1. Amber Thomas
HCA 403
Oregon Coordinated Care Organizations
Introduction to U.S. Healthcare and Medicaid
Healthcare costs in the United States have rapidly increased during the second half
of the twentieth century. In 1902 the United States government spent 0.25% of the GDP on
healthcare programs, and by the early twenty-first century it was over 7% of GDP
(usgovernmentspending). Following the passage of the Social Security Act in 1965,
healthcare spending increased rapidly. Total healthcare spending in 2012 reached $2.8
trillion, which averages $8, 915 per person on healthcare. The United States spends more
money than any other country on healthcare services, but our healthcare systems ranks
37th in world for overall health outcomes when compared to the cost of care, with the
world’s wealthiest nations spending far less than the United states, but ranking in the top
ten for their outcomes and performance (nejm.org). This shows that the United States is
obviously doing something wrong, and changes are needed to contain costs and improve
health outcomes for patients.
Rationing healthcare is a problematic concept in medical ethics; however, it is also a
reality in the lives of many Americans. Throughout the years the United States has seen
many attempts by the government for healthcare reform to contain costs and to ensure all
American’s receive affordable, high quality medical care, but all of those attempts until the
Patient Protection and Affordable Care Act have failed. While universal coverage is a new
and developing idea with the rollout of the ACA, the federal and state governments have
made other attempts to help the elderly and the poor with the Medicare and Medicaid
programs. Over the years Oregon has taken a different approach than other states to its

2. Medicaid coverage. Medicaid in Oregon is called the Oregon Health Plan (OHP). The
changes started in 1990 with prioritization of services covered under Medicaid. Essentially,
Oregon rationed payments of services based on their priority level, and if an individual’s
medical issue was not on the list as a top priority within the states guidelines, the cost was
not covered, or there was a reduced payment to the physician or hospital by the Medicaid
program. This was very controversial, and many people disagreed with the coverage
decisions, and ultimately it did not solve the Medicaid funding problem. Then in 2003,
Governor Kitzhaber expanded OHP coverage to pregnant women and children, and
households earning up to 185% of the federal poverty level. But because of rising
healthcare costs and budget shortfalls, the state had to “impose significant cost sharing on
beneficiaries, which led to many leaving the program” (rwjf.org). Cost sharing measures
included imposing high deductibles and co-payments to the Medicaid recipients, which
they could not afford, so the program no longer benefitted them. In order to keep those
who needed healthcare coverage covered, but could not afford it even under OHP,
something new needed to be done.
As Oregon’s population grows, the state has come to realize that Medicaid is “not a
bottomless bucket of money” (Washington post). In 2013 Oregon Governor Kitzhaber
made a deal with the Obama administration that gave the state $1.9 billion over five years
to patch the Medicaid budget hole, but the states healthcare costs and spending must “grow
at a rate that is 2 percent slower than the rest of the country, ultimately generating $11
billion savings over the next decade” (Washington post). If the state fails to do this, the
federal money for Medicaid is gone, and the state is left with a massive problem of how to
fund Medicaid. Without the federal deal, Oregon residents receiving OHP (Oregon Health

3. Plan) would pay higher costs, or their benefits and doctor salaries would be cut. If the deal
fails, they face the same problems. This is why Oregon’s government is justified in taking
extreme measures, by redefining how patients receive health care, to ensure patients are
receiving high quality care that leads to better outcomes, while being delivered at a lower
cost, by using the implementation of coordinated care organizations. If the CCO model
succeeds it means Oregon could be a roadmap for the rest of the country on how to provide
high quality care to low-income and disabled people while containing and ultimately
lowering the cost of that care.
A third-party analysis was done, and they found that by implementing CCOs, Oregon
could save a significant amount of money. Savings could potentially be $1 billion within
three years, and more than $3.1 billion over five years (total spending). Judy Mohr
Peterson, Oregon’s Medicaid Director, along with Governor John Kitzhaber then created a
plan aimed to provide an “integrated package of health care services to beneficiaries
through local coordinated care organizations (CCO)” (rwjf.org). Beneficiaries in this
proposed plan would receive their medical, dental, mental health, and chemical
dependency services through one CCO, “which would receive a global payment—based on
value and good health outcomes—to provide all services for the assigned beneficiary
population” (rwjf.org). The total budget for each CCO would be capped at a set amount each
year, which is a feature no other state offered. The plan was approved in, and started in
2012. The reform bill was called HB 3650, and endorsed the blueprint with a goal of
reducing Medicaid spending by nearly $300 million over two years. The need to close the
Medicaid budget deficit was seen as imperative, because Medicaid would be expanding
with the rollout of the ACA in 2014. The federal government also supported this plan by

