Only months before Americans will face the most significant changes to the health care system in decades, the country is facing a crisis of unawareness.
A Kaiser Health Tracking Poll in April found that four in 10 Americans did not know that the Affordable Care Act — President Barack Obama's health reform legislation signed into law in 2010 and now known as “Obamacare” — is still the law of the land and in the process of being implemented. Awareness was even lower among the groups the law is most intended to help; six in 10 Americans making less than $30,000 a year and five in 10 adults under the age of 30 did not know the law was still in force.
Similarly, a Gallup poll in June found that while 81 percent of Americans knew of the requirement to carry health insurance or pay a fine in 2014, 43 percent of those without insurance said they were unaware of the rule.
Half of those surveyed in the Kaiser poll, including some 58 percent of the uninsured, said they did not have enough information about the health reform law to understand how it will affect their own family.
“Millions of uninsured Americans stand to benefit from the implementation of the Affordable Care Act,” said Anne Filipic, president of Enroll America. “But they won't get enrolled unless they know about it.”
Groups like Enroll America, as well as federal and state government agencies will try to educate Americans about the new requirements and benefits of the Affordable Care Act over the coming months. They'll have to reach millions of individuals and businesses that face new challenges and opportunities starting in 2014 , and dispel many of the myths that have emerged around the law.
Support for Obamacare falls mainly along political fault lines. Four of five Democrats support it, while four of five Republicans oppose it. On Jan. 1, 2014, however, all of them will be subject to it.
Surveys also show that most Americans don't really understand what the health reform law entails or what problems it is intended to fix. But there's widespread agreement on both sides of the political fence that the U.S. health care system is broken. Year after year, the cost of providing health care continues to rise, even as the health of Americans continues to lag behind that of other countries.
In 2012, Americans paid an average of $5,615 for an individual health insurance plan, or $15,765 for a family plan. Premiums have doubled over the past nine years. Such growth hampers the ability of businesses to provide health care coverage for their employees and siphons money away from other benefits or pay raises. Meanwhile, public health spending is growing at the same clip. Health care costs now account for 21 percent of the federal budget and 22 percent of the Oregon budget.
The high cost of health care means many individuals who don't get insurance through their work can't afford to buy it on their own. About one in seven Americans, nearly 49 million, are uninsured, and many others have plans that don't provide meaningful coverage.
Individuals who have chronic diseases are often unable to find coverage or are forced to take plans that won't cover costs associated with their pre-existing conditions. Other plans put annual or lifetime caps on benefits that can easily be reached within months of a catastrophic accident or illness.
The Affordable Care Act attempts to reduce that number of uninsured by establishing a penalty for those who can afford to buy insurance but choose not to, and by giving subsidies to those who can't afford coverage on their own. At the same time, the law closes many of the gaps that keep people from getting good health coverage.
It's considered more of a first step in health reform. Although the ACA includes some pilot projects that will test ways to shift the incentives in health care away from more procedures and higher spending, it doesn't tackle the underlying issue of rising health care costs.
Still, getting more people on health insurance would mean individuals could get treated in more cost-efficient settings, such as health clinics or doctors' offices, rather than waiting until their conditions reach crisis levels and require emergency room care or surgery.
Most of the bigger changes in the health reform law won't go into effect until 2014, and some not until 2018. A number went into effect almost immediately after the ACA was signed into law. And for the most part, those changes have been very popular, even among some of the law's staunchest opponents.
Those include provisions allowing children to remain on their parents' health plans until age 26, providing free contraception and vaccinations, and eliminating lifetime caps on health coverage.
The next phase of implementation will begin Oct. 1, when state and federal health exchanges open, allowing individuals and small groups to shop for health insurance and receive subsidized coverage.
In the coming months, many Americans will have to make crucial decisions that could have long-term financial, medical and tax implications. It will take an educational blitz few have ever seen, relying on everything from celebrity pitches to volunteers going door to door, to make sure everyone is aware of the choices and their consequences.
With anywhere from 20 to 40 million uninsured currently unaware of the changes, the effort is facing a significant challenge
“Our goal,” Filipic said, “is to change that number.” •
On the federal level, lots of changes are afoot
The Affordable Care Act is aimed at finding health coverage for as many people as possible and relies primarily on two new rules to get there: the individual mandate and the guaranteed-issue provision. The first says nearly everyone will be required to have insurance or pay a penalty. The second says insurance companies have to sell insurance to anyone who wants it.
Because many people have trouble affording insurance, the law also provides significant financial help for individuals to pay the premiums, deductibles and copayments.
Under the law, states have the option of expanding their Medicaid programs for low-income residents. The federal government will foot the bill for most of that added care, covering 100 percent of the cost of those added to Medicaid in 2014 through 2016, and no less than 90 percent of costs after that.
Oregon is participating in the Medicaid expansion and has negotiated special terms with the Obama administration to help fund its health care transformation. As many as 200,000 Oregonians could be added to the Medicaid program through the expansion.
