Oregon’s Global Budgets Would Allow Medicaid MCOs to Focus on Equity

Nov. 4, 2021
In 1115 Demonstration Waiver program, state will also seek approval to restructure the quality incentive program into upstream and downstream components

The State of Oregon is developing ambitious plans to create value-based global budgets for managed care organizations that will better drive investments in health equity.

As the Oregon Health Authority (OHA) prepares its 2022 – 2027 renewal application for the Medicaid 1115 Demonstration Waiver program, it has released several policy papers describing the concepts under consideration. Centers for Medicare & Medicaid Services (CMS) approval is required to implement the policy changes.

According to a recently published concept paper, Oregon is requesting authority to create coordinated care organization (CCO) value-based global budgets that will better drive investments in health equity, incentivize spending on health-related services, and be developed to cover all reasonable, appropriate costs of running the CCO program while increasing at a predictable growth rate in line with the state’s cost growth target.

The state is requesting waiver flexibility in how Medicaid managed care (CCO) capitation rates are typically established. The new value-based global budgets would provide longer-term predictability and flexibility to CCOs and providers, in turn driving additional upstream investments in prevention and health-related services to improve health outcomes and reduce avoidable health care costs. "This value-based global budget would further flip financial incentives in the delivery system: instead of being financially rewarded when Medicaid members are sick and access more care, CCOs would be accountable for members’ health and have more resources to invest when members’ health improves, inequities are eliminated, and avoidable health events are prevented through better, more coordinated care for members," the report said.

The concept paper describes why this flexibility in capitation rates is necessary. “Oregon’s original global budget concept was intended to drive local, community conversations about how to shift spending within the system to better meet community needs and to spend wisely within limited resources to maximize health outcomes,” the report said. “However, the distribution of spending within Oregon’s healthcare system (e.g. the amounts split between physical, behavioral, and oral health) remains largely the same, indicating spending is following historical habits and market power, rather than a true shift in focus to population health. Oregon cannot fully address health inequities or correct historical racism and power imbalances in the health system, unless the financial incentives in the system more fully focus on population health and drive community conversations about prioritizing resources to achieve better outcomes.”

In the new waiver application, Oregon also plans to add a focus on metrics that address factors affecting health equity. One plan is to restructure the quality incentive program into two complementary components: upstream and downstream. The concept paper notes that they are called “upstream” and “downstream” because it’s like a river—by focusing on things that cause poor health, we can catch and address them before they show up “downstream” as worse health outcomes.

An example of an upstream measure would look at providing culturally responsive health care services in an OHP member’s preferred language. Downstream measures would be the standard health metrics already required by CMS that focus on more traditional medical care, such as diabetes screenings and well child visits.

OHA also plans to work with the Oregon Legislature to change the Health Plan Quality Metrics Committee into the Health Equity Quality Metrics Committee (HEQMC). HEQMC would focus on the people who have been most affected by health inequities: OHP members, community members from diverse communities, individuals with lived experience of health inequities, and health equity professionals and researchers.

HEQMC and the Metrics and Scoring Committee would select which metrics will be incentivized to improve health equity the most. To help the committees decide, OHA will provide race, ethnicity, language and disability data. They’ll use that information to decide how to structure the incentive program in a way that encourages CCOs to provide OHP members with equitable access to high-quality care.

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