By Jim Rickards, MD, MBA
Back in 2011, the state of Oregon was facing a massive budget deficit, primarily driven by rising Medicaid costs. Medicaid is government-supported health insurance for economically disadvantaged individuals earning up to 138 percent of the federal poverty level. About 25 percent of Oregon’s population, nearly 1 million individuals, are currently enrolled in Medicaid. This is a similar percentage to what is seen nationally. Not only did the deficit substantially impact the state’s overall budget for health care funding, but the potential impact on the lives of many Oregonians also weighed heavy on the medical community.
Typically, when states try to manage deficits related to Medicaid, they employ a combination of three strategies. For one, they will decrease reimbursement rates to hospitals and providers. This does not work very well because, ultimately, clinics will need to limit the number of Medicaid members they see since they are not financially viable, in turn creating access issues for patients. Second, the number and types of covered services can be restricted by the state. In Oregon, we had already employed the Prioritized List of Health Services for more than 20 years, which served as an evidence-based approach to prioritizing and limiting the availability of health care services. Limiting what was already on the list would not have been possible without denying many essential services. Finally, a state can decrease the number of individuals enrolled in Medicaid. This was not an option either, as Oregon was going to be an expansion state under the Affordable Care Act and would see its Medicaid population grow from 600,000 to a little over 1 million members within just a short time.
Oregon’s approach was to take the fourth path and develop a new model to deliver Medicaid benefits, the Coordinated Care Model. Under this model, the state would pass legislation and receive an 1115 waiver from the federal government, which allowed it to create new community-governed health insurance plans for the Medicaid population called Coordinated Care Organizations or CCOs. Medicaid members enrolled in CCOs reside within a defined geographic region and receive funding for their medical, behavioral health, and dental care benefits by a single global budget the state defined.
A significant component of the CCOs was the focus on community governance. The board of the CCO needed to have a local primary care physician still in practice, a behavioral health provider, a representative from local public health departments, as well as several local elected officials. Additionally, each CCO could have a clinical advisory panel made up of various actively practicing health care providers including physicians, social workers, and dentists, among others. As a physician, I saw the CCO framework as a formal way for me to work with others in my community on addressing population health and the various determinants of health. As a result, I helped my community apply for and become recognized as one of 16 CCOs in the state of Oregon.
The CCO then provided me with a number of opportunities and a community-wide platform to improve the community’s health. One example of this was the development of a community paramedicine program. As a result of conversations in the CCO, we realized as a community that one of our local fire departments had extra capacity with its paramedics and ambulances. They were looking for work and additional revenue. Thus, we proposed incorporating them both into a transition-of-care strategy for Medicaid members discharged from the hospital. When transitioning back home, the last thing I wanted was to see those patients be re-admitted, especially when it could have been prevented.
The idea was to create a so-called paramedicine program, whereby paramedics could perform non-emergency visits to Medicaid members’ homes after they were discharged from the hospital. Paramedics could help with a variety of issues such as medication reconciliation, laboratory specimen collection and safety checks. The CCO was able to fund this initiative after input and approval from the governing board and clinical advisory panel. Not only were the lives of patients improved, but the local economy was stimulated at the same time.
From a physician standpoint, the CCO model has been successful in providing a platform to address the population health needs as well as the so-called determinants of health. These include all the aspects of life such as our behaviors, socioeconomic status, and level of education that determine our health in addition to the medical care we receive.
Financially the model has been successful by helping to keep annual Medicaid cost increases under 3.4 percent per year for the last five years. Alongside cost savings, even quality metrics have seen improvement. Currently, more than 90 percent of Oregon Medicaid members are enrolled with a state-recognized medical home, which provides recognized organized systems of care. Hospital readmission rates for preventable conditions have decreased by 30 percent since 2011. And finally, avoidable admissions for chronic diseases such as diabetes have dropped by up to 20 percent under the model.
The CCO model has worked for Oregon Medicaid from a financial, clinical, and quality perspective. Additionally, it is a model which is attractive to either side of the political aisle given its focus on fiscal stewardship and access to care. Examining its success and advantages could prove quite valuable in determining the next step in overhauling our nation’s health care system.
Jim Rickards, MD, MBA, is the Senior Medical Director for Population Health and Delivery System Collaboration at Moda Health in Oregon. He is the author of “Our Health Plan: Community Governed Healthcare That Works.”