With costs growing rapidly, Oregon’s health care players need to better collaborate on solutions with support from government to address systemwide challenges, experts said Tuesday.
With medical costs in the commercial insurance market growing between 8-12% annually — well above inflation — it’s time to take the temperature of Oregon’s existing cost control programs and see if they’re working, said Jack Friedman, former Providence Health CEO. He moderated the event hosted by the Oregon Health Forum, an independent public policy discussion program affiliated with The Lund Report.
Escalating labor costs and rate hikes from physician groups are part of the picture, Friedman said, as well as low government reimbursements that in effect shift costs onto businesses, other commercial payers and individuals. The costs of injectable drugs “are skyrocketing,” he added. “These are good drugs. They work, but they're very expensive. We're seeing behavioral health costs up for good reasons, because a lot of people have been left out of the system. And finally, hospital length of stay is up.”
Sarah Bartelmann, who oversees the health care cost-control efforts of the Oregon Health Authority, said that while the state’s health care costs had been staying close to a goal of 3.4% set years ago, the latest preliminary data suggests that figure could double, similar to what other states are reporting — 9.1% in Delaware and 7.8% in Connecticut last year, for example.
She cited a recent survey finding that three out of four Oregon adults delayed getting care because of costs, as well as a national report finding that that almost a third of small businesses no longer could afford to provide employees with coverage.
“We know that we're looking at a really challenging economic situation, and as those conditions are increasingly changing, it's more important than ever that we keep that focus on affordability,” Bartelmann said.
Charlotte Flood, the CEO of Northwest Primary Care, said that primary care is a low-cost service compared to hospitals, but with 7-8% inflation for needed supplies, and flat Medicare reimbursement and high Oregon taxes, her organization has little hope of achieving the 3.4% goal set by the state. Starting next year the state program overseen by Bartelmann will gain the authority to require cost-control plans and even fines for providers or insurers that don’t meet the target.
“It's an impossible setup,” she said, adding that the state needs to ensure equal reimbursements between hospitals and primary care clinics. “There needs to be some readjustment there.”
Felisa Hagins, executive director of the Oregon State Council of the Service Employees International Union, said that people don’t question the need to pay for increased primary care and behavioral health. She drew applause with her defense of the need to curb costs.
“I feel like the conversation needs to be about the overall system. And we have an overall system that is driving people into bankruptcy, eating our gross domestic product and making people make terrible choices about their health care. They are choosing between their rent and going to the doctor. They are choosing between food and going to the doctor, and if they make the choice to go to the doctor, they are staying there longer, they are sicker, it costs them more, and it's ruining their lives. We have to do something about that. So if we cannot have a commitment to a target, as the state of Oregon, to stop ruining people's lives. I don't know what the hell we're doing.”
Clogged system breeds waste
Sean Kolmer, an executive of the Hospital Association of Oregon, said his members are feeling the brunt of the impacts of a “clogged system” in which hospitals can’t discharge patients to less-expensive care because there are no options. Not only that, but primary care providers are not available to address problems in a lower-cost way.
“Patients are sicker ... They're not seeing primary care because access points are gone, your (insurer provider network) panels are closed,” he said. “People aren't making the choices they should be making right now, and the system is failing them. So what is the conversation we should be having so people are getting the right kind of care in the right place at the right time?”
When the pandemic ended, there was a surge in the use of health care services as people returned to their physicians and addressed medical needs they'd had to delay. Since then, however, the levels of care consumption and costs have not returned to normal, Dr. Tracy Muday, executive medical director at Regence BlueCross BlueShield of Oregon, said.
“That's alarming to me,” she added. “We know that primary care is really the foundation of what we do — but hospitals are absolutely necessary for Oregonians who need them. Who [also] need medications. So what’s driving premiums is the combination of all of those things ... drug (spending) continues to spiral up (with) more expensive drugs.”
Gesturing at her fellow panelists, Muday added that “we all need to be thinking about how we don’t bankrupt our population ... our society is so polarized, we're all about outrage and fighting each other, but we're only going to get there if we cooperate and we're all pulling in the same direction.”
