Reforms in Oregon’s Medicaid Program and Emergency Department Use

Jan 16, 2014, 5:23 PM, Posted by Susan Dentzer

“Past performance is no guarantee of future results,” goes the boilerplate warning on financial investments. The caution is worth keeping in mind in the wake of a recently published study that found that expanding Oregon’s Medicaid program in 2008 led to a 41 percent increase in emergency department (ED) use by many of those newly covered by the program.

The study, by an esteemed group of researchers (some of whom are affiliated with the National Bureau of Economic Research) is the latest to emerge from the Oregon Health Insurance Experiment. This series has focused on the effects of 2008-2009 policy changes that led thousands of previously uninsured Oregonians to enroll in Medicaid. The latest study found that costly visits to the ED rose across the board over a two-year period, including for relatively simple conditions, such as headaches, that could easily have been treated in primary care settings.

Media reports played up the study’s counterintuitive conclusion: that even when uninsured people gained access to multiple types of health care, including primary care, they still kept going to the emergency room—despite the fact that their concerns could have been dealt with in less expensive ways.

But the study’s findings may not predict future results because, since Oregon’s earlier Medicaid expansion, many states have taken sensible steps to reform health care delivery, better manage patients’ care, and prevent some of the costly utilization patterns seen in the study. One of these states, ironically, is Oregon itself.

Coordinated care organizations: At a recent RWJF-sponsored roundtable for reporters, Oregon’s Medicaid director, Judy Mohr Peterson, described broad health care reforms the state has undertaken to better manage care and spending in its Medicaid program, the Oregon Health Plan. These reforms include creation of “coordinated care organizations” for its population of more than 650,000 Medicaid enrollees.

CCO’s are local partnerships among hospitals, primary care doctors, and other providers, including mental health and addiction specialists and, in most cases, dentists. The state’s 16 CCOs each receive an annual budget from the state to care for their assigned population of Medicaid enrollees. The partnerships are accountable for meeting specified health outcomes and achieving quality targets. Their spending per Medicaid enrollee may grow by no more than 3.4 percent a year, well below the double-digit growth in spending that the state had previously experienced.

The CCOs are built on a foundation of patient-centered medical homes, the advanced primary care practices that aim to reduce preventable hospital use by chronically ill patients. They appear to be working.  In the first six months of the program (January to June 2013), emergency department visits, rather than rising in number, were actually 9 percent lower for the enrollee population than in 2011.

Peterson, a former fellow of the RWJF-funded Medicaid Leadership Institute, said other early results from CCOs are also in keeping with the strategy of enhancing access to primary care and preventing illness. Primary care visits rose by 18 percent compared to 2011, and there has been a decrease in hospitalization for such conditions as congestive heart failure, chronic obstructive pulmonary disease, and adult asthma. All-cause hospital admissions are down as well. (Oregon’s CCO resulted are being evaluated under a grant from RWJF through the State Health Access Reform Evaluation program.)

“Real people, and people’s lives, are being affected” through the CCOs, said Peterson. She described how the new approach had empowered those within the organizations to take flexible, common-sense approaches to managing care, including helping with housing, unemployment and other factors that influence Medicaid enrollees’ health and use of health care.

An example that “brings the whole story together,” Peterson said, is that of one Oregon Medicaid enrollee with congestive heart failure. He was supposed to contact his doctor every day and report on his weight. (An effect of the condition is fluid retention, so a patient whose weight shoots up is probably seeing an exacerbation of the disease.)  But this patient wasn’t calling in daily—frustrating his doctor, who knew that the patient had a scale. Further investigation by the CCO disclosed the problem: The patient’s poor eyesight prevented him from reading the scale accurately. The CCO purchased a scale with large, illuminated numbers, the patient resumed calling in his weight daily, and at least one emergency hospital stay was probably avoided.

Oregon isn’t alone in taking such approaches to better coordinate and manage care of Medicaid enrollees, noted Alan Weil, executive director of the National Academy for State Health Policy, at the same reporters’ briefing. Patient-centered medical homes or “health homes” are a “component of almost every state effort” to expand Medicaid, he said. Several states, including Utah, Colorado, Minnesota, and New Jersey, are creating accountable care organizations for their Medicaid enrollees, either as standalone demonstration programs or as part of broader State Innovation Model grants from the Centers for Medicare and Medicaid Innovation.

The ultimate lesson is that states must undertake these types of reforms if they want to avoid an uncontrolled rise in utilization that could result from coverage expansions. “States are saying we’re not going to get the results we need” if they conduct business as usual, Weil observed. And while states will surely need to forge solutions specific to their local context, it’s already clear many could make headway by following Oregon’s new trail.

Susan Dentzer is a senior health policy adviser to the Robert Wood Johnson Foundation.