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Three health care companies increased costs excessively, Oregon warns

Notices to Oregon Medical Group, Moda Health and UnitedHealthcare amount to “first strike,” one official said. The new program is preparing to leverage its authority in an effort to rein in inflation affecting patients and consumers and other members of the public.
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OREGON MEDICAL GROUP IS A MAJOR PROVIDER IN LANE COUNTY,/CHRISTIAN WIHTOL/THE LUND REPORT
January 22, 2025

In a dry run of an Oregon program that aims to curb soaring health care costs, officials have warned two insurance companies and a chain of clinics that their spending grew excessively between 2021 and 2022.

The warnings issued by the Oregon Health Authority are the first of their kind since lawmakers in 2019 first launched an ambitious effort modeled on a similar program in Massachusetts — later tweaking it in 2021 and 2023.

The program aims to cap the annual growth of spending by health care provider organizations of a certain size. The target set is 3.4% per person affected.

While the newly issued warnings do not carry any penalties, starting next year the state program will gain the power to issue fines to insurers and providers that persistently exceed the target. Later this year, regulators will place companies on "performance improvement plans" if they can’t justify excessively higher costs. 

The three companies cited by the state were:: 

  • Portland-based health insurer Moda Health for an 11.6% spending increase with its Medicare Advantage plan, which the company ended in December 2024.
  • Oregon Medical Group, a Eugene-based group of primary and specialty care clinics, for a 6.5% increase in costs for patients with commercial health insurance. Optum, a subsidiary of UnitedHealth, quietly purchased the chain in 2020. 
  • UnitedHealthcare for a 6.4% increase for its Medicare Advantage insurance plan. The company is part of the UnitedHealth Group, a giant conglomerate that also provides health care and other related services.

 Company representatives did not immediately respond to requests for comment from The Lund Report.

Clare Pierce-Wrobel, the newly hired director of the agency’s Health Policy and Analytics Division, told The Lund Report the cost-growth program is on a “glide path to greater accountability” that will continue after the health authority reports similar data in May on cost increases between 2022 and 2023.

The warning amounts to a “first strike,” Pierce-Wrobel said. The companies warned for exceeding the target will not be required to take further action this year. 

survey of Oregonians last year found that about three-quarters of Oregonians were burdened by health care costs and about the same number delayed care because of the cost. Additionally, 83% of Oregonians worried about being able to afford health care in the future. 

Many companies exceeded the target for justified reasons

State figures released last year show most insurers, hospitals and other care providers met the 3.4% cost growth target between 2021 and 2022 despite Oregon’s overall health care expenditures rising 3.6% during that time frame. Of the 30 insurance plans covered by the program, 19 met the target. For hospitals and medical groups, the figure was 29 out of 52. 

Regulators decided that the vast majority of insurers and providers that did not meet the target fell short for what the program considers justifiable reasons. Those reasons included higher workforce costs, adding services and treating patients with particularly costly conditions, according to Sarah Bartelmann, who manages the Sustainable Health Care Cost Growth Target Program. 

“We did have conversations with all of the organizations that exceeded the target,” she said. “And yes, there was back and forth, there was discussion of reasons.”

Hospitals’ persistent challenges in discharging patients to lower-care settings was another cost driver, Bartelmann said.

“Some increases are understandable,” Pierce-Wrobel said.

Comments

Submitted by Debra Bartel on Fri, 01/24/2025 - 08:09 Permalink

While lowering the costs of care is an admirable goal, placing full responsibility on the shoulders of PCP's who have zero control over what happens outside their four walls is not the way to do it. 

Costs for services mandated by law (language interpreters) should be excluded though they are not.  

Costs for services to close care gaps mandated by OHA should be excluded though they are not.  

Costs for services inaccurately assigned to a PCP/Clinic should be moved to the correct PCP/Clinic though they are not.  

Costs for serious outlier cases (newborns in a NICU for several months not even seen by their PCP yet) should be excluded though they are not.  

Providers should have the ability to review the data they are charged with in detail in order to accurately dispute it though they cannot.  

We have a loooooong way to go before this program will do anything other than push providers out of Primary Care; something Oregon can ill-afford.  

Questions:  Why are only 2 insurance companies charged with outpacing the growth target when many, many more of them do the same every single year?  Provider groups are unable to match this for their own reimbursement, yet insurance companies have no problem convincing the state to increase their rates year over year by double digits.  Reimbursement increases are rarely more than 2%.