Oregon’s Vision for a Multi-Payer Global Budget Pilot

Speaking at the March 7 meeting of the federal Physician-Focused Payment Model Technical Advisory Committee (PTAC), Chris DeMars, M.P.H., of the Oregon Health Authority described Oregon’s vision for multi-payer reform that includes three main initiatives: a healthcare cost growth target, spreading value-based payments across all payers and providers, and plans to pilot a regional multi-payer global budget.

The PTAC meeting was focused on total-cost-of-care alternative payment models, and multi-payer alignment was identified as a key to success. At the state level, Maryland and Vermont have been the pioneers on global budgets, and now Oregon is seeking to join them.

DeMars, M.P.H., director of the Transformation Center and deputy director of the Delivery Systems Innovation Office at the Oregon Health Authority, began with a brief description of the 10-year-old Coordinated Care Organization (CCO) model, which is focused on Medicaid. These are community-governed organizations that bring together physical, behavioral and dental health providers to coordinate care for the Medicaid plan, which is called the Oregon Health Plan. About 25 percent of the state’s citizens and about 90 percent of Medicaid members receive care through a CCO. The CCOs receive a fixed monthly blended budget from the state to coordinate this care for their members, and it grows at 3.4 percent a year.

The CCOs receive a blended budget that gives them flexibility to address their members’ health needs or social needs beyond traditional medical services, such as short-term housing, cooking classes, and mental health programs within schools.

“We've seen significant progress in both quality and costs, and we've saved well over $2 billion,” DeMars said. “Also, about 94 percent of people in Oregon are insured. It is moving in the right direction. All that being said, we know we still have quite a bit to do related to costs and value-based purchasing, health-related social needs and health inequities.”

Oregon has a patient centered medical home model that has been very effective, DeMars said. “We have a prioritized list of health services that promotes high-value care, and we're taking the CCO model and we're starting to spread some components of that to our public employee plans. And then for administrative simplicity, we have a statewide committee that is trying to identify metrics to be adopted by all payers in the state.

In 2020, Oregon established a 10-year goal to eliminate health inequities. “Yes, it's very bold, but we thought we would set it the bar high,” DeMars said. We knew that to achieve the health equity goal, we needed to create a simpler system that's focused on equity. Our vision is that everyone, not just the Medicaid members, has access to high-value benefits and culturally responsive care that promotes equity, primary care and prevention, that the entire health system uses a fixed total cost of care global budget, and has the flexibility to address social needs.”

It also requires, she said, that health plans and contracts are aligned with common expectations for equity, quality, access and cost containment.

Achieving this vision requires knitting together a number of different initiatives. First is to achieve virtually universal coverage. Oregon is at 94 percent and striving toward 98 percent. Another effort involves implementing the statewide cost growth target and delivery system market reforms around value-based payment and aligning across markets and piloting a regional multiplayer global budget.

The statewide cost growth target was established through legislation in 2019. It set a cost growth target for the entire state starting in 2021, for 10 years. “That target is at the 3.4 percent, which is you might remember I mentioned that that's where CCOs had started out.” It then reduces that further starting in 2026 to 3.3 percent. “We've just done the projections for the first five years, and we're projected to save $16 billion over that time,” DeMars said.

The cost growth target committee that was established to the legislation recommended principles to adopt advanced value-based payment as their first strategy to put in place to help meet the cost growth targets statewide. “As a result of that, we've recently put in place last year a statewide value-based payment compact, which has goals or targets for all payers and providers in the state,” she explained. These are voluntary targets, DeMars added, “but we had wonderful adoption of this voluntary compact. We’ll be tracking, obviously, over the next number of years to see if it's actually successful, but all the major payers have signed on, and this accounts for almost three-quarters of all lives in Oregon. The self-insured is the biggest chunk that's missing.”

The value-based care compact was Oregon’s first step at true alignment across all payers and providers toward their vision. “Now we want to further align across markets,” DeMars said. They want to get all the state programs aligned, including Medicaid, public employees and educators, and the Health Insurance Marketplace members, which combined account for about a third of the insured in the state.

In 2020, the Oregon Legislature passed a bill to require the Oregon Health Authority to design a plan to for a pilot of a multi-payer global budget. Besides those insured under state programs, the state hopes to bring in Medicare as well. “We've had some initial conversations with CMMI about this, and we also bring in commercial payers,” DeMars said. “We just started working on this over the last few months, and the preliminary plan is that we'd start with a budget for payers in a defined geographic region to cover the total cost of care for their members, and pair this budget with expectations for promoting equity, quality, community engagement, the value-based care compact targets and actually have them become requirements as opposed to voluntary,” she added.

“All purchasers would pay their payers a global budget that would grow at the same fixed rate, and we would trend that forward at an annual fixed rate. The results that we're looking toward for is more equitable access to quality care for people across all insurance plans, improved access to preventive and health-related social needs, and cost containment and smarter spending. That is our vision.”