The Applications Are In: CCOs Will Be in Every Part of Oregon

May 5, 2012—The expected but still jaw-dropping announcement that the federal government would give Oregon $1.9 billion over five years to help jump start healthcare reform in Oregon shadowed an equally important development: the Oregon Health Authority’s receipt of 14 applications from potential coordinated care organizations that would provide care to 90 percent of the state’s Oregon Health Plan population.

“The results far exceeded our expectations,” said Governor John Kitzhaber during a press conference yesterday. “We knew some remarkable conversations were going on…but we didn’t think we were going to get that many.”

The 14 applications cover all parts of the state, erasing worry that some parts of the state would go, for the time being, without a coordinated care organization to provide care to the Oregon Health Plan population in that area.

Coordinated care organizations—also known as CCOs—are the backbone of the reforms the Legislature put in place with the passage of House Bill 3650 and Senate Bill 1580 in the last two sessions. CCOs are expected to integrate the physical, mental and dental care of Oregon Health Plan patients by creating patient teams. The hope for CCOs is that they will provide more efficient care, and keep patients out of the emergency room and prevent costly specialty care.

On Thursday morning, the Governor’s office announced that the federal government will give the state $1.9 billion over the next five years—starting with $620 million this year—to help CCOs get off the ground and establish themselves.

“The vote of confidence and the investment from federal partners will help us put together the infrastructure” for CCOs, said Dr. George Brown, the president and CEO of Legacy Health System, who is also intimately involved in creating the CCO that will provide care in the Portland metropolitan area.

“It’s an incentive,” said Carlos Crespo, director of Portland State University’s School of Community Health and a member of the Oregon Health Policy Board.

Had the federal government not given Oregon the money, the state would have proceeded with creating coordinated care organizations, but it may have had to cut benefits, provider networks, and find other cost savings to fill a $240 million gap that would have resulted in Oregon’s budget.

Kitzhaber said the agreement marked “a great day for Oregon,” and represented “unprecedented collaboration” between the state and the federal government. Senator Jeff Merkeley, who was also present at the press conference, said the government’s interest in Oregon’s efforts in reforming healthcare helped the government make its decision a bit quicker than it normally would.

“Normally, the federal bureaucracy moves at an incredibly slow pace.” The government’s decision to give Oregon the money, he said, was made at the “speed of light.”

Kitzhaber thinks Oregon will receive the money for each of the five years, even if Republicans take control of both chambers of Congress, and President Barack Obama is not re-elected. “I would be very much surprised if it becomes a partisan issue in D.C.,” he said.

The 14 applications propose providing care to 90 percent of Oregon Health Plan patients, if every application is approved. The Oregon Health Authority has yet to release the applications, or their exact coverage areas, so it’s unknown which areas of the state the remaining 10 percent of patients are from.

Dr. Bruce Goldberg, director of the Oregon Health Authority, said the Oregon Health Authority “may” ask one or more organizations to pick up those extra patients.

But there will be two more opportunities, or “waves,” in July and August for organizations to apply to be CCOs.

“There has always been the plan that there would be waves [of applications],” said Dr. Joe Robertson, the president of Oregon Health & Sciences University, adding that to prepare an application to be a coordinated care organization requires a “tremendous amount of organization.”

“These are extremely complicated plans that have to be outlined,” said Lillian Shirley, the director of Multnomah County’s health department and vice-chair of the Oregon Health Policy Board. “There are so many issues—provider networks, the benefits, contracting, financing. Community driven solutions often take a little longer to bang out the details.”

But none worry that there will be too many coordinated care organizations throughout the state, or that they would be compete in the same geographic area. It’s expected that the organizations will serve larger geographic areas than the current managed care plans that provide care to Oregon Health Plan patients.

“They do need to be large enough to have efficiencies of scale and scope,” Robertson said.

It is also unknown whether the Oregon Health Authority will consider the applications of each wave separately, or jointly. The authority did not respond to The Lund Report’s query by press time.