1. Making the Transition to a Sustainable Health Care System The Oregon Approach: so far … December 6, 2011 Mike Bonetto Health Policy Advisor to Oregon Governor John Kitzhaber

2. Agenda 1. State and Federal Budget Issues 2. System Challenges 3. House Bill 3650 4. Next Steps

3. Oregon’s Long Term Budget

5. 20002025 Number of beneficiaries39.5M69.7M Beneficiaries as share of pop.13.8%20.6% 2004 - Medicare accounted for 8% of all federal income taxes. 2015 – 19% 2025 - 32% 2075 – 90% 2024 Medicare Trust Fund assets are exhausted Future of Medicare

6. U.S. National Debt & U.S. Debt Ceiling Trillions National Debt

7. Failure of the “Super Committee” Two percent reduction in Medicare spending, which must come from:  Payments to hospitals  Doctors  Nursing homes  Other providers And not in benefits

8. Source: Organisation for Economic Co-Operation and Development, OECD Health Data, Feb 2011; U.S. Congressional Budget Office, The Long-Term Budget Outlook, June 2010, p. 42 Total Expenditure of Health as Share of U.S. GDP % Current Projected

10. System Challenges: The cost-shifting cycle System Challenges: The cost-shifting cycle Public Private Those who do not fit into a category (uninsured) Change eligibility Pressure on state/federal budgets Employers and/or employees drop coverage Increase in premiums, co-pays, co-insurance ER (uncompensated, expensive care)

11. System Challenges: Influence Factors on Health Status Social 15% Environmental 5% Human Biology 30% Lifestyle & Behavior 40% Medical Care 10% Source: McGinnis J.M., Williams-Russo, P., Knickman, J.R. (2002). Health Affairs, 21(2), 83

12. System Challenges: Fragmentation of Care System Challenges: Fragmentation of Care

13. Not workingBetterEven better PaymentFee for serviceEpisode-based reimbursement Quality Global budgeting IncentivesConduct procedures Evidenced-based care Pay for performance Address root causes Reduce obstacles to behavior change MetricsRevenue improvement Quality Reduced hospitalization Reduced disparities Better health Improved quality of life Reduced costs GovernanceInformal relationships & referrals Joint partnerships between organizations (e.g., mental health & behavioral health) New community accountability linking ALL System Challenges: Misaligned Incentives

14. House Bill 3650 Creates a new vision for the Oregon Health Plan Passed with broad bipartisan support Emphasizes better health – recognizes if we deal with budgets alone, we won’t succeed Transforms the system to meet the outcomes we need

15. Ways to Reduce the Cost of Health Care 1. Reduce what we pay for it (provider cuts) 2. Reduce the number of people covered 3. Reduce the benefits covered … or 4. Change the way care is organized and delivered

16. GOAL: Triple Aim A new vision for a healthy Oregon

17. Employer Wages Common Pool Resources – Money for Health Care Federal Medicare Tax Insurance Premiums State Medicaid Funds Federal Medicaid Match Out-of-pocket Hospitals Doctors Pharmaceutical Companies Medical Equipment Suppliers Other Health Professions PROVISION OF THE COMMON POOL

18. Vision of House Bill 3650 Local accountability for health and resource allocation Standards for safe and effective care Global budget indexed to sustainable growth Integration and coordination of benefits and services Improved outcomes Reduced costs Healthier population Redesigned delivery system

19. Coordinated Care Organizations Community-based, strong consumer involvement in governance that bring together the various providers of services Responsible for full integration of physical, behavioral and oral health Global budget Accountability through measures of health outcomes

20. Key element: Global budget Global budgets based on revenue/expenditure target and then increased at agreed-upon-rate rather than historical trend  Management of costs – clear incentives to operate efficiently  More flexibility allowed within global budgets, so providers can meet the needs of patients and their communities  Accountability is paramount  Opportunities for shared savings when patients remain healthy and avoid high-cost care

21. Key element: Accountability and metrics Incentives & measurements for: right care, right time, right place by the right person Activities geared towards health improvement Hospital quality and safety Patient experience of care Health outcomes

22. Long-term Begin to use redesigned delivery system platform for other state contracts: Public Employees Benefit Board Oregon Educators Benefit Board Redesigned delivery system could be core component of health insurance exchange and an opportunity for private sector to participate

23. Better health & value comes from: Ability to reduce preventable conditions Widespread use of primary care health homes Improved outcomes due to enhanced care coordination and care delivered in most appropriate setting Reducing errors and waste Innovative payment strategies Use of best practices and centers of excellence Single point of accountability for achieving results

24. Challenges Change is difficult Time is short Federal approvals are necessary Transitioning from current models while maintaining access to care and community infrastructure

25. 133 Oregonians – 4 work groups Coordinated Care Organization Criteria Who, how, where Global Budget Methodology Criteria for determining global budget funds, shared savings arrangements, stop-loss, risk corridors and risk-sharing arrangements Outcomes, Quality and Efficiency Metrics Clinical, financial and operational metrics Medicare-Medicaid Integration of Care and Services Proposals for integrating care for those who are dually eligible for Medicare and Medicaid into CCO framework and for creating virtual integration for long term care services

26. Oregon Health Policy Board Products 26 OHPB will deliver the following products to the Legislature in February 2012: Draft legislative language for implementation of Coordinated Care Organizations (CCOs) CCO criteria and process for CCO development; global budget methodology, and financial reporting requirements Medical liability/cost containment strategies Standards for specified health care workers: community health workers, peer wellness specialists, personal health navigators

27. Timeline DateEvent 12/13/11 Oregon Health Policy Board meeting: Review of draft materials 12/19/11 – 1/3/12Public Comment Period on Draft HB 3650 Deliverables 1/10/12 Oregon Health Policy Board meeting: Review of draft materials 1/10-1/18/12Public Comment Period on Draft HB 3650 Deliverables 1/18-1/20/12Interim Legislative Hearings 1/24/12 Oregon Health Policy Board meeting: Approval of final HB 3650 Deliverables 2/1/12Delivery of HB 3650 Deliverables to Legislature 3/2012 If Legislature approves, apply for required permissions to CMS 3/2012Oregon Health Authority implementation planning 7/2012Potential first CCOs certified and enrolling members

28. www.health.oregon.gov