Oregon’s Medicaid Reform and Transition to Global Budgets Were Associated with Reductions in Expenditures

McConnell Jk, Renfro S, Lindrooth RC, Cohen DJ, Wallace TN, Chernew ME
Publication Year: 2017
Patient Need Addressed: Care Coordination/Management
Population Focus: Medicaid beneficiaries
Intervention Type: Service redesign, Staff design and care management
Study Design: Pre-post with Comparison Group
Type of Literature: White

In 2012, Oregon initiated an ambitious delivery system reform, moving the majority of its Medicaid enrollees into sixteen coordinated care organizations, a type of Medicaid accountable care organization. Using claims data, we assessed measures of access, appropriateness of care, utilization, and expenditures for five service areas (evaluation and management, imaging, procedures, tests, and inpatient facility care), comparing Oregon to the neighboring state of Washington. Overall, the transformation into coordinated care organizations was associated with a 7 % relative reduction in expenditures across the sum of these services, attributable primarily to reductions in inpatient utilization. The change to coordinated care organizations also demonstrated reductions in avoidable emergency department visits and improvements in some measures of appropriateness of care, but also exhibited reductions in primary care visits, a potential area of concern. Oregon’s coordinated care organizations could provide lessons for controlling healthcare spending for other state Medicaid programs.

Insights Results

Approach to care

  • These strategies include incentives to enroll patients in primary care homes; the use of data in new ways to target high-risk patients; the integration of behavioral health services in primary care sites; care transition programs for emergency department (ED) patients or patients admitted to inpatient settings; increased training and employment of community health workers; pilot programs designed to test new ways to care for high-risk groups; and the use of flexible funds to support social services that are intended to improve health and reduce the use of the medical care system
    Cost outcomes
  • In the post-intervention period, standardized expenditures across evaluation and management, imaging, procedures, tests, and inpatient care increased by $1 per member per month in Oregon and by $7 per member per month in Washington
  • Overall, adjusted estimates indicated that the CCO intervention was associated with a $6.65 (p ¼ 0:004) decrease in standardized expenditures per member per month, relative to what expenditures would have been without the intervention. This is equivalent to savings of 7%
  • The reduction in spending was attributable largely to differential trends in the use of inpatient care in Oregon after the care coordination organization (CCO) intervention (a relative decrease of $5.80, p ¼ 0:002). However, Oregon also exhibited relative decreases in standardized expenditures for evaluation and management visits ($1.95, p ¼ 0:03)
  • Standardized expenditures for imaging, procedures, and tests declined or were flat in both states, although Oregon exhibited a small but significant relative decrease in standardized expenditures for tests ($0.22, p ¼ 0:04) and small but significant relative increases in standardized expenditures for imaging ($0.16, p ¼ 0:04) and procedures ($1.17, p < 0:001) relative to Washington Care/quality outcomes
  • Primary care visits decreased in Oregon but increased in Washington, with adjusted estimates indicating a difference of 23.92 visits per thousand member-months (p < 0:001), a relative decrease of approximately 8 %. This decrease was larger in year 2 (31.25 visits per thousand member-months)
  • Oregon also experienced a relative decrease in inpatient days after the CCO intervention (3.69 days per thousand member-months, p ¼ 0:002)
  • Adjusted estimates indicate that children’s access to primary care declined by 1.1% age points (p ¼ 0:005) and adults’ access to preventive ambulatory care declined by 3.0% age points (p < 0:001)
  • Measures of avoidable ED visits declined in both Oregon and Washington, with Oregon demonstrating a slightly larger decrease (0.7 visits per thousand member-months, p ¼ 0:001) in the two-year average across states. Overall preventable hospital admissions declined in Oregon, with a significant decrease in the first year of implementation (2.7 visits per thousand member-months, p ¼ 0:04), although the overall two-year decrease was not statistically significant