The Oregon Health Plan (OHP) was enacted in 1989 as part of a larger effort to achieve universal coverage in Oregon. The OHP is Oregon’s Medicaid program and operates under an 1115 waiver granted by the Clinton Administration in 1993. There were several key elements.
The 1989 legislation extended eligibility to all Oregonians with incomes up to 100 percent of the federal poverty level, including men and childless couples who, until then, had not been “categorically” eligible. The waiver allowed the state to receive federal matching dollars for this newly eligible population. This approach mirrored what the Affordable Care Act would do two decades later.
The benefit was based on a “priority list” developed by the Health Services Commission (HSC), an eleven-member body that originally was composed of five physicians, a public health nurse, a social worker, and four consumers. Their task was to create and report to the legislature each budget cycle, “a list of health services ranked by priority, from the most important to the least important, representing the comparative benefits of each service to the entire population to be served.” The HSC was to base its prioritization on a consideration of clinical effectiveness, and on a community meeting process to build consensus on the values that should guide how health services were to be prioritized.
The priority list was given to an independent actuarial firm to determine the cost of providing each element on the list, after input from providers and consumers. This actuarial process was required to consider reimbursement rates in the commercial market, not just existing Medicaid rates, and, as a result, Medicaid reimbursement in Oregon increased following the enactment of the Oregon Health Plan.
Determining the Capitation Rate
The list, and its accompanying cost data, would then be given to the legislature which could not rearrange the priorities on the list or change the actuarially determined cost. The covered benefit would be determined by how much of the list was funded. The idea here was to create a firewall between the prioritization process—which would be objective and evidence-based—and the resource allocation decision by the legislature which, by its very nature, is political. The priority list was then used to determine the capitation rate paid to providers and equaled the amount of money allocated to fund the priority list, divided by the number of people covered.
The Oregon Health Plan was first implemented on February 1, 1994 and for the past 25 years the covered benefit has been built from the priority list, which is updated every budget cycle by the Health Evidence Review Commission (formerly the Health Services Commission).