Erin Fair Taylor’s job isn’t easy. That’s because every day, she must figure out how to pay doctors. Taylor works for CareOregon, which is playing an active part in Oregon’s effort to overhaul its Medicaid system. As such, it’s her job these days to find a way to spur physicians toward lowering costs for care while maintaining a high quality of care. As she’s been talking with doctors, Taylor says, “many of them see the benefit” of what the state is trying to do. But also, she adds, there’s fear.
Oregon is among a handful of states leading its Medicaid system into a new era. Traditionally, states have provided Medicaid benefits using a fee-for-service system — an approach critics say encourages providers to administer more services, often unnecessary ones. As a result, states over the past two decades have been implementing managed care organizations MCOs, in which people receive most or all of their Medicaid services from an organization under contract with the state. Under these systems, a state pays a flat, capitated rate per beneficiary to the managed care organization. The concept makes state costs more predictable. But in many cases managed care is still driven by fee-for-service payments. The simple difference is that it merely shifts the bills from the state to the health plan.