Lo­cally con­trolled groups would pair com­pet­ing providers to or­ga­nize care for en­rollees

Modern Healthcare - - FRONT PAGE - An­dis Robeznieks

Fac­ing crush­ing health­care costs, Ore­gon law­mak­ers found the po­lit­i­cal will to trans­form the state’s Med­i­caid pro­gram by cre­at­ing a sys­tem in which com­pet­ing providers and pay­ers vol­un­tar­ily col­lab­o­rate un­der per-mem­ber, per­month global bud­gets with the po­ten­tial for shared sav­ings and fi­nan­cial risk.

While other states are ex­per­i­ment­ing with vari­a­tions on the ac­count­able care or­ga­ni­za­tion theme for their own Med­i­caid pro­grams (Jan. 9, p. 6), Ore­gon of­fi­cials be­lieve theirs to be unique be­cause of its global, lo­cally con­trolled bud­get frame­work, com­mit­ment to pay­ing for pre­ven­tive care and its silo-shat­ter­ing co­or­di­na­tion of med­i­cal, men­tal and den­tal care.

Of­fi­cials are count­ing on the ex­per­i­ment to save $11 bil­lion over 10 years.

Many de­tails still need to be worked out. But the pro­gram’s bi­par­ti­san po­lit­i­cal sup­port was matched last week with fi­nan­cial sup­port in the form of a $1.9 bil­lion grant from the CMS. And although the open­ing round of the pro­gram pro­duced ap­pli­ca­tions from only 14 groups seek­ing to form co­or­di­nated care or­ga­ni­za­tions—out of the roughly 50 that filed let­ters of in­tent to do so—state of­fi­cials say that if all 14 ap­pli­ca­tions are ac­cepted, 90% of the state’s 600,000 Med­i­caid ben­e­fi­cia­ries will have ac­cess to a CCO.

Roughly 16% of the state’s to­tal pop­u­la­tion and 39% of its chil­dren are served through Med­i­caid, and all eyes are on the largest of these 14 en­ti­ties, the Tri-county Med­i­caid Col­lab­o­ra­tive, which would cover the Port­land mar­ket’s Clacka­mas, Mult­nomah and Washington coun­ties, and in­clude or­ga­ni­za­tions such as Ad­ven­tist Health, Kaiser Foun­da­tion Health Plan of the North­west, Legacy Health, Ore­gon Health & Sci­ence Univer­sity, the Ore­gon Med­i­cal As­so­ci­a­tion, Ore­gon Nurses As­so­ci­a­tion, Prov­i­dence Health & Ser­vices, and oth­ers.

“We’re about 40% of the Med­i­caid pop­u­la­tion in the state of Ore­gon,” said Dr. Ge­orge Brown, pres­i­dent and CEO of five-hospi­tal Legacy Health. “We have a large cen­ter of grav­ity, so it’s im­por­tant that we do suc­ceed— all the or­ga­ni­za­tions in­volved are quite cog­nizant of that fact.”

Be­cause they’re try­ing things that haven’t been tried be­fore, Brown said, “The big­gest con­cern that I have is the un­known,” but he re­mains op­ti­mistic for suc­cess, in part be­cause he has no other choice.

“The in­con­ve­nient truth, if I can bor­row a phrase from Vice Pres­i­dent Al Gore, is that we can’t af­ford the cur­rent sys­tem we have,” he said. “My pre­dic­tion is that we will be suc­cess­ful. It will be a lot of hard work, but if we’re not, it will be much worse. There is a com­mit­ment that this is in the best in­ter­ests of the com­mu­nity.”

Brown noted that one sign of this com­mit­ment is an agree­ment that, if one health­care or­ga­ni­za­tion within the CCO is pro­duc­ing bet­ter pa­tient out­comes, that or­ga­ni­za­tion will share in­for­ma­tion on how those out­comes are be­ing achieved. Brown noted, too, that in­for­ma­tion shar­ing is made eas­ier be­cause all par­ties are al­ready us­ing the same elec­tronic health record ven­dor: Epic.

Dr. Craig Wright, chief ex­ec­u­tive for physi­cians and clin­i­cal ser­vices at 26-hospi­tal Prov­i­dence Health & Ser­vices, echoed Brown’s re­marks on com­peti­tors com­mit­ting to col­lab­o­rat­ing on CCOS.

“Health­care is com­plex, mak­ing trans­for­ma­tion a dif­fi­cult job,” Craig said in an e-mail while trav­el­ing. “As we change di­rec­tion from com­pe­ti­tion to col­lab­o­ra­tion, one of the keys to suc­cess is open and hon­est com­mu­ni­ca­tion among the part­ners.”

Andy Van Pelt, spokesman for the Ore­gon As­so­ci­a­tion of Hos­pi­tals and Health Sys­tems, noted that col­lab­o­ra­tion is manda­tory. “This is forc­ing col­lab­o­ra­tion among what tra­di­tion­ally have been com­peti­tors,” Van Pelt said. “Is this go­ing to work? We sure hope so.”

Such in­ti­mate co­op­er­a­tion or­di­nar­ily would raise sig­nif­i­cant an­titrust is­sues, which Ore­gon law­mak­ers sought to ad­dress in the leg­is­la­tion, declar­ing it “in the best in­ter­est of the public” and their “in­tent to ex­empt from state an­titrust laws, and to pro­vide im­mu­nity from fed­eral an­titrust laws through the state ac­tion doc­trine.”

