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Oregon's Federal Agreement on Health System Transformation Finalized

Press Release

Location: Salem, OR

The federal government has signed off on Oregon's health transformation initiative, approving a waiver that grants the state more flexibility to improve its Medicaid services program. Governor Kitzhaber announced the agreement with the Centers for Medicare & Medicaid Services as a key step forward in Oregon's goals to improve the quality of care for Oregon Health Plan members while reducing costs.

"I want to thank our federal partners for their responsiveness and strong partnership," said Governor Kitzhaber. "This waiver is the final building block to creating a better model of care, and Oregon is ready to demonstrate how local communities can lead the nation in keeping people healthier over the long term in a more effective way."

Oregon's 1115 Medicaid demonstration affirms federal financial investments over the next five years, which will be used to increase access to better coordinated, more patient-centered care and support a more efficient delivery system. In return, Oregon has committed to reducing the state's growth in Medicaid spending, resulting in significant savings to the federal government through improved health care, not through reductions in eligibility or benefits covered.

Kathleen Sebelius, Secretary of the Department of Health & Human Services, said, "These efforts to coordinate care, which mirror our efforts at the national level thanks to the Affordable Care Act, will mean better care for those on Medicaid, better health outcomes, and lower costs. This is another example of how we are collaborating successfully with States in their efforts to find innovative healthcare solutions that work for their communities."

Under the agreement, Coordinated Care Organizations responsible for providing care to Oregon Health Plan members will have more flexibility to pay for services that improve health and lower costs, but that are not traditionally covered by Medicaid. Examples include preventive services to reduce unnecessary hospitalizations and acute care, more primary care, and greater emphasis on local community health workers who can help Oregon Health Plan members manage chronic illnesses.

To support a larger workforce necessary for this model of care, the federal agreement includes funding for a loan repayment program for primary care physicians who commit to working in rural or underserved communities in Oregon and training for 300 community health workers by 2015.

Agreement terms also call for Coordinated Care Organizations and the state to meet high standards for care and quality. Measures of success include patient experience of care, hospital readmission rates, care received after hospitalizations due to mental illness, health disparities among races and ethnicities, and rates of obesity and tobacco use. Eight Coordinated Care Organizations have been approved by the Oregon Health Authority to begin serving patients in August, with more scheduled to begin operations later this year.

"The new model of care we are creating will bring a better quality of life to people on the Oregon Health Plan," said Bruce Goldberg, M.D., director of the Oregon Health Authority. "With the federal support, we will be able to invest in local, patient-centered care that works to improve health and lowers costs."

The 1115 waiver can be viewed in its entirety at

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