OHA amends 2018 CCO capitation rates

The Oregon Health Authority has amended and finalized 2018 capitation rates for coordinated care organizations (CCOs). These rates are the per-member-per-month amounts the state pays CCOs to coordinate health care for nearly 1 million Oregonians on the Oregon Health Plan (Medicaid).

The adjustment will result in an average net payment of $427.70 per month for each member, which is $8.04 more than the initial 2018 rate, and $21.49 more than the average per-member-per month payment in 2017, an increase of 5.3 percent.

“OHA set 2018 rates last fall, but we committed to review the impact of recent eligibility renewals and update rates, if needed,” said Laura Robison, OHA’s chief financial officer. “The majority of the increase is driven by the impact of these renewals.”

The amended rates also include the 1.5 percent managed care tax and the reduction of Health Share of Oregon’s rates due to the February 1 transition of FamilyCare members to Health Share of Oregon. As of February 1, Health Share of Oregon’s average rate decreased by 0.6 percent due to the member transition, reflecting the lower average health risk of FamilyCare’s members relative to Health Share of Oregon’s existing members.

CCOs’ capitation payments are divided into 12 rate categories. The rates take into account the average cost for members in these specific categories. For example, the state pays CCOs more for members who are disabled than it does for children because members who are disabled generally have higher health care costs.

Why did renewals increase the CCO capitation rates?
After Cover Oregon failed in 2014, the state received permission from the federal government to hold off on annual Medicaid renewal reviews until it could implement a new renewal system. The state implemented the new Oregon Eligibility (ONE) system in late 2016 and completed renewal reviews for the final group of cases in August 2017.

During this effort OHA determined that more than 67,000 members were still eligible for Medicaid benefits, but more than 47,000 no longer qualified, either because they didn’t meet the income criteria or because they didn’t respond to the state’s letters requesting additional information.

On average, CCOs had been spending less on these members because they were healthier and needed fewer services. This shift in the CCO membership left fewer healthy members in the system to compensate for the higher costs of less-healthy members who continued to qualify for Medicaid.

“The rate-setting process already accounts for natural fluctuations in the Medicaid market,” Robison said. “But we needed to make an adjustment because such a large number of members were deemed ineligible at one time.”

“We don’t expect this to be an issue going forward, as we have finished the renewal eligibility work and the ONE system reviews Medicaid eligibility annually,” added Robison.

Since 2012 Oregon has avoided $2.2 billion in Medicaid costs through the coordinated care system and other health system reforms. A recent independent evaluation of the first five years of Oregon’s Medicaid waiver found Oregon’s health reforms lowered per-member costs compared to Washington’s Medicaid program.

“Now that enrollment has stabilized, we look forward to working with our CCO partners to build on Oregon’s success in reducing health care costs,” Robison said. “We want to use the lessons we’ve learned in the first five years of health system transformation to further improve the quality of care and meet our cost-saving targets.”

A full breakdown of final amended 2018 CCO rates is on the OHA website here. Additional information is available on the OHA website here.

This press release was provided by the Oregon Health Authority.