Oregon hopes to prove that states can save billions on Medicaid without sacrificing the quality of health care. Democratic Gov. John Kitzhaber's plan would invest in preventive care to keep patients healthy so they don't need expensive hospitalizations.
He wants it to be a model that other states adopt as they struggle with budget deficits and rising Medicaid costs. The federal government could save $1.5 trillion over the next 10 years of all 50 states adopted Oregon's approach, the governor said.
Medicaid, which provides health coverage for low-income Americans, is jointly funded by the state and federal governments. Federal officials have not yet agreed to grant a waiver from standard Medicaid regulations, which is needed for the program to be implemented and the money to be spent.
The financial commitment, while tentative, is a clear public endorsement of the concept and an indication that the administration believes it holds promise to save money. The state anticipates savings of $11 billion over the next decade.
Finding ways to deliver health care for cheaper is a critical challenge as baby boomers age and President Barack Obama's health care overhaul extends coverage to millions more Americans, many of whom will join the Medicaid rolls. Under Obama's Affordable Care Act, the federal government will pay nearly the entire cost for the new patients enrolling in 2014, when the overhaul goes into effect.
The Oregon plan would create "coordinated care organizations" to manage all mental, physical and dental care for 600,000 low-income patients on the Oregon Health Plan, the state's Medicaid program. It would focus particularly on the sickest patients with the highest costs, especially people with chronic conditions such as diabetes and asthma or with mental health concerns.
The point, proponents say, is to pay for services that keep people healthy but don't get much funding — such as paying caseworkers to make sure patients go to medical appointments and take their medications. The state Legislature overwhelmingly endorsed the idea this year and last, though some Republicans complained that it would increase the government's role in health care.
Kitzhaber cleared his schedule at the last minute this week to fly to Washington, D.C., and finalize the deal for the money.
The federal money will lessen the impact of payment cuts to providers and help them pay the upfront costs of the new initiative before the savings can kick in. Oregon, facing a budget shortfall, planned to severely cut payments to doctors, hospitals and other care providers beginning this summer.
Potential coordinated care organizations, which had been working to comply with proposed requirements, were eager to find out how much federal money would be available. Many will have to upgrade their computer systems so patient records can be shared, or hire new staff to manage patient care. They face a May 14 deadline to submit financial proposals to the state.