Introduction
The creation of Oregon’s Coordinated Care Organizations (CCOs) in 2012 was, in many ways, an unlikely event given the fiscal and political challenges facing the state at the time. When the Oregon legislature convened on January 10, 2011 the state was in the depths of the Great Recession; unemployment was high and the state faced a $3 billion revenue shortfall, one of the largest per capita budget deficits in the nation. The previous year, the state had been deeply polarized by two controversial ballot measures to raise taxes on corporations and higher-income households. Furthermore, while the Democrats held a slim majority in the State Senate, the House of Representatives was evenly split 30:30 between Democrats and Republicans. A deeply polarized electorate, a divided legislature and an enormous budget deficit: this was the formula for disaster in anyone’s book. The fact that things didn’t turn out that way is a remarkable and inspiring story, and one well worth telling.
Good health care policy does not spontaneously come about. It requires knowledge, expertise and an ability to successfully navigate across the political landscape. The creation of the CCOs required navigating two discrete sets of politics: the politics of the Oregon state legislature and the politics of Washington, D.C. The first set of politics involved the passage of the legislation that established the Coordinated Care Organizations; while the second involved gaining federal approval of the Medicaid Section 1115 waivers necessary to implement the care model.
This chapter will tell a very personal and narrative story of the politics of Oregon’s recent health reforms with reflections on the lessons I learned from decades in public service.
Background
The creation of the CCOs was not Oregon’s first foray into health policy. In 1987 the legislature created the Oregon Health Plan (OHP), which laid the groundwork for the health care transformation of 2012. But it was the lessons I learned during my first campaign for public office that would help shape my ability to enact sound public policy.
Mine was an improbable candidacy when, on January 18, 1978, I announced my intention to run for the legislature in House District 45, which encompassed the southern Oregon timber town of Roseburg in Douglas County. I had moved to Roseburg in 1974, and began my career as an emergency room doctor there.
Nobody had any idea that I had been planning a career in public served ever since Bobby Kennedy was assassinated in 1968 while running for president. But I’d been thinking about this for years—about how to put it all together—and I had maps of all the precincts in the district with voter registration and turnout information. Having no grassroots support from the party—and never having run before—I wrote a detailed campaign plan, broken down by the day from Election Day back.
On election night, after falling behind early in the evening, I was declared the winner shortly after midnight with a slim margin of 653 votes out of 14,279 cast. My opponent was the only incumbent Republican to lose in Oregon that year and I think I won for a couple of reasons. For one thing, nobody saw me coming, my opponent did not take me seriously, and we worked hard to get the voter turnout we needed, when we needed it.
More importantly, I knew a lot of these people. I’d been practicing medicine in the ER for four years. These loggers and millworkers were generally pretty conservative guys, but not only had I treated them in the ER, I had fished with them and drank beer with them. They called me “Dr. John,” a name that has followed me through union halls to this day. I know they didn’t always agree with what I was doing, but they believed I was doing it for the right reason. And one of the lessons I learned from this experience, is that once you break bread with someone, once you raise a glass together, once you get to know them—not for their views and opinions but as the people behind those views and opinions— people who care and worry about the same things that all of us care and worry about, our families, our jobs, our future—once you do that, something profound happens. You can still disagree, and undoubtedly will, but it is difficult to demonize someone you know simply because their views or politics differ from yours. And that speaks to the magic of personal relationships, which, in politics, is about getting to know the people behind the positions.
Ten years later, this lesson was a major reason we were able to pass the Oregon Health Plan—the first effort in the nation to honestly confront the reality of fiscal limits and reject the complex federal system of categorical eligibility that provided some people with everything and other people with nothing. Instead, the OHP expanded Medicaid eligibly to all Oregonians with incomes below the federal poverty level and created the covered benefit by prioritizing health from the most important to least important, based on the health benefit of each service to the entire population being served. This involved the explicit rationing of health services and was extremely controversial at the time. Nonetheless, not only did it pass, it passed with huge majorities: 30-0 in the Senate and 57-3 in the House.