In the past, Medicaid was available only to individuals with dependent children, and in most states, only to families with incomes below the federal poverty level. The expansion would raise the income threshold by 38 percent and allow anyone below that threshold to enroll, even if they don't have children. Those who qualify for Medicaid wouldn't have to pay anything for their health insurance and would face no out-of-pocket costs when they sought care.
For those who make up to three times the poverty level, and who can't get adequate health coverage through their employers, the federal government will provide subsidies or tax credits to help them afford the premiums. The subsidies will be available only through the health insurance exchange in each state. Some states are allowing the federal government to set up and run their exchange. Other states, including Oregon, will run their own.
The exchange is a sort of online marketplace where consumers can shop for health plans . Plans must conform to the rules set up by the federal government and the state . That allows consumers to know the insurance they're buying covers the essential core of health benefits the state requires, including hospital and physician services, prescription drugs, oral and vision care.
“The most confusing part is the federal poverty level,” said Rocky King, executive director of Cover Oregon, the state's health care exchange. “People know their income . They don't know the poverty level.”
The actual income corresponding with the poverty level changes with family size and is updated by the government each year. It's easier for most individuals to go to the Cover Oregon website and plug in their basic information to determine whether they'll get a subsidy or not. Until the exchange goes live Oct. 1, individuals can use an online calculator to see whether they'll get a subsidy and what a health plan might cost them.
Amy Fauver, Cover Oregon's chief communication officer, said many people will be surprised that they will get a subsidy despite their income.
“So often when people hear about the financial help that might be available, their instant reaction is, 'Well, that's not for me. I won't qualify for that,'” she said. “But the financial help we have through Cover Oregon is pretty incredible.”
Individuals with an income of $45,000 could be eligible for some assistance. A family of four making as much as $94,000 could still get some help paying for coverage. The Congressional Budget Office estimates that 90 percent of those buying insurance through the exchange will get some help paying for their premiums.
Individuals who qualify for a subsidy will have to make the decision whether to take the funds each month in the form of a lower premium, or to claim the funds as a tax credit on their tax returns. The monthly discount will help those who don't have the money to pay for the premium up front, but because the financial assistance is tied to income, changes in earnings could change the amount of subsidy someone is due. And that could leave some people owing more in taxes if they don't notify the exchange of an increase in income.
The exchange is set up to help consumers check if they might be eligible for Medicaid or qualify for a subsidy, compare plans, and after Oct. 1, choose a plan and enroll. The site works very much like consumer-friendly tax preparation software, guiding individuals step by step by asking questions about income, family size and employment.
Insurers can no longer drop coverage as long as members pay their premiums and can't exclude certain conditions from coverage .
Rates and costs
Rates can vary only due to age, tobacco use, geographic variation and family size. Plans will not be able to charge higher premiums from people who are sick or to women, who in the past could pay 50 percent higher premiums than men in certain plans.
Health plans will also be required to justify any potential increases in premiums. Some states, including Oregon, will take an active purchaser approach, in which state regulators can reject plans that want to charge customers too much.
In Oregon, health plans had to file their rate proposals in May, and regulators reviewed the assumptions those plans made regarding how much their costs would increase next year. The state then told insurers how much they would be able to charge and insurers could decide whether or not to accept those rates.
Most of the rates for Central Oregon were reduced anywhere from 1.5 percent to 32 percent from the rates requested by the insurance plans.
“We don't want rates too high, but we want to make sure carriers justify their rates,” said Lou Savage, Oregon's outgoing insurance commissioner. “We were concerned about carriers not a being able to financially sustain a low rate. The last thing we want is for a carrier to not be able to pay claims.”
The exchange will allow individuals to compare plans side by side so they can choose the plan that best suits their needs. Cover Oregon will include a variety of tools to help consumers choose among the options, including quality ratings, cost sharing and participating doctors.
“We have an opportunity to help hundreds of thousands of people who don't currently have insurance or who have to buy insurance in a market that's very complicated,” Fauver said. “In the individual market, it's really hard for people to understand what they're getting, and sometimes people learn that it's not really as good insurance as people had thought it was.”
To help consumers sort through the options, the ACA created tiers — bronze, silver, gold and platinum — to describe the amount of cost-sharing involved.
Bronze tiers have a lower premium, but require individuals to pay on average 40 percent of the cost of their care in deductibles and copays. Silver plans require 30 percent cost sharing, gold plans 20 percent, and platinum plans 10 percent.
Consumers can then decide what premiums they can afford and whether they are likely to use a lot of care in the coming year. Those who are healthier and unlikely to have high medical costs might save money by going with a bronze or silver plan. Those who tend to use care more often might do better paying a higher monthly premium, but limiting their ongoing out-of-pocket costs with a gold or platinum plan. All the plans include a cap on out-of-pocket costs as well.
