OREGON HEALTH PLAN: Backing Off HMOs in Rural Areas
In an apparent "concession by administrators that managed care isn't a universal remedy for poor Oregonians," the state is changing the fundamental nature of the HMO-dominated Oregon Health Plan. The Wall Street Journal/Northwest Edition reports that the "pioneering" program has led to 85,000 more poor state residents being insured than would be the case with traditional Medicaid. Its success, however, has been limited mainly to "densely populated areas or near urban centers." By contrast, many HMOs have pulled out of rural areas because they cannot turn a profit serving a sparsely-populated community. Annie Mockabee, assistant vice president for government health plans at Regence HMO Oregon, said of her firm's decision to pull out of 16 of 34 counties since 1996, "It was a simple business decision. Regence never entered the Oregon Health Plan to make money, but we didn't enter it to lose a lot of money either." Ellen Pinney, director of the Oregon Health Action Campaign, a watchdog group, said, "The Oregon Health Plan managed care promise is really working only in the Willamette Valley. The Oregon Health Plan is really the Willamette Valley health plan."
Concerned about the HMO "exodus" from rural counties, plan administrators this year decided to "fix at least part of the problem by allowing" primary care organizations into the plan. The PCOs -- "groups of doctors unaffiliated with hospitals or insurers" -- will manage patient care for office visits, X-rays and lab work just as HMOs do. But the state will pay hospital and drug costs on a fee-for-service basis. Hersh Crawford, director of the Office of Medical Assistance Programs, which runs the OHP, said while PCOs are "less comprehensive, it may get us more stable care in rural areas." Not everyone is happy with the new arrangement, however. Rick Wopat, a founder of the Intercommunity Health Network HMO, said by "dividing the interests of the hospital and the physician, there is no real financial incentive to manage care." He said the state should instead simply offer higher reimbursements to HMOs serving rural areas (Jones, 4/28).