To develop the legislation necessary to create the Oregon Health Plan, I used some of the things I learned back in Roseburg, specifically the importance of getting to know people on a personal basis. I knew this was not going to be an easy lift. Its success depended on giving the stakeholders who would be affected by the legislation—as well as the legislators who had vote for it—some common understanding of the problem we were trying to address, and a sense of ownership in the proposal we were developing to address it.
To accomplish that I convened a “working group” of key stakeholders that met regularly in my office throughout the summer and fall of 1988 and ran through the 1989 legislative session. We met almost every week and developed a set of eight operating principles that we wanted the health care system to reflect, things like: society is responsible for financing care for poor people; there must be a process to determine what constitutes a basic level of care; funding must be explicit and economically sustainable; and, there must be a mechanism to establish clear accountability for allocating resources and the human consequences of those decisions.
We then set ground rules for those who were at the table. In essence, these stated that if a proposal was put on the table and it did not work for a given stakeholder, that stakeholder had to offer an alternative that still met the principles. In other words, to be at the table, you could not simply say “no.” As the weeks and months passed—as the people around the table spent time together and got to know each other—they gradually began to feel some ownership in the process. I have come to believe that this is a fundamental truth, not just of politics, but also of life itself. It is all about relationships.
With that background, let’s fast forward to September 2008, the collapse of Lehman Brothers and the beginning of the global financial crisis. The following year, in a guest editorial in the New York Time, Thomas Freidman wrote: “What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall?” I believe he was right.The Great Recession had created an enormous budget deficit, and it was clear to me that there was an opportunity for transformational change embedded in the fiscal crisis. We had no latitude to deal with the budget deficit by raising taxes, because unemployment was desperately high in Oregon. And we couldn’t do it by simply cutting programs, by ceasing to fund education and public safety. So, the opportunity lay in redesigning those programs, updating them to make them relevant to the challenges and environment of the 21st century, rather than the 20th century when they were put into place.
It was the global financial crisis—and the election of Barak Obama and his commitment to tackle health care reform—that inspired me to run for a third term as governor in 2010. On March 23, 2010, President Obama signed the Affordable Care Act (ACA) into law, which, among other things, set up a huge expansion of Medicaid starting in 2014 when all Americans with incomes up to 138 percent of the federal poverty level would become eligible. Implementing the ACA and transforming Oregon’s Medicaid care model became a central theme of my campaign. I was elected in November 2010 and took the oath office on January 10, the first day of 2011 legislative session.
Oregon Legislative Politics
When I took office in January 2011 we were facing a dramatically altered Medicaid landscape. We were sitting at the crossroads of an unprecedented expansion of health care coverage through the ACA; at time when state and federal budgets were more strained than ever, and states were struggling to keep up with the escalating cost of health care; combined with the recession-driven need for increased services. While many governors believed that this crossroad would be the scene of an inevitable disaster, I saw only opportunity. That was why I ran again in 2010. But to capitalize on that opportunity would take innovation at the state level to completely rethink how health care was delivered.
Of all the budgets impacted by the Great Recession, the Medicaid budget faced the deepest cuts. It was the perfect storm. First, as unemployment rose, the amount of revenue available to the general fund through our income tax system declined. Second, many of those who became unemployed now sought their health coverage through the Oregon Health Plan, increasing enrollment. Finally, Oregon lost $675 million in Medicaid funds, which had been coming from the American Recovery and Reinvestment Act (ARRA) since Congress passed it in February 2009. The ARRA expired in June of 2011, so those resources were not available for the 2011-2013 biennium. The result was a $1.234 billion revenue shortfall in the Medical budget which—if we continued to provide care to all those who were eligible, and with no replacement revenue—would amount to a thirty-nine cut in provider reimbursement.
I had been in public office during several recessionary periods—as a senator during the recession of the early 1980s; and as governor during the recession of 2002. The historic response of state government to a revenue shortfall is to cut from the existing program structure in lean times and add those cuts back in good times—but leaving the structure of how services are provided basically intact. In essence this amounts to doing less of the same in hopes that later would be able to do more of the same.
