Ore. governor says cuts in provider payments are needed

Reduced payments to healthcare providers and a focus on preventive medicine and care coordination are part of Oregon Gov. John Kitzhaber's two-year plan to help mend a gap in the state's budget.

Full details of the plan are expected to be released Feb. 1. Kitzhaber, a Democrat, said in the release that a loss of federal stimulus-fund and tobacco-settlement money has "profoundly impacted" Oregon's healthcare and education budgets and that as a result, the state must seek cuts in healthcare provider payments, as well as "consolidation and other efficiencies" in education.

"My budget funds the Oregon Health Authority and long-term care at $2.3 billion," Kitzhaber said in a news release. "While that is a $350 million increase in general-fund dollars over 2009-11, it does not make up for the loss of one-time money. Cuts in benefits and provider payments will be required to manage reduced revenues in the first year of the biennium while preparing to build a platform to transform our healthcare delivery system in the second year of the biennium through integration of services; incentives for prevention; and community-based management of chronic conditions."

On his website, Kitzhaber notes that the state used $779 million in "one-time revenues" to pay for healthcare services, which—if not replaced—would result in a 39% budget cut. While state revenues are projected to grow 9% over the next two years and provide an additional $1.2 billion to the budget, this new money must be divided among several other state programs.

To meet the state's healthcare needs under current budget constraints, Kitzhaber advocates adopting the "triple aim" strategy of CMS Administrator Donald Berwick to provide better care, reduce the need for care via preventive medicine and deliver care at lower costs.

"This new delivery system must produce higher value at a lower cost through better integration and better care coordination," Kitzhaber's "Healthy Oregon" Web page states. "It must meet the objectives of the Triple Aim; and it must operate within a fixed budget or rate of growth."

Kitzhaber was governor from 1995 to 2003. State law prohibits governors from serving three consecutive terms. He was elected again last November after leading a healthcare reform organization known as the Archimedes Movement.