The Oregon Health Plan (OHP) is our state Medicaid program. It provides health coverage for low-income Oregonians that include working families, children, pregnant women, single adults, seniors and more. The Oregon Health Authority (OHA) has contracted with a variety of health entities, known as Coordinated Care Organizations or CCOs, to manage and deliver health care for most of these people eligible for Medicaid. OHA pays CCOs to cover these individuals with capitation rates. Capitation rates are a predetermined payment that depends on the individual's OHP eligibility status and is paid to CCOs on a monthly basis dependent on enrollment.
These capitation rates are developed and certified by OHA's contracted actuaries on a yearly basis. The process and methodology used to develop capitation rates are governed by federal and state regulations. CMS requires Oregon's capitation rates be Actuarially Sound and follow applicable Actuarial Standards of Practice, which are developed by the American Academy of Actuaries.
OHA releases 2019 CCO capitation rates
The Oregon Health Authority has finalized the 2019 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). This increase represents a 4.35 percent change in the rate of growth for plan year 2019.
The adjustment will result in an average net payment of $449.69 per month for each member, which is $21.81 more than the average per-member-per month payment in 2018, an increase of 5.1 percent. A reduction in the Quality Pool payment for calendar year 2019 of at least 0.75 percent results in an overall rate of growth of 4.35 percent.
Increases in CCO costs have been driven by three primary factors: changes in membership due to the renewals process (1.7-2.1 percent impact), pharmacy costs (1.8-2.3 percent impact), and fluctuations in rural hospital costs.
The renewals process in 2017 led to changes in OHP enrollment and has meant a less healthy population of members, which affects the rates.
There are 12 rate categories for CCOs, which 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. The rates are also based on average provider rate costs in each region.
"Containing health care costs has gotten harder the deeper we dig into the system, but many of our CCOs are proving that it can be done," said OHA Director Patrick Allen. "To incentivize cost containment, we are putting rewards in place for those who are bending the cost curve."
The Central/Eastern region (Eastern Oregon CCO, PacificSource Central, PacificSource Gorge and Cascade CCO) successfully came in at a rate of growth below 3.4 percent for the first time since Affordable Care Act expansion in 2014. Three out of four CCOs in the region achieved an expenditure growth from 2016 to 2017 that was lower than 3.4 percent.
As part of Oregon’s Medicaid waiver commitment to incentivize cost containment and quality in the program, CCOs in this region received an upward adjustment. With this reward, the region still maintains the lowest percentage increase when compared against the other three regions.
As part of its “CCO 2.0” policy proposals, OHA is working to address the major cost drivers in the health care system, increase the share of CCO budgets tied to performance, and find areas of opportunity for improved efficiency. The recommended policies also offer changes to OHA’s rate-setting policies and procedures that could help reduce costs in the long term.
In its 2012-2017 Medicaid waiver, the state held spending growth to 3.4 percent and 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.
2019 Aggregate CCO Rate Comparison
2015-2019 Capitation Rate Reports
2015-2018 Contract Rate Sheets
2015 & 2016 Rate Methodology