Oregon’s CCO’s What T hey Mean to Your Future Jeff Heatherington, LHD (Hon) President and CEO FamilyCare, Inc.

1. Oregon’s CCO’s What They Mean to Your Future Jeff Heatherington, LHD (Hon) President and CEO FamilyCare, Inc.

2. Oregon’s Managed Care History • Began in 1985 with PPO risk model for Medicaid • Privatized Medicaid physician services • Coalition of Interests • Big business, Small business, State, Advocates, Providers • Legislature authorized Oregon Health Plan in 1989 • Began operation in 1995

3. Oregon Health Plan • Goals of the Oregon Health • Reduce cost shift of uninsured • Reduce cost shift of under reimbursement by Medicaid • Guarantee access to care • Expanded Population Coverage • Integrate Physical, Mental, and Dental care • Prioritize health coverage to the most effective treatments and prevention – Prioritized List • Define covered and non-covered benefits by Prioritized List • Create community based care organizations (MCO’s) to provide health care • Fund health care services through an annual set premium. • Audit delivery of services by MCO’s to guarantee compliance

4. Oregon Health Plan • Goals Achieved • Reduce cost shift of uninsured • Reduce cost shift of under reimbursement by Medicaid • Guarantee access to care • Expanded population coverage • Integrate Physical, Mental, and Dental care • Prioritize health coverage to the most effective treatments and prevention – Prioritized List • Define covered and non-covered benefits by Prioritized List • Create community based care organizations (MCO’s) to provide health care • Fund health care services through an annual set premium. • Audit delivery of services by MCO’s to guarantee compliance

5. Significant Outcomes • Prioritized List • Only Evidence-based Benefit Package in U.S. • Client Access • 16 successful community based MCO’s throughout Oregon • Integration of Services • Only one plan in Portland • Savings • $ 16 Billion since 1995 • Bi-Partisan support in the Legislature

6. Health Care Transformation • Goals of Transformation • Reduce cost of Health Care • Guarantee access to care • Expanded Population Coverage • Integrate Physical, Mental, and Dental care • Define covered and non-covered benefits by Prioritized List • Create community based care organizations (CCO’s) to provide health care • Fund health care services through a Global Budget. • Audit delivery of services by CCO’s to guarantee compliance • Cover PEBB and OEBB under CCO’s • Establish Insurance Exchange for Individuals

7. What’s New about CCO’s • Full Integration of Mental and Physical Health • Better collaboration of providers and social and County services • Changes in Governance • Community Advisory Councils • Everyone thinks it’s a whole new ballgame.

8. Outcomes to Date • 14 Certified CCO’s throughout Oregon • Integration of Mental and Physical Health Services • Dental soon? • Insurance Exchange Developing • Federal Dollars coming in • $ 1.9 Billion • Positive Energy about Effecting Change

9. What’s Left? • Mature Integration of Mental and Physical Health • Integration of Dental Health • Actuarial Soundness of Global Budget • Re-Organization of Oregon Health Authority • OHA and DHS not integrated • IT Systems not functional or not developed for CCO’s • Rules not yet finished • Hospital challenges to the System • Funding in current economic environment

10. What’s Missing? • Access to Primary Care • No Real Attention to Health Demand • Real Discussion about Reducing Costs

11. Future of CCO’s • Integration of PEBB and OEBB • Politics undecided • Opposition from commercial insurer’s, Hospitals, • Unions are hesitant • Exchange membership questions • State General Fund budget implications • Integration of Long Term Care (same issues) • Worker’s Compensation • Commercial Insurance • Competition vs Integration • Self-Insured industries • Rent the system

12. What Does This Mean For You • WHAT DO YOU WANT? • WHAT ARE YOU WILLING TO FIGHT FOR? • GDP Revenue going into Health Care is 18% and rising • It should be 11% and stable • No Health Care Sector is willing to give up their share

13. What Does This Mean For You • As A Purchaser you are currently • Uniformed • Misinformed • Heavily Marketed • Satisfied with insignificant levels of information and facts • Not curious • Unwilling to challenge your friends in Health Care • WHAT DO YOU WANT? • WHAT ARE YOU WILLING TO FIGHT FOR?

15. CCO MYTHS • Quality focus will lower costs • Unit and Utilization Costs? Maybe • Prices? NO • Collaboration and Integration will mean better care • CCO’s and providers have no skill set for this – YET • Quality outcome incentives will drive the process • Not if Primary care continues to be under-paid • Not if the reporting/record requirements cost more than the incentive • Not if Price increases as Utilization goes down.

16. Access to Primary Care • Primary Care Services are Under-reimbursed • Physician supply is old and not being replenished • Education is too expensive • Education system is not responding to the shortage • Need ~ 24,000 new primary care physicians annually • Producing a TOTAL of 18,000 new physicians annually

17. Health Care Demand • Health Care is the service provided for a disease process • Disease processes start OUTSIDE of the Health Care System • Disease development involves: • The physical, mental, emotional and spiritual development of the individual • The environment, Economics,Education, Nutrition,Family dynamics and relationships, and genetics • Reducing the Demand for services starts in the family, the neighborhood, the schools, the whole community. • The Result is what lands in the Health Care System • We are paying not only for a broken health care system, we are also paying for a deficient community system.

18. Health Care Demand • Health Care is the service provided for a disease process • Disease processes start OUTSIDE of the Health Care System • Disease development involves: • The physical, mental, emotional and spiritual development of the individual • The environment, Economics,Education, Nutrition,Family dynamics and relationships, and genetics • Reducing the Demand for services starts in the family, the neighborhood, the schools, the whole community. • The Result is what lands in the Health Care System • We are paying not only for a broken health care system, we are also paying for a deficient community system.

19. ACO MYTHS • Primary Care Medical Homes will be the basis for healthcare transformation. • Primary care is underpaid by 40-50% and there is no plan to raise reimbursement • Growing shortage of primary care physicians and nurses. • You can’t make up the shortage and improve quality by putting care into the hands of lessor trained people • Practicing at the top of one’s license does not mean putting the patient in an assembly line. It means paying the provider for the time necessary to diagnose and deliver complete patient centered care.

20. The Reality • This is not about health care – it is about money and politics. • No health care entity will willingly give up revenue or profit. • Health outcomes are what will be achieved after money and politics are decided. • You have to be prepared to fight for everything. • Trust no one – This is about money and politics.

21. My Opinions • You, and your business sector, are 100% responsible for the current mess. Clean up your own house. • Equal attention must be paid to creating healthy communities. Health begins in the community, not in the Health Care system. • We need different leaders for change to occur.

23. Your Choices • You can do nothing and be a victim • You can plan for the future and take your chances • You can Create the Future and Build a Healthy Community.