Oregon’s Medicaid Experiment

By March 30, 2017Commentary

Following the federal reform law, Medicaid enrollment and spending has surged.  This is just one of several federal and state programs bankrupting the nation.  States bear much of the cost and will be responsible for more of it in future years and they are searching for ways to control costs.  Many have mandated use of managed care.  Oregon has taken a slightly different approach and researchers evaluate its program in an article in Health Affairs.   (HA Article)   Oregon in 2012 created 16 coordinated care organization and required that almost all Medicaid recipients enroll in one of them.  These organizations are kind of like a health plan or an ACO and they are paid on a global budget basis and expected to coordinate or deliver all health care services for enrollees and attend to social needs which impact health.  The CCOs have some flexibility in how they establish and manage care.  The authors compared results under the Oregon program with Medicaid data from adjoining Washington state.  The analysis did not include behavioral health, since Washington handles that separately, which given the significance of those needs in the Medicaid population, may have affected the study outcomes.

The analyses of utilization and spending were adjusted to match populations in the two states.   The measurement period started in the third year after implementation of the CCO program, so that it was past the implementation stages.  During the study period, spending on inpatient care, imaging, procedures, tests and primary care rose about $1 per member per month for Oregon and $7 per member per month in Washington.  The authors estimated that spending was about 7% lower in Oregon than it would have been without the CCO program.  Most of the savings was related to fewer hospitalizations, but some came from reduced primary care use, which is a little puzzling.  Emergency room use was not significantly reduced.  Most of the savings occurred on spending for the highest risk, highest cost patients.  There was some modest improvement in avoidance of “low-value” care.  Overall, it would appear that the program is a success in reducing spending.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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