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Lynne Saxton Expects to Finalize CCO Rates Shortly

The administrator of the Oregon Health Authority, who sat down for an interview with The Lund Report, talked about the sale of Trillium to Centene Corp. and the likelihood of moving the transformational healthcare model into the private sector.
August 12, 2015

TLR: I understand you’re planning to hire someone to oversee physical and behavioral health who’s being called the healthcare czar.

LS – Or czarina – that’s the chief health systems officer – that position in restructured so that the Oregon Health Authority has oversight over what used to be known as the Medicaid Assistance Program and Addictions and Mental Health. Both are now consolidated. We’ve had open recruitment, and are doing interviews bringing in community partners and CCOs – we have strong applicants, and ideally are looking to hire someone the first of September.

TLR: I understand you’ve projected a $500 deficit in Medicaid funding over the next six years when the federal match runs out. Will that jeopardize the future of the Oregon Health Plan?

LS: We’re not calling it a deficit. In a series of presentations I did during the Legislature on the future of health system transformation. I did a six year projection I shared with the governor’s office and legislators that showed in 2017-19 our health system would need an additional $500 million to sustain the Oregon Health Plan. It’s a conservative projection. There are several potential variables – those dollars could come from the growth in the annual general fund, or the federal government could continue to be pleased with the innovation Oregon is accomplishing and invest in data driven research. We’re also watching the enrollment in Medicaid that now we have over a million people but that’s stabilizing. When we implement our new software in December and January, we’ll see further stabilization. Most of all I wanted to be clear to policymakers the mechanics and the economics of the health system.

TLR: Is it possible that the CCOs will see reductions to meet that shortfall?

LS: The health system is built on a collaborative relationship between ourselves, the CCOs and the federal government contributes 8.9 billion. Part of what will evolve over time is the right rate structure and service portfolio. My goal is to make the health system understandable to multiple stakeholders.

TLR: Some of the CCOs such as FamilyCare are saying their rates are continuing to go down this year while others are seeing increases. Can you explain why?

LS: The process has not been completed. This is a three–legged stool, the Oregon Health Authority, the CCOs and CMS. We briefed each of the CCOs on where we are on the 2015 rate redevelopment process, and now we’re having discussions with CMS then we’ll finalize the rates. There are rate regions established in this process, and a lot of actuarial work has gone on. The variances occur as a result of the analytical framework that’s been established. When we made the difficult decision to look at the 2015 rates, it’s important to point out that our goal is to be able to show people the path forward and build a really solid rate structure for the 2016 rate setting process that starts in September. We’re bringing in people who have experience in rate setting across the country. We’re not the only state doing global budgeting. And, what we’re hearing from the CCOs is that they’re very pleased with the process. They

understand the analytical framework and they have greater transparency than before, but we’re not done yet. We’re talking to CMS and would like to get done so we can start the 2016 rates by September.

TLR: Contracts have to be renegotiated once again in 2017. Do you envision a new procurement process where new insurers such as Centene Corp. could become CCOs?

LS: That’s a far reaching question. The contracts come up in 2017 and that’s when things get discussed. Whether there’ll be a bidding process I’m not sure. What’s happening nationally is we’re seeing consolidation. What we have going on in Oregon is CCOs doing really exceptional work and meeting the metrics and responsibilities and moving through change that I really admire. Most of the CCOs are committed to doing the work. One thing we do know in the Medicaid equation. It’s a competitive business, and a lot people are interested in doing the work. That’s healthy because what we have is people standing up to innovation and best practices.

TLR: Does the acquisition of Trillium by Centene raise questions about the future of Oregon’s CCOs?

LS: I’m not concerned from the standpoint that we have a contract with Trillium, and the contract is in place and enforceable and Trillium is going to continue to do what it has been doing. We have the authority to make tough decisions if necessary on behalf of the Medicaid population.

TLR: Recent reports show that hospital profit margins continue to rise in Oregon—what does this mean for the state’s health reform goals?

LS: We look at all the financial parameters for the whole system every month at a fairly intense level, and we’ll continue to do that. We view the financial piece not as a snapshot but look at all aspects of the system every month including capacity and access with our CFO and finance team to see whether this is a sustainable system for the Medicaid population. Right now we see sustainability. I’m not overly concerned. I’d rather have lots of data and not live in constant concern. The great thing is that policymakers and everyone have access to the data. The fact that everyone is looking at the system gives us constant awareness and potential.

TLR: At a breakfast meeting recently, Janet Meyer, CEO of Health Share, said pharmaceutical expenses are the most difficult costs to control. Do you share her concerns?

LS: It’s a national issue, and we forecast into our projections those high pharmaceutical costs. We’re going to be looking at it closely as we go forward. One thing we’re also focusing on -- the Oregon Health Authority has a great advantage in that public health and Medicaid are in the same agency and that enables us to call out public health opportunities including managing behavioral health issues including drugs and addictions in innovative ways that take the cost pressure off the Medicaid system. We want people to think about how they can be healthy and stay well without pharmaceuticals.

TLR: What’s your strategy to ensure that cost savings in Medicaid do not result in cost-shifting to the commercial health insurance market?

LS: Frankly, I have to think that one through. Part of what’s exciting about the metrics is that CCOs get a lot of credit and have implemented ways to contain Medicaid costs that are very exciting and different. A lot of people say to me all the time that costs can continue go down, and I believe that. Part of what we’re looking for with CCOs and the transformation team is ok – we’ve got this far – now what’s the next frontier? A lot of policymakers feel very strongly that the next frontier has to be behavioral health.

We’ve done a good job with physical health. We’ll continue to bend the cost curve and that will take the pressure off the commercial market.

TLR: Is there much movement for the CCO model to move into the private sector?

LS: Stakeholders are interested in this happening but it’s clear that we have to get our house in order first and get some stability in the system. I wouldn’t project a timeline. Our priorities are the 2017 Medicaid waiver renewal, filling the four executive positions we’re recruiting for right now, completing the 2015 rates, executing the 2016 rate process and continuing the health system transformation

TLR: Will the Kentucky system make it easier for people to enroll in the Oregon Health Plan next year?

LS: My job is to lower the expectations for the Kentucky one eligibility system. We have to convert the system and go live the next day but keep it simple and keep expectations modest.

TLR: Will you have a role in choosing Sean Kolmer’s successor as the governor’s health policy advisor? As you know he recently became a consultant for Health Management Associates after being hired by Tina Edlund.

LS: I don’t know who will replace him but will certainly be happy to support the governor’s office on whatever they need. I’m happy for Tina Edlund who’s put a great team together. From our perspective we’re also building a great team that’s ready to do the job.

TLR: Are you having hands on experience with the CCOs?

LS: I meet with all the CEOs of the CCOs every month as a group. We have a rapport where we can talk about difficult things directly. The piece I didn’t get done in my first 100 days was meeting with the 200 plus stakeholder organizations. I’m doing that in clusters now and that process has begun.

TLR: What challenges do you face in the next six months?

LS: Immediately hiring the four executive positions – the chief health systems director, the Medicaid director, the external affairs director and the business IT lead, and they’re all in the process of recruitment. Then, completing the rates work, getting ready for the Medicaid waiver and preparing the framework for public health modernization.

TLR: Do you have a comment on the lawsuit filed by Jeff Heatherington, CEO of FamilyCare against the Oregon Health Authority regarding his rate disparity issues?

LS: No.

Diane can be reached at [email protected]

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