OHA report says Oregon health care costs rose 3.6% in 2021-22, driven by prescription drugs, other factors

PORTLAND, Ore. (KTVZ) -- The Oregon Health Authority on Tuesday released its annual report on cost growth trends for health insurance plans and large provider organizations across the state.

The report provides insight into health care spending in the Commercial, Medicaid, and Medicare markets statewide, and for 30 health plans and 53 provider organizations; more than half of plans and provider organizations met the cost growth target.

The report shows that between 2021-2022 health care costs in Oregon grew 3.6%, slightly above the cost growth target of 3.4%. Cost growth was driven by increases in hospital outpatient services, behavioral health services, and changes in how providers were paid, with more providers receiving prospective payments, quality payments, and other value-based arrangements.

“It’s important to continue to shine a light on health care spending in Oregon. This report allows health insurers and large providers to see where they stand in comparison to others and help focus their efforts on containing health care costs,” said David Baden, Oregon Health Authority Deputy Director for Policy and Programs.

In 2019, the Oregon Legislature established the Sustainable Health Care Cost Growth Target Program, which is designed to prevent health care costs from growing faster than wages, inflation, and other economic indicators. In collaboration among large provider organizations, hospitals and health insurance plans, employers, and patient advocates, the program sets a statewide target for the annual per-person growth rate of total health care spending.

Accountability measures for health plans and provider organizations exceeding the target cost growth rate will be phased in with a multi-year approach. Performance improvement plans (PIPs) for entities exceeding the cost growth will begin in 2025. No health plans or provider organizations will be subject to a PIP based on the data in this report.

Key trends from the 2021-2022 report include:

• Overall cost growth was greatest in the Medicare market. Statewide, total health care expenditures grew 2.2% in the Medicare market, compared to 1.5% in the Commercial market, and 1.2% in the Medicaid market. Even though health care cost growth in Oregon was below the target for this measurement period, cumulatively, health care costs in Oregon have grown 12.4% between 2018-2022.
• More than half of health plans and provider organizations met the target in at least one market. Health plans were more likely to meet the cost growth target for their Medicaid and Commercial lines of business; only 3 Medicare Advantage health plans met the target. Provider organizations were more likely to meet the target for Medicaid.
• Primary cost drivers include an increase in hospital outpatient services, behavioral health services, and non-claims payments. Medicare Advantage non-claims spending increased substantially, largely due to prospective payments. Medicaid, Medicare Advantage and Commercial markets also saw more performance incentive dollars.
• Retail pharmacy spending continued to grow across the state, even after more than $1.2 billion in pharmacy rebates were taken into account. Retail pharmacy spending grew 2.9% in the Commercial and Medicaid markets, and 2.6% in the Medicare Advantage market.

The 2024 Cost Growth Target Public Hearing will be held pm Tuesday, June 4. You can share your story about the high cost of health care via email (HealthCare.CostTarget@oha.oregon.gov) or comment at the public hearing. More information available online.