4. giving Oregon $1.9 billion over a five-year period, but Oregon must slow its healthcare
spending at a rate that is 2% higher than any other state, or all of that federal funding is cut
off, and therefore, Oregon would face even greater problems closing the Medicaid funding
deficit.
The state acknowledged that tough challenges lie ahead as they started
implementing this new way of Medicaid funding, but that doing nothing, and letting the
system continue how it was, was not a sustainable option either. A lot of work has to be
done to make this bill that was signed into law work, but that if it does work it could be a
roadmap for other states that will be implementing ACOs (accountable care organizations)
in the near future, as mandated by the ACA. ACOs are very similar to CCOs, but focus more
on Medicare patients rather than Medicaid (although Medicare and Medicaid are often
intertwined), which could mean nation-wide changes and huge financial savings, while
providing high quality care, which is ultimately what everyone wants. Oregon has started
taking the drastic changes needed, and has the federal financial support, to make
coordinated care organizations work over the next several years.
Cost Savings of CCOs
Coordinated Care Organizations, which are a part of the nation wide movement
towards Accountable Care Organizations contained in the ACA, has the potential to save $3
billion over the next three to five years, and reduce Oregon’s overall healthcare spending
by two percent over the next two years. Providers would have more flexibility in treating
their members. CCOs would allow providers to be paid based on member outcomes,
instead of just by the number of services they provide. The way this is achieved is by giving

5. providers a global budget for all care, rather than a set rate or a capitated rate for each
different type of care provided (Oregon.gov). Performance measurements for CCOs would
provide incentives for better care as well. As of 2014, coordinated care organizations have
already lowered ER visits and hospitalizations. In 2013 the 15 regional CCOs provided care
to about 90 percent of Oregon’s Medicaid population. From this, the “organizations saw a
17 percent decrease in costly ER visits and a 32 percent decrease in hospitalization rates
for several chronic diseases” (knowledgecenter.org). It is important to note that while the
ER visits and hospitalizations costs have decreased, primary care spending increased by 11
percent and preventative care services increased by 20 percent. However, those are the
costs Oregon wanted and projected to raise. Providing preventative care through primary
care, and using a primary care physician as a gatekeeper to other specialized physician’s or
services is a much more efficient use of money, saves money in the long-run, and provides
patients with better health-outcomes, which I will discuss later.
How CCOs ultimately work is that each coordinated care organization receives a
fixed global budget for physical and mental care of each Medicaid enrollee. The Oregon
government keeps a portion of the CCOs payment until the end of the year. When the year
is up each CCO is rewarded or penalized “based on if they met certain objectives
throughout the year, like reducing hospital readmissions” (knowledgecenter). It was
reported that 11 of the 15 CCOs earned 100 percent of their withheld performance pay in
2013, and some “earned even more through extra funding for objectives like boosting
primary care enrollment and controlling blood sugar levels in diabetes patients”
(knowledgecenter.org). The main idea is that for a CCO to earn money, they must save
money on their healthcare expenditures.