A recent study in the journal Health Affairs found that in 2010, 65 percent of families with group coverage have plans that would qualify as gold or platinum. But the study found that more than half of plans sold in the individual market covered less than 60 percent of health costs. Dubbed tin plans, they are no longer allowed under the ACA. About a third of individual plans would have qualified as bronze plans.
With all the new rules, health plans will cover individuals who previously couldn't get coverage because of pre-existing conditions, and the available plans will cover more health care costs . Those added costs means most plans at least initially will have to charge higher premiums than they did in the past. Reform experts believe that over time, premiums will not grow as quickly, making them more affordable in the long run.
In 2011, the average monthly premium in Oregon's individual market was $202 per month. In Central Oregon, the new rates for a single, non-tobacco user would range from $130 per month for a 21-year-old in a bronze-level plan, to $839 per month for a 60-year-old in a gold level plan.
For most individuals purchasing health insurance through the exchange, those rates will be offset by the financial subsidies or tax credits available. But there will be some individuals who will face higher premiums with no additional help to pay for them.
That will leave some currently uninsured individuals wondering whether it's worth paying the penalty for not having insurance or paying the full cost of the premium.
The penalty for not having insurance in 2014 is the larger of 1 percent of income or $95 per individual and $285 per family. The penalty will increase over the next two years, reaching 2.5 percent of annual income or $695 per individual and $2,085 per family by 2016.
Because insurance plans can no longer reject individuals with pre-existing conditions, they could always sign up for insurance once they get sick.
“As the younger and healthier people realize that the price of insurance is more than the fine and that guaranteed-issue rules force insurers to sell them a policy even when they get sick, they'll have substantial incentives to forgo insurance until they actually need it,” said David Hoberg, a health policy analyst with the National Center for Public Policy Research.
Hoberg believes that will create a “death spiral” because fewer and fewer healthy people enrolled means average costs will rise higher and higher. Eventually, the insurers could stop selling individual insurance policies if they're no longer able to make a profit.
Individuals who opt to pay the penalty, however, run some risk in taking that approach. For one, if they're eligible for financial help through the exchange, they can only get that subsidy during the open enrollment period, from Oct. 1 to March 31. After March , they'll have to wait until the next open enrollment period in October 2014 to get subsidized insurance for 2015, unless they have a major change in their circumstances, such as getting married or divorced or a change in employment status.
Additionally, those paying the fee are still at risk for high medical expenses from a sudden event, such as a car accident, that could generate huge medical bills before they're able to sign up for insurance.
A recent study in the New England Journal of Medicine compared the costs incurred in emergency rooms among individuals 19 to 25 who were covered under their parents' plans starting in 2010 under a popular provision of the ACA, with those 26 to 31, who were not affected by the provision. The researchers found that insurance companies paid an additional $147 million for more than 22,000 emergency room visits by those newly covered young adults. Those who plan to sign up for coverage after they get sick would likely have to pay those costs — an average of $6,600 — out of their own pocket.
Surveys also show that few of the uninsured actually think they don't need health insurance. A Gallup poll in June found that 43 percent of the uninsured said cost was the primary reason why they didn't have insurance, and an additional 32 percent cited not getting insurance through an employer as the reason. Only seven percent said they didn't need it.
According to the group Young Invincibles, which advocates on social issues for adults younger than age 35, only 5 percent of young people choose not to have insurance. The group expects up to 17 million of the 19 million uninsured under age 35 to get coverage as a result of the ACA — 8 million through a full expansion of Medicaid, and 9 million through the subsidies.
“The health care reform law means that as many as 17 million currently uninsured young adults age 18 to 34 could gain access to more comprehensive, affordable health insurance coverage through the expansion to Medicaid and new subsidies to purchase insurance,” said Aaron Smith, the group's executive director. “Already, more than 3.1 million young adults have gotten covered thanks to a provision of the law that took effect letting young people stay on their parents' plan until age 26. In 2014, the 16 percent of young Americans with pre-existing conditions can no longer be denied coverage .”
The ACA exempts certain groups from having to pay the penalty for no insurance, including exemptions for Native American tribes, religious conscience, and those for whom even a bronze level plan would cost more than 8 percent of their annual income.
An analysis by the Urban Institute, a Washington, D.C., think tank, found that only 6 percent of Americans will be expected to buy health insurance or pay a penalty. The rest either already have insurance or will be eligible for Medicaid next year under the expansion. Of that 6 percent, two-thirds will be eligible for subsidies. That leaves only two percent of Americans facing the full cost of the premium, without any financial help.
In Oregon, that would still account for up to 80,000 individuals who must decide between the premium and the penalty.
The role of businesses
Businesses will also have to make significant decisions this fall about health coverage for their employees. Small businesses, those with fewer than 50 full-time employees, won't be required to provide insurance but can get tax breaks if they use the small business portion of the exchange to shop for insurance .
