Medicaid:

Oregon's Managed Care Program and Implications for Expansions

HRD-92-89: Published: Jun 19, 1992. Publicly Released: Jun 19, 1992.

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Pursuant to a congressional request, GAO reviewed Oregon's current Medicaid managed care program and the state's proposed expansion of the program as part of a larger demonstration.

GAO found that: (1) Oregon's current managed care program provides adequate access to health services, despite indications of strained capacity, which the state is working to address by recruiting more health plans; (2) Oregon's current program incorporates safeguards that help protect Medicaid managed care clients against inappropriate reductions in access to care; (3) the Oregon program meets federal requirements for safeguarding the quality of care through reviews of the quality assurance efforts of individual health plans and through annual reviews of patients' medical records; (4) the Oregon program also attempts to determine client views and problems through a grievance process, satisfaction surveys, and special hearings; (5) in 1991, Oregon officials found quality assurance activities at most participating health plans to be substantially in compliance and Oregon's opinion surveys and grievance procedures likewise disclosed few problems; (6) Oregon's independent medical record review process identified few quality problems in the program, but concluded that health screening services for children should be improved; (7) the effectiveness of Oregon's financial oversight systems could be improved by providing guidance on financial reporting, defining the state's solvency indicators and evaluation criteria, and extending reporting requirements to subcontractors; (8) Oregon could require contracting plans to disclose ownership, control, and other information, which could help program managers ensure that Medicaid funds are not diverted from the delivery of health services; and (9) concerns exist over whether Oregon's proposed demonstration project can develop adequate health plan and physician capacity within 1 year to serve three times its current managed care enrollment.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Approval letter did not address this issue. HHS has no plans.

    Recommendation: The Secretary of Health and Human Services, through HCFA, should direct the Office of Medical Assistance Programs to require risk basis subcontractors of fully capitated health plans to meet standards for financial solvency. Specifically, entities subcontracting with fully capitated plans to provide a comprehensive range of services, including inpatient care, should be subject to the same solvency monitoring requirements as those for fully capitated plans.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: Approval letter did not address this issue. HHS does not believe such oversight is necessary and has no plans to require Oregon or any other state to implement such monitoring activity.

    Recommendation: The Secretary of Health and Human Services, through HCFA, should direct Oregon to improve its monitoring of contractor financial solvency in the current program, by: (1) developing reporting guidance for the contractors to ensure that the state's adopted solvency indicators measure comparable aspects of financial performance; and (2) adopting evaluation criteria in the form of ranges or limits for use in assessing solvency indicators.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: Approval of waiver requires state to have extensive data collection on service delivery and quality assurance plans submitted from all participating health plans.

    Recommendation: The Secretary of Health and Human Services, through HCFA, should direct Oregon to continue to improve quality assurance activities in the current program. Specifically, Oregon should intensify its efforts to improve the delivery and documentation of well-child screening services, which were identified as a weakness by Oregon Medical Professional Review Organization and GAO consulting physicians. Oregon also could increase the usefulness of its client satisfaction survey by revising the questionnaire and survey methods.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: The agency decided just recently to approve Oregon's request, and it is requiring the state to submit evidence that health plan and physician capacity is adequate to serve the expected enrollment.

    Recommendation: If the Secretary of Health and Human Services decides to approve Oregon's Medicaid demonstration project, the Secretary should direct the Administrator, Health Care Financing Administration (HCFA), to require Oregon to demonstrate, by binding letters of intent or other means, that adequate health plan and physician capacity can be put in place to serve the expected client population before it allows Oregon to implement the project. Provider capacity relative to managed care enrollment should be monitored carefully throughout project implementation.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: Approval letter specifically requires compliance in the proposed demonstration plan which will subsume the current program.

    Recommendation: The Secretary of Health and Human Services, through HCFA, should require Oregon to meet Medicaid disclosure requirements in both its current Medicaid managed care program and the proposed demonstration project, if approved.

    Agency Affected: Department of Health and Human Services

 

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