Everyone recognized that the current health care system was unsustainable— expensive, fragmented, inefficient and ineffective in terms of improving population health. Yet no one was motivated to change the system because we continued to fund it. The ARRA funds, for example, simply propped up the existing Medicaid program, but delayed the time we would be forced to look not just at the cost of services but also at the way in which they were being delivered. Indeed, most of the debate over health care reform over the last few decades had been focused on coverage—on how we could pay for more people to have access to the existing system (doing more of the same). In 2011, however, with the Medicaid budget short by over $1.2 billion, it was clear that our choice going into the future was to do a lot less of the same or to change what we’re doing. Doing more the same was simply no longer an option.
In many ways, this convergence of factors put providers in a serious financial bind: they were facing a potentially huge cut in reimbursement which, in turn, motivated them with a willingness to look at anyinnovation that might reduce the magnitude of that cut. It was, indeed, the perfect storm. We had a significant Medicaid expansion coming down the road at us, a huge hole in our existing Medicaid program, providers willing to look at change and innovation to avoid a huge cut in reimbursement, and a governor with a medical degree and a long history in health policy who wanted to fundamentally transform the way care was delivered.
Through a combination of benefit changes, administrative efficiencies and front-end loading the resources we did have into the first year of Oregon’s two-year biennial budget, we were able to reduce the size of the cut from thirty nine percent to around eleven percent. However, that still left us with a $240 general fund hole the second year of the biennium—$600 million if we counted the $360 million in federal Medicaid matching dollars. When I was putting together my budget for the 2011-2013 biennium, I intentionally chose to not completely fill that funding deficit for two reasons. First, the state had other priorities for the general fund besides health care; and, second, I wanted a daunting revenue shortfall in the Medicaid budget in the second year of the biennium. This created the imperative to change, because it was clear to me that as long as we continued to fund the current Medicaid care model, there would be no incentive to change it.
Our plan was to make up the $240 million shortfall through cost savings by transforming the care model for the Medicaid program to get more value in terms of health outcomes for each dollar spent. So, it was the way we structured Medicaid budget cliff into the second year of the biennium that provided the political motivation necessary to unify providers and consumers around our reform efforts. Furthermore, by building the $240 million general fund hole into the budget I presented to the legislature, the legislators themselves were motivated to support the health care transformation agenda, to avoid having to make additional cuts if we could not find the cost savings we sought.
To make this idea a reality, a Joint Legislative Committee on Health Care (JLCHC) was created and co-chaired by Representative Tim Freeman and Senator Alan Bates. Tim was a conservative Republican from Roseburg, who had served on the Roseburg city council before being elected to the legislature in 2008. Although he had no health care experience his even temperament and layman’s perspective made him the perfect counterpoint to Senator Alan Bates. Doctor Bates, a Democrat, practiced primary care in Medford, had served on the local school board and had been elected to the Oregon House of Representatives in 2000 and to the State Senate in 2004 and again in 2008. He had been a member of the first Health Services Commission in 1989 and brought a provider’s perspective and deep knowledge of the OHP to the committee. The JLCHC was a very large committee and met weekly, the purpose of which was to provide an opportunity for the engagement of a broad group of stakeholders, ensuring that their concerns were reflected in the proposed new care model.
As the legislation was beginning to take shape, I convened a smaller group of key stakeholders, which met three times at Mahonia Hall, the governor’s residence. The purpose of this ad hoc group was to work though the politics around the proposed legislation as it moved through the legislative process. The idea was to ensure that the major stakeholders who could affect the outcome of this legislation were all talking with each other and that we could anticipate problems before they developed. This was not dissimilar to the workgroup I established to create SB 27 and the Oregon Health Plan in 1988-1989.