Each company will have to decide how much money they will put down toward the premium cost. They can then opt for a single plan for all their employees or provide a certain dollar amount and give employees choices of carriers or tiers.
“Small businesses wanted the same options that large business wanted, that is, they wanted choices,” King said. “They wanted to be able to say, 'Employee, here's the amount you have. Go shop.'”
A company could offer $300 per employee per month, for example, expecting employees to pay an additional $30 for a $330 per month silver-tier plan. An employee might be able to choose a bronze-tier plan for $300 and not owe anything more each month. Another could opt to pay $80 out of pocket and get a gold-tier plan.
Companies would have to make their determinations first, then when individuals logged into the system, they would see the plans available to them and their costs.
Patrick O'Keefe, owner of Cascade Insurance Center in Bend, said businesses are now working with their agents and accountants to determine what the costs of providing insurance to their employees might be. In many cases, it might benefit employees for the company not to offer group insurance, but to give the funds directly to employees to shop for plans on the individual insurance exchange.
“It might make sense — no harm, no foul to anybody — to say let's cancel this group health insurance plan, bump up everybody's salary X number of dollars and send them to the exchange,” O'Keefe said. “They'll be using post-tax dollars to pay their premiums, but they'll get subsidies.”
The Urban Institute said the ACA will have little impact on companies with more than 1,000 employees and will cut costs for those with fewer than 100 employees. It's the mid-sized businesses — between 101 to 1,000 employees — that are likely to see higher costs.
Local business responds
Firms such as cable and internet provider BendBroadband , with 270 employees, fall into that mix.
“We are too small to self-insure and lack the scale and leverage to negotiate aggressively with the insurance carriers,” said CEO Amy Tykeson. “The Affordable Care Act does not help companies our size curb spiraling health care costs and will likely have the perverse effect of increasing costs at a faster rate than before.”
Tykeson said new fees charged to help finance the ACA's cost will add about 5 percent to premiums on top of the usual double-digit annual increases.
“I fear the annual increases by the carriers will increase at a faster rate now because more high cost individuals will be covered under the insurance exchanges they are participating in,” she said.
BendBroadband will continue to offer its employees health insurance, calling it an important part of taking care of its employees and their families. With 270 employees, the company spends $2 million a year on health benefits. It would face a fine of about $500,000 in 2015 if it decided against offering health insurance. Still Tykeson could see other employers making that move if insurance costs become prohibitive.
“As staggering as the ACA penalty sounds, it may be more cost-effective for some companies to pay the penalty versus the expense of health insurance,” she said.
The success of the ACA will rest in large part on whether individuals and companies opt for the cheapest option — which will often be to pay a penalty — or take advantage of the incentives to purchase health insurance.
“I think the predominant approach with businesses is they know that it is important to provide benefits for their employees,” O'Keefe said. “I think they realize that most employees aren't going to go do it themselves .”
In July, the Obama administration announced it would delay for a year a provision that set penalties for companies with more than 50 employees if they didn't provide health coverage to their employees in 2014. The cost of insurance had many businesses considering their options. Some companies began laying off staff or avoiding hiring to stay below the 50 full-time employee threshold. Others were transitioning part of their workforce to part-time status to avoid having to pay for health insurance. An entire cottage industry of workforce consultants and software products has sprung up to help companies manage their employee numbers and the resulting health care costs.
“You can't provide benefits if it's going to put you out of business,” O'Keefe said. “There are a lot of businesses where benefits haven't been a part of it, and I don't see anything in here that would encourage them to start doing it. There is a risk for low-margin businesses with a large number of employees. How do you all of a sudden throw on a $20,000 line item which you didn't have a month before?”
Companies and their advisers are also waiting for many of the remaining rules to be finalized and perhaps even delayed. Many individuals won't see any change in their benefits, including some of the free preventive or wellness services mandated by the ACA.
Companies that renew existing plans without any major changes will be considered grandfathered plans and won't have to adhere to all of the new regulations .
The Congressional Budget Office estimates that by 2019, the ACA will get another 32 million individuals insured. Factoring in exemptions and those who choose to pay the penalty , that could still leave some 26 to 30 million people without insurance.
Still, that would be the lowest rate of uninsured that the U.S. has seen in decades, down from 58 million today . Success will likely depend largely on how well the administration can get the word out about the new rules. The ACA provides billions in grants to states and community organizations to conduct outreach and enrollment services.
Cover Oregon began its media blitz in July and will continue its advertising and public relations campaign through the open enrollment period in hopes of reaching as many uninsured Oregonians as possible.
“Some will hear those messages and go to the website,” Fauver said. “Other people may hear those messages, but unless they have an organization that they know and trust to get more information from, it's not going to be enough. They're not going to be convinced there's something there for them, or that it's enough or that it's real.” •
At the state level, a new approach to care emerges
Six years ago, Chip Aimes was employed, healthy and happy. Working for the Providence Hospital System in Anchorage, Alaska , he worked out regularly with co-workers and ran 40 miles a week.