6. Most of the savings are focused on reducing hospital admissions and unnecessary
emergency room visits, by promoting preventative care and the use of primary care
physicians. Chronic diseases account for about 75% of the nation’s healthcare spending,
and these chronic diseases can be largely preventable by a patient having a close
partnership with their healthcare team, which typically leads to early detection through
appropriate screenings. Preventative care also includes healthy eating, exercising regularly,
avoiding tobacco, receiving preventative services such as cancer screenings, yearly
checkups, physicals, etc., however, despite the known benefits of preventative health
services, Americans generally let a condition get bad enough for an ER visit or a
hospitalization, because going to a doctor during the early signs of an illness or disease are
avoided because of high deductibles, copayments, or other cost sharing measures. Medicaid
reduces these costs greatly, which promotes the use of primary care physicians and
preventative care services. Money is saved when these services are used in a number of
ways. First of all, emergency department visits are more costly, because a person’s
condition has reached a point that requires more care, more medication, more services and
treatment in general. If a primary care physician had been utilized, the ED visit would most
likely never have occurred because the proper preventative steps would have been taken.
Within a primary care physicians practice, a patient has the ability to access a wide
spectrum of health services, and by developing a relationship with a PCP (primary care
provider/physician) the patient is ensuring that other physicians and medical staff within
the practice also know their medical history, and so this “health care team can more easily
detect patterns in the patients health and recommend lifestyle changes to prevent future
complications requiring expensive specialty care” (mass.gov). For example, simple testing

7. during a visit with a PCP can reveal health problems, such as high blood pressure, that may
go unnoticed leading to more serious issues later on and a visit to the ED or a
hospitalization because the symptoms are out of control and undetected. To then get those
symptoms under control will take more time, care, medication, and therefore healthcare
money. The usage of PCPs within CCOs will help prevent patients from getting sick in the
first place, which will lower costs.
Other ways CCOs will see cost savings is through the use of electronic health records
(EHRs). EHRs make information available across the board “thereby reducing unnecessary
care duplication” (healthcarefinancenew.com). Every bit of information is available to
every physician or specialist the patient sees and there is less room for error between the
different physicians being seen.
So far Oregon CCOs have seen cost saving results, and are staying within the budget
that meets its commitment to the Centers for Medicare and Medicaid Services to “reduce
the growth in spending by 2 percentage points per member, per year” (Oregon.gov).
Overall, the coordinated care model showed large improvements for the state’s Oregon
Health Plan members in 2013 (the latest results). The implementation of CCOs decreased
emergency department visits by 17% since 2011 baseline data, and the “corresponding
cost of providing services in emergency departments decreased by 19% over the same time
period” (Oregon.gov). Hospitalizations for chronic conditions have greatly decreased.
Hospital admissions for congestive heart failure have been reduced by 27%, chronic
obstructive pulmonary disease by 32%, and adult asthma by 18% (Oregon.gov). There has
also been an increased use of primary care. Outpatient primary care visits for CCO

8. members increased by 11%, and spending for primary care and preventative services is up
over 20%. The yearly report that this data came from, from the Oregon Health Authority,
shows that a lot of progress has been made in cost savings, but there is still room for
improvement. Having better screen for risky drug or alcohol behavior would ultimately
save money if addiction could be prevented or treated early enough, and also whether
people have adequate access to health providers to receive these preventative services.
Although there is room for improvement, great strides have been made in reducing the cost
of healthcare with the implementation of coordinated care organizations.
Improved Quality of Care
Not only will coordinated care organizations lower healthcare costs, they will also
improve the quality of care patients receive. Before implementation of CCOs, and for
individuals who are still not currently a part of a CCO, they received or receive services
such as mental and physical healthcare separately, “in fragmented and uncoordinated
ways, so that members have gaps in their care” (health.oregon.gov), providers are being
paid for treating illness, and not preventing it, and patients with chronic conditions don’t
get services that will keep them healthy and help them avoid unnecessary hospitalizations
or emergency care. CCOs ultimately change this outdated way of care. Coordinated care
organizations are doctors, hospitals, and other health care providers forming a network,
which provides coordinated care to patients, and at the heart of each patient’s care is a
primary care physician (kaiserhealthnews). CCOs are meant to be a community-based
network of patient-centered care, driven by local need. The legislation provides for
flexibility to set them up in a way “that will work best locally because health care needs

