OHA Releases Requirements For Next Round Of Medicaid Contracts

The Oregon Health Authority on Friday released a draft of its requirements for its next round of Medicaid contracts.

The criteria mark the agency’s first step in selecting which organizations will manage physical, mental and oral health care for more than 1 million low-income Oregonians for the next five years. The contracts were worth at least $6 billion in fiscal year 2018. The state's 15 current Medicaid contracts expire at the end of 2019.

"(Coordinated care organizations) are a critical component of health transformation in Oregon," health authority Director Patrick Allen said in a statement. “I want to provide an opportunity for Oregonians to let us know if we’ve hit the mark on setting expectations for (coordinated care organizations) that will improve care for members and transform our health care system."

The highly-anticipated release details how the state intends to determine which applicants will qualify for its next round of Medicaid contracts, worth more than $6 million a year. The document held few big surprises, emphasizing the Medicaid priorities the state detailed in October. They include improving behavioral health care, investing in social determinants of health such as housing security and education, switching from a fee-for-service payment system to one that rewards positive health outcomes, keeping cost growth down and increasing financial transparency.

The state intends to ask applicants to answer a number of questions to evaluate whether they can meet these goals.

Behavioral Health

Oregon’s Medicaid system has historically left mental health patients in the lurch. Long wait times, a lack of addiction treatment options and peer support groups and underpaid behavioral health providers have hindered mental health care in the state.

The state is calling on potential coordinated care organizations to describe how they would improve the state’s behavioral health care system.

Insufficient mental health care in the state has led to excessive emergency room visits from patients experiencing a mental health crisis who had nowhere else to go. The state proposes asking applicants to set up a plan for offering services to patients who have had two or more emergency room department visits within six months.

Applicants will have to describe the behavioral health care needs of its intended service area, how it will address them, how it will partner with social support groups and how it will support a workforce’s ability to meet those needs.

The proposed application requires prospects to describe how they will help tackle the state’s opioid abuse epidemic while prioritizing pregnant women and children.

Social Determinants of Health And Equity

The state intends to require coordinated care organizations to spend part of their profits each year on social determinants of health. For the first two years, coordinated organizations would have to invest in housing-related services. They also would have to spend a portion of their annual profits on addressing health disparities among diverse populations. The state might identify new priorities for the following years.

State officials intend to set up a new bonus fund to reward selected Medicaid payers for meeting goals related to improving social determinants of health. They also plan to set up a public advisory group to set those metrics.

The health authority is in discussions with several of Oregon’s nine native tribes about one or more tribes becoming entities that manage care for Native Americans and about exploring possibilities to contract with those organizations in the future.  

Rewarding Health Outcomes

Oregon also intends to move away from a fee-for-service payment model to one that encourages positive health outcomes through its selection process.

The state proposes requiring that at least 20 percent of coordinated care organizations’ payments to providers beginning in January 2020 to be “value-based.”

The state report offers multiple ways that coordinated care organizations could pay based on health outcomes, several of which center around paying clinics a lump sum to care for a certain population or certain conditions. One option would penalize providers by having them cover any costs that exceed the budget set by the coordinated care organization. Another option mirrors the way the state pays those organizations. Each year, the state pays them a certain amount per patient each month, based in large part on how many members the organization covers, how sick they are and how much the payer spent the previous year. The state gives the organizations bonuses at the end of the year if they meet certain quality metrics such as child immunization status, depression screening, cancer screening and others.

Under the current proposal, applicants would have to either implement new value-based pay methods or expand the number of providers or patients using a value-based pay model each year. The state aims to require that 70 percent of all payments by coordinated care organizations are value-based by the end of 2024. It focuses on regularly increasing value-based payments within hospitals and maternity care.

Containing Costs, Promoting Transparency

The state's proposal says it will reward organizations that keep their costs down.

The Oregon Health Authority plans to continue its quality incentive program, in which it provides a financial reward to organizations that meet health care quality metrics. However, the state plans to change that reward from a bonus at the end of the year to a “withhold” from the per patient per month rates it pays organizations throughout the year and then reward those that qualify for the bonus at the end of the year. The change is meant to encourage coordinated care organizations to invest in their community, the document said.

The state seeks to curb increasing pharmacy costs by increasing transparency of the relationships between the insurance payers and the pharmacy benefits managers who act as middlemen among drug manufacturers, insurers and pharmacists in price negotiations. The state intends to require third-party audits of the drug prices of coordinated care organizations.

The state’s proposal requires coordinated care organizations to publish their preferred drug lists and prior authorization criteria for pharmaceutical products so that the public can compare costs of the preferred drugs among coordinated care organizations.

The state intends to increase financial reporting requirements and to create a statewide reinsurance program to help control the costs of expensive medical conditions.

Enrollment And Rate Changes

The document says that members will be able to choose their coordinated care organization. In cases where patients don't select a provider, the state suggests matching patients with a Medicaid insurer that will allow them to stay with their current primary care and behavioral health providers.

The state will assign patients who do not choose a coordinated care organization and do not have an established provider to an insurer in the patient’s service area.

Patients who want to change insurers after getting assigned one can do so within 30 days.

The draft also says the state will set rates based on regional health data and the risk pool. The calculation will take into account patient health and the number of patients served. A Regional Approach

The draft says the state will base its 2020 rates on an analysis of health care costs and needs in nine regions. Oregon will finalize how it will define regions after it selects the next Medicaid insurers and understands where their patients and providers are located. State officials have said they will not limit the number or location of qualifying coordinated care organizations. Prospective organizations will have to list the counties they intend to cover entirely or partially. In partial coverage areas,  the organizations will have to explain why serving just a portion of the county would “more effectively” address the state’s Medicaid priorities rather than serving the full county. Organizations will also have to prove that they are not cutting out sicker, or riskier, parts of the county to avoid financial risk, the document said.

The health authority has given itself leeway to negotiate proposed services areas.

An Oregon Connection

The state intends to require applicants to have a connection to Oregon through one of the following:

  • Being a health insurance company or health care service contractor licensed with the state of Oregon.
  • Having a Medicaid contract to manage the risk of covering health care costs in Oregon in the last two years.
  • Being a provider organization such as a hospital that bears financial risk in Oregon.
  • Being a tribe in Oregon.

The state will also accept applications from new organizations developed from an organization that met one of these criteria.

The agency will accept public comment on the draft measures until 10 a.m. on Jan. 14. It will release final criteria on Jan. 25. Organizations that wish to apply must letters of intent Feb. 1. The state will announce in July which coordinated care organizations will manage Medicaid patients' care from 2020 through 2024.

You can reach Jessica Floum at [email protected].

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