These efforts converged into draft legislation that created the concept for the new care model, which we called the Coordinated Care Organization (CCO). This draft became HB 3650 and established the “Oregon Integrated and Coordinated Healthcare Delivery System,” which would replace the existing managed care system for the Medicaid program by January 1, 2014—the same day that the Medicaid expansion required by the ACA also went into effect. HB 3650 required the Oregon Health Authority to develop a proposal—to be considered by the 2012 legislative session—that would establish the criteria required to become a CCO; set up a global budgeting process, as well as outcome and quality measures. The result was a piece of legislation that was remarkable, both in terms of its content and also by the fact that it passed with significant bipartisan majorities—something that offered a stark contrast to the bitter partisanship that swirled around health care reform in our nation’s capital. HB 3650 passed in late June 2011 with a vote of 57-1 in the House and 22-7 in the Senate.
The bill establishing criteria for becoming a CCO, and the process by which to apply, was introduced as SB 1580 in the 2012 session. The content of this legislation was, in many ways, revolutionary and yet I had little doubt that it would pass. With the passage of House Bill 3650 the previous year there was no turning back. The entire state budget had been predicated on the assumption that we would find $240 million of general fund savings by transforming Medicaid care model, a fact that motivated providers, consumers and employers to work together. Success also meant that the legislature would have an additional $240 million to spend on other priorities like education. From a political sense, everyone was boxed in; or, in the parlance of Douglas County, we had them in the “squeeze chute.”
Ironically, the sticking point turned out to be over something else: medical malpractice. Members, particularly in the Senate, felt strongly that we needed to directly address medical malpractice in SB 1580. This was a very contentious issue as it pitted many Republicans, members of the business community, doctors and hospitals against many Democrats, consumer advocates, organized labor and trial lawyers. This issue, rather than the far-reaching policy embedded in the bill itself, was the rock on which our health care reform almost foundered.
I proposed to add a section to SB 1580 that would create a process—which I would personally oversee—to bring to the 2013 session a recommendation to address the medical malpractice issue. I made sure that the language in the bill was not prescriptive but that it set some sideboards on the process. Specifically, the language stated that the medical malpractice problem should be addressed in a way that “improved patient safety; more effectively compensated individuals who were injured as a result of medical errors; and reduced the collateral costs associated with the medical liability system, including the cost associated with insurance administration, litigation and defensive medicine.” What I attempted to do with this language was to lay out a set of broad parameters, which would incorporate the basic concerns that both sides had about the medical malpractice system. With this language, were able to separate this contentious issue from our larger health care transformation agenda, and SB 1580 went on to pass the Senate by a vote of 18-12 and the House 53-7.
Federal Politics
While the legislature was designing and approving the formation of the Coordinate Care Organizations, we were also working with our federal partners in Washington, D.C. to lay the groundwork for the waivers we knew would be needed to implement the new care model. Here, we were fortunate on two fronts. First, President Obama had appointed Kathleen Sibelius as Secretary of the Department of Health and Human Services (HHS). Sibelius served as the Kansas State Insurance Commissioner before being elected Governor of Kansas in 2002. Having a former governor, who understood Medicaid as well as insurance issues, as secretary of HHS gave Oregon an ally in Washington, D.C. Furthermore, the president had also appointed my friend Dr. Don Berwick as the acting director of the Centers for Medicare and Medicaid Services (CMS), the agency that would have to approve waivers for Oregon to implement its new care model. Dr. Berwick, trained as a pediatrician, was the president and CEO of the Institute for Healthcare Improvement and we had worked together on several occasions.
I traveled to Washington, D.C. on several times to advocate for Oregon’s approach and on February 28, 2011—long before HB 3560 became law—I had lunch with Dr. Berwick to let him know that we were planning a major overhaul of Medicaid, which would undoubtedly need waivers. By late 2011, however, it was becoming clear that we would need more than waivers; we would also need a significant investment of federal funds. Even if we successfully transformed the way we delivered health care within the Oregon Health Plan—and even if that transformation resulted in significant cost savings—this system change could not possibly happen fast enough to realize those savings in 2011-2013 budget, especially given the fact that the first CCOs were not scheduled to be operational until July 2012 at the earliest— and that was an optimistic projection.
