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Hospitals Support Sharing Transformation Fund Dollars with CCOs

Gov. Kitzhaber’s advisors and the Oregon Health Leadership Council collaborated on a proposal to give some money to CCOs, from a fund currently earmarked to help hospitals reform their delivery systems. The money would likely take years to reach the CCOs -- hospitals who paid into the transformation assessment that was authorized in 2013 won’t get rewarded until March.
January 22, 2015

The Oregon Health Leadership Council is floating a proposal that would expand the scope of the hospital transformation tax fund to financially reward coordinated care organizations that have shown success at reforming the delivery system while producing showing good health outcomes. .

“Right now, we see the transformation effort working,” said Greg Van Pelt, the director of the leadership council. “What we have tried to see at the OHLC is how do we support that and keep what we have going.”

Currently, the the hospital assessment tax is levied to provide state matching funds to qualify for federal Medicaid dollars. Most of that money goes to provide healthcare for low-income people, but with a federal waiver, Oregon has been able to use some of that money to support hospitals that have risked their bottom-lines by steering patients away from lucrative emergency rooms.

The money allows these hospitals to invest in non-emergency care.If the Legislature adopts the leadership council’s proposal, and if the Centers for Medicare and Medicaid Services approves, some of this money could also be given to CCOs. A separate proposal outlined by Gov. John Kitzhaber in his proposed budget would give $10 million for transformation efforts in rural, critical-access hospitals -- which are not a part of the assessment.

“The CCOs have performance targets,” Van Pelt said. “Some of these dollars could be used in a performance reward pool.”

From a separate pot of money, CCOs were paid $47 million last summer for meeting quality improvement targets, with payments based roughly on how well they met 17 targets. However, all of the CCOs fell short in at least two measures, with some missing as many as a third of their targets. A similar pool of money will be handed out this summer, based on slightly different metrics.

The 2015 Legislature will have to approve a new hospital assessment to fund the state medical assistance programs anyway, since the tax passed in 2013 is set to expire in September. The current assessment has generated $1.4 billion over two years to fund the state’s share of the Medicaid program.

Van Pelt said the Oregon Health Leadership Council could not take full credit for the proposal to expand how the hospital assessment will be structured, but had worked closely with Kitzhaber’s office, including chief health policy advisor Sean Kolmer. The leadership council is a coalition of hospitals and health insurance companies that also has representatives from the Oregon Medical Association and CareOregon, a Medicaid provider.

The details of the proposal are still being worked out, and some key players, such as Jeff Heatherington, president of the Portland CCO FamilyCare, said he had not yet been educated on the manner by Van Pelt.

But the Oregon Association of Hospitals and Health Systems, whose members are integrally involved in the operation of FamilyCare’s competing CCO, Health Share, were involved with the leadership council’s proposal from the get-go, according to hospital association spokesman Philip Schmidt.

Schmidt said the hospital association had been involved in developing the new hospital assessment package and the association board had voted to approve the new transformation structure that shares money with the CCOs.

“This program is a unique approach ... designed to further incentivize shared system improvements and collaboration,” Schmidt wrote in an email to The Lund Report.  “And, as this program will require new waiver approvals from CMS, we felt it was prudent to help the state design a transformation incentive program that reflects CMS’ stated expectations that states will align these incentive mechanisms across stakeholders.”

Schmidt added that hospitals haven’t actually seen any of the money contained in the current transformation fund. The federal government took more than a year to approve the waiver for that fund, and hospitals are still submitting their measurement data. They won’t get rewarded from this pool until March.

Van Pelt said he was unable to share too many details about how much money would be in the new transformation fund for CCOs or on what grounds the money would be distributed, but said those details would be discussed during the upcoming legislative session.

“People start running to conclusions,” he said. “We’re just not there yet.”

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