Kitzhaber Heats Up Debate Over Oregon's Medicaid Direction

John Kitzhaber as governor in 2014.jpg

Debate over how Oregon should run its $6 billion-a-year Medicaid system for intensified sharply this week, with controversy continuing to swirl around Trillium Community Health Plan, a for-profit subsidiary of the nation’s Medicaid heavyweight.

A key architect behind the current Oregon Health Plan entered the fray: Former Gov. John Kitzhaber fears that state is abandoning its unique, community-based approach to ensuring that one-quarter of state residents have health insurance.

There was a flurry of developments Monday:

PDF iconA letter from Kitzhaber to state elected leaders was widely circulated and discussed. Kitzhaber, building on warnings he has made before, faulted the Oregon Health Authority for approving Trillium, which is owned by Missouri-based Centene Corp., a multi-billion dollar company with Medicaid contracts across the country. The approval pits Trillium against a homegrown nonprofit, Health Share of Oregon, which has extensive partnerships and support. Health Share is now the only Medicaid insurer of the Portland area’s 300,000-plus low-income members.

“It is difficult to see how this commercial insurance company, headquartered in Missouri, can truly develop and demonstrate the community relationships and engagement that are central to the whole concept of the (coordinated care organization) model,” Kitzhaber wrote. He said the state was turning its Medicaid system into a traditional commercial insurance market.

State legislators grilled Patrick Allen, the Oregon Health Authority’s director, over how his agency had chosen coordinated care organizations like Trillium and Health Share for 2020 and beyond under the agency’s so-called CCO 2.0 program.

PDF iconThey asked Allen how his agency had vetted insurers’ finances and whether it had favored “large insurance-carrier based models” over smaller, locally controlled coordinated care organizations. Appearing before the Oregon House Committee on Health Care, Allen doggedly defended his agency’s work. In an apparent allusion to Trillium and the opposition it has faced from Portland area hospitals and county governments, PDF iconAllen said in a written statement that  “while local leaders may prefer one (CCO) applicant over another, any applicant that meets OHA’s higher bar for CCO 2.0 will get a contract.” He added that to win final contracts later this year, “applicants must show they have a network of providers who can serve OHP members and strong local partnerships with counties, housing agencies, schools, human service providers.”

Allen also said that his agency is using CCO evaluation methods that were developed by insurance regulators for commercial insurers, but “we are not turning CCOs into insurance companies. We do not want to limit CCO ingenuity, just safeguard their financial stability.”

Further debate is set for Wednesday when the Senate Committee on Health Care is also slated to hear from Allen, and to discuss Kitzhaber’s letter. The panel has invited Kitzhaber to speak.

Kitzhaber Tracking Oregon Medicaid Work

Kitzhaber, now working as a consultant and public speaker on health care policy, has been carefully following the evolution of Oregon’s Medicaid system.

In a Sept. 8 letter to Gov. Kate Brown and legislative leaders, Kitzhaber wrote that the state’s recent actions with CCO 2.0 “appear to reflect a decision to move away from a flexible, community-based collaborative model toward a commercial insurance model with more focus on regulation.”

Allowing Trillium into the Portland-area market has the potential to be disruptive, he wrote.

“The Medicaid population in the Portland area includes some of the state’s most vulnerable people who are now in a stable and well-run health plan (Health Share of Oregon),” he wrote. Previously, the metro area had two Medicaid insurance providers: Health Share and Family Care, which folded in 2018. Its members were taken over by Health Share. Now overseeing the entire Multnomah/Clackamas/Washington Medicaid population, Health Share has been able to keep its health care cost growth rate under the 3.4 percent per year cap sought by the state, he wrote.

“The effort to establish (Trillium) in the Portland metropolitan area has been justified on the basis of ‘market competition,’” Kitzhaber added. But there is “little evidence” to support this, given that the state allocates budgets to Medicaid insurers and sets standards that they must meet and incentives to reward good performance, he wrote.

“If the goals of CCOs are to manage the health of the population within a global budget indexed to a sustainable growth rate, and to invest in the social determinants of health through strong community support and engagement, bringing (Trillium) into the metro market would appear to contradict these goals,” he wrote.

The Centene move, and the OHA’s increasing preference for commercial-style CCOs “reflect a deviation from legislatively adopted policies and may have serious unintended consequences to the health care transformation efforts that I know we all support,” he wrote.

Key Administrator Responds

OHA’s Allen pushed back -- politely but firmly -- during Monday’s hearing.

His agency’s  choice of coordinated care organizations meets Oregon legislative policies and guidance from the OHA’s governing board, the Oregon Health Policy Board, he said.

He insisted that OHA will continue to push Medicaid insurers for “inclusive community governance, effective investments in housing, food security and other social determinants; (and) strong partnerships with counties and nonprofits aimed at improving the health of local communities.”

“The priorities of CCO 2.0 — improving behavioral health; addressing social determinants of health and health equity; increasing value and pay for performance; and maintaining sustainable cost growth — are complementary to the hallmarks of the original CCO model,” he wrote in comments to the House committee.

Trillium, despite resistance from Portland-area hospitals and governments, has stressed it wants to build community connections in the metro area and tackle social issues that contribute to ill health.

Robb Cowie, a spokesman for the OHA, said the agency “remains committed to getting better results, holding CCOs more accountable and ensuring every CCO remains financially stable, to protect OHP members from unexpected disruptions in care. This focus is in keeping with the Legislature’s expectations (that) we ensure CCOs improve outcomes for OHP members and that their spending is consistent with the state’s health transformation goals.”

OHA Choices Questioned

Ever since the OHA announced its CCO picks this summer, legislators, health administrators, Medicaid executives and others have questioned the effects of the decisions.

The OHA appeared to favor insurers that had some semblance of financial strength.

Springfield-based PacificSource, a multi-state insurer with several lines of insurance work, was a big winner, not only retaining the two CCOs it runs in the central Oregon and Columbia Gorge areas, but also taking over the 100,000-member Marion/Polk market and being allowed to compete for members against existing insurer Trillium in the 90,000-member Lane County market.

The state backed Trillium for the Portland market and kept it in Lane County in part because of the massive finances of Trillium’s parent, Centene.

Smaller insurers, or those with little history or clear financial backing, got the short end of the stick. PrimaryCare in Josephine and Jackson counties was ousted because state analysts said it was heading toward insolvency. Its 10,000 members are to be picked up by other CCOs in the region. A new nonprofit, Marion Polk Coordinated Care, failed to win the Marion/Polk territory in part because it lacked financial backing, according to the state. Marion Polk has threatened to sue.

Moda, an insurer that holds the rural Eastern Oregon Medicaid market, tried to expand into other regions but was rejected by the state, in part because of its lackluster financial condition.

In the new landscape for 2020 onward, a handful of Medicaid insurers in Oregon’s 1 million member market will be dominated by a few companies:

  • PacificSource will have an anticipated 100,000 members in Marion/Polk, 61,000 in the central Oregon and Columbia Gorge markets combined, and a slice of the 90,000 members in Lane County;
  • Trillium, will cover slices of the Lane and massive Multnomah/Clackamas/Washington markets;
  • And CareOregon, a dominant member of Health Share, manages 200,000 plus of Health Share’s 300,000 members and  owns two CCOs, one on the north coast and one in southern Oregon, that total about 60,000 members.

All told, PacificSource, Trillium, Health Share and CareOregon will manage more than 600,000 of the state’s Medicaid members come 2020, with the remaining 400,000 mostly rural members being managed by seven much smaller care organizations.

You can reach Christian Wihtol at [email protected].

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