Oregon Medicaid will begin using coordinated care organizations (CCOs) instead of their historical fee-for-service model for paying physicians beginning later this year. The House approved the Senate Bill 1580 in mid-February.

Under the legislation, signed by Oregon Governor John Kitzhaber, it will create new regional CCOs, which will each be responsible for looking after Medicaid patients in their area.

Kitzhaber believes the plan will improve care and reduce costs.

“With today’s vote, the Legislature set Oregon on a path for a better health care system that saves public dollars. This is good for patients, good for the state budget, and good for business,” said Governor Kitzhaber in a written statement.

The democratic governor’s republican foes have issues with the legislation, like representative Jason Congerbut. He’s concerned that the bill does not address medical liability tort reform, or patient responsibility and accountability. But ultimately, he saw more positive than negative.

“Despite the weaknesses in this bill and the challenges inherent in crafting this kind of legislation, the alternative to do nothing is simply unacceptable,” Conger said.

The House passed the bill on a 53-7 vote and the Senate passed it with a 18-12 vote.

It’s our belief at MBA Medical Business Associates that the passing of this bill is not a positive development, since physician reimbursement won’t be based on a doctor’s own services, but instead be tied to the services and quality of other CCO providers over whom they have little influence.

In January, the Congressional Budget Office released a report that found projects experimenting with coordinated care for Medicare patients didn’t provide conclusive evidence of savings.