9. may be different from community to community” (Oregon.gov). It gives providers the
chance to work to keep patients healthy and manage existing conditions, rather than just
treating them when they are sick (samehealth.org).
The CCO program focuses largely on Medicaid recipients, because 20% of Medicaid
recipients account for 80% of Medicaid spending, and these are typically individuals with a
high number of emergency department (ED) visits, and multiple hospitalizations every
year (managedhealthcareexecutive). The goal is to move these high utilizers, along with all
other Medicaid patients, into primary care medical homes “where providers can focus on
chronic and preventative care” (managedhealthcareexecutive.com). To give patients better
care, physicians must focus on the patient’s total health status and not just medical issues.
Providers within coordinated care organizations realize that actual medical care is
“responsible for only about 10% of a patients overall health status”
(managedhealthcareexecutive), and the other 90% is linked to socioeconomic issues,
nutrition, social environments, living arrangements, and other non-medical factors that are
beyond the control of physicians and other healthcare providers. However, a part of the
CCO program is “health resilience specialists” as a part of the primary care process. Those
specialists work on the nonmedical factors that physicians may recognize, but cannot do
anything about. A health resilience specialist may, for example, go “grocery shopping with a
diabetes patient who keeps coming into the ED, and might even teach him/her how to cook,
to improve their nutritional status and reduce ED usage as well” (managedhealthcareexec).
Another example, that Oregon Governor Kitzhaber likes to use, is buying an air conditioner
for a congestive heart failure patient to keep them out of the hospital when temperatures
go up. An air conditioner may not be a typical Medicaid intervention, but it makes more

10. sense to spend $200 on an air conditioner and prevent a $100,000 hospitalization. It is this
type of care that will not only improve the patients overall health, but also great cost-saving
measures for the Medicaid program. By having a fixed global budget, instead of fee-for-
service system, physicians have greater power to utilize the system in a way that will
actually benefit the patients beyond the setting of a doctor’s office, and by “exploring
innovative strategies to support transformation based on the needs within their specific
communities” (pcpcc.org).
Another way CCOs are improving the quality of patient care is by ensuring patients,
especially those who are chronically ill, get the right care at the right time, while avoiding
unnecessary duplication of services and preventing medical errors (CMS.gov). There are
also quality standards that physicians must meet (and are also paid based on), and there
are 33 quality measures that have been established to ensure “care coordination and
patient safety, appropriate use of preventative health services, improved care for at-risk
populations, and patient and caregiver experience of care” (hhs.gov), and to also assure
that care is appropriate, safe, and timely.
A big part of coordinated care is the electronic health record (EHR). This is an
electronic version of a patients medical history, that is maintained by the provider over
time, and includes all key administrative clinical data relevant to that person’s care under a
particular provider, including “demographics, progress notes, problems, medications, vital
signs, past medical history, immunizations, laboratory data and radiology reports”
(cms.gov). The EHR automates access to patient information and has the potential to
“streamline the clinician’s workflow” (cms.gov). A very interesting aspect of the HER is that

11. it has the ability to support other care-related activities directly or indirectly through
various interfaces, “including evidence-based decision support, quality management, and
outcomes reporting” (cms.gov). EHRs are ultimately just one step in the continued progress
of healthcare that can strengthen the relationship between patients and clinicians by giving
them the technology to make better decisions based on the individuals health needs, and to
relay information in a more efficient way from one physician to another (for example from
a primary care physician to a specialist such as a cardiologist).
There are many ways to improve the quality of care within the healthcare system,
and Oregon coordinated care organizations have had a great start. Different communities
have different needs, one community may have high rates of diabetes that need to be
addressed, another may have a high rate of impoverishment and bad nutrition that needs
to be handled, and CCOs give physicians and other healthcare professionals the flexibility to
improve the medical needs and non-medical needs of the people they are serving, which
will improve the overall health of people and the quality of care providers are providing.
Alternatives to CCOs
Oregon, so far, is the only state to adopt the coordinated care organization model for
its Medicaid beneficiaries. Some states have implemented accountable care organizations
(ACOs) for their Medicare beneficiaries, and they are very similar to CCOs, but not quite as
comprehensive as Oregon’s CCO model. Other alternatives are out there currently,
including what Oregon has done in the past, but after a review of the alternatives, CCOs will
prove to be a better model, and will show why Oregon is making the roadmap for the future
of Medicaid services.