In May 2007, while fishing for steelhead on the lower Deschutes, he suddenly became extremely ill. He had sharp pains in his abdomen and felt weak and feverish. He made it back to his friend's house in Bend, and called 911. He was on the floor before completing the call.
Aimes awoke from a coma three months later in the intensive care unit at St. Charles Bend, and was told a cyst on his pancreas had burst, flooding his body with a bacterial infection and causing his organs to shut down.
“It came on very quickly and spread very rapidly,” he said. “They had called my family and said they didn't think I was going to make it.”
By November, he was diagnosed with non-Hodgkins lymphoma . Doctors in California removed his gall bladder, his spleen, and 80 percent of his pancreas.
“So I went from good health to being insulin dependent, weak, depleted,” Aimes said. “The next thing I was seeing six or more specialists, one or more times a week. I couldn't afford it. I went through a huge amount of money and depleted my resources.”
He turned to the Mosaic Medical clinic, which uses a medical home model, where a team of providers from a variety of disciplines help to manage patient care. Aimes primarily sees Billie Cartwright, a physician assistant at the clinic, who refers him to other specialists as needed.
“They're keeping my costs down and keeping my health up in a better way than anyone ever has,” Aimes said. “I have a nurse calling me once a week, coordinating with home health care. I have Dr. Cartwright, who's judiciously watching me closely and shooting me to where I need to be.”
The clinic has connected him with a therapist to treat his depression, a pain clinic to manage his pain, and dentist to fix the teeth ravaged by his cancer treatment.
“They'll monitor you and make sure you're not deteriorating medically, but at the same time they will do everything they can themselves,” he said.
In late June, Aimes was again experiencing stomach pain . Instead of going to the emergency room, however, he called Mosaic and spoke to the doctor on call.
His care team had developed a plan for using different insulins to handle his flare-ups.
“I got stabilized within eight hours,” he said. “That could have cost me an overnight stay in the hospital.”
The next morning, the clinic called him in for an appointment. By the time he arrived, the providers had discussed his case and settled on changes to his care. Now Aimes is feeling well enough to start volunteer work and return to fishing.
“I've been through this twice before,” Aimes said. “The cost of treating me went from $8,000 to I would estimate $800. But it was still really good care.”
Fixing what's broken
Aimes' experience underscores a major problem with the health care system today. Hospitals and doctors are paid for each procedure, so they are organized around treating patients once they get sick. The more patients they see, the more procedures they perform, the more the money they make. There is little financial incentive to keep people from getting sick in the first place.
Oregon's health care transformation was launched well before the Affordable Care Act was passed, but relies on the federal law. It is intended to change those incentives, to switch from a system in which providers are rewarded for doing procedures, to one where providers are rewarded for keeping people healthy.
It's a multi-billion dollar bet that Gov. John Kitzhaber and Oregon legislators made with the federal government: Give the state the money and flexibility to refashion its health care system, and Oregon will slow the rate of growth in health care costs.
“This isn't about decreases. This is about managing a fixed budget that grows at a sustainable rate,” said Dan Stevens, senior vice president of government programs for PacificSource Health Plans. “Instead of growing at double-digits or twice the rate of inflation, what if we only grew at the rate of inflation? It would be a huge change.”
The vision for health reform in Oregon is to transform care statewide by starting with the state's Medicaid program for low-income adults and children. The program covers about 15 percent of the state's residents. In a deal with the federal government, Oregon will receive $1.9 billion over five years to transform the program, pledging to slow the rate of growth by 2 percentage points from 5.4 percent to 3.4 percent over the next two years.
The state has created 15 regional groups, called coordinated care organizations, and given them a fixed amount per individual to pay for all the medical, mental and dental care they need. The CCOs, as they are known, will have broad discretion in how they distribute that money.
To ensure that CCOs don't simply cut back on care, each organization will be evaluated based on 17 measurements of quality, ranging from patient satisfaction to prenatal care, from emergency room visits to follow-up after a hospitalization for a mental illness. Unless a CCO meets the benchmark or shows a 10 percent improvement for at least 75 percent of those quality measures, the CCO won't get its full allocation of money.
“We want to look down below that global budget and see that care is being transformed and changed,” said Bruce Goldberg, director of the Oregon Health Authority, the state agency that is overseeing the effort.
Over time, state officials hope that CCOs will be able to learn from one another how to best transform care. Those CCOs that excel at certain metrics will become examples for others in the state.
“As we compared which metrics get moved by which CCOs and figure out why,” Goldberg said. “That's going to give us a lot of information.”
The state has also created a transformation fund, outside the global budgets given to each CCO, to help CCOs start innovative projects.
