Whether the CCO’s succeed will ultimately be judged by how they perform in controlling costs. Providing better health care for Oregon’s Medicaid population is also an important goal. However, the CCO’s are an experiment whose primary purpose is to see if the growth rate of Medicaid spending can be reduced.
Much of the CCO’s initial activity was focused elsewhere—on producing a “community health assessment” and a “community health improvement plan” (CHIP). The statutes establishing the CCO’s require both to be developed starting during the first year. This requirement absorbed most of the time of the Community Advisory Council (CAC) and the CCO’s staff during the important period when the CCO’s were first getting organized. The community health assessment is an important background document and the development of the CHIP stimulated many good ideas. The CCO’s need both. However, from the beginning, I’ve worried about diverting so much of the CCO’s attention away from where the main focus needs to be—reducing costs.
The many hours spent developing the CHIP raised hopes, especially among the CAC members, that campaigns will soon be launched to address the problems they identified. Given the CCO’s current tight budgets, they will likely be disappointed. The CHIP’s focus is on programs promoting better lifestyle management and improved social and economic conditions—e.g., programs to reduce obesity and tobacco use and to increase the availability of family wage jobs. While these programs should improve health over the long run, the evidence indicates they are unlikely to pay for themselves by reducing Medicaid costs.
What programs will produce the needed cost saving? I believe the workplace wellness programs run by large employers in the U.S. are a good place to look for answers. These programs have goals similar to the CHIP’s and have been in existence long enough to have a track record. I recently read a particularly interesting article about the PepsiCo workplace wellness program. Overall, the Pepsi program reduced costs. However, the lifestyle management parts of the program—weight management, nutrition management, fitness, stress management, and smoking cessation—didn’t reduce costs by enough to offset the money spent running them ($0.48 cost reduction for every dollar spent). The disease management part of the program, which focused on providing help to employees with ten chronic conditions, was much more successful. It reduced costs by $3.78 for every dollar invested and reduced hospital admissions by 29%. If you have access, the Health Affairs article on the Pepsi program is worth reading. You might also check here.
My conclusion is that the CCO’s should make their initial investments in helping patients with chronic diseases to better manage their conditions. This conclusion is supported by another article that analyzes the effects of increasing deductibles and co-pays. Increasing deductibles and co-pays reduces total medical costs because the majority of the population is healthy and has a greater incentive to reduce unnecessary care. However, increasing co-pays raises costs for those with serious chronic conditions because they often benefit from more medical care. Until the CCO’s have succeeded in reducing the growth rate in costs, they should focus on their high-cost patients.