12. Maintaining a robust Medicaid health plan has not been easy for Oregon over the
years. The state’s tax revenue dropped during the economic downturn in the early 2000s,
and to keep Medicaid afloat during that time, Oregon had to charge significantly higher co-
payments, for some it was $50 for an emergency room visit and $250 for a trip to the
hospital. This was simply too much for people who were already barely making it
financially, and Medicaid enrollment shrank by 46% during that time. Oregon has had to
cut people from coverage, cut payment rates, and cut some benefits over the years to
sustain the program, Oregon has also tried rationing services and prioritizing services. For
thirty years Oregon tried different methods of lowering and sustaining costs, but the
problem of funding Medicaid never went away. This is why Oregon turned to coordinated
care organizations. It gave them a goal to make high-quality health care less expensive than
the alternatives, which seems to be working.
Rapid growth in the Medicaid program beginning in 1982 and accelerating in the
1990s, is what made states begin to address the problem of rising Medicaid costs. States
began to contract with private health insurance companies to provide care to beneficiaries
through capitated contracts that became known as Medicaid Managed Care Organizations
(MCOs). There are three different types of arrangements that are commonly referred to as
managed care within the Medicaid policy arena, which are: comprehensive risk-based
health plans, primary care case management programs, and limited benefit plans.
Comprehensive risk-based plans are the most commonly used type of Medicaid
managed care arrangement. Typically states employ an HMO (health maintenance
organization) model in which qualified health plans receive fixed per member per month

13. payments (PMPM) form the state for “furnishing a defined range of health services to plan
enrollees, and enrollees receive services through a network of participating providers”
(ncd.gov). If the aggregate expenditures exceed total income, the health plan is responsible
for absorbing the excess costs. These losses are generally reflected in the cost of care,
because they must require rates that take into account, and compensate for, the additional
risk, which would therefore mean healthcare costs for the entire program would rise, and
the participants in the plan would have co-payments or deductibles, which is a huge
financial hardship for Medicaid recipients, and defeats the whole purpose of Medicaid.
The second Medicaid plan is primary care case management (PCCM) programs. A
primary care provider is assigned to participants, and the primary care provider receives a
small, monthly per capita payment for coordinating each enrollee’s care. All other health
services (aside from the care coordination and case management function) are reimbursed
on a fee-for-service basis. In 2009, 7.3 million Medicaid beneficiaries were enrolled in
PCCM programs. PCCM programs have shown to improve patient outcomes and reduce
costs because of the coordination of care. However, PCCMs are not as well organized and
coordinated as CCOs, and therefore do not have the same level of savings as CCOs. PCCMs
are not used in every community, and part of the effectiveness of CCOs is that it takes all of
the Medicaid beneficiaries in Oregon and provides coordinated care for them based on the
community they are residing in, and the needs of that specific community. Without the
specific community component it is not as focused as to what the PCCM primary care
physician should be focusing on. Also, physicians are not paid based on the performance of
the care they provide. They are paid for coordinating the care of their patients, and then
paid on a fee-for-service basis, which could lead to fraud and overutilization of services