The system creates in essence 15 health reform laboratories, testing various approaches to improving care and seeing which ones work. A single CCO having success on a single metric could impact care in all the other CCOs, and spill over into commercial and Medicare patient care as well.
In Central Oregon, for example, the CCO has embedded behavioral health providers within primary care clinics.
“There's a lot of medical conditions that have a behavioral health component or mental health issues that impact the medical condition,” said Scott Stafford, a clinical psychologist with St. Charles Family Care.
Depression or other behavioral health issues often keep patients from managing their chronic conditions properly or adhering to the treatments that doctors prescribe for them. Behavioral health counselors can often address the psycho-social issues that get in the way, Stafford said.
In the past, physical and mental health were separate systems. So if doctors felt patients could benefit from behavioral health counseling, they would refer them to a mental health clinic.
“If you look at the research data, follow-up is pretty poor,” Stafford said. “Less than 50 percent of the patients will follow up on the referral.”
With behavioral health embedded in a primary care clinic, the doctor can call the counselor into the examination room to speak with patients and help address their issues.
“They won't have to go anywhere else,” Stafford said. “It helps to reduce the stigma.”
Meanwhile, individuals with serious mental health issues often don't get the medical care they need. Studies show such adults are less likely to have their blood pressure, asthma, diabetes and heart disease under control. As a result, they die on average 25 years earlier than those without mental illness .
Pacific Source Community Solutions, the CCO in Central Oregon , in 2012 began offering physical and mental health care in a single location through Deschutes County Health Services and Mosaic Medical. Prior to the change, on average one individual with conditions like schizophrenia and bipolar disorder died each month in Deschutes County. Over the first 14 months of the program, there has been only one death.
For the transformation to succeed, CCOs will have to think of new and innovative ways to allocate their dollars, rather than simply relying on the traditional means of cutting health costs by squeezing payment rates to providers or cutting services. And they'll need to find ways to encourage health providers to think not primarily about the revenues and costs associated with every patient encounter, but about how to keep the patients in the community healthy.
“We need to be looking at all of our business models in health care and how do we morph our business models to focus on population health and patients' outcomes,” Pacific Source's Stevens said. “Despite the fact that in Oregon, health care is really dominated by not-for-profits, they're not-for-profits who have a revenue and expense business model, not a population health business model.”
A model system
As CEO of Advantage Dental, Mike Shirtcliff has had to make those kinds of decisions for the past 20 years. Advantage receives a per-person payment from the state to provide oral health care for Oregon Health Plan and Healthy Kids enrollees.
“We realized a long time ago we were going to go broke as a company if we were only worried about fixing teeth, because there were too many teeth to fix,” Shirtcliff said. “We really had to look at population-based health care, where do we effectively put our money.”
Advantage Dental opted to hire rather than contract with many of its dentists and to focus more on the less expensive preventive dental care that would keep their patients' teeth healthy and avoid the more expensive dental work, such as fillings or root canals, down the road. Cavities are essentially an infectious disease, he said, that is passed down from mother to child through oral bacteria.
“The good hope of the CCOs is we can separate out the infection disease, treat it as a public health issue, and effectively fund it, so we end up with kids with better outcomes,” he said.
Shirtcliff believes the CCO design encourages the various players in health care to sit down at the table and work out solutions that improve population health, just as Advantage Dental had to do with its global budget.
“It's much more complex because you have way more parties involved that have to change,” he said. “We have to have that discussion. Where do we spend our dollars?”
The CCO in each region has already enrolled all of the current Medicaid patients, and will see a major influx of new Medicaid patients as eligibility widens in 2014. But the effort may have a significant impact on other Oregonians as well. If CCOs can improve patient health while slowing the rate of growth in health costs, they could become the model or even the vehicle for transforming care for the rest of the state.
Oregon officials are already contemplating shifting public employees, including teachers, into CCOs . The Public Employees Benefit Board has estimated that if CCOs could cut the rate of growth in health spending for their members by the same 2 percentage points they've committed to in Medicaid, PEBB would save $2.5 billion over 10 years. Eventually even private companies might look to contract with the CCOs in their region to provide care for their employees at a more manageable cost.
“Other payers are going to be looking at that model and having that be the way coverage is set up,” said Meghan Haase, CEO of Mosaic Medical and a board member for the Central Oregon CCO.
Haase said many of the changes that hospitals and clinics are implementing under CCOs will apply to patients with private insurance as well. And more broadly, tax dollars that are not spent for Medicaid can be spent on other needs in the state, such as roads and schools.
“The more we can really influence wiser spending in health care,” she said, “it leaves more resources for education and other community investments that health care is kind of pushing aside.” •
At the local level, integrating medical and behavioral health
As the light turned green, Ryan Stinchcomb hesitated a moment to make sure no car had run the red light. Before he could start his motorcycle into the intersection, however, a young woman texting while driving hit him from behind.
In an instant, Stinchcomb went from an active lifestyle, working physically demanding jobs and building furniture in his spare time, to a life of disability and chronic pain.
