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

April 11, 2017
The March issue of Health Affairs includes an article based on a study of Oregon’s exceptionally innovative Medicaid managed care program—with major implications for the future of population health initiatives nationwide

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.

And here’s the key nugget: “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.” In other words, care management becomes a form of social-care management that extends out far beyond the typical, relatively brief primary care visit in the clinic. And, the CCO model allows for care managers to spend flexibly in areas like supportive housing, where such spending can actually end up reducing overall healthcare resource utilization, even though the expenditures will not strictly be for clinical items.

None of this is absolutely new, of course. Back in the 1990s, I wrote about pioneering programs, including at Medica Health Plan in Minneapolis, that were helping to improve the health status of so-called “dual eligibles” (individuals eligible for both Medicare and Medicaid coverage), individuals who tend to be both poor and older, and often frail. Medica’s senior care managers and clinician leaders often uncovered gaps in what are called the “social determinants of health,” that definitely were not “clinical” in nature, but which had tremendous clinical implications. For example, that health plan often paid for things like installing handrails in hallways in the homes of dual-eligible members. Clearly, a handrail is far from “clinical” in nature; and yet if installing a handrail can avert a fall, which in most elderly people can be potentially devastating—and lead to a cascade of costs and expenditures that will be clinical—shouldn’t care managers go ahead and install that handrail?

This is the non-secret “secret” that has long been known among care managers working in the trenches in U.S. healthcare: that the vast majority of elements that impact the personal health of individuals are not strictly clinical in nature, but rather psychosocial, sociodemographic, and socioeconomic, and related both to the choices that individuals make in their lives, as well as to the social and economic environments in which they live and which they navigate.

And as I’ve long said, if care management can work for people in the Medicaid context, in which resources are constrained and needs are high, then it can work anywhere. And this new study proves it. What’s more, it’s clear that extending the concept of care management beyond strictly medical management, will require investment in very extensive information systems and in data analytics, in order to collect, store, manage, analyze, and use data that is far more expansive than the purely clinical data that currently exists in electronic health records and other clinical information systems in patient care organizations. For healthcare IT leaders nationwide, that will mean rethinking data itself—what kinds of data are needed, where they’re needed, and how data from very, very disparate systems can really be connected, for effectiveness in genuine population health work going forward.

So, yes—we absolutely can learn from the Medicaid reform initiatives in Oregon and Washington. I would urge everyone to read this article and consider its implications, because what’s happening in those states is where U.S. healthcare is headed—not only all the state Medicaid programs, but Medicare- and commercial health plan-based care and care management as well. And as I say, if they can accomplish these advances in Medicaid programs, it will be possible just about anywhere.

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