The primary care CEO, Flood, said the state’s cost-control program may not be helping by publicizing providers who aren’t meeting the state’s target. “We don't meet the cost per target ... it feels punitive.”
Hagins, the union official, said her work on the committee working with the state cost program, left her with some takeaways. The program focuses on a concept of paying for “value-based care” to promote efficiency, but she noted that her own union didn’t fully embrace the concept.
Some components of the state program “have been really challenging ... and I don't actually think that there is a magic bullet in any of these things,” she said.
But Hagins urged insurers and government officials to join in fighting cost growth in areas that can have impact, such as escalating pharmaceutical costs. “We have to hold pharmaceuticals accountable. Fundamentally, there's no denying that. We all agree on that. ... How do systems partner with the government to get creative around doing that?
Flood said that the federal funding that helped launch value-based care programs in Oregon is now gone, “and so the ultimate individual who suffers is the patient.”
She said more collaboration could help, saying a patient with a life-threatening condition recently needed a CT scan, but had to be referred to a hospital emergency room because no imaging providers had openings.
“That is an indication of the broken system,” she said, adding that if hospitals joined with her organization in a joint venture to boost imaging, “we could care for the community and make it affordable to them — and have a $25 copay for imaging instead of the $1,000 copay from going through the ER.”
Muday said Regence is working to share prices of services to help cut costs, but specialty providers are reluctant to get involved in value-based care due to the risks and a lack of trust.
Hagins said simply sharing prices to promote shopping doesn’t help the majority of health care consumers, who don’t have options. “There are huge access challenges that we have to address, that we need to deal with.”
Asked what makes her optimistic about health care costs, she said she takes comfort in Oregon’s history of working together. “I am also a believer that crisis breeds opportunity, and our federal government is about to create one of the most devastating crises that we have ... particularly in Oregon, where we believe everybody here deserves health care ... I feel like together, we can do something great.”
As members of the audience rose to ask questions, Richard Gibson from Comagine Health said that Oregon’s work on single-payer health care should also be cause for hope, saying it would be equitable and address many of the challenges the panel had cited.
Jeff Heatherington, a former insurance company and Medicaid care organization CEO, said “You can't have good health care if you don't have a value-based provider network. And that's what we don't have — we have squeezed primary care and mental health care right out of the market.”
Former Oregon Gov. John Kitzhaber said that the prevailing dialogue in health care is that “we need more money to support a system that is economically unsustainable. I don't know what universe that makes sense in. What it does is it begs the question of the structure of the system, the business model, the financial incentives that drive it, and I would say also the legitimate and important labor has to play in the solution.”
The discussion was sponsored by Physicians Insurance, Moss Adams, CareOregon and the Heatherington Foundation for Innovation and Education in Health Care. The Heatherington Foundation also is a financial supporter of The Lund Report's journalism.
Having managed a union plan for 15 years out of California but with some participants in north central Oregon and central Washington (Boardman/Hermiston up to Yakima) I have seen cost problems there especially with hospitals and certain services (i.e., dialysis is outrageously priced in rural Oregon). But I also in have participants in Arizona, southern Nevada, and south Texas that have problems but not the extreme prices we see in northern California. Before moving to California I spent time managing plans in Oregon and Washington and once thought health care was relatively reasonably priced - but it feels like Oregon prices have lost most of its comparative advantage.
We have had success keeping our costs down only by using some approaches that will make those we cover uncomfortable and by a willingness to push back with financial folks at most hospitals. My position is that we are willing to pay 1.5 to 2 times what Medicare would pay for the same services at the same hospital - but many of the hospitals demand at least 2.5 times to 4.5 times Medicare. And if management cannot figure out how to run a hospital getting that much from commercial payers to offset what they get from Medicare/Medicaid then they are not very good at managing costs.
And I suggest Oregonians might take a look at what is happening in some states where you might least expect to see some combined effort at controlling costs - such as Indiana.