|
July 14, 2022
Media Contact: Robb Cowie, ROBB.COWIE@dhsoha.state.or.us, 503-421-7684
PORTLAND, Ore. – New financial information reported to Oregon Health Authority (OHA) from 16 contracted coordinated care organizations (CCOs) show that the state’s CCOs were financially stable and sound in 2021.
OHA financial analysts also noted high profit margins for some large contracted partners within CCOs. One CCO – Health Share of Oregon – pledged to reinvest $100 million in profits gained by its contracted partners into services for the Oregon Health Plan (OHP) members it serves.
CCOs are responsible for delivering coordinated medical, behavioral and dental benefits and other services to more than 1.1 million members enrolled in the OHP, most of whom are enrolled in Oregon’s Medicaid program. In total, OHP covers more than 1.4 million people in Oregon; as the largest provider of health coverage in the state, nearly 1 in 3 Oregon residents is covered under OHP.
Senate Bill 1041 (ORS 414.593) requires the Oregon Health Authority to make the expenditures of a CCO serving OHP members fully transparent and available to the public. CCO financial reports must be posted by Aug. 1, 2022. Financial statements for all 16 CCOs can be found here, along with additional CCO program financial summaries.
OHA Director Patrick Allen said, “Oregon’s coordinated care organizations remain financially strong, even as they have taken on more members. On average, coordinated care organizations spent 90 cents of every dollar on services for members. We want to see CCOs continue to expand their investments in care for members, especially in critical areas where they can make a bigger difference, such as giving more people access to behavioral health treatment and expanding access to supportive housing in communities across Oregon.”
Highlights of the 2021 CCO financial reports include:
-
Operating margins: OHA uses Net Operating Margin to measure the financial performance of the CCOs. Net Operating Margin is calculated from the revenues of the organization less the member medical expenses and administrative costs. Across the entire CCO system, the 2021 operating margin was 2.1%, up from 1.5% in 2020. Of Oregon’s 16 CCOs, Eastern Oregon CCO reported the highest operating margin of 5.5%. Only Trillium Community Health Plan/Tri-County (operating in the Portland metropolitan region) reported an operating loss, which was 2.9%. However, Trillium’s consolidated operating margin was 5.2% when its Tri-County loss was combined with Trillium Community Health Plan/Lane County’s operating margin of 7.8%.
-
Spending on services for members: Across the system, CCOs spent 90.4% of their income on member services and 7.5% on administrative costs, resulting in the 2.1% operating margin.
-
Enrollment: Membership increased in 15 of the 16 CCOs over the past 18 months. PacificSource-Community Solutions in Lane County reported the largest percentage of increase (44% percent growth). Trillium Community Health Plan/Lane County reported the only decrease (a 2% decline).
-
Health-related services: Health-related services are services that CCOs may provide beyond the standard Medicaid benefits to improve care delivery, member well-being and the health of the community. In 2021, CCO spending on health-related services increased by more than $2.5 million across the system. However, CCO spending declined by $1.44 per member/per month as OHP member enrollment increased during 2021. Umpqua Health Alliance spent the largest amount on health-related services on a per member basis at $158 (total $5.4 million). Cascade Health Alliance spent the least on health-related services at $12 per member (total $0.3 million).
OHA notes significant profit margins among certain large contracted partners, known as sub-capitated entities
CCOs contract with other partners and distribute a per-member rate on a monthly basis to the contracted provider or service organization. This contracted organization agrees to cover the costs of that member or group of members for a specific service, this is called a sub-capitated arrangement. Sub-capitated arrangements are a cornerstone of many of the CCO’s business models. New transparency requirements under SB 1041 have given OHA and the public additional insight into sub-capitated entities.
Across the entire CCO system, sub-capitated entities reported an average Operating Net Income of $104 million and an average operating margin of 3.31%. This average includes all the sub-capitated entities’ performance; however, there are some outliers for 2021.
Sub-capitated entities that reported significant operating margins who also received significant revenue in 2021 included:
- CareOregon, which reported $145 million in Operating Net Income, (and a calculated net operating margin of about 11%) through its sub-capitated contract with Health Share. CareOregon is also a large contracted partner with Jackson Care Connect and Columbia Pacific CCO.
- In the behavioral health space, Greater Oregon Behavioral Health, Inc. reported a gain of $7.67 million (and a calculated net operating margin of 22.5%) through its sub-capitated contract with Eastern Oregon CCO.
Due to the amount of profit from 2021 revenues, Health Share has informed state health officials that it intends to reinvest $100 million of the operating net income into improving access to services for OHP members. According to a proposal Health Share provided to state regulators at OHA, the CCO would reinvest:
- $80 million in health-related services, including behavioral health treatment and non-emergency medical transportation (NEMT).
- $20 million for the SHARE initiative. The SHARE initiative comes from a legislative requirement for CCOs to invest some of their profits back into their communities. After meeting minimum financial standards, CCOs must spend a portion of their net income or reserves on services to address health inequities and the social determinants of health and equity.
In 2021, CCOs were required to report operating revenues and net income by sub-capitated entities on an annual basis. However, for 2022 and beyond, state financial analysts will request that CCOs report the financial performance of their sub-capitated entities on a semi-annual basis (through Quarter 2 and through Quarter 4) to enhance the accuracy and timely transparency of their use of public Medicaid dollars.
In addition, the Oregon Health Authority posted recent data on hospital finances. Quarter 4 hospital financial and utilization trends are available on our website here. Data show that hospitals in the state returned to pre-pandemic revenue amounts by the end of 2021, however total operating expense continues to grow faster than revenue, driven primarily by payroll.
 You are subscribed to Oregon Health Authority News Releases. View all OHA news releases.
|
