Will It Work? Oregon Rolls Out Medicaid Coordinated Care Organizations Across the State

Oregon Gov. John Kitzhaber, a former emergency room surgeon, believes his state has found the solution to halt the growth of Medicaid and has gambled his state’s solvency to prove it. But even though it will be months before he finds out if that gamble has paid off, he is selling his state’s approach to his peers around the country.

The Democratic governor was in Washington, D.C. over the weekend attending the National Governors Association  meetings pounding the drum for his state’s Medicaid program. “We’ve fundamentally changed the business model for how health care is organized and delivered,” he told Politico  in an interview during the NGA meetings in Washington, D.C.

Oregon has adopted the coordinated care organization (CCO) model  for its Medicaid population. It has established 15 CCOs around the state which now covers 90 percent of the state’s 600,000 Medicaid recipients.

Each CCO is run by a coalition of healthcare providers and public health professionals, with oversight by an advisory panel made up of Medicaid recipients, local government, and other community representatives. Instead of reimbursing providers on a fee-for-service basis, Oregon instead makes lump sum distributions to the CCOs to provide coordinated care for its respective Medicaid clients.

The state’s goal in this, its first year? Savings of almost $240 million. But if the state fails to achieve savings or attain several quality metrics, the federal government will pull the plug. Oregon will receive $1.9 billion over five years, but only if its Medicaid program grows slower than the rest of the country by 2 percent.

At the end of five years, Medicaid savings in Oregon are projected to be $11 billion over the next decade, which for the federal government would be a nice return on the almost $2 billion invested.

“If you were to apply this model to Medicaid nationally, that 10-year savings are in excess of $1.2 trillion, which is more than what they’re looking for in sequestration,” Kitzhaber told Politico.

However the results of the Oregon experiment will not be known for months as the program has yet to complete its first year.

(The Washington Post last month published an excellent profile of Kitzhaber and the gestation of the Oregon program.)