Making the Transition to a Sustainable Health Care System The Oregon Approach: so far … December 6, 2011 Mike Bonetto Health Policy Advisor to Oregon Governor John Kitzhaber
Dec 27, 2015
Making the Transition to a Sustainable Health Care System
The Oregon Approach: so far …
December 6, 2011
Mike BonettoHealth Policy Advisor to Oregon Governor John Kitzhaber
Agenda
1. State and Federal Budget Issues
2. System Challenges
3. House Bill 3650
4. Next Steps
Oregon’s Long Term Budget
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
2009-11 LAB 2011-13 2013-15 2015-17 2017-19
Revenues (11/2010)
Expenditures
Best 4 Biennia
Worst 4 Biennia
Comparing the rate of increase in Medicaid and PEBB health care expenditures vs rate of increase in state General Fund revenue
100
150
200
250
300
350
400
2001-2003 2003-2005 2005-2007 2007-2009 2009-2011 2011-2013(proj)
2013-2015(proj)
2015-2017(proj)
2017-2019(proj)
Perc
ent C
hang
e (In
dex=
100)
Medicaid (TF) PEBB (TF) Statewide General Fund Revenue
2000 2025Number of beneficiaries 39.5M 69.7M
Beneficiaries as share of pop. 13.8%20.6%
2004 - Medicare accounted for 8% of all federal income taxes.
2015 – 19%
2025 - 32%
2075 – 90%
2024
Medicare Trust Fund assets are exhausted
Future of Medicare
U.S. National Debt & U.S. Debt Ceiling
Trill
ions
National Debt
Failure of the “Super Committee”
Two percent reduction in Medicare spending, which must come from:
Payments to hospitals Doctors Nursing homes Other providers
And not in benefits
Source: Organisation for Economic Co-Operation and Development, OECD Health Data, Feb 2011;U.S. Congressional Budget Office, The Long-Term Budget Outlook, June 2010, p. 42
Total Expenditure of Health as Share of U.S. GDP
%
Current
Projected
System Challenges: The cost-shifting cycle
Public Private
Those who do not fit into a
category(uninsured)
Change eligibility
Pressure on state/federal
budgets
Employers and/or employees drop
coverage
Increase in premiums, co-
pays, co-insurance
ER(uncompensated, expensive care)
System Challenges:Influence Factors on Health Status
Social 15%
Environmental 5%
Human Biology 30%
Lifestyle & Behavior 40% Medical Care 10%
Source: McGinnis J.M., Williams-Russo, P., Knickman, J.R. (2002). Health Affairs, 21(2), 83
System Challenges: Fragmentation of Care
Not working Better Even better
Payment Fee for service
Episode-based reimbursement
QualityGlobal budgeting
Incentives
Conduct procedures
Evidenced-based carePay for performance
Address root causesReduce obstacles to behavior change
Metrics Revenue improvement
QualityReduced hospitalization Reduced disparities
Better health Improved quality of lifeReduced costs
Governance
Informal relationships & referrals
Joint partnerships between organizations(e.g., mental health & behavioral health)
New community accountability linking ALL
System Challenges: Misaligned Incentives
House Bill 3650
• Creates a new vision for the Oregon Health Plan
• Passed with broad bipartisan support
• Emphasizes better health – recognizes if we deal with budgets alone, we won’t succeed
• Transforms the system to meet the outcomes we need
Ways to Reducethe Cost of Health Care
1.Reduce what we pay for it (provider cuts)2.Reduce the number of people covered3.Reduce the benefits covered
… or
4.Change the way care is organized and delivered
GOAL: Triple AimA new vision for a healthy Oregon
Employer
Wages
Common Pool Resources – Money for
Health Care
FederalMedicare
Tax
Insurance
Premiums
State Medicaid Funds
FederalMedicaid
Match
Out-of-pocket
Hospitals
Doctors PharmaceuticalCompanies
Medical EquipmentSuppliers
Other HealthProfessions
PROVISION OF THECOMMON POOL
Vision of House Bill 3650
Local accountability for health and resource
allocation
Standards for safe and effective care
Global budget indexed to sustainable growth
Integration and coordination of
benefits and services
Improved outcomes
Reduced costs
Healthier population
Redesigned delivery system
Coordinated Care Organizations
Community-based, strong consumer involvement in governance that bring together the various
providers of services
Responsible for full integration of physical, behavioral and oral health
Global budget
Accountability through measures of health outcomes
Key element: Global budget
Global budgets based on revenue/expenditure target and then increased at agreed-upon-rate rather than
historical trend
Management of costs – clear incentives to operate efficiently
More flexibility allowed within global budgets, so providers can meet the needs of patients and their
communities
Accountability is paramount
Opportunities for shared savings when patients remain healthy and avoid high-cost care
Key element:Accountability and metricsIncentives & measurements for: right care,
right time, right place by the right person
Activities geared towards health improvement
Hospital quality and safetyPatient experience of care
Health outcomes
Long-term
Begin to use redesigned delivery system platform for other state contracts:
Public Employees Benefit BoardOregon Educators Benefit Board
Redesigned delivery system could be core component of health insurance
exchange and an opportunity for private sector to participate
Better health & value comes from:
• Ability to reduce preventable conditions• Widespread use of primary care health homes
• Improved outcomes due to enhanced care coordination and care delivered in most
appropriate setting• Reducing errors and waste
• Innovative payment strategies• Use of best practices and centers of excellence
• Single point of accountability for achieving results
Challenges
Change is difficultTime is short
Federal approvals are necessaryTransitioning from current models
while maintaining access to care and community infrastructure
133 Oregonians – 4 work groups
Coordinated Care Organization CriteriaWho, how, where
Global Budget MethodologyCriteria for determining global budget funds, shared
savings arrangements, stop-loss, risk corridors and risk-sharing arrangements
Outcomes, Quality and Efficiency MetricsClinical, financial and operational metrics
Medicare-Medicaid Integration of Care and Services
Proposals for integrating care for those who are dually eligible for Medicare and Medicaid into CCO framework and for
creating virtual integration for long term care services
Oregon Health Policy Board Products
26
OHPB will deliver the following products to the Legislature in February 2012:
• Draft legislative language for implementation of Coordinated Care Organizations (CCOs)
• CCO criteria and process for CCO development; global budget methodology, and financial reporting requirements
• Medical liability/cost containment strategies
• Standards for specified health care workers: community health workers, peer wellness specialists, personal health navigators
TimelineDate Event
12/13/11Oregon Health Policy Board meeting: Review of draft materials
12/19/11 – 1/3/12Public Comment Period on Draft HB 3650 Deliverables
1/10/12Oregon Health Policy Board meeting: Review of draft materials
1/10-1/18/12Public Comment Period on Draft HB 3650 Deliverables
1/18-1/20/12 Interim Legislative Hearings
1/24/12Oregon Health Policy Board meeting: Approval of final HB 3650 Deliverables
2/1/12 Delivery of HB 3650 Deliverables to Legislature
3/2012If Legislature approves, apply for required permissions to CMS
3/2012 Oregon Health Authority implementation planning
7/2012Potential first CCOs certified and enrolling members
www.health.oregon.gov