14. billed for by the primary care physician. Coordinated care organizations require physicians
to show how they are improving care for patients while also containing costs, which leaves
less room for overutilization and fraud.
Lastly, various types of Medicaid services are provided through limited-benefit
plans. These plans “typically cover only a single type of benefit, with payment generally
made on a capitated basis, these plans are used in conjunction with other Medicaid
managed care of FFS arrangements” (ncd.gov). Limited-benefit plans are frequently used to
deliver mental health and/or substance use services, transportation services, and dental
services. This plan is also inferior to coordinated care organizations. Coordinated care
organizations include these services as well, but it is not a service provided separately from
other general services. In fact, the huge appeal of CCOs is the coordination of care, and
integrating physical health care needs, along with mental health care needs, substance
abuse services, dental care, alongside their primary care from a PCP. Limited-benefit
programs contribute to what is wrong with the current system in most states, and that is
fragmented care. The care from one physician service to another is not a smooth transition,
and there is room for error and duplication of services because of the lack of coordination
and separation of services.
Problems Surrounding CCOs
One of the largest problems coordinated care organizations will face in Oregon is
how to distribute a fixed number of healthcare dollars. While Doctors are excited to get off
of the reimbursement system so that they can focus on face-to-face visits, which will make
them more able to anticipate the needs of their patients, rather than respond to them once

15. a problem arises, they are worried about how much of the lump-sum payment they will
receive depending on the community they reside in (washingtonpost), and hospitals are
especially worried. Hospitals that tend to deliver more expensive types of medicine have
traditionally relied on keeping beds full, because each new patient brought in new
payments. If they cannot find a way to reduce the cost of hospital care, the hospitals
become a cost center rather than a revenue generator. Greg Van Pelt, chief executive of
Providence Health said, “If Medicaid is going to grow slower, you have to figure out a way
to get it to cost less, and this process is not always easy. I have had to oversee workforce
reductions, as the hospital has become more efficient” (washingtonpost). It is a huge issue
for hospitals, and there is no doubt that hospital business models are going to have to
change. Despite the difficulties hospitals may face with the implementation of CCOs, Van
Pelt also thinks that the potential rewards of CCOs make the risks worthwhile, saying, “The
first few years are going to be very difficult financially, politically, and culturally, it’ll be
about hanging in there. We know this is the right thing for us to do. We all complain about
healthcare spending, but nobody does anything about it. Now, that’s changing”
(washingtonpost).
Governor Kitzhaber has already addressed the dilemma hospitals are facing with a
possible solution. The Governor is looking to create an innovation fund for the state’s
hospitals, one that rewards steps taken to reduce the cost of the care it provides. Which
means that hospitals will not be penalized for spending more money than other healthcare
entities, but will instead be rewarded if they are taking steps to try and reduce their costs
and provide healthcare in more efficient ways that will be of benefit to the goal of
coordinated care organizations. While this would greatly benefit the hospitals who are

16. worried about funding, the plan for the innovation fund does not specify where the money
for the fund would come from. It could possibly be the funds that the state withholds until
the end of the year until they see if the CCO reached its quality measure and cost savings
goals, or it could be completely separate money from the state, which Governor Kitzhaber
did not specify, and hospitals have been questioning as well. While the innovation fund
would greatly benefit the hospitals, more information is needed on the amounts hospitals
would receive, what the standards for receiving that money would, and where exactly the
money for the fund would be coming from.
Another problem that Oregon is facing is the rush of unexpected enrollees since the
implementation of coordinated care organizations. Since the implementation of CCOs
Oregon has added nearly 360,000 new people to the Oregon Health Plan. This has strained
the “capacity of the revamped network that was endorsed as a potential national model,
locking out some patients, and forcing others to wait months for medical appointments”
(bigstory.ap.org). Part of this particular problem is the shortage of primary care physicians.
Medicaid patients are finally trying to utilize the system the way the government wants
them to, but there are not enough primary care doctors to go around to meet the needs of
everyone in a timely matter. It has hit rural areas of the state especially hard, because that
is where the physician shortage is the most severe. This flood of new patients and shortage
of primary care physicians has required some of the CCOs in the state to stop accepting
new patients, which has locked out more than 16,000 new enrollees, thousands of others
have not been assigned a doctor or been to their first medical appointment. It is important
to not that the physician shortage is not just an Oregon problem, it is a huge national
problem that needs to be addressed.

