Some of Oregon’s Largest Health Insurers Didn’t Keep Their Promise to Pursue Lower Costs

Oregon’s showcase effort to lower health care costs is off to a bumpy start, according to a new report released by the state’s health regulator.

In 2019, legislators tasked two state agencies, the Oregon Health Authority and the Department of Consumer and Business Services, with bringing down health care costs. Such costs have long outpaced inflation, not just in Oregon but across the country.

Heads of both agencies signed a “compact” with Oregon’s largest health insurers and health care systems, who promised to renegotiate their contracts to drive down costs.

The compact set explicit goals. Insurers committed to spending 40% of payments on a wonky concept called “advanced value-based payments” by 2022. VBP, as it’s known, is all the rage in health policy circles. It means, in short, paying doctors and hospitals based on the quality of care, not the quantity of care.

Now, two years later, the state has crunched the data. And the results are not encouraging.

According to a new report from OHA, around half of the insurers that signed the commitment didn’t meet the stated goals.

Even more alarming: Eight signatories “failed to commit any spending in the form of an advanced VBP,” the report says. In other words, they didn’t spend anything on the central plank of the agreement.

It’s not clear why. When asked, a Providence Health Plan spokesperson said the insurer remains “committed to advancing value-based care initiatives” but provided no specifics. (A spokesperson for the one Medicaid insurer on the list, AllCare CCO, says that its inclusion was due to reporting errors.)

Still, the report isn’t surprising, says Christopher Koller, president of the Milbank Memorial Fund, a New York foundation and early promoter of the Oregon compact.

The agreement was always voluntary, Koller says, and commercial insurers have little leverage in their negotiations with health care providers, who have scant financial interest in accepting the new payment models. “They can make more money the current way,” Koller says.

A spokesperson for the state’s largest health system, Oregon Health & Science University, declined to make anyone available for an interview, but released a statement blaming the pandemic for the lack of progress in implementing VBP.

Still, many of the compact’s signers did meet its goals. Six, including Aetna and Kaiser Permanente, both spent more than 50% of their payments on VBP and met the state’s cost-reduction targets.

Now, Koller adds, the onus is on the legislature to make the goals mandatory.

Here’s a list of the eight insurers the state says didn’t spend a dime toward fulfilling the agreement.

Commercial

Providence Health Plan

UnitedHealthcare

Cigna Healthcare

Health Net of Oregon

Medicare Advantage

Moda Health

Providence Health Assurance

ATRIO Health Plans

Medicaid

AllCare CCO