I needed to get this problem on the radar screen at the highest levels of the Obama Administration as soon as possible, and the fact that we were able to do s0, was made possible largely by Scott Nelson and Dan Carol, two of those genuinely brilliant individuals who never get the credit they deserve for the amazing things they do. Both had deep connections in Washington D.C, including their mutual friend Greg Nelson who was Chief of Staff of the White House Office of Public Engagement and Intergovernmental Affairs, directed by Valerie Jarret, one of President Obama’s closest advisors.
It was through these connections that on October 3, 2011 I found myself in Valerie Jarrett’s private office in the West Wing of the White House. Also, at the meeting was Nancy-Ann DeParle who had directed the White House Office of Healthcare Reform and oversaw the passage of the ACA, before becoming the president’s Deputy Chief of Staff. It was a good meeting and everyone expressed support for what we were trying to do in Oregon—essentially to put on the ground a reformed health care delivery system that mirrored the ACA, two years before the ACA was to take effect. The only push back came around the need for an additional investment of federal funds. Valerie Jarrett pointed out that such an investment would require not only approval from CMS but also from the Office of Budget Management (OMB), the largest agency in the executive branch, which oversees the development of the president’s budget, and she said we would have to find a strong justification for what we were asking.
We knew we were not going to realize our projected $240 million in general fund savings from transforming the system in the second year in the biennium, but we had a plan. In addition to Medicaid, there was something called “Designated State Health Programs” or DSHP. These were programs outside of the Medicaid program but which provided Medicaid-like services and were thus eligible for federal match. For example, the general fund dollars Oregon sent to the counties to provide mental health services. As such, we set out to identify around $400 million in DSHP dollars to fill our Medicaid shortfall.
In January 2o12—three months after my initial meeting with Valerie Jarrett—I traveled again to Washington, D.C. to explain the plan we had come up with. This time the meeting included Nancy-Ann DeParle and Marilyn Tavener, who had succeeded Dr. Berwick as the Director of CMS. Dr. Berwick had resigned in December 2011 in the face of heavy Republican opposition and the likelihood that his appointment would not be confirmed. I laid out our plan to cover the shortfall in our Medicaid budget, with the federal investment gradually phasing out over the next five years as cost savings from the new care model began to accrue. I told them that the Oregon Health Authority (OHA), the agency that oversaw the Medicaid program, would send a formal request for the DSHP match by March 1, 2012> I also asked that the process be expedited because we expected the Coordinated Care Organizations to be operational by July 1, 2012.
To say that there was some discomfort with what I put on the table would be an understatement. We were asking for was a five year federal investment of over two billion dollars. In addition, some of the DSHP match we were requesting was new territory for CMS officials. Nevertheless, I pointed out that Oregon had a positive track record in health care reform with the implementation of the Oregon Health Plan in 1994, which had saved nearly $15 billion in total funds over the past twenty years. I argued that what we were attempting to do was an extension of what we had already demonstrated our ability to do. Being a physician, having a relationship with Dr. Berwick and having successfully implemented major Medicaid reform in Oregon in the previous decade, gave us some much-needed credibility with the administration.
I said that Oregon was not looking for a handout. We were willing to agree that the federal investment be contingent upon achieving a two percent reduction in the per capita Medicaid inflation trend rate by the end of the second year, with no reduction in enrollment or benefit. In early 2012, Oregon’s Medicaid inflation rate was 5.4%, so we would have to bring it down to 3.4%. And because CMS was required to provide over sixty percent match on each state general fund dollar spent on Medicaid, the federal government would savethe match on every dollar Oregon did not spend if we implemented our new care model. Conversely, if we continued to operate the current Medicaid program, CMS would have to match a 5.4% growth rate, which would cost them $2.3 billion over the next five years. However, if—with the initial federal investment—the new care model reduced the Medicaid inflation rate to 3.4%, not only would the investment be paid back, but CMS would realize a net savings of $4.9 billion over five years.
After this meeting things began to move rapidly. A month later, on February 23, the Oregon legislature approved the establishment of CCOs as the state’s new Medicaid care model. On March 1, the Oregon Health Authority submitted its request for the 1115 waivers needed to implement the model; and the formal request for DSHP matching funds. In addition, we requested a decision on the DSHP funds by April 1, 2012 and a decision on 1115 waivers by June 1, 2012. Also on March 1, the OHA requested formal applications for Coordinated Care Organizations to be submitted by April 27, 2012.
