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Last year, the institutions that manage the health benefits for 1 in 3 Oregonians started a collective brouhaha when they said they were getting lowballed by the state.
The geographically dispersed “coordinated care organizations,” as the large health insurance-style entities are known, receive a certain amount per member per month to administer and fund Oregon Health Plan benefits.
The model is supposed to incentivize the facilitation of efficient, high-quality health care that keeps global costs down for taxpayers. But, as in much of the country, costs had in fact risen greatly. The state had offered the CCOs a record pay increase in recompense. But CCOs, hemorrhaging money, said they required more money still, and threatened in some cases to leave the system entirely.
In the end, a CCO in Lane County halted its operations. But others stuck around after the state sweetened the deal, bumping their pay 10.1% on average overall.
The cycle is now beginning anew, as the state proposes to raise CCO rates by an average 6.1% per member, according to a preliminary proposal obtained by WW through a public records request.
The rate would be the highest increase in at least a decade—second only to last year’s. Most years, per-member pay rates on the multibillion-dollar program go up between 3% and 4% on average.
The rate increase would pale in comparison to some of the price hikes looming for consumers on the commercial insurance market. Still, multiplied to cover the medical expenses of the 1.4 million-plus Oregonians on the Oregon Health Plan, the proposed pay bump represents a massive budgetary figure. Much of this would come from the feds, who cover most Medicaid expenses, but a large portion would also come out of Oregon’s already stretched general fund.
The preliminary OHP proposal comes as alarm bells clang over runaway medical inflation.
“The overarching challenge facing our health care system today is the total cost of care—which has become increasingly unaffordable for individual consumers, the government and for employers,” said the first sentence in a lengthy report on the state health system submitted to Gov. Tina Kotek in early July by a group of health care figures led by former Gov. John Kitzhaber. “Reducing the total cost of care, therefore must be our primary objective—but it must be achieved without compromising quality or access.”
The group’s recommendations range from convening labor and management, to cutting red tape at the Oregon Health Authority, to stabilizing the commercial health insurance markets. A separate group, tasked with assessing a response to massive Republican legislation that will bring “drastic” federal funding reductions for Medicaid, urged Kotek to focus on administrative inefficiencies before considering benefit reductions.
Others, meanwhile, mull more radical options, as they push toward a single-payer model that would swap premiums for taxes and put all Oregonians on something not unlike the Oregon Health Plan.
For now, “cost growth is accelerating,” said a February OHA report, contributing, as Kitzhaber’s group puts it, to a “toxic downward spiral that feeds on itself and serves no one.”
Despite last year’s massive pay boost, it has continued to be rough go financially for the CCOs, and some doubt the latest proposed pay increase would be enough. “I have a feeling it will still not be adequate for people to break even,” says Jeremiah Rigby, chief of staff at CareOregon, which manages Medicaid benefits for hundreds of thousands of OHP members.
Much remains uncertain: As of Tuesday, CCOs had not yet received their specific rate proposals, which will vary by institution. Still, barring an unexpected development, Rigby anticipated a calmer reception this time around. “The state was so far away from reality last year,” he says, adding, “We’re not dealing with that this year.”
