CCOs make the grade - but do patients benefit?

As the Oregon Health Authority pays $178.3 million to Medicaid providers that met their goals, leaders ask if it’s rewarding the right things.

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Oregon’s coordinated care organizations got a shining report card on Tuesday – but it’s not clear how many of the metrics they’re being graded on are making the state’s health care system better.

And of $178.3 million the Oregon Health Authority will pay out to reward these Medicaid providers for making the grade, $20.3 million will go to a nonprofit that no longer operates a CCO.

These payments are part of the state’s effort to reward coordinated care organizations for improving their members’ health. When CCOs were created out of Oregon’s implementation of the Affordable Care Act in 2012, the state developed a series of quality metrics aimed at measuring how well each improved health care while holding down costs.

Nearly all of the 16 CCOs that operated last year scored well enough to earn the full financial reward allowed under the state’s formula. Only Coos Bay-based Advanced Health, and Klamath Falls-based Cascade Health Alliance did not get top marks -- each qualifying for only 70 percent of the the maximum reward they were allowed.

“What we’ve seen over the past five years is that incentives work,” Jeremy Vandehey, the Oregon Health Authority’s director of health policy and analytics, said in a statement. “They are driving improvement in the care that Oregonians receive and helping to improve the health of our communities.”

But experts are divided on whether the annual report card reflects the overall goal of keeping prices in check and improving the health of patients. Even the head of the Oregon Health Authority, CEO Pat Allen, has misgivings about the agency’s approach.

“I can see clearly a decision five years ago was made that said, ‘Let’s get this whole system stood up and later we’ll figure it out,’” Allen said during a talk about the future of the agency earlier this year. “Later is now.”

Allen, Vandehey and other health authority staff are engaged in a statewide tour to gather feedback on coordinated care organizations, and have said that they may overhaul the CCO report card and rewards when a new round of Medicaid contracts go into effect in 2020.

Jeff Heatherington, CEO of former coordinated care organization FamilyCare and a frequent critic of the health authority, said the grading system needs to change.

“Measures are based on procedures, not outcomes,” Heatherington said.

As one example, Oregon rewards CCOs based on the share of child-bearing-age women using contraception, he said. Taken to its most extreme, this metric could encourage CCOs to push for sterilization, Heatherington said.

“It’s a weird metric. We should be asking something along the lines of what Planned Parenthood does: Do you intend to get pregnant in the next year? And then we can respond accordingly.”

But other metrics, such as vaccination rates, more clearly correlate to better member health, he said.

“This is no criticism of the Oregon Health Authority – and that’s uncharacteristic of me,” Heatherington said, noting that the effort to develop good measurements is a daunting task.

Heatherington has not shied away from criticizing the health authority in the past. FamilyCare is engaged in federal litigation over how the state agency determined its reimbursement rates, which the CCO argues were unfairly low, leading to its decision to cease operations at the end of January. Heatherington said that if FamilyCare received the Medicaid payments he believes it should have gotten in 2017, its bonuses would have been $5 million higher.

Instead, FamilyCare will get a $20.3 million incentive payment for its performance last year -- even though it has shuttered its CCO.

Asked why the Oregon Health Authority is still paying an organization that is no longer operating a Medicaid plan, agency spokesman Rob Cowie said by email that FamilyCare earned the funds while it was still in operation.

“There are no restrictions on how a CCO can use its quality pool payments, though the payments are designed to (encourage) CCOs to reinvest their quality pool dollars in service improvements and continue to meet performance targets,” Cowie said.

The funds FamilyCare receives for its 2017 performance will be transferred to the nonprofit’s foundation, Heatherington said.

Reach Courtney Sherwood at [email protected].

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I did not say that "Taken to its most extreme, this metric could encourage CCOs to push for sterilization.". The real issue is that CCO's should not be incentivized to pressure women to use birth control.

Jeff Heatherington


If mediocrity is the goal, I guess they made grade. Did patients benefit? Some surely did, but as a whole, reasonable quality medicine is harder and harder to deliver. To the degree phsyicians are hindered from providing excellent quality, patients are harmed, but this won't be measured or considered.