BH: Oregon's efforts at overhauling the way it delivers health care to low-income residents got a $1.9 billion boost today. The state announced it’s reached a five-year agreement with the U.S. Department of Health and Human Services. The deal aims to ultimately cut Medicaid costs for the state and federal governments. Joining us now with more details is our Salem reporter, Chris Lehman. Hi Chris.
CL: Hi Beth.
BH: So how significant is this agreement?
CL: Let me put it this way: Governor Kitzhaber's spokesman, Tim Raphael, told me that today is easily the biggest day in the governor's current term in office. The words "big deal" kept surfacing. And for a state like Oregon, of course, $1.9 billion IS a big deal.
BH: But I thought Oregon and the feds had been in talks for a while and there was already an understanding that the federal government was on board. What’s changed here?
CL: The big change is that this is an influx of cash. It's true the federal government had indicated a willingness to play along, so to speak, with Governor John Kitzhaber's proposal to give medical providers more flexibility in how they spend Medicaid dollars. But until today, there was no actual deal in place.
BH: Does that money all come to the state right away?
CL: No, but a good chunk of it will show up pretty soon, about $620 million. That money will be used to help the health care collaborations known as Coordinated Care Organizations to get started. Without the money, there was fear that the system would quickly fall apart. But the federal cash is based on an understanding that Oregon will reduce its overall Medicaid costs by at least two percentage points in two years. So the pressure's on.
BH: So how will that save money, especially when the federal government is pumping in $1.9 billion over five years.
CL: Well I should point out first of all that these groups—and 14 of them have applied so far—they're not really new to the health care business. What will be new to them is the degree to which they'll be trusted to spend taxpayer money to keep people healthy. In other words, gone will be a series of inflexible billing codes. Instead, these groups will coordinate care among local providers to help keep people out of expensive emergency rooms or in-patient care. An example the Governor is fond of using is that of a hypothetical elderly woman with a heart condition. When the temperature rises, she might end up in the ER..but the governor says all she might really need is a $200 air conditioner. But under the traditional health care delivery model, Medicaid money won't pay for an air conditioner.
BH: Doesn't the state need a waiver to be able to spend federal Medicaid money differently?
CL: That's true, and technically today's agreement doesn't include that waiver. I spoke with Bruce Goldberg about that. He's the head of the Oregon Health Authority.
Goldberg said, "We've come to a financial agreement with the feds, and over the next six weeks we will be hammering out the waiver's terms and conditions, and we have a mutual agreement to have that wrapped up by July 1."
CL: And that July 1st date is significant for the state, since it's when the second year of the current budget cycle begins. Without this federal money and the waiver, Oregon would be faced with potentially having to make deep cuts to its existing Medicaid services.
BH: Thanks Chris.