There is broad agreement that the United States must slow rising health care costs, yet relatively little consensus about how best achieve it. This proposal aims to evaluate a policy experiment in the Oregon Medicaid program, using the Colorado Medicaid program as a control state. Colorado and Oregon have developed parallel programs that reflect the national movement toward accountable care and primary care medical homes. However, Oregon differs from Colorado in two significant ways. First, savings in Oregon's CCOs are enforced with a transition to a global budget that includes a large (11%) reduction in spending in their first year. Second, whereas Colorado continues fee-for-service (FFS) payments for specialists and carved-out behavioral health care, Oregon's program integrates funding and payment for behavioral and physical health care, including funds that have traditionally been "carved out" for mental health and addiction treatment. CCOs have flexibility in how these dollars are spent. We will assess two key economic questions that are relevant to public and private payers across all states. First, faced with a large, exogenous decrease in funding, how are savings accomplished? Is it primarily through reductions in payment rates, or is it through an incentive to integrate delivery to realize efficient utilization patterns? Second, what are the consequences of financial integration of behavioral health? A preponderance of research has demonstrated that integrated primary care and behavioral health care can improve quality, but relatively little is known about how the methods of financing impact the degree of coordination and its effectiveness. Our study is specifically designed to decouple the specific impacts of spending reductions and financial integration from the contemporaneous policy changes (such as reliance on the medical home) that are occurring in both Oregon and Colorado. The proposed research will provide crucial knowledge for the development and design of innovations necessary to improve the long term value and affordability of health care.
Our study evaluates the effects of major Medicaid program restructuring in Oregon, using Colorado as a control state. This study will provide early and critical information on policy approaches currently under consideration for Medicaid and Medicare programs - how to reduce health care spending (e.g., through reductions in unnecessary care, or through reductions in payment rates), and the implications of financial bundling of physical and mental health care.
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