Oregon Announces Plans To Lead On Implementing Key ACA Reforms

Our guest blogger is Lindsay Rosenthal, Special Assistant for Health Policy and Women’s Health and Rights at the Center for American Progress.

Gov. John Kitzhaber (D-OR)

In order to combat an impending budgetary crisis related to spending on Medicaid, Oregon will take the lead on implementing a model that the Affordable Care Act has invested in at the Federal level. Yesterday, the Gov. John Kitzhaber (D-OR) and the Obama Administration announced a Federal-State Partnership for a coordinated care initiative that is projected to save $11 billion dollars in Medicaid spending over the next decade. These savings offer reason to celebrate, given the burden rising health care costs have placed on the economy. But perhaps more important than the savings alone is the way that they will be achieved: by investing in increased quality of patient care.

Effectively implementing this reform will require a fundamental shift in the way we pay for care, which Kitzhaber has explicitly proposed to his legislature. A cornerstone of the coordinated care effort is a change in the way that the doctors are paid for their services, away from the current fee-for-service system that incentivizes quantity and towards an integrated payment system that incentivizes quality. The concept is simple: If we want a doctor’s goal to be controlling diabetes, then we should pay her for controlling diabetes, not the number of tests she runs or medications she prescribes. We should pay her to collaborate with her peers and to communicate with her patients to track improvement, not to sign a higher volume of referrals and prescription slips.

The initiative will target Medicaid patients with chronic conditions like diabetes and severe mental health problems, who require particularly complicated treatment regimens that account for 80 percent of all Medicaid spending. More than one in four Americans have multiple concurrent chronic conditions and in the more severe cases are unable to manage their daily care on their own, leaving them dependent on a relative or in-home caregiver to help them negotiate their treatment. In the current system, care for chronically ill patients is administered through a diffuse and patchwork system comprised of different doctors, providers, and hospitals that is difficult to navigate and results in unnecessary complication, error, duplication and inefficiency. Patients with chronic conditions often report receiving conflicting advice from different physicians for the same symptoms (and even different diagnoses); they are often prescribed contraindicated or interactive medications that lead to life-threatening complications; and they frequently experience multiple, expensive hospital admissions that could easily have been prevented with better coordinated care.

Oregon has committed to improving patient outcomes and reducing costs by two percentage points in two years by investing in coordinated care. “With unprecedented collaboration between local communities, health care providers and our federal partners, Oregon is on the right track to create a system that will both improve care and reduce costs,” said Kitzhaber in a statement announcing the proposed initiative. The state is asking communities and doctors to work together to give sick patients the services they need to prevent acute care incidents and serial hospital readmissions, which are not only bad indicators for patient health but also come with an exorbitant price tag.

Integrating and coordinating care so that all responsible parties have the information they need to take care of a chronically ill person seems like it should be the way our health system functions intuitively, but practically speaking the challenges of implementing coordinated care within our current health system are greater than one might expect. It will require a concerted effort at developing a collaborative network between primary care physicians, in-home care providers, and relative caretakers. To that end the coordinated care initiative in Oregon will likely invest both in hiring and training caseworkers and in technology that will allow providers to share important information about a patient’s health.

This shift in the focus of the health care delivery system—moving towards coordination and a focus on patient outcomes— can only happen with a parallel reform in the payment system that incentivizes collaboration between primary care physicians and other providers. Paying for quantity instead of quality is costly both in terms of health and in terms of cost. The initiative in Oregon will provide a strong demonstration of both the cost-saving and lifesaving potential of the reforms enacted by the Affordable Care Act.