17. Solutions to this problem include the start of a new residency program in Eugene for
physicians. The shortage around the country is so extensive, that simply adding one
residency program will attract more doctors to come to Oregon nationwide. Oregon is also
focusing on using more nurse practitioners, physician assistants, pharmacists and a system
of team-based care, instead of solely focusing on the need for physicians. Also, a lot of
physicians in the past have not covered Medicaid patients because of low reimbursement
rates, but two of the CCOs in Oregon have increased their Medicaid reimbursement rates
for doctors to run even with commercial rates to increase physician participation. Another
strategy to attract more physicians and to address the physician shortage problem,
coordinated care organizations are opening new clinics and offering grants to physicians
who will accept more Oregon Health Plan members. Another solution is not to actually add
more physicians, but to use new innovations to redefine how physicians meet with
patients. Some centers have been working through the backlog of patients to link
thousands of people to doctors, using innovations such as group visits and telemedicine
(bigstory.ap.org). This reduces the need for more doctors immediately, and allows patients
to utilize their primary care benefits. It is unfortunate that the primary care physician
supply has not tripled like OHP enrollment has since the implementation of coordinated
care organizations, but the state is trying to rectify the situation in many innovative ways
that look very promising.
The Best Solutions to the Current Problems Facing CCOs
I believe that the rush of new enrollees into the Oregon Health Plan and the lack of
primary care physicians is the biggest obstacle that coordinated care organizations are

18. currently facing, and it needs to be addressed immediately so that the state can see and
analyze all of the positive benefits CCOs have to offer. Oregon Health & Science University
expanding to Eugene is a huge benefit for the state. OHSU found that in December 2006,
over 1,200 physicians left practice in the state of Oregon, and in that same time OHSU
trained only 200 new medical students. From tracking data they know that 55% of the
students and residents trained in the state will reside and practice here once they are done.
Medical schools across the country are being asked to increase their enrollment by as much
as 30% over the next fifteen years, and OHSU, while an outstanding teaching school, does
not have the capacity to train that many people at their Portland campus and in the
Portland community, which is why expansion to Eugene is needed. Like stated previously,
there is also a mal-distribution of physicians practicing in Oregon with the majority of
physicians practicing in urban communities, leaving rural areas with severe shortages.
OHSU is hoping that by expanding the “medical school training outside of Portland will
encourage students to consider practicing in other parts of the state and encourage
students from more rural areas to enter the medical field” (peacehealth.org). Since the start
of the program in 2006, over 600 students have come to OHSUs Region Medical Campus for
training, with 110 new students arriving each academic year.
Expanding a residency program to the Eugene area addresses many of the problems
CCOs are facing. Not only is the residency program allowing Oregon to train more
physicians than before, who are very likely to stay in Oregon once their residency is done,
which addresses the shortage in general, it is also addressing the shortage of physicians in
rural areas. Physicians being trained outside of the metro area will be able to experience
what a rural community has to offer, which they were unable to do before, and it also

19. attracts more rural residents than ever before. Not only will they be more likely to return
to a rural area to serve the community, the program is reaching out to students that it had
not been able to before. By adding this one residency program, in a prime location, will
greatly help with the physician shortage all over Oregon, and also the severe shortage in
rural areas, which will help CCOs manage more enrollees.
A huge appeal of coordinated care organizations is the fact that it is a team of
healthcare professionals working together to give patients the best quality of care possible,
while saving money. Physicians are not the only professionals that can greatly contribute to
an individuals overall health, and focusing more on the importance of physician assistants
and nurse practitioners can have great advantages. Nurse practitioners and physician
assistants need a physician to work under that is a lot easier to manage in Oregon’s current
state, than rounding up hundreds of new primary care physicians. While nurse
practitioners and physician assistants do receive high compensations, it is still not as much
as an actual physician, which means Oregon could provide high quality care to the
thousands of new enrollees needing to get started in the OHP system that have not yet been
able to through these highly trained and qualified individuals, but save money on salaries
and compensation.
Not only is the state suffering from a physician shortage, they are also not attracting
all of the physician’s they could because of low OHP reimbursement rates. So far only two
out of the fifteen coordinated care organizations have increased their reimbursement rates
to match commercial rates. While this is obviously not a cost saving measure, it would help