CMS and OMB readily found $250 million in DSHP dollars—about $150 million short of what we needed to fill our budget hole—but in late March indicated that they would be unable to identify additional funds by our April deadline. Over the next two weeks our team worked with staff at OMB and CMS to reach agreement. We would send off a list of proposed DSHP programs we believed should be eligible for the federal match and staff in Washington, D.C. would send back a long list of questions and concerns. We would respond and another set of questions would arrive. Finally, I scheduled a trip to Washington D.C. for Monday April 16th for meetings with HHS and the White House to see if we could resolve the impasse. Three days before I was to leave I received a call from Marilyn Tavener who told me that there are two outstanding issues—both of which could be resolved—but not by Monday April 16th. On that assurance I cancelled my trip.
Yet, on April 24, just three days before the formal applications for Coordinated Care Organizations were due, we were still no closer to an answer, with CMS continuing to request additional information. Once again I scheduled a trip to Washington D.C. Two days later I received a call from HHS Secretary Sibelius assuring me that an answer would be forthcoming on Friday, April 27. Again, on this assurance I canceled my trip. But on Friday, Dr. Bruce Goldberg—the Director of the Oregon Health Authority (OHA), the state agency that was responsible for Medicaid—was informed that CMS would only approve $250 million of the $400 million of DSHP funds Oregon had identified for a federal match, which was about the same level they offered at the beginning of April, when our request was first made. No real progress.
I rescheduled my trip to Washington, D.C. for May 1 and then I set about to become the smartest person in the room on every detail of the waivers we were seeking; and on the technical intricacies of what could and could not draw down federal match as DSHP funds. I addition, the D.C. staff had expressed concern over what kind of precedent they would be setting with the waivers and the significant federal investment if they approved our plan. This was not a technical issue, but, in my view, a matter of political will. I called David Agnew, who was President Obama’s Director of Intergovernmental Affairs, to see if he could put me in touch with Jack Lew the presidents’ Chief of Staff. Jack had been Deputy Director of OMB in the Clinton Administration. I wanted to get this on his radar screen both because of his relationship with the President and because I knew he would understand the budget issues involved. By the time the call was scheduled I could talk the language of the OMB with the best of them.
I explained why I believed our request was doable, and I was able to respond to every technical issue he raised—and he raised all of them. I told him about the dance we had been doing with CMS and OMB for the last few weeks, that we were running out of time and that I did not think it was going to be resolved at the staff level. I said I was flying out to Washington, D.C., on May 1 and wanted a meeting with the President. Lew clearly understood what we trying to do from a budgetary standpoint and seemed sympathetic. He was vague, however, about meeting the President. What I did not know at the time was that he was in the midst of planning the President Obama’s May 1 surprise visit to Afghanistan.
On the morning of May 1, I flew to Washington, D.C. with Bruce Goldberg. I had a meeting scheduled with Secretary Sibelius the morning of May 2 and another meeting later that afternoon with people from CMS, OMB and the White House. In the weeks preceding our trip, Scott Nelson and Dan Carol had used their amazing connections to gain access to the highest levels of the administration and lobby in support of the proposal I would be presenting on May 2. Among those called for support were Mary Kay Henry, president of Service Employees International Union, Randy Weingarten, the national president of American Federation of Teachers, John Stocks, the president of the National Education Association; Richard Trumpka, president of the AFL-CIO; and former U.S. Senator and Majority Leader Tom Daschle.
I met with Secretary Sibelius at ten o’clock on Tuesday May 2 in her office at the Hubert Humphrey Health and Human Services building. The Secretary said that while she was very supportive, she remained concerned about the precedent that HHS would be setting and that we were still far apart on amount of DSHP funds that could be matched. I was incredibly frustrated. I left the meeting feeling like the Secretary had been preparing me for disappointment at the afternoon meeting.
