What Can We Learn From Oregon’s Innovative Medicaid Experiment? | Mark Hagland | Healthcare Blogs Skip to content Skip to navigation

What Can We Learn From Oregon’s Innovative Medicaid Experiment?

April 11, 2017
| Reprints
Oregon’s Medicaid reform experiment has demonstrated innovation in care management

The March issue of Health Affairs carries a range of noteworthy articles under that issue’s theme of “Delivery System Innovation.”

One of the articles I found most compelling was “Oregon’s Medicaid Reform And Transition To Global Budgets Were Associated With Reductions In Expenditures,” by K. John McConnell, Stephanie Renfro, Richard C. Lindrooth, Deborah J. Cohen, Neal T. Wallace, and Michael E. Chernew. As those authors noted, “In 2012, Oregon initiated one of the nation’s most ambitious Medicaid delivery system reform efforts, creating 16 coordinated care organizations (CCOs) to care for 90 percent of its Medicaid enrollees. CCOs can be considered a type of accountable care organization (ACO), acting as regional entities that are accountable for healthcare quality and spending of a defined population.”

And this is a population at high risk, with many Medicaid enrollees either homeless or on the verge of homelessness; having multiple chronic illnesses, and long histories of poor health; and, of course, living in poverty, with all the challenges and complications that poverty poses. So it was fascinating to read this article, based on its authors’ thorough study of Medicaid managed care programs in Oregon and in Washington state. And here’s the thing: some of the innovations taking place in those two states, but most especially in Oregon, have really made a difference in managing the care of the Medicaid populations there, with implications not only for the managers of Medicaid programs nationwide, but for the leaders of the healthcare system overall, including for how healthcare IT leaders should be thinking about the data and information systems that will be needed for successful population health initiatives in going forward.

“Two years into its implementation,” the researchers write, “Oregon’s coordinated care organization model was associated with reductions in standardized expenditures for evaluation and management, procedures, tests, and inpatient services relative to Washington State’s Medicaid program. These reductions would be equivalent to savings of approximately 7 percentage points across the five service areas examined. The largest reductions were observed in the use of inpatient hospitalization. ED visits, which had been targeted through high-profile initiatives in each state, declined in both states, which no significant difference in the two-year average.”

The article’s authors do note that “Standardized expenditures for evaluation and management visits grew less in Oregon relative to Washington, a finding consistent with our analysis of primary care use. Primary care visits increased in Washington but declined in Oregon, even though Oregon’s CCO model emphasized enrollment in a ‘primary care home’ and other primary care access measures… This differential might reflect tightening primary care capacity in Oregon, potentially exacerbated by the 2014 Medicaid expansion,” which they note increased monthly enrollment by more than 450,000 people, or 84 percent.

Now, here’s the absolutely key section of this article: “Although markers of access decreased in Oregon, the state also reduced inpatient days, ED visits (overall and avoidable), and preventable hospitalizations. There are several possible explanations for these changes. First, CCOs engaged in a variety of nontraditional support services and transition programs that may have accounted for the reduction in ED and inpatient services, even if primary care visits went down. For example, CCOs substantially increased their use of community health workers, social workers, and care coordinators to engage their Medicaid enrollees outside of the clinical setting. These programs typically targeted adults and patients with multiple comorbidities, consistent with our finding that savings were primarily attributable to these groups. Second, the CCO model includes flexibility to spend on health-related services that are not part of the traditional ‘medically necessary’ medical care system. Thus, CCOs may have identified mechanisms to improve care and reduce spending, even if office visits for primary care decreased. For example, a recent study of supportive housing initiated with the CCO reform found reductions in overall healthcare use and expenditures among homeless people enrolled in the program.” Yes.

So what has happened in Oregon and in Washington state, but particularly in Oregon, is important, and very much worth reflecting on. To begin with these coordinated care organizations, or CCOs, have obviously been an absolutely critical success factor both in reducing utilization and resources, and in improving outcomes, among the Medicaid populations of those states. It goes without saying that these are needy individuals; they not only often have medical needs—including, frequently, multiple chronic illnesses—they also have intensive psychosocial and socioeconomic needs and issues. Some are homeless, others, teetering on the verge of homelessness. Many suffer from a lack of healthcare literacy. And nearly all are in need of psychosocial support and of services that are not purely medical in nature, as well as of course of medical services.

Not surprisingly, these Medicaid recipients can benefit tremendously from innovative approaches to care management and social service support, just as members of commercial health plans can. Indeed, given their often-fragile personal status, such care management and support are needed even more by this historically underserved population.