State spending on Oregon Health Plan members next year will climb at a rate significantly above a long-held growth cap, for the second year in a row.
The Oregon Health Authority on Monday announced per-member rates paid to the organizations administering the health plan, the state's version of Medicaid, will climb 4.35 percent overall.
The program serves one in four Oregonians, those who meet certain income standards. It was the focus of reforms approved by the Legislature in 2012 that were touted as revolutionary and radical in their aim of reining in cost growth while improving care.
Officials attribute the new round of larger-than-hoped rate hikes to escalating spending on prescription medications, hospital costs, and the impact of a high-profile eligibility redetermination process that was completed late in 2017.
The hikes will come in significantly above the 3.4 percent target that the state adopted in 2012, a figure that officials sometimes call the "sustainable" growth cap for the program.
And it's the second straight year that has happened.
In April, OHA officials announced that they had to readjust rate hikes in the previous year to an aggregate increase of 5.3 percent. That change took into account eligibility redeterminations that weeded out OHP members who lost eligibility over a long period, in which the state — hampered by technology problems in the wake of the Cover Oregon debacle — had not been able to do yearly eligibility checks.
So the regional Coordinated Care Organizations set up in 2012 to administer the program around the state had people on their rolls who didn't belong there,
The roughly 50,000 ineligible people culled from the plan were much healthier than the average OHP member, so the per-member cost of the remaining, sicker group of members went up.
"We eliminated a lot of healthy people from the Oregon Health Plan and that's having a pretty marked but short-term effect on rates," said Health Authority Director Patrick Allen.
But he said the state's success will be judged over a period of several years, noting that a new round of changes to the state program, called CCO 2.0, will try to address costs. "...Short-term variation in rates shouldn't be taken as a sign the approach isn't working. Certainly, holding costs down gets more difficult over time. That's why the governor, the Oregon Health Policy Board, and the recommendations in the draft CCO 2.0 report all put such a strong emphasis on reducing costs."
Last week the Portland Tribune published figures from internal state records showing that underlying costs of the program had been climbing at double the inflation targets or more since 2014, growing between 6.7 and 8.7 percent each year. That's essentially been squeezing the bottom lines of Coordinated Care Organizations, the insurance-company-like regional providers that administer the Oregon Health Plan.
Oregon officials reaffirmed their commitment to the 3.4 percent spending growth cap figure in correspondence with the federal government in 2016.
But while Oregon has failed to hit the spending cap two years in a row, the agency is not considering increasing the growth cap, or target, Allen said. If anything, he said, the cap needs to be lowered.
"We've begun a conversation about whether it makes sense, and the general tone of the conversation is it's too high," he said. "Over time we need to get the rate closer to the rate of growth of the economy, or some other measure of our ability to afford health care.
"Otherwise we'll just spend more and more of our money on health care."
This article is the product of the Portland Tribune's participation in the Reporting Fellowship on Health Care Performance, which is supported by the Commonwealth Fund and sponsored by the Association of Health Care Journalists.
Reporter Nick Budnick is looking at reforms to the Oregon Health Plan, where they've succeeded and where they haven't.
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