivery of the Oregon Health Plan,” he said. “So paying attention to what they’re upset about is probably a good thing.”

But he said he was interested in hearing the health authority’s response and was open to the rules continuing on their present course.

The concerns raised about the rule have come from CCOs around the state, including PacificSource Community Solutions serving Central Oregon and other parts of the state, Yamhill Community Care, Trillium Community Health Plan and Eastern Oregon CCO.

Jeremiah Rigsby serves as chief of staff for CareOregon, which is part of Health Share and which operates two other CCOs, Jackson Care Connect and the Columbia Pacific CCO.

He said his biggest concern is that the rule seems to discount all the other good works CCOs like CareOregon are doing voluntarily to address social determinants of health, things like providing aid and care for victims of wildfires and beefing up the state’s fragmented and underfunded behavioral health system. Other CCOs that may not be holding up their end of that bargaain aren't necessarily treated accordingly under the proposed rules, he said.

“The intent of the SHARE program, we absolutely agree with,” he said. But by giving the CCOs no credit for the other investments they are making in social determinants of health outside of the SHARE initiative, he added, it risks creating a disincentive for good works. “It's not clear to us if the agency wants the SHARE initiative to be the end all, be all of investment from CCOs, which is why it's important to talk about other places CCOs are investing.”

The rules, he said, “hit different CCOs in different ways, regardless of what work they're doing in the community currently.”

Nick can be reached at [email protected] or at @NickBudnick on Twitter.

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