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A $1.9 billion Oregon experiment gives Medicaid local roots

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SALEM, Ore. » Some say America has been homogenized, a chain-store nation bereft of regional distinction in dialect or dinner. But now this state, at the pioneer’s end of the road, is testing the idea that local community difference is alive and well, and that grassroots leadership holds the key to fixing health care in America.

Under an agreement signed with the Obama administration last year, and just now taking shape, Oregon and the federal government have wagered $1.9 billion that — through a hyper-local focus on Medicaid — the state can show both improved health outcomes for low-income Medicaid populations and a lower rate of spending growth than the rest of the nation. If Oregon fails on either front, the consequences are grave, potentially tens of millions of dollars in penalties a year, bleeding a state budget still wounded from recession.

Fifteen Community Advisory Councils have been established across the state, charged with setting local goals. One of them, around the college town of Eugene, will take aim starting July 1 at smoking by pregnant women, hoping to cut neonatal costs through a system of rewards, like gift cards at the doctor’s office for women who go tobacco free. Another council, in Portland, is focusing on something that might sound ho-hum in health care, but that local leaders have identified as a care-and-cost driver: mold in low-income housing. Another group, in an economically depressed rural swath in the state’s center, will try getting people out of their cars, aiming for a payoff in reduced cardiovascular care that is both measurable and relatively quick.

Other states, notably Massachusetts and Vermont, are experimenting with new models as well, mainly through regulation. But Oregon’s way — one ear to the ground, health care with local input — has always been different, and the Medicaid experiment, health care experts said, has now sharpened those distinctions to an incisive edge.

"We’ve got essentially 15 experiments going around Oregon," said Gov. John Kitzhaber, who was an emergency room physician before entering public life, and still signs his official correspondence with an M.D. next to his name. "They all have to meet the same metrics in outcome and quality," he added, but after that the new Community Care Organizations, to which the advisory councils report, are largely being left to their own devices in finding a way that makes sense for them.

Local, interventionist, hands-on attention — reducing health problems before care is warranted or billed — means breaking deep tradition in a system that thinks mostly about treatment and response. "We’re building something that’s never been built before," Kitzhaber said.

National health care experts are divided about whether the Oregon Experiment, as many people call it, can achieve real, measurable goals within the five-year timeline of the federal agreement. Some say that to expect once-competing hospitals, in some cases with different cultural traditions and billing systems, to pull together for a common goal — a pattern in some of the new organizations — runs contrary to human or institutional nature.

Others say Oregon’s path through the health care wilderness is so idiosyncratic that what happens here might stay here, untransplantable to other locales even if it does succeed.

The state has been tweaking its Medicaid system for years under Kitzhaber, a Democrat who served two terms starting in the mid-1990s, then ran again and won in 2010. Nonprofit organizations with a collaborative bent, like Kaiser Permanente, also run deep in the health care culture, with a big presence and market share. And Oregonians tend to be joiners, with some of the highest rates of volunteerism in the nation, especially in liberal Portland, which has 40 percent of the state’s Medicaid patients, and where words like "community" and "social justice" get repeated in public life like mantras.

"One thing unique about the CCO process is the degree to which it focuses on all the elements of an Oregon Health Plan recipient’s life," said Steve Weiss, the chairman of the advisory board at Health Share of Oregon, a Community Care Organization in Portland. Weiss, 70, is disabled and gets by, he said, on $864 a month.

Kitzhaber, in an interview in his office at the Capitol, said the anecdotal interventionist health care story he imagines is that of a poor 92-year-old woman who develops congestive heart failure in a heat wave because she has no air-conditioner.

"Under the current system, Medicaid will pay for an ambulance and $50,000 in the hospital," he said. "What it won’t pay for is a $200 window air-conditioner, which is all she needs to stay in her home and out of the acute medical system."

Getting to that $200 decision, though, is not easy. It means both having a community health care worker able to check in on the woman, he said, then having a system flexible enough to send someone down to the local Target store with a credit card.

It also requires a paper trail of measurements and procedures, officials said, to ensure that local decisions are fair and based on predictable outcomes, so that something like the purchase of one air-conditioner does not open the door to questions of bias, or claims that every poor family is entitled, in the name of fairness or social equity, to cooler air at state expense.

Mike Bonetto, a health policy adviser to Kitzhaber, said: "How do you maximize the value of the tax dollars that are being spent on health care? If it’s to pay for the air-conditioner, so be it." He says the public understands that linkage — that savings on many small things can mean greater support for big things like public safety and education — and the Democratic-controlled Legislature has endorsed it with bipartisan votes on elements of the health package.

The state has also developed 33 performance measures to aim to show to the public and the federal government how the project is working, with financial incentives to local Community Care Organizations for meeting goals like rates of adolescent well-care visits and colorectal cancer screening. The first reports of baseline data are scheduled to start coming in this spring.

Mark V. Pauly, a professor of health care management at the Wharton School of Business at the University of Pennsylvania, says he thinks coordinated care of the sort Oregon is embarking on might seem a little too interventionist in parts of the country where people are expected to mind their own business.

"We don’t know whether Americans are ready for coordinated care," he said. "But Oregon keeps trying. God bless them."

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