Oregon Health Plan Integration And Its Discontents : Substance Abuse Treatment In The Katherine

With the creation of the Oregon Health Plan (OHP) in 1994, Oregon placed its Medicaid program under a managed care system. This paper examines the managed care practices of seven health plans serving OHP enrollees between 1996 and 1998. Results indicated that the original vision of integrating substance abuse treatment services with physical care for OHP enrollees evolved into a multilayered, carved-out approach. Factors working against integration included changes in the administration and management of the chemical dependency benefit, financial losses by health plans, and lack of training and incentives for physicians to refer clients to substance abuse treatment. M edica id reform began in Oregon in 1987 and resulted in state laws that paved the way for the establishment of the innovative Oregon Health Plan (OHP) in February 1994. A Centers for Medicare and Medicaid Services (CMS, then HCFA) 1115a Medicaid waiver granted in 1993 nearly doubled the size of Oregon’s Medicaid population and placed the responsibility for administering the health benefit under a managed care system. Some nineteen fully capitated health plans negotiated contracts with the state Medicaid agency and became responsible for the delivery of health care services.1 By April 1998 almost 85 percent of Medicaid clients were enrolled in one of these plans.2 However, through mergers, reorganizations, and discontinuation of services, only thirteen plans were serving OHP enrollees by the end of 1998.3 Outpatient substance abuse treatment for Medicaid clients was included in the basic OHP benefit package and was placed under managed care in May 1995.4 Funding for the treatment (including methadone maintenance) was assigned to health plans as part of their capitation payments. Inpatient (including residential) treatment, not a covered benefit, was funded by a federal block grant. Integration of substance abuse treatment within the OHP physical health benefit was a fundamental aspect of the plan, to ensure continuity of care and contain (or reduce) medical and surgical costs.5 Drawing on the perceptions of key stakeholders involved in the provision of substance abuse treatment for OHP enrollees, this paper describes the outcome of Oregon’s effort to form an integrated system under managed care.