Van Pelt said that a main con­cern of his is that the state bud­get was bal­anced on an as­sump­tion that Med­i­caid care providers will some­how find a way to save $239 mil­lion this year—out­side of the CCO pro­gram. And, if that level of sav­ings is not achieved, he said it could af­fect how much fed­eral money the pro­gram re­ceives, so a to­tal of $650 mil­lion in Med­i­caid fund­ing is at risk.

The $1.9 bil­lion Ore­gon is re­ceiv­ing from the CMS for its CCO pro­gram will be spread out over five years with $620 mil­lion com­ing in July and roughly $320 mil­lion in years two through five of the grant. “We don’t know yet what is at­tached to those dol­lars,” Van Pelt said. “I know it can’t be used to back­fill the bud­get.”

In his e-mail, Wright said the pro­jected ef­fi­ciency sav­ings “will be a chal­lenge, par­tic­u­larly in the first years of CCO op­er­a­tion,” be­cause of the time and money needed to re­struc­ture a new de­liv­ery sys­tem, but he noted that an in­de­pen­dent anal­y­sis con­firmed the state’s pro­jec­tions that CCOS could pro­duce sav­ings of ap­prox­i­mately $50 mil­lion to $60 mil­lion in 2012 and 2013.

Dr. Evan Saulino, pres­i­dent-elect of the Ore­gon Academy of Fam­ily Physi­cians, be­lieves there is enough low-hang­ing fruit to achieve the nec­es­sary sav­ings—but he’s still con­cerned.

“I’m a big be­liever in that, if we give peo­ple bet­ter care, we will save money,” Saulino said. “But it could be a catas­tro­phe if peo­ple make bad de­ci­sions for short-term gain and just push the risk down­stream.” He re­called that in 2003, the state sought to save on Med­i­caid costs by re­mov­ing 150,000 peo­ple from the pro­gram.

“These peo­ple still got sick and they still went to the emer­gency room,” Saulino said. “We have to in­no­vate out of the prob­lem, so the OAFP and my­self wel­come the idea and ef­fort we’re pur­su­ing in Ore­gon.”

Gov. John Kitzhaber, a Demo­crat who served be­tween 1995 and 2003 and was then elected again in 2010, al­luded to these cost-cut­ting mea­sures back when he spoke as a pri­vate cit­i­zen at the Health­care In­for­ma­tion and Man­age­ment Sys­tems So­ci­ety meet­ing in 2006.

A for­mer emer­gency medicine physi­cian, Kitzhaber told the story of how the state stopped pay­ing the daily $14 pre­scrip­tion­drug tab a man needed to man­age his chronic con­di­tions, and he sub­se­quently suf­fered seizures and died af­ter a month in a hospi­tal in­ten­sive-care unit where he ran up a bill of more than $1 mil­lion.

Kitzhaber used ex­am­ples such as that to help suc­cess­fully push Med­i­caid re­form through the state Leg­is­la­ture with bi­par­ti­san sup­port. The Ore­gon state House of Rep­re­sen­ta­tives is split evenly be­tween 30 Democrats and 30 Repub­li­cans, and the CCO bill passed by a 53-7 vote.

One story posted on the Ore­gon Health Au­thor­ity web­site tells of a Med­i­caid pa­tient in his late 20s who rang up health­care costs es­ti­mated at al­most $99,000 in 2009 af­ter he was treated 40 times in hospi­tal emer­gency rooms for asthma at­tacks and hos­pi­tal­ized twice for prob­lems re­lated to schizophre­nia. In 2011, af­ter a pri­mary-care team started pro­vid­ing care co­or­di­na­tion, he stayed out of the hospi­tal and his health­care bill was re­duced 90% down to less than $12,000.

Kitzhaber has re­ceived some crit­i­cism for one pos­si­ble use of CCO spend­ing, sug­gest­ing that heat-re­lated hos­pi­tal­iza­tions cost thou­sands of dol­lars for the el­derly and could be avoided if a CCO pays a few hun­dred dol­lars for an air con­di­tioner.

“De­ter­min­ing who needs air con­di­tion­ers would be complicated, and pos­si­bly even in­tru­sive,” scolded the (Eu­gene) Reg­is­ter-Guard news­pa­per in an ed­i­to­rial.

Brown noted that just be­cause a health­care con­cept makes com­mon sense doesn’t mean it’s easy to im­ple­ment. “Health­care is one of the most highly con­trolled and reg­u­lated en­ter­prises in the coun­try,” he said. “A lot of things that make sense bump against a rule.”

TAKE­AWAY: Com­pet­ing or­ga­ni­za­tions will co­or­di­nate care for Ore­gon's Med­i­caid ben­e­fi­cia­ries in what of­fi­cials hope will save $11 bil­lion over 10 years.

Ore­gon Gov. John Kitzhaber says his plan will save $11 bil­lion over 10 years.

Legacy Health’s Dr. An­gela Lewis-tray­lor, right, speaks with a pa­tient. “We’re about 40% of the Med­i­caid pop­u­la­tion in the state of Ore­gon,” said Legacy pres­i­dent and CEO Brown of the three-county Port­land area.

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