20. address the shortage of physicians, which is crucial since the state has taken on 360,000
new enrollees, and is turning thousands more away until more resources are available.
Telemedicine is another area that needs to be addressed. Formally defined,
“telemedicine is the use of medical information exchanged from one site to another via
electronic communications to improve a patient’s clinical health status”
(americantelemed.org). Telemedicine includes a growing variety of applications and
services using two-way video, email, smart phones, wireless tools, along with other
telecommunications technology. The benefit of telemedicine can address many issues that
CCOs are facing including the physician shortage, the rush of new enrollees, and the severe
physician shortage in rural areas. Telemedicine is not a separate medical specialty, and the
products and services are often part of a larger investment already made by healthcare
institutions, so there is not additional cost for its usage, and is generally more convenient
for the physician and patient. Telemedicine greatly increases access to healthcare for rural
patients who can more easily obtain specialty services, regular checkups, and do not have
to travel long distances. Home care is an excellent example of how telemedicine is
beneficial. Elderly people receiving home health care may not have transportation to a
physicians office, or they at least do not have affordable transportation, not to mention it
could be difficult for them to go out on a regular basis. Being able to meet with their
physician from the comfort of their own home helps reduce their transportation costs, and
worry about having to make the trip (jtt.sagepub.com).
Telemedicine can also improve health outcomes. Patients can be diagnosed and
treated earlier which can contribute to improved outcomes and less costly treatment.

21. Research as also found that patients with telemedicine supported ICU’s experience
“reduced mortality rates, reduced complications, and reduced hospital stays” (setrc.us).
A huge goal of CCOs is obviously to reduce and lower the cost of healthcare spending
in the Medicaid program. Research has found that nursing home telemedicine reduces
costly transports and unnecessary ED visits, high cost patient transfers for stroke and other
emergencies are reduced, and home monitoring programs can reduce high cost hospital
visits. Telemedicine also addresses the problem of primary care physician shortages
because specialists and PCPs, and other healthcare professionals, can serve patients
together without having to physically be together, which means more patients than ever
before can be served with the same number of physicians available (setrc.us).
Telemedicine is a huge area of medicine that will growing in use in the future, and
could help make CCOs in Oregon more successful. With more enrollees than ever, and the
need for more efficient ways to deliver services and have the physicians available meet the
needs of the growing OHP population, this is an option that would be highly beneficial in
solving the major problems CCOs are facing.
Conclusion
Overall, the appeal of coordinated care organizations is, in fact, the streamlining and
centralization of healthcare services. Each person would have a primary care physician to
help coordinate their care, build a relationship with so the physician knows their
individualized needs, and get the care that is most needed in a timely, safe, and appropriate
manner. The needs of communities are different, and each CCO would focus on the needs
not only of the individual, but also of the community as a whole. If a community has a high

22. instance of heart disease, the CCO would work to improve eating habits and exercise
routines of all people, as preventative measures for the whole community, while people
who actually have heart disease would have more specialized care based on their
individualized needs. The care is less fragmented than other types of care currently used,
and previously used in Oregon, which means there will be less gaps in care, less duplication
of services, which will also contain and help lower costs. The global payment structure
gives physicians the power to give patients what they truly need (transportation to doctor’s
offices or air conditioners like in the previous example), which will improve the quality of
care received and overall health of individuals and communities. Providers, although they
have always cared about their patients (in theory), now have to be truly invested in the
outcomes of their patients care, because their reimbursement depends on it.
CCOs are in the early stages in Oregon, but are already on track to attain the savings
lawmakers laid out nearly three years ago, and that is huge. If Oregon provides higher
quality care, while saving money and lowering costs it would have huge benefits for the
Medicaid program nation wide. The Oregon Health Plan has seen many bumps in the road,
but I think that it is well on its way to becoming the leader in Medicaid services.