Greenlick Wants State to Improve 2016 Rate Process, Hopes for Flexibility from Feds

Health Share CEO Janet Meyer refutes the idea that profits in the Health Share system raised its costs. Rep. Mitch Greenlick said the state should move away from basing rates on cost data for 2016 and appeal to CMS that rolling back the 2015 rates to January will badly disrupt Oregon’s healthcare transformation.

Rep. Mitch Greenlick, D-Portland, has proposed two possible remedies to the turmoil of proper and adequate payments for the Oregon Medicaid system that could improve the situation both as a matter of policy and politics, even though everyone’s not likely to be pleased.

Greenlick said the state should appeal to the Centers of Medicare and Medicaid Services so the initial capitation rates can be used for the first six months of the year, and then go forward with the revised rates for the remainder of 2015. He’s not sure if CMS would agree to such a compromise, but faulted the Oregon Health Authority for not doing all it could to to work out this arrangement from the beginning.

“I don’t think they were speaking in the best interests of the CCOs,” Greenlick said.

Right now six of the coordinated care organizations that provide healthcare to Oregon Health Plan members are being hit with a clawback of money already handed to them because of the bad rate-setting process developed by the health authority in 2014, a situation that has been hard for the Oregon House Health Committee chairman and other lawmakers to swallow politically.

The business disruption posed by asking the CCOs to return $100 million that they had already been given has created disbelief in some circles about whether the Centers of Medicare and Medicaid Services want the state to fail.

Portland-based FamilyCare, the hardest hit CCO, is being asked to return 10 percent of its 2015 revenues as a result, $55 million, wiping out all its profits for the year, and threatening the ability for FamilyCare and several other of Oregon’s coordinated care organizations to transform their operations from mere insurance plans that process medical claims to innovative companies that more holistically invest in providing care to the state’s poorest and most vulnerable residents.

Sen. Alan Bates, D-Medford, who has attempted to meet with federal officials, was not available for comment, but his office said he was researching the dilemma and planned to continue workIng on this issue this month.

In testimony last week, health authority officials said the federal government told them verbally they could have only one set of rates, which led them to support the revised 2015 rates retroactive to Jan. 1, and discard the rates they had been using.

Switch to Risk-Based Model ASAP

Secondly, Greenlick said the health authority should not wait until 2017 to use a risk-based payment model for all Medicaid members, and instead begin using it for everyone next year, including the newcomers who joined the Oregon Health Plan following the implementation of the Affordable Care Act.

Zach Aters, an actuary the state hired from Arizona-based Optumas Consulting to reset the rates, argued last week that there was not enough data from the new population to responsibly use the risk-based model for 2015 or 2016, so Optumas based the rates on cost data and then incorporated other CCO investments into the revised 2015 rates.

But Greenlick said people who have chronic conditions like diabetes, which a risk model would use to weight rates, will be the most likely ones to access care in the first months after they became eligible for the Oregon Health Plan. By Oct. 1 the Oregon Health Authority would have enough electronic medical data to allow them to use a risk-based model for 2016. State officials told him they believed that the rates won’t change much by switching to a risk model from a cost-based model, but that was beside the point.

“They’d face a lot less criticism if they used an established actuarial model,” Greenlick said.

The cost-based model has been one of the biggest bones of contention for FamilyCare’s CEO Jeff Heatherington, who argued the state was rewarding inefficiency. To make matters worse, the Oregon Health Authority has blocked much of the cost data from public view, citing trade secrets, denying anyone the chance to second-guess the rates, he said.

Meyer Refutes Heatherington’s Assertions

Heatherington has accused the state of hiding the numbers to allow other CCOs, including his Portland-area rival Health Share, to count profits made by their partnering entities as medical costs -- a point strongly refuted by Janet Meyer, Health Share CEO.

“It reflects [only] the medical costs that we’ve spent,” she told The Lund Report.

Meyer said a number of complicated factors might explain why Health Share’s members required more expensive healthcare than FamilyCare’s members, including her company’s closer relationship with Oregon Health & Science University, which serves many of the most complex cases. A risk-based analysis for the traditional Medicaid population showed that its members were indeed statistically at higher risk of medical need than FamilyCare’s.

The model created for the expansion population did not show as definitively that their costs should be higher, but she said it would be wrong to assume that the populations for the two CCOs was the same. “All of our partner plans have very different patient mixes and provider networks. It’s comparing apples to oranges,” Meyer said.

Martin Taylor, the public policy director for CareOregon, which oversees care for a large portion of Health Share’s members, said FamilyCare’s reduction from the inflated payment levels for the expansion population was always going to be greater since FamilyCare received more than its share of these new members.

“The costs submitted to Health Share only included actual costs,” said Teresa Learn, the chief financial officer of CareOregon. “We think that the rates that they [Optumas] developed reflected the greater risk.”

But the profits of the partner organizations have not been made public and in fact, no entity-level medical cost information has been released by the hospital-managed Medicaid plans that Health Share subcontracts to Tuality Healthcare, Kaiser Permanente and Providence Health & Services. The only figure that’s been reported is the overall medical costs for the overall CCO, not the individual organizations that actually handle the care for Health Share, with the exception of CareOregon.

Without that data, it’s impossible to know how fairly their costs were set, and the confidential set-up raises the question of whether the hospitals have been able to freely set higher payments for their own medical facilities and providers than FamilyCare might be paying providers for similar patients, which results in higher per member payments to Health Share.

“If they’re spending more, they’re getting more back,” Heatherington complained.

Bend and Cut the Cost Curve

Greenlick said the cost-based payment methodology was a temporary problem, one that will become moot once the state goes to a more rigorous accounting method for the Affordable Care Act expansion population. With so little data, the state didn’t have any good options for developing the 2015 rates. FamilyCare’s sore feelings about low rates would have been reversed had a different methodology produced an outcome where HealthShare’s rates had been the ones that were sharply cut.

“If they had gotten the better rates, I can guarantee you FamilyCare would be supporting the model, and Health Share would be arguing it’s a corrupt, inept model,” he said.

Taylor said it was well-accepted that the 2014 rates had been set without any data at all, and were widely believed to be too high. All CCOs should have braced for a rate cut from those lofty members, and a 3.4 percent increase of the arbitrary 2014 rates was not something the federal government would likely allow.

He pointed out that Oregon Health Authority Director Lynne Saxton inherited this mess from the previous administration, and had only ordered the revised rates from Optumas at the request of CCOs unhappy about the initial 2015 rates, including FamilyCare.

He also said CCOs should not assume they’ll be able to build up surplus revenues or earn a business profit for themselves. “The CCO plan’s job is to drive down the cost of care every year so the state has the ability to bend the cost curve,” Taylor told the Lund Report. “We’ve got to do it, and expect the rates to come down, and we’ve got to do it again and expect the rates to come down again.”

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