Healthcare Business News

Latest Oregon data show gains in cutting Medicaid costs

By Andis Robeznieks
Posted: June 26, 2014 - 2:45 pm ET

Supporters of Medicaid expansion now have an Oregon report they can quote to counter a previous Oregon report opponents have cited repeatedly in their anti-expansion arguments.

In January, researchers writing in the journal Science, reported that Oregon’s 2008 limited expansion of Medicaid led to an increase in emergency department use at Portland-area hospitals. This was the exact opposite of what expansion proponents say that increasing enrollment will do.

But that report studied data generated prior to the state’s 2012 Medicaid reform initiative, which has more than 90% of Medicaid enrollees belonging to a coordinated care organization in which competing providers and payers collaborate and receive payments from a per-member, per-month global budget. Launched with a $1.9 billion grant from the CMS, the CCO program is projected to save $11 billion over 10 years.

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Lori Coyner, director of health analytics for the Oregon Health Authority, said that quality targets are being met and the state has kept its commitment to the CMS to reduce spending growth by 2 percentage points per member each year.

The state has been releasing quarterly reports that provide updates on how well the effort is proceeding. The most recent report, released this week, includes 12 months of data that show CCO members’ emergency department visits have decreased 17% compared to 2011, leading to a 19% decrease in costs.

Chronic-condition-related hospitalizations in 2013 also registered a decrease. In particular, hospitalizations for congestive heart failure fell by 27%, chronic-obstructive-pulmonary-disease-related hospitalizations dropped 32%, and adult asthma hospitalizations decreased 18%, according to the report.

More than 90% of the state’s approximately 900,000 Medicaid enrollees belong to one of 15 CCOs. Ten of the 15 met 100% of improvement targets in 2013, but 2014 could be a different story, Coyner warned.

First, standards are being raised. Second, Medicaid expansion has brought 340,000 more people into the program since January and it is unknown what the effect of this will be, Coyner said.

Along with potential negative effects, Coyner noted that it’s also unknown what the possible cumulative positive impact will be from numerous other hard-to-measure developments. This includes an increased focus on primary care. In 2013, spending on CCO members’ primary-care visits increased by 11% and spending on preventive services grew by more than 20%. The number of patients receiving care at a recognized patient-centered medical home, called patient-centered primary-care homes by the state, grew 52% above what was recorded in 2012.

The reform effort seeks to coordinate medical, behavioral and dental care. One of the quality measures targets follow-up care within seven days of being discharged for a mental-health-related hospitalization. This was achieved for 67.6% of CCO patients—just short of the 68% target that was linked to the 90th percentile for 2012 national Medicaid statistics.

While many efforts seeking to integrate physical and behavioral health are aimed at providing mental health services to patients when they see their regular primary-care provider, Coyner said Oregon will be looking at “reverse integration” this year. This involves providing medical care for patients being treated for behavioral conditions.

Childhood immunizations are another area where the effort needs improvement. Only 65.3% of children in the program were receiving all recommended vaccines before their second birthday. This not only fell short of the 82% target (which was linked to the 75th percentile for 2012 national Medicaid statistics), it fell below the 66% benchmark established in 2011.

Coyner speculated the rate was linked to parental refusal to vaccinate their children.

The reform effort also involves withholding 2% of CCO global payments and diverting that money into a “quality pool” to reward those that reach benchmarks or make improvements. The initial pool was $47 million and was split between the 15 organizations based on size and performance. An additional $2.4 million was distributed among those that met targets involving alcohol and drug treatment, diabetes, depression and medical home enrollment.

While being able to measure 12 months of data was significant, Coyner said that, historically, the big news was that organizations were being paid for improved service and outcomes and not for the volume of services provided.

“We see that as a huge success,” she said. “Now, we’ll need to continue that improvement.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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