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Focusing on Quality: CCOs Embrace Shift to Alternative Payment Methodologies

AllCare, Eastern Oregon CCO and InterCommunity Health Network already have models in place.
July 28, 2015

Healthcare transformation in Oregon and across the country has involved change on everyone’s part; customers, providers and insurance companies are thinking differently about healthcare costs, delivery and outcomes. They are also thinking differently about their communities, collaboration and long-term results.

For providers, one of the biggest changes has involved moving from traditional fee-for-service payment models to quality-based models that put the focus on performance and the value of care versus the number of patients that come through the door. Oregon’s coordinated care organizations are one of the key players in helping providers make that shift. In fact, CCOs are required to implement at least one alternative payment methodology that focuses on quality of care and supports the triple aim.

To help CCOs with implementation, the Oregon Health Authority contracted with the OHSU Center for Evidence-Based Policy to investigate the status of alternative payment methodology development in Oregon, review evidence for its effectiveness, and recommend tools, strategies and best practices for implementation. The key findings of the Center’s recently released report include:

  • Alternative payment methodologies can be effective in reducing utilization and costs while improving quality of care
  • Thought leaders understand alternative payment models, support their development and implementation
  • There is no “one-size-fits-all” model
  • Reform decisions need to be made at the local level and involve all stakeholders
  • It’s all about relationships

“Implementing alternative payment methodologies requires commitment to effective processes with all of your stakeholders,” said Dr. Allison Leof, senior policy analyst at Center for Evidence-based Policy. “What’s going to work depends on the environment, the relationships and the community.”

Leof is also quick to note that alternative payment methodologies are only one part of healthcare transformation. And, it’s not just about financial savings or rewards, but about the relationships, community collaboration, and accountability that comes from people working together toward a common goal.

“I’ve been working in healthcare for 35 years and people are finally coming together (on healthcare). People are at the table and there is so much transparency and sharing. It’s a refreshing environment to be in,” said Maryclair Jorgensen, formerly the director of health plan administration St. Charles’ Health System and currently a consultant who works with CCOs across the state.

Several CCOs already have models, or pilots of models, in place.

AllCare Health Plan in Jackson, Josephine, Curry Counties and Southern Douglas County, has offered their alternative payment methodology on a volunteer basis to primary care physicians and pediatricians for 18 months. Starting July 1, it became available to specialists, behavioral health practitioners and dentists. In fact, AllCare just made its first distribution to providers, who each received, on average, $20,000.

In developing its alternative payment methodology, AllCare relied on a combination of capitation and shared savings, with physicians and other providers, according to Will Brake, business services support manager. “It requires significant provider participation, there’s no doubt,” he said.

AllCare is also focusing on educating providers to ensure success of the model and meeting quality measures, and adding an alternative payment methodology specifically for facilities (hospitals, surgery centers, and nursing homes).

“We made sure to have an adequate incentive and enough support to implement the model,” Brake added.

While only in place since the latter part of 2014, the Eastern Oregon Coordinated Care Organization’s (EOCCO) alternative payment methodology has also been successful both financially and from a community-building perspective.

EOCCO’s alternative payment methodology is a voluntary risk model that includes hospitals and primary care physicians. All the 10 hospitals in its 12-county service area participated as well as two tertiary hospitals. The primary care physicians represented 60 percent of EOCCO’s membership. Using their alternative payment methodology, EOCCO had a surplus for 2014 and returned money back to providers. For 2015, they expanded participation to include specialists and behavioral health.

While not the largest CCO in terms of membership, EOCCO has the challenge of providing coverage for Oregon Health Plan members in 12 counties in eastern Oregon (Baker, Gilliam, Grant, Harney, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler), a land area of over 50,000 square miles.

“Providers had input as to how it would work,” said Sean Jessup, director of Medicaid programs for Moda Health, which oversees the operational and financial performance of EOCCO. “It’s not something we came up with on our own and shoved down their (providers’) throats.”

“The success we have seen is because of Sean and his colleagues and all the work done in preparation, the partnerships forged, and a lot of time on the road,” said Jonathan Nicholas, vice president of strategic communications at Moda Health. “That’s the way we got buy-in.”

The alternative payment methodology helped to create accountability and transparency across the region, Jessup said, and the surplus dollars given to providers helped them expand access and hire community health workers.

A percentage of the surplus was also set aside for the 12 local community advisory councils, one per county, which will use those resources to help EOCCO meet its quality measures.

InterCommunity Health Network (IHN) in Benton, Lincoln, and Linn counties, implemented an alternative care methodologies pilot at three primary care clinics (Benton Community Health Center, Samaritan Internal Medicine, and Coastal Health Practitioners) in January. While the per member per month risk-based capitation methodology is the same for all three, each clinic has the opportunity to see what works best and is being evaluated on their performance data related to access, quality of services, costs, and utilization of services of their assigned members. Eventually they will be reimbursed based on their ability to meet performance standards.

IHN has an alternative payment methodology workgroup that meets with providers and stakeholders to determine what works most effectively.

“It’s been a multi-level process aimed at ensuring complete collaboration from the community and our providers,” said Kim Whitley, chief operations officer. “Our approach is that it’s important to know how we have a collective impact. It’s not just about IHN-CCO but our three county wide system of providers; it’s not about what we (IHN-CCO) are going to achieve but what we are all going to achieve. We can feel the community coming together as one to improve the health of the most vulnerable part of our community.”

Alternative payment methodologies have been used in the past (including capitation and risk sharing) but they didn’t work as well because they were missing the quality piece, said Whitley, who explained that IHN has other alternative payment methodologies in place that are smaller and more targeted.

“One of the things that the state as a whole needs to recognize, and is coming to recognize, is that this is a huge culture shift for providers,” Whitley said. “If we are going to be effective, we have to support that culture shift.”


Joanne can be reached at [email protected]