“I'm 41 years old now. I'll be living with this forever,” he said. “It's hard to swallow.”
Two years after his accident, the 41-year-old La Pine man still has significant back and hip pain . Having moved from California, the site of his accident, to Central Oregon, he sought care at St. Charles Family Care clinic in Bend. In addition to helping him with his physical problems, his doctor suggested he attend pain school, a coping class taught by a clinical psychologist.
At first, Stinchcomb was skeptical.
“I didn't need a psychologist,” he recalls thinking. “I'm in pain, I'm not mental.”
But in the very first class, he could see himself in the scenarios the psychologist was describing.
“Just a lot of the mental process, days where you wake up and you don't feel like moving. You think, 'This is it, man, this is how my life is going to be,'” he said. “It kind of helped me through it, to see it will get better, that each day is going to be different.”
In the four one-hour classes, Stinchcomb learned relaxation techniques, breathing exercises and stretches that can help calm his body when his pain flares.
“When I'm going through a break through pain, where I get chronic pain all of a sudden, I'll try that and it does seem to help,” he said. “Instead of just grabbing for the Vicodin, I try to calm myself, breathing and stretching.”
His doctor cut his monthly prescription from 180 pills a month to 90. But unable to work, Stinchcomb couldn't quite figure out what to do with himself. He told psychologist Scott Stafford he had thousands of dollars worth of construction tools just going to waste because he could no longer lift the heavy wood needed to build furniture.
Stafford had a suggestion. Had he ever thought of building dollhouse furniture?
Stinchcomb might not have taken it seriously if his wife hadn't encouraged it on the ride home. She had gone to doll shows as a child and remembered the elaborate displays. At home, they looked online. Master craftsmen were selling dollhouses for as much as $45,000.
“I haven't started that yet,” Stinchcomb said. “But I'm thinking that is something I'm going to pursue.”
So far, more than 127 patients have gone through pain school, an offshoot of an initiative by the Central Oregon Health Council to integrate medical and behavioral health. By focusing on the psycho-social issues that can accompany and often exacerbate a patient's physical health, the approach is showing great promise in keeping patients from spiraling into costly medical crises.
“It seems like there are more people on your team,” Stinchcomb said.
Initiatives like pain school and embedding psychologists within primary practice are the types of small steps health leaders in Central Oregon are hoping will start to change the dynamics of providing care in the region. The state has granted great flexibility to regional health groups, called coordinated care organizations, to reorganize care on a local level, to shift dollars from the traditional approach of paying hospitals and doctors for treating patients once they get sick, to a more coordinated approach where multiple medical and non-medical personnel work together to help keep patients healthy and away from expensive treatment.
To accomplish that, however, local providers will have to set aside their longstanding competitive differences and work together to focus on improving not their bottom line but the region's health.
The work to integrate behavioral health into primary care practices was a project launched by the Central Oregon Health Collaborative long before federal and state health reform was passed. Bolstered by early success and a new cooperative approach that began sweeping Central Oregon, the collaborative soon expanded its scope, launching new pilot projects around patient-centered medical homes, community health workers reducing emergency room use.
By the time state officials were ready to hand over controls of the Medicaid program to regional CCOs, the Central Oregon group was primed to lead the local effort.
Renamed the Central Oregon Health Council, the group sought special permission from the Legislature to partner with an insurance company, Pacific Source Health Plans , to create a shared leadership structure. In most other parts of the state, the CCO was either an insurance plan with a network of providers, a health system with its own hospitals, or a group representing independent physicians.
The council is made up of 13 members representing the major providers in the region, the three counties and the community. It serves as the decision-making board for the CCO, while PacificSource manages the finances.
“No one interest holds a majority ,” said Robin Henderson, the outgoing executive director of the council. “That makes it different than anyone else. We have to work together to make our CCO dollars work.”
Like all CCOs, the council is charged with allocating a single pool of money to provide all the necessary care for Medicaid residents in Central Oregon, but they will be evaluated based on their ability to improve the health of the patients they serve.
The design creates a unique balance in the CCO structure . Even St. Charles Health System, which now receives 50 percent of the money spent by Medicaid in Central Oregon, has only a single vote on the governing board. So does Bend Memorial Clinic, the region's largest multispecialty provider, and the Independent Practice Association, which represents the region's doctors. Those players carry no more votes than each of the two community representatives on the board.
The balance ensures that providers, who have typically been adversarial competitors in the region, must work together. And because funding from the state is dependent on improvement on quality measures, any providers that try to maximize their own revenue are likely to undercut those quality gains and jeopardize the full funding from the state.
