The Oregon Health Authority has found two providers and three insurance plans had unreasonable cost increases in 2023.
The Corvallis Clinic, St. Charles Health System in Bend, PacificSource’s commercial insurance plan, and United Healthcare’s and Moda’s Medicare Advantage Plans were found to have unreasonably cost increases.
OHA defines an unreasonable increase as cost growth above 3.4% without an acceptable reason such as high drug prices, state or federal mandates, or frontline workforce costs. Other companies did have cost growth the state’s target, but were able to provide the state with some evidence that linked those increases to allowable reasons.
The OHA’s Director of Health Policy and Analytics, Clare Pierce-Wrobel, said no companies will face financial penalties this year – but some will be required to work with the Health Authority on strategies to reduce costs.
“It is about looking at that broader issue, that healthcare cost growth is unsustainable and its crowding out wages and other economic growth in the state,” Pierce-Wrobel said. “That can be a really difficult thing as a family and as individuals just trying to live their lives and get access to healthcare”
OHA Health Care Cost Growth Target Program Manager Sarah Bartelmann said the state will likely change its approach next year for The Corvallis Clinic. It was acquired by national healthcare corporation Optum in early 2024. Optum also owns Oregon Medical Group, which also had its costs flagged in one of the agency’s previous reviews.
"It became really clear this year as we went through the conversation with the Corvallis Clinic that we really needed to include Optum as the organization that should be held accountable,” Bartelmann said. “As the owner of the Oregon Medical Group, The Corvallis Clinic (and) some other practices, that's really how they're being administered now. That's really who's in charge of the contracting, that's who's running the clinic."
UnitedHealthcare, which also had an insurance plan flagged for an unreasonable cost increase, is owned by the same parent company as Optum.
Optum provided public notice of its intent to acquire the Corvallis Clinic in late 2023 and the state authorized the purchase in March 2024. Leading up to the decision, Corvallis Clinic leaders told the state the clinic was struggling financially and at risk of losing essential staff.
In a letter last month, Phil Capp, Executive Medical Director of Optum Oregon Care Delivery, wrote to OHA on behalf of the Corvallis Clinic. He argued costs may have been caused by factors outside the clinics’ control. He said sharing any other insights into cost drivers would be speculative.
He said he anticipated the clinic’s outcomes would improve.
“As the Optum model matures in Corvallis, our ability to directly influence cost elements we control, as well as our ability to influence levers that we do not directly control, will dramatically increase, as will quality and patient experience,” Capp said.
Moda is no longer offering the Medicaid Advantage plan that OHA flagged for cost and therefore won’t have to provide a performance improvement plan.
St. Charles Health System and PacificSource will need to share information with OHA identifying the cause of their high cost growth, share plans they have to address those cost drivers, and provide a timeline. OHA said it is excusing The Corvallis Clinic from a performance improvement plan this year so it can focus on holding Optum accountable in future years.
OHA will be able to fine healthcare companies if they have continued, unreasonable cost increases starting in 2028.
