The Kotek administration has pumped up its offers intended to satisfy the organizations that oversee care for more than 1 million low-income people enrolled in the Oregon Health Plan.

But it’s unclear if that will be enough to keep the groups from walking away from the state’s Medicaid-funded managed care system on January 1 — as some of their leaders reportedly have threatened.

The new rates represent the latest development in a closely watched situation with the contractors that serve low-income people in regions around the state, known as coordinated care organizations.

The CCOs, as they’re called, have been losing gobs of money. The rates approved by the state for last year’s contracts failed to cover costs to the tune of hundreds of millions of dollars.

And if the CCOs leave the program, their provider networks would be gone — as would other programs intended to boost communities’ health. Years ago, the move by one such organization to pull out of the program sparked complaints from providers that, without more time for a transition, the disruption to care could literally lead to patient deaths.

Rep. Rob Nosse, who chairs the House health care committee, told The Lund Report recently that the situation was the worst he’d seen in a decade.

On Tuesday, a top Oregon Health Authority manager, Clare Pierce-Wrobel, said at a public meeting that “We’ve gone really above and beyond to address CCO needs while also minimizing disruption for OHP members.”

Costs, rates growing

In the coming year commercial health insurance rates around the country are climbing 18%, largely to reflect massive increases in costs for drugs, payroll and other services.

In contrast, state health officials had budgeted 3.4% average rate hikes for the Oregon Health Plan organizations, then upped their offer to 6.8% — only to have care organizations say that wasn’t near enough.

In response, the state has now upped its rate offers by an average of 10.2% and entered into discussions about how to revise the program to cut costs.

Asked about the new rates shared with them last week, leaders of the coordinated care organizations contacted by The Lund Report generally expressed gratitude to state officials for upping their offers.

But they for the most part declined to say whether the numbers were sufficient to ensure their continued participation. That’s not surprising since negotiations continue on program changes intended to cut costs. Some of them have expressed concern that the state intends to reduce funds used to pay providers, potentially affecting patient access.

A spokesperson for CareOregon, which serves more than 500,000 members of the Oregon Health Plan, said in an email that “The state’s efforts to further develop 2026 rates represent a meaningful first step in addressing immediate challenges within the CCO landscape. CareOregon’s financial position has been significantly affected by the tension between rapid, abnormal changes in the health care system and a rate development model that has struggled to keep pace with this evolving reality. We are encouraged by the state’s willingness to rethink how we provide the Oregon Health Plan to one in three Oregonians, and we look forward to partnering closely to ensure the program’s long-term sustainability.”

A spokesperson for PacificSource, which serves Oregon Health Plan members in Central Oregon and several other regions told The Lund Report that “We received the revised rates late last week and are in the process of revaluating the rates and whether program changes are sufficient.”

Sean Jessup of the Eastern Oregon Coordinated Care Organization said in an email that the rates don’t seem to take into account some of the regional variations and challenges of providing rural care.

“I believe we have an opportunity to continue to partner with OHA to help translate what frontier healthcare means and how that impacts care. For example, we have 10 Type A cost-based hospitals in our service area and a disproportionate amount of care going to pay out-of-state care to ensure access as compared to other CCO’s. The rates do not seem to fully reflect that differentiation,” he said. “We also have overall concerns on the dental rates. While the CCO rates increased overall as compared to prior years, the statewide dental rate did not receive an equivalent increase and in the tri-county area the rate was reduced after removal of the dental directed payments for 2026. The ability to maintain dental access is going to be a challenge; and the important, scientifically-proven role of preventive care is undermined.”

State officials say more needs to be done

In a public meeting Tuesday, Pierce-Wrobel of the Oregon Health Authority said that based on the latest data, “since early August, we’ve seen that expenditures per (Oregon Health Plan) member grew by more than 10% between 2023 and 2024, which is in line with overall health care cost trends that we’ve seen in all sectors.”

In response, she said the agency had upped its rate offers to match those trends, and continued to work on refining the program: “This is a start, rather than an end, of what’s intended to be an ongoing dialogue about ensuring the sustainability of the Medicaid program amid unprecedented fiscal and policy constraints.”

Oregon Medicaid Director Emma Sandoe informed the organizations of their rates in a letter sent Sept. 4 by email. The letter also laid out what changes to the program the state is working on to cut costs for the organizations.

• Shift funds from the quality payments used to increase provider reimbursements — considered a key element of Oregon’s program
• Have the state take over paying for certain high-cost drugs
• Reduce reporting requirements
• Have the state take responsibility for unexpectedly high behavioral health costs.

The rate hikes are significant in that they call into question the 3.4% cost growth target that state health officials have been gearing up to enforce.

The situation also could bring about renewed discussion of a push by the Kotek administration to eliminate a longstanding but polarizing cost-control program of the Oregon Health Plan, contrary to plans laid by Kotek’s predecessor, Kate Brown.

This story was originally published by The Lund Report, an independent nonprofit health news organization based in Oregon. It is republished with permission. You can reach Nick Budnick at [email protected]or at@NickBudnick on X.

This republished story is part of OPB’s broader effort to ensure that everyone in our region has access to quality journalism that informs, entertains and enriches their lives. To learn more, visit opb.org/partnerships.

News Source : https://www.opb.org/article/2025/09/10/oregon-health-care-plan-kotek-plan-medicaid-ccos-insurance/