Reforming healthcare: Oregon steps well past federal model

By JONATHAN J. COOPER, Associated Press

SALEM, Ore. (AP) -- Pregnant with her seventh child and desperate to kick a meth addiction, Madeline Hutchinson turned to a program from the local Medicaid provider that connected her with a mentor and other support that she said helped her get off drugs.

Emmanual, now 2, was born healthy.

"We need mentors. We need advocates," Hutchinson said. "We need someone that's going to come along and say, `This baby needs to be clean. And we're going to show you how."'

There's a smattering of preventative care programs like this around Oregon, and not just for addicted mothers. But there hasn't been a statewide push -- until now.

Oregon Gov. John Kitzhaber last week signed a law that will create new regional entities, called coordinated care organizations, which will be able to spend money on programs like the one Hutchinson credits with turning around her life.

Kitzhaber says the plan will improve care, reduce costs and serve as a model for the rest of the nation.

But critics say that if the program works, more people will use health care benefits and costs will rise.

The coordinated care organizations will be responsible for looking after Medicaid patients in their area. Local organizations will determine their exact models.

But each will be a holistic approach that addresses every aspect of health -- mental, medical and dental -- with a focus in particular on people with mental illnesses, addictions or chronic conditions like diabetes, heart disease, asthma and kidney failure.

The idea is to target the costliest patients and provide up-front care that can prevent emergency room visits and other expensive interventions, and thus save Medicaid a lot of money.

Oregon has long been a pioneer in finding new approaches to health care, and Kitzhaber -- a former emergency room doctor who is passionate about overhauling the system -- believes the new law could solve several problems.

Officials say that if all 50 states adopted Oregon's changes, the federal budget would save more than $1.5 trillion over the next 10 years -- more than Congress' failed "super committee" was trying to save over the same time period.

"I'm convinced ... the federal government is going to have to do something drastic about the cost of health care," Kitzhaber said. "And it's not going to be driven by how you keep people healthy. It's going to be driven by how do you keep from defaulting on the national debt, which is two completely different conversations."

Long before the Oregon Legislature passed the law in February, Kitzhaber took his idea to Washington, D.C., to present it to Obama administration officials, and he caught their attention.

"There are several states thinking about this kind of approach," said Cindy Mann, a deputy administrator at the federal Centers for Medicare and Medicaid Services. "This is definitely a time when everybody can be learning from each other."

In some ways, Oregon's effort is an attempt to pick up where Obama's health overhaul leaves off. While Obama expanded access to care, his Affordable Care Act leaves it largely up to the states to find a plan for lowering the cost and improving the quality.

But there is no guarantee the new Oregon law will do exactly what Kitzhaber wants.

A January report by the Congressional Budget Office found that previous projects experimenting with coordinated care for Medicare patients did not provide conclusive evidence of savings.

"On average, the 34 programs had no effect on hospital admissions or regular Medicare expenditures," according to the report.

And the ability to usher in widespread cost savings across the health care system will depend on whether the program can expand beyond Medicaid. Even if it works in Oregon, there's no guarantee that other states with different cultural and political environments would see the same results.

Oregon state Sen. Fred Girod, a conservative Republican and a dentist, said he doesn't think the plan would actually save money because he says it will increase consumption of health care.

"Are we going to get more for less?" Girod said in a committee hearing. "I've been in the Legislature for a long time, I've been promised that I don't know how many times and I have yet to see it."

Proponents dismiss the CBO report, saying their plans go far beyond the limited experiments that were studied, and point to data from projects in Oregon and elsewhere that more closely align with their plans.

A state-commissioned report found that significant savings were possible from eliminating duplicated tests, preventing hospitalizations and other techniques.

Oregon's changes will focus on the neediest, costliest patients. Many of them are on both Medicare, primarily for the elderly, and Medicaid, primary for the poor.

Various funding streams from all levels of government for mental, physical and dental care will be pooled into a global budget. Each coordinated care organization gets a share of that budget and will have broad authority to spend the money as it sees fit. Successful organizations will be rewarded with additional cash.

Local officials around Oregon have already begun setting up coordinated care organizations in various parts of the state, and some are expected to be up and running on July 1.

Supporters of the new law say a project in central Oregon shows that it can work.

After identifying 144 patients who were frequently visiting the emergency room -- at least 10 times in a year -- a group of health providers found that most had mental health conditions and more than half had no primary care provider who could treat simple disorders outside the ER.

By creating care plans, assigning case managers to help them navigate the health care system and embedding mental health providers at the doctor's office, emergency room visits were reduced by 49 percent in six months.

Robin Henderson, a psychologist who is director of behavioral health services for the hospital in Bend, Ore., says the program has promise, "It's an interesting shift in philosophy to start to look at how you care for the whole person." (Copyright 2012 by The Associated Press. All Rights Reserved.)

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