In Oregon, health reform is welcome

CareOregon is one of several managed-care plans that will serve Medicaid patients under a new Coordinated Care Organization in Portland.

Kai Ryssdal: There are -- just as a rough estimate -- a zillion or so moving parts in the health care law. Individual mandates, mandatory coverages, lots of stuff.

One of the big ones is Medicaid. States can choose to expand their coverage for the poor and disabled, or they can choose not to. If they do expand it, and enroll people who earn to 133 percent of the poverty level, the feds will pick up virtually the entire bill for the new recipients.

Oregon has tried health reform before, with mixed results. Now it's trying something new. From our bureau at Oregon Public Broadcasting in Portland, Marketplace's Mitchell Hartman reports.


Mitchell Hartman: Here’s something you don’t hear every day: A government official looking forward to adding another 200,000 poor and disabled people to his state’s Medicaid rolls.

Bruce Goldberg directs the Oregon Health Authority, which oversees Medicaid in the state.

Bruce Goldberg: Having uninsured people come on to Medicaid brings in access to care, brings in dollars. We know that coverage helps people remain more financially stable and healthier. May not be the best dollars, but better than no dollars.

Maybe not the best dollars -- because of all the federal strings attached. But better than no dollars, because health care spending knows only one direction: up.

Goldberg: The Affordable Care Act has brought a mechanism to address the coverage part. That’s unsustainable unless we address the cost aspect.

Which is rising at triple the rate of inflation.

This month, Oregon rolled out an ambitious makeover of its Medicaid system, based on Coordinated Care Organizations, or CCOs. Medicaid patients will now get all their care through a regional CCO. The CCO brings together doctors, hospitals, mental-health workers, even competing managed-care insurers. It gives them a single per-patient budget to coordinate care.

Most important, the new CCOs will target the highest-cost patients -- the ones with chronic conditions like heart disease and diabetes. It’s these people who end up in the hospital again and again -- at hundreds or thousands of dollars a pop -- all paid for by the taxpayer.

Goldberg: Twenty percent of the population account for about 80 percent of the cost. And what we need to do is manage those illnesses better, move the care to a higher-quality, lower-cost setting.

Like a primary-care clinic, instead of a high-priced specialist’s office, the ER or -- if things go really bad -- the ICU.

To see Oregon’s CCO pilot program in action, I’ve come to Portland’s Northeast Health Center. It’s a busy county clinic. Social worker Amy Vance is one of the new community-care coordinators, responsible for helping patients navigate the system.

Amy Vance: So an example is, I have a young woman, she had uncontrolled diabetes, who was being admitted to the hospital about twice a month.

With her insulin out of control, her kidneys were failing.

Vance: So I would go to the hospital, we would talk, and it made her come to the realization that her diet was at play. And so we started cooking at her house.

And shopping for healthy food, instead of deep-fried take-out. The patient started keeping her doctor’s appointments.

Vance: And she hasn’t gone to the hospital in two months.

Medical emergencies averted. Health and well-being restored. Taxpayer money saved.

Sounds simple. But nothing is simple when it comes to Medicaid.

Medicaid funding still needs to be funneled through insurance systems that pay doctors and hospitals for everything they do. It’s all done by code.

Freddy Sennhauser: Which department pays? Is it claims? Is it administration?

Freddy Sennhauser is a manager at a new CCO serving Southern Oregon, and he attended a recent coordinated-care ‘summit.’  He’s confused about how to bill for a diabetic’s cooking lesson, or an air conditioner paid for by Medicaid to prevent an old lady from going into congestive heart failure every time it gets hot.

Hartman: Is there no code for it?

Sennhauser: No code.

Which is why, before Oregon could even roll out its new CCOs statewide, it had to get a complicated waiver from the Feds to bend the incredibly Byzantine rules governing Medicaid coverage.

See how much your state will spend under expanded Medicaid. View an Interactive Map

Terry Coughlin studies health care reform at the Urban Institute. She says Oregon is a pioneer -- the first state to put its entire Medicaid caseload into coordinated care, to try and bend the cost curve for public health spending down.

Coughlin: That is the million-dollar question -- whether the CCOs can fulfill the promise of improving quality, and tackle cost, and really lower the trend-line. That’s the hope, that’s the goal.

Actually, it’s more like a $1.9 billion question. That’s how much additional federal money Oregon is getting to re-vamp the insurance reimbursement system -- add codes for cooking lessons and air conditioners and the like, plus monitor patient health and hire more medical workers.

And there are a lot of strings attached. The state has to hit ambitious cost-saving goals—cut the rate at which Medicaid spending rises to about half the national average. Miss the mark, and taxpayers here are on the hook for hundreds of millions of dollars in penalties to the federal government.

I’m Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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