“I feel I have two bosses: My boss in my company, and I'm heavily accountable to this health council,” said Dan Stevens, senior vice president of government for PacficSource Health Plans. “If we didn't perform in this, the council may want to find a new CCO partner. ”
Stevens said in some ways, the health plan has ceded control over its operations to the council, but it's a level of partnership many insurance plans never enjoy. Plans can try to encourage hospitals, doctors and patients with financial incentives but in the end have little control over what those parties will do. With the CCO structure, the providers and the community become committed partners, helping them find and implement solutions.
“We're sitting around the same round table having really productive conversations about quality and outcomes,” he said. “It's not easy, but I would prefer that any day to making decisions behind closed doors.”
A recent meeting of the council showed how well the collaboration works. After a presentation about the effectiveness of pain school, its directors sought the council's help in eliminating a vexing hurdle.
As a group visit, pain school costs less per session than a one-on-one consultation with a psychologist, but had to be billed in a way that required patients to get prior authorization from the health plan. The staff had to spend considerable time and resources to get approval to enroll patients and get reimbursed for the cost. When the psychologists brought the issue to the council, Stevens immediately pledged to eliminate the need for prior authorization.
The council will now have to move toward resolving thornier issues. When the CCO was formed in 2012, PacificSource had separate contracts with each of the major providers that worked with Medicaid patients. Now those contracts will have to be renegotiated as the CCO reallocates the Medicaid funds available for the region. It will be up to the CCO board to determine how much hospitals, doctors, clinics and other providers — many of whom serve on the board — will get paid.
“That is the elephant in the room that will test our resolve,” said Jim Diegel, CEO of St. Charles Health System. “The vision is much different in five years. We better not be spending 50 percent of our Medicaid (dollars) on hospital care, because we'll make no progress. From a transformational standpoint, if the future is still what hospitals see the present as, we are doomed to failure.”
Although the hospital probably has more to lose with the distribution of funds than any of the other players, its future is also subject to the decisions of the council.
“They've done a pretty good job of tap dancing around the politics and solving problems,” said Mike Shirtcliff, CEO of Advantage Dental and a council member. “When you get all the big providers around the table, everybody has a vested interest. ”
Even with a limited pot of money, the providers on the council have agreed to fund several initiatives that might take money away from payment rates, but that will improve the health of the region's residents.
One effort focuses on maternal health, hiring two nurses and two community health workers who can help expectant mothers connect with primary care services, including prenatal visits, oral health, behavioral health and other care services.
Another focuses on ensuring patients get follow-up care after being discharged from the hospital. Studies show that a lack of follow-up often results in the patient being readmitted to the hospital, poorer outcomes and higher costs. The initiative sets up a process of notifying the patient's primary care provider — or assigning one if the patient has no regular doctor — and calling the patient within 24 hours of discharge.
A third initiative will target patients with complex health care needs. Although they represent only 10 percent of Central Oregon's Medicaid population, they account for 75 percent of the total health care spending. The initiative will establish ways of identifying such patients and then referring them to HealthBridge, a high-intensity complex care center. The patients will be seen by a team including physicians, nurse practitioners, community health workers, behavioral health specialists and physical therapists, who will work to help patients manage their health.
If the initiative can meet its goal of cutting spending on these patients by an average of 10 percent, it would save the region $4 million a year. Those efforts will build on the success the council has had, even before the CCO was formed.
In 2011 the council identified Medicaid patients who visit the emergency room more than 10 times per year. They hired a community health worker to help those individuals connect with primary care practices in the region so they could better manage their health conditions and avoid using expensive emergency room care.
The first 144 patients involved in the initiative had an average of 14 trips to the ER per year. Within six months, however, that rate had been cut in half. The group had 541 fewer ER visits, reducing costs by more than $3,100 per patient. Now other CCOs in the state are implementing that same approach.
Henderson said it would have been easier for the CCO to have a single entity that makes all the decisions, but the shared structure it adopted ensures both collaboration and transparency.
“We wanted something that was accountable to the community,” she said. “We have to rely upon each other to make this work, and that's the strength. It's much easier if there's one entity running it . It's not better, but it's easier.” •
What parts of Obamacare are already here?
Medical loss ratio:
Requires plans to spend at least 80 percent of premiums on medical costs, or rebate the difference.
Allows dependent children to remain on parent's group health plans up to age 26
Eliminates cost sharing for many preventive services, including colorectal screening, mammography, vaccinations and contraception.
Allows employer with no more than 25 employees with average annual salaries of $550,000 or less to take a federal tax credit up to 35 percent of the costs of insurance for its employees.
How are we paying for this?
Funding for the Affordable Care Act comes from a variety of sources including:
• Taxes on so-called Cadillac plans valued at more than $10,200 for individual plans, $27,500 for a family.
• A Medicare tax increase for those earning more than $200,000 for an individual, $250,000 for a married couple.
• Limits on flexible spending account contributions to $2,500 and the elimination of reimbursements for over-the-counter drugs without a prescription.
• New taxes on medical devices, drug manufacturers, insurance plans and tanning salons.
• A cut in payments to Medicare-managed care plans