More than 100 Insurers, Providers Likely To Be Held To Oregon’s Health Care Cost Cap

Oregon regulators have tentatively identified 117 health insurance companies, hospital systems, clinic groups and other medical providers that will be subject to the state’s new program to limit health care spending growth.

Those on the list range from Oregon’s biggest providers, including Providence Health & Services and Oregon Health & Science University to many much smaller ones, such as the Hillsboro Pediatric Clinic and Childhood Health Associates of Salem. The list also includes insurers large and small, from giants Kaiser Foundation Health Plan and PacificSource’s network of insurance plans, to small coordinated care organizations like Yamhill CCO.

All 117 have rosters of patients that are large enough so that the organization’s overall costs won’t be skewed too much if a few individuals run up exceptionally large expenses, according to state officials. That will make it easier to place a per-capita cost growth cap on the organization, PDF iconaccording to state officials

Lawmakers and state executives want the cap set at 3.4% per capita per year, which would cut in half the current growth rate.

The tentative list -- which the state will likely tinker with as it gathers more up-to-date data -- is one in a long series of steps to create an elaborate cost-control program.

The idea is to limit per-capita health care spending increases at the targeted entities and at the same time make sure those providers and insurers don’t resort to unacceptable means to meet the limits. For providers, no-nos could include cutting services, and firing or cutting the hours of health care workers; for insurers, it could mean raising deductibles or copays, or otherwise increasing out-of-pocket costs for members.

At the March meeting of the state’s Sustainable Health Care Cost Growth Target Implementation Committee, which has been working on the state’s plan for nearly a year and a half, members spent considerable time mulling over how to make sure the cost curb system didn’t produce these undesirable results.

Jeremy Vandehey, the Oregon Health Authority’s director of health policy and analytics director, said his agency needs to finalize which companies will be covered by the program and alert them to what lies ahead. Some providers or insurers, he told the committee, may be unaware of the program, which was authorized by lawmakers in 2019 and which the Oregon Health Authority has been working ever since.

Elements of the program, including an enforcement system that will include penalties on companies for failing to meet the cap for multiple years, are before the Legislature for approval this session.

Under the proposed system, companies would have to report their spending and their patient numbers annually to the state. They would have to justify if the company as a whole exceeds the 3.4% allowed increase per capita. If Oregon Health Authority officials considered the explanations reasonable, they could give the company a waiver.

Oregon is the fifth state to be developing a cost growth target program, though the plans differ from state to state.

The list of 117 covered entities is based largely on 2018 data. The state picked the entities based on the number of patients they have. Many small or specialty providers in the state were not included because they don’t have a high enough patients. The OHA will use more recent figures to update the list.

As of now, the list has 38 insurers, including, for example, six PacificSource entities; 24 self-insured systems, including the cities of Portland and Salem; and 55 providers, ranging from Eugene-based PeaceHealth Medical Group to Bend-based St. Charles Health System in Bend.

At the March committee meeting, consultant Michael Bailit, gave the panel a rundown of potential negative effects based on implementation of a similar system in Connecticut. Connecticut is looking to monitor its program for “underutilization” of services by patients; changes that hurt “marginalized populations;” and insurers making changes that drove up out-of-pocket costs for members.

Out-of-pocket costs for people insured by commercial plans – as opposed to Medicaid or Medicare – have soared in Connecticut, Bailit said. That state’s data show that between 2015 and 2018, wages went up 1.47% annually, spending by commercial health care plans rose 4.9% and commercial member out-of-pocket costs increased 8% annually.

Sarah Bartelmann, OHA’s policy lead on the cost curbing program, said state officials want to ensure that the system doesn’t hurt access to care and the quality;  that out-of-pocket spending doesn’t rise too high; and that providers don’t reduce the hours or pay of health care workers.

The OHA is trying to develop parameters that would prevent insurers and providers from doing these things.

Committee member Jessica Gomez, CEO of Rogue Valley Microdevices, told the panel she feared the program might reduce the financial viability of some health care providers, and prompt them to consider joining larger organizations.

“Are we encouraging more mergers and acquisitions, which would limit competition?” she wondered.

Committee member Dr. Kevin Ewanchyna, an Albany doctor, wondered how the state would even get wind that a provider or insurer had made changes that hurt minority or marginalized groups.

And Ken Provencher, CEO of PacificSource and another member of the committee, asked how the state would be able to pin down “causality” – whether it was the cost control plan that had caused a provider or insurer to take a certain step that short-changed patients or members.

No one agrees on why health care costs in Oregon and around the nation continue to surge. Observers point to many possible causes: the cost of insurance company and hospital bureaucracies, insurance company and hospital profits, unnecessary medical procedures, high drug costs, high salaries for health care executives and health professionals, and an aging population with more physical ailments.

The state committee said it will be up to the companies covered by the program to find ways to cut cost growth without cutting back on vital services, hurting the workforce or driving up out-of-pocket spending. The state is developing a list of quality and service measures that providers will have to meet to ensure they don’t try to meet the cost growth limit by scrimping on patient care.

The state committee has plenty of representation from the sectors that will be regulated by the program, and there has been no opposition so far.

You can reach Christian Wihtol at [email protected].



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