From the Secretary’s office I went to a working lunch with Bruce and Scott Nelson. Charles Miller joined us, an attorney Bruce had retained to look at the legality of whether the additional DSHP funds we had identified could be matched. Miller was a graduate of the University of California Berkeley Law School and served as a clerk for Supreme Court Justice William O. Douglas. He was with a prestigious Washington, D.C. law firm and was an expert on Medicaid law. Scott’s assessment was that we were being set up for a “no” at the afternoon meeting—that neither CMS nor OMB really wanted to approve what we were requesting. Their main arguments were going to be that portions of the DSHP funds could not be legally matched and that granting Oregon waivers of this nature would set a dangerous precedent.
Bruce had also concluded that CMS and OMB were reluctant to give us the green light, and Scott’s comments further reinforced that view. Bruce argued that at the afternoon meeting we should simply accept the $250 million in DSHP funds that CMS had offered to match and not risk walking away with nothing. I told him that there was a point at which you needed to be willing to walk away. I didn’t think much of the augment about the precedent they might be setting and I thought I could convince the White House—if not the staff from the agencies—to support us. But if we caved in right now, we would never know. I also felt that we had a strong case to make to the public if the administration refused to help us do exactly what the ACA sought to do. Bruce and I got into a heated argument over strategy, but I made it clear we were not going to back down.
Around three o’clock Bruce, Charles Miller, Scott and I walked over to the Old Executive Office Building through a glorious spring afternoon. At the security checkpoint outside the Old Executive Office Building, we were met by Scott’s longtime friend Greg Nelson. Greg said, “You can’t imagine how much trouble you have been causing us. For the past week we’ve been getting calls from labor leaders, former members of congress and just about everyone else from all over the country. Who are you guys?”
Greg accompanied us up to a large, ornate room on the second floor of the Old Executive Office Building where we were met by David Agnew and his deputy, Jewell James. No one else was there. Not a good sign. About five minutes later Nancy-Ann DeParle came in to say she was unable to attend the meeting—another bad sign. She pulled me into the hall and went on to say something to the effect that the administration was spending four hours a day on Afghanistan, three hours a day on the budget and an hour a day on the Oregon Health Plan. This was a very bad sign. I thanked here for her past support told her there was a quick way to get us out of her hair . . . say yes.
I went back into the room and, after some further delay, in they all came: CMS Administrator Marilyn Tavener, Medicaid Director Cindy Mann, Paul Dioguardi, the Director of Intergovernmental Affairs for Secretary Sibelius, Jean Lambrew, the Director of the White House Office of Healthcare Reform, and Heather Higginbottom, the Deputy Director of OMB. Both Marilyn and Paul apologized for being late and I felt certain they had been meeting together to prepare themselves for this meeting. We seated ourselves around the large mahogany table and did a round of introductions.
I opened the meeting by thanking them for all the hard work that had been done on Oregon’s behalf by both CMS and OMB. I pointed out that Oregon’s health care reform effort shared many similarities with the ACA. I also point out that under the ACA, millions of people would become eligible for Medicaid on January 1, 2014. Adding that many people to the current inefficient, hyperinflationary Medicaid delivery system could cause it to collapse in many states; exacerbating access problems for millions of Americans and undermining the goals of the ACA. Oregon’s new transformed Medicaid delivery system, however, could give other states a model to replicate in order to meet the logistic and capacity challenges inherent in this huge expansion of the Medicaid program.
I went over the need for the investment of federal funds, the time constraints under which we were operating, our commitment to meet quality and outcome measures and our willingness to accept penalties if we failed to do so. I discussed our commitment to reduce the Medicaid cost trend rate by two percentage points with no reduction in benefit or eligibility, and the fact that this would not only pay back the initial CMS investment, but would give the federal government a net cost-savings of $4.5 billion over five-years.
