CCOs Spend $2.06 Billion and Counting on Healthcare Costs

In financial reports for January through September 2014, all Oregon coordinated care organizations report profits; FamilyCare realizes the highest profit.

Coordinated care organizations born out of the Affordable Care Act to provide healthcare to Medicaid recipients in Oregon spent $2.06 billion caring for the poor in the first nine months of 2014, according to the most recent available figures filed by the 14 CCOs that have filed standardized financial statements with the state.

About 13.4 percent of that spending – some $275.7 million – fell into the “member service” category, which are non-administrative costs associated with covering members. The rest went to providing care. Here’s how Oregon’s CCOs collectively spent their healthcare dollars Jan. 1-Sept. 30, 2014:

  • Physicians/professional services: $ 414,358,198, 20.15 percent of total spending.
  • Hospital services, not categorized: $34,652,996, 1.68 percent of total spending.
  • Hospital inpatient care: $371,039,682, 18.04 percent of total spending.
  • Hospital outpatient care: $216,477,112, 10.53 percent of total spending.
  • Hospital emergency room: 89,801,088, 4.37 percent of total spending.
  • Pharmacy: $244,138,802, 11.87 percent of total spending.
  • Labs and X-Rays: $60,762,540, 2.95 percent of total spending.
  • Vision: $7,145,289, 0.35 percent of total spending.
  • Substance use disorder treatment: $40,459,784, 1.97 percent of total spending.
  • DME and supplies: $15,267,036, 0.74 percent of total spending.
  • Mental health: $171,841,617, 8.36 percent of total spending.
  • Dental: $113,666,532, 5.53 percent of total spending.
  • Health related non-benefit services: $1,371,053, 0.07 percent of total spending.
  • All other member service expenses: $275,691,444, 13.4 percent of total spending.

A closer look at financial reports filed by CCOs with the Oregon Health Authority shows that there’s wide variation in the types of spending at each organization, along with disparities in profitability – though all of Oregon’s CCOs reported profits during the first nine months of 2014.

It’s important to note that the numbers don’t tell the whole picture. For example, a CCO might spend less on mental health services because fewer people are seeking this type of care, or because it’s succeeded at treating patients before their conditions grow complex – or even because it’s failing to meet its members’ needs. And a small number of sick people can have a big impact on the bottom line

at a smaller CCO. Nonetheless, these figures provide a window into the fast-evolving world of Oregon healthcare.

Health Share

Health Share of Oregon CCO, based in the Portland area, is the largest CCO in the state, with about 236,800 people enrolled – double the size of the next largest organization.

Its spending was in line with state-wide averages in nearly every category, with one exception: member service expenses, which were only 7 percent of total costs, about half the average across Oregon. (See spreadsheet for a detailed breakdown of each CCO

Health Share was consistently profitable for the first nine months of 2014, posting net income of $11.66 million during that period.

FamilyCare

The state’s next-largest CCO, FamilyCare Inc., also primarily serves the Portland area, and has about 117,800 members.

Its spending varies from statewide averages in several areas. FamilyCare spent slightly less than other CCOS, on average, on mental health care (5 percent of expenses compared to 8.4 percent statewide), pharmacy (10 percent vs. 11.9 percent) and physicians (16 percent vs 20 percent). It spent slightly more than other CCOs, on average, on emergency room visits (6 percent of expenses compared to 4.4 percent statewide), dental care (9 percent vs 5.5 percent) and member service expenses (17 percent vs 13.4 percent).

FamilyCare’s profits climbed steadily last year, reaching $70.04 million for the first nine months of 2014.

Willamette Valley Community Health

Willamette Valley Community Health, serving about 98,300 people in Polk and Marion counties, categorized its spending significantly differently than most of the CCOs in Oregon. It said 64 percent of its health-related spending - $150.4 million - fell into the “other member service expenses” category, far more than any other CCO.

FamilyCare, with 17 percent in this category, ranked No. 2 for member service expenses as a share of total health spending. Willamette Valley’s quarterly financial statement does not explain the reason for this discrepancy.

Willamette Valley reported steady profits in the first three quarters of last year, with a Jan. 1-Sept. 30, 2014, net income of $11.2 million.

Intercommunity Health Network

Intercommunity Health Network serves about 56,300 members, mostly in Linn and Lincoln counties. IHN spent $939,856, or only 1 percent of its healthcare dollars, on member service expenses, well below the

statewide 13.4 percent average. Its emergency room and inpatient hospital spending were both below average, while its outpatient hospital spending made up about 18 percent of healthcare dollars, considerably higher than the 10.5 percent more typical statewide.

IHN’s reported a $9.25 million profit in the first nine months of 2014.

PacificSource CCOs

PacificSource Community Solutions Inc. filed financial reports with the state for two CCOs – one serving central Oregon, the other serving the Columbia River Gorge. But the spending and profit figures are identical across both sets of documents, suggesting that Pacific Source may have consolidated the figures for both CCOs into each report. The two organizations serve a total of about 63,900 people.

