Oregon's Medicaid Transformation: An Innovative Approach To Holding A Health System Accountable For Spending Growth

In 2012, Oregon initiated a significant transformation of its Medicaid program, catalyzed in part through an innovative arrangement with the Centers for Medicare and Medicaid Services (CMS), which provided an upfront investment of $1.9 billion to the state. In exchange, Oregon agreed to reduce the rate of Medicaid spending by 2 percentage points without degrading quality. A failure to meet these targets triggers penalties on the order of hundreds of millions of dollars from CMS. We describe the novel arrangement with CMS and how the CCO structure compares to Accountable Care Organizations (ACOs) and managed care organizations (MCOs).