So far, so good. Everyone seemed to be paying attention, but it seemed odd that nobody was taking notes and there had been no questions. I plowed on, going over how we had identified the additional $150 million in DSHP funds and had addressed all the technical issues that had been raised. I pointed out that Mr. Miller had done a legal analysis and was prepared to discuss why all of these funds could be matched. Still no questions. The energy in the room was tense. I felt like I was giving a lecture but there was no interaction, no response. So I moved on to address the concern about setting a new precedent.
“We do not believe that there are any risks, either legal or fiscal,” I said. “The only real risk lies in not setting a new precedent. To transform the U.S. health care system, we must stop clinging to the precedents of the past—which keep us anchored to the status quo—and set new precedents for the future, aimed at creating a pathway to a new transformed health care delivery model. The question we should be asking about the Oregon waiver requests is not whether other states can apply for the same DSHP federal matching funds; but rather, whether the Oregon effort is consistent with the policies being championed by the Obama Administration. And, in fact, they are.”
“Therefore, if other states should enact legislation to transform their Medicaid programs in the same way—and are willing to be held accountable for meeting the same high-quality standards around access, clinical outcomes and improvement in population health; to reduce the Medicaid inflation trend line by at least two percentage points; and to fully repay the initial investment within five years—they should be encouraged by CMS to move forward. This would constitute setting a new precedent intended to move us toward the objectives of the ACA rather than shackling us to the dysfunctional and unsustainable health care system of the past.”
Still no reaction—it was as if I was alone in the room. Nonetheless, I forged ahead and as I neared the end of my presentation, Mark Childress, Deputy Chief of Staff for Planning, joined us carrying what seemed to be a spreadsheet. Childress had worked for Senator Daschle and in HHS and was currently in charge of developing the messaging around the ACA, which was under intense attack by the Republicans. He was a “fixer” and a “closer” and has been referred to as “the most powerful man in the White House you’ve never heard of.” While I was still talking he began whispering to Marylyn Tavener and going over the spreadsheet, which I found distracting—even a bit rude. But when I finished he said, “I think I have some good news, it appears that we are very close.” And he handed around copies of the spreadsheet.
There it was—an additional $130 million is DSHP funds that the federal government was willing to match and it was right off our list—only twenty million dollars short of what we had set out to get. I felt a wave of relief and elation as I sat there looking at the spreadsheet. It meant we could close our budget hole in the current biennium and would get a five-year federal investment of $1.9 billion. The odd body language that had dominated the room now made sense. The group had met earlier with Mark Childress and had been waiting for him to come in and make the political call—which is exactly what it came down to. I was brought back to the moment when I heard Mark saying, “Okay, if we are all in agreement, we need an action plan.” He directed staff from OMA and CMS to work with Bruce to develop an MOU, which they would run by Secretary Sibelius later that afternoon and finalize the next day. That was it. I wrote in my notebook: “The deal is done!! 4:43 pm May 2, 2012.”
It was a warm and clear outside and I was in a bit of a daze as we walked from our meeting to The Old Ebbitt Grill to wait word from Secretary Sibelius confirming the deal. The Old Ebbit Grill is Washington’s oldest bar and restaurant and, apparently, had been the site of political scandals and wild parties over the years, but it was quiet at five that afternoon. I wanted a splash of bourbon to celebrate what seemed like a huge accomplishment, but we still needed final confirmation from the Secretary. I was nervous and could not focus, watching people come and go and hearing the incomprehensible murmur of many voices. At 5:45 my phone rang and I walked outside to take the call.
I was standing just outside The Old Ebbitt Grill, looking across at the U.S. Treasury building. The sun had just gone down but the building was bathed in a pinkish light. It was a warm, soft spring evening in Washington, D.C. and I stood there and listened to Secretary Sibelius telling me that she had signed off on the agreement we had reached earlier that afternoon. Oregon was going to get the waivers and a five-year federal investment of $1.9 billion. I can’t even remember exactly what we said, but I was overwhelmed with a warm sense of relief and accomplishment and joy. After working on this issue for so many years we had finally accomplished, not just a new way to prioritize services, we had begun to directly address the delivery system itself. I’ll never forget that moment, one of the most special moments of my life. I went back into the bar and discovered that I had tears running down my cheeks.
