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Greenlick Encourages OHA to Delay New CCO Contracts to 2020

The House Health chairman has tried to revamp the CCOs before they get a new 5-year contract, arguing they need greater transparency and accountability. A year's delay would give the new administration more time to improve a system the public has had to support with more taxes.
September 22, 2017

The Oregon Health Authority may delay a new contract for Medicaid coordinated care organizations until 2020, giving the state a chance to evolve the framework for the publicly-funded insurance system for the poor and disabled.

“I strongly believe that you should put it off for a year,” said Rep. Mitch Greenlick, D-Portland. The powerful chairman of the Oregon House Health Committee, at a hearing this week, after OHA’s interim director, Pat Allen, called it an option.

The state’s 16 coordinated care organizations act as locally driven insurance companies that manage the care for people on in Oregon on Medicaid, also known as the Oregon Health Plan. The current five-year contracts expire at the end of 2018. A new five-year contract was anticipated to be put before bidders in the coming months.

But a sudden change in leadership on Sept. 1, combined with efforts from Greenlick and the Oregon Health Policy Board to modify the framework of the CCOs, may make it more prudent for Allen to just extend the current contract to the end of 2019, and call for a new one in 2020.

Former Oregon Health Authority Director Lynne Saxton resigned on Aug. 31, and Gov. Kate Brown appointed Pat Allen, the longtime director of the Department of Consumer & Business Services. Allen has brought a team of people from that agency, which regulates private health insurance, over to his new agency, which has stumbled through a number of public failings in the past few years.

New contract time could be a chance to tighten their commitment to upstream and holistic spending on healthcare, and live according to the marketing slogan that former Gov. John Kitzhaber used to launch them: better care, better health, lower costs.

The new contract may also be the best chance to make changes to the Medicaid coordinated care organization structure that ends a worst-of-both-worlds situation where their spending and business practices can’t be held accountable to the public because they’re private companies, but they can’t be regulated like insurance companies in the commercial market because they’re public partners.

Allen said he would work to increase transparency, but it was unclear whether he meant to the CCOs, as business partners, or to the public, which has provided the lifeblood for these organizations and has now been asked to give the CCOs more money in the form of $550 million in new insurance tax and hospital taxes.

Let’s Make a Deal

Greenlick has pushed the CCOs to have greater community involvement, opening up their boards to public meetings laws similar to school districts, and capping their reserves and profits.

But since the state of Oregon has essentially outsourced its Medicaid management to 16 private insurance companies, consumer advocate Jesse O’Brien thought Allen might want to embrace the Oregon Health Authority’s role as a regulator of these private companies to ensure they are being transparent and accountable with the public purse.

“The rate-setting process ought to look more like a regulatory approach,” said O’Brien, the policy director for the Oregon Public Interest Research Group.

Even many CCOs that have fought Greenlick, however, have sought guaranteed contracts, which would enable them to position themselves as public institutions, and not be subject to a bi-decade competitive bidding process.

Several of the CCOs, led by the Coalition for a Healthy Oregon, refused to play ball with Greenlick in the past legislative session, not without the countervailing support of their longtime advocate, Sen. Alan Bates, D-Medford, who died last year. Bates had also fallen short in getting changes to the CCOs that he thought would allow them to better meet Kitzhaber’s vision.

FamilyCare CEO Jeff Heatherington said he approved of a delay, and unlike other CCOs, he wanted more public transparency, since he believes that his company already provides more information than other CCOs, including his competitor in the Portland market, Health Share of Oregon.

“We should be more transparent because we’re 100 percent taxpayer money,” Heatherington said, who otherwise did not want OHA to make huge changes to the existing system. “We have got a good system overall -- it has worked well over the past five years. The state would be ill-served if they decided to make major changes.”

FamilyCare has sued the state to provide it with more data to explain the rate-setting process, and has complained repeatedly that the information provided in the rate-setting process for CCOs is actually less transparent than it was predecessor organizations, the managed care organizations, which were more explicitly private contractors without the patina of community involvement that CCOs must give with their community advisory councils and public board members.

CareOregon CEO Eric Hunter was not available for an interview, but in a statement, he conceded that changes were needed before the new contract, without going into details. “The formation of Coordinated Care Organizations has improved both individual and community health over the last five years, and we want to continue making progress. The important thing from CareOregon’s perspective is that Oregon build on the transformative work of CCOs.”

CareOregon owns or contracts with three CCOs in Oregon, including Health Share..

CCOs must meet a number of accountability metrics while operating under a global budget, a risk-sharing model that gives them a strong incentive to avoid expensive emergency departments and coordinate their members’ care.

The taxpayer-funded companies otherwise operate with little public scrutiny and do not have to make public how they’re spending their revenues with near the requirements of private insurance companies which have their rates set each year by the Department of Consumer & Business Services.

Hospital expenses and payments to other providers are masked in the name of “trade secrets,” and the Oregon Health Authority has tried to block even information such as the percentage each CCO spends on primary care from the public.

“The trade secret argument falls apart when you look at the information private insurance companies have to give to justify their rates,” Heatherington said.

If they insist they’re private companies simply contracting with the state, than they should meet at least the rigorous standards that insurers operating in the individual and small group market do to justify their rates and costs, and those quantifiable justifications should be made just as publicly available.