These documents indicate that the PacificSource CCOs spent $74.6 million on physician services in the first nine months of last year, 46 percent of all its expenses for that period. That’s more than twice the statewide average for CCOs. It reported no spending on mental health over the same period, compared to the statewide average of 8.4 percent of all health spending going to mental health.

PacificSource CCO reported stable profits for each of the first three quarters of 2014, with a total net income of $13 million for the period.

Eastern Oregon CCO

Eastern Oregon CCO Inc. covers about 45,500 people in 12 counties, and is administered by Greater Oregon Behavioral Health and Moda Health. Eastern Oregon spent 24 percent of its healthcare dollars on outpatient hospital care – more than double the 10.5 percent statewide average. Its mental health spending, at 11 percent of its healthcare dollars, was also above the state average, which is 8.3 percent.

Eastern Oregon CCO reported profit growth through the first nine months of last year, with a January through September 2014 net income of $8.1 million.

AllCare Health Plan

AllCare Health Plan Inc. covers about 49,200 people, primarily in Jackson in Klamath counties. It spent 32 percent of its healthcare dollars on physicians and professional services, notably more than the 20 percent statewide average. It also spent more on mental health– 8 percent of healthcare expenses, compared to a statewide average of 8.3 percent. But AllCare said it only spent 1 percent of its healthcare dollars in the “other member services” category, compared to a 13.4 percent statewide average.

AllCare reported steady profits during the first three quarters of 2014, with a net income of $19 million during the period.

Columbia Pacific CCO

Columbia Pacific CCO LLC serves about 28,400 members, mostly in Clatsop, Columbia and Tillamook counties. It reported spending less on physicians and professional services than the statewide average, and more on outpatient hospital care – perhaps a reflection of where its members receive their treatment. At 8 percent of all healthcare spending, Columbia Pacific’s emergency room costs were higher than the 4.4 percent state average during the first nine months of last year.

This CCO was profitable through the first three quarters of 2014, with net income of $992,846 for the period.

Jackson Care Connect

Jackson Care Connect CCO serves about 30,300 people, nearly all in Jackson County. In most spending categories, its healthcare expenses are very close to the state averages. However, this CCO spent about 6 percent of its healthcare dollars on labs and x-rays – double the average.

In the first three months of last year, Jackson Care Connect reported a small profit of just $92,530, but its profits grew in the following months, and for the first three quarters its net income totaled $9.98 million.

Umpqua Health Alliance

Umpqua Health Alliance has about 25,500 members, mostly in Douglas County. It reported that less than 1 percent of its healthcare spending went to physicians and professional services during the first nine months of last year – while 26 percent went to outpatient hospital treatment. Statewide, CCOs averaged 20 percent for physicians and professional services, and 10 percent to outpatient hospital care. It seems likely that this difference reflects where Umpqua Health Alliance members receive treatment.

The CCO was consistently profitable for the first nine months of 2014, with net income of $5.96 million for the period.

Western Oregon Advanced Health

Western Oregon Advanced Health – sometimes abbreviated as “WOAH” – serves about 18,000 people in Coos County and another 2,700 in Curry County.

While several other CCOs spent considerably more than average on outpatient hospital care and less on physician or professional services, at WOAH the reverse was true. It spent 36 percent of its healthcare dollars on physicians and professional services during the first nine months of last year, compared to a statewide average of 20 percent. And it spent just 7 percent of healthcare expenses on outpatient hospital care, compared to 10.5 percent statewide. WOAH also spent more on inpatient hospital care than the statewide average – 28 percent of healthcare expenses, compared to an 18 percent statewide average. It only spent 2 percent on member service expenses, compared to 13.4 percent statewide.

WOAH reported an $891,918 profit for the first nine months of 2014.

Cascade Health Alliance

Cascade Health Alliance, based in Klamath County, reported the smallest profit of Oregon’s CCOs, $399,070 from Jan. 1 through Sept. 30 of last year, with profitable first and third quarters, but a financial loss in the second quarter.

Cascade is also one of Oregon’s smaller CCOs, with about 17,200 members. It spent about 13 percent of its medical dollars on mental health, higher than the 9.4 percent statewide average.

Primary Health of Josephine County

Primary Health serves about 11,200 members, nearly all in Josephine County, as its name would suggest, though some 1,200 are from Jackson County. This CCO spent 34 percent of its healthcare dollars on physicians and professional services, compared to the statewide average of 20 percent. It spent only 5 percent on outpatient hospital care, compared to 10.5 percent, on average, statewide. Primary Health also spent 16 percent of its healthcare dollars on mental health, double the statewide average.

Primary Health of Josephine County reported steady profits through the first three quarters of last year. Its net income for the period was $5 million.

Trillium Community Health Plan

Trillium Community Health Plan is not in the attached Excel spreadsheet because it used a different reporting format when submitting its results to the state. Rather than submit a file that matches the documents used by other CCOs, it followed the guidelines of the National Association of Insurance Commissioners. Its financial and health dollar numbers will be reported when The Lund Report produces its annual article on health insurers in early April.

Primarily serving people in Lane County, Trillium reported a $14.45 million profit in the first nine months of 2014.

Courtney can be reached at [email protected]

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