OHA Determines Most Oregon Health Care Entities Limiting Cost, but 3 Had Unreasonably High Spending 2021-22

Sustainable Health Care Cost Growth Target Program seeks to hold health care spending increases at 3.4% per person per year

SALEM, Ore. — While most of Oregon’s health insurance plans, hospital systems and medical groups successfully limited health care cost increases between 2021 and 2022, Oregon Health Authority (OHA) has determined for the first time that three health care organizations had unreasonably high cost growth.

“Health care is increasingly and unacceptably expensive, making quality health care out of reach for many working families and straining budgets of the businesses and government agencies that pay for health insurance,” said OHA Health Policy & Analytics Division Director Clare Pierce-Wrobel, M.H.A.

“To reverse this unwelcome trend, the Oregon Legislature created OHA’s Sustainable Health Care Cost Growth Target Program in 2019,” Pierce-Wrobel continued. “The program’s first-ever determination that a small number of health care organizations exceeded this cost growth target without an acceptable reason, along with our work to understand the factors driving health care costs statewide, is consistent with OHA’s core mission to make health care affordable, accessible and equitable for everyone in Oregon.”

Each year, the Sustainable Health Care Cost Growth Target Program collects and analyzes data from health insurance companies and other sources to measure what people and organizations in Oregon collectively spend on health care. The program established its first target for health care cost growth in 2021, setting it at a 3.4% annual average increase per person.

As noted in May 2024, when the program released its most recent annual report, OHA found 19 of Oregon’s 30 health insurance plans and 29 of the state’s 52 hospital systems and medical groups met the 3.4% cost growth target between 2021 and 2022. Even so, the state’s total health care expenditures grew 3.6% on a per-person-per-year basis during that timeframe.

Between July and December 2024, OHA worked with the 28 entities that went over the target to understand why they had higher spending. OHA found most had acceptable reasons, including:

• Increased enrollment in and use of Medicaid health coverage
• OHA raised Medicaid behavioral health payment rates
• Longer hospital stays because skilled nursing facilities didn’t have needed capacity
• Increased health care pay and other workforce costs
• Some conditions are exceptionally expensive — more than $1 million annually — to treat
• Increased services to meet growing community needs.

It was also determined that the following three entities had unreasonably high health care cost growth between 2021-2022, meaning they exceeded the 3.4% target without an acceptable reason:

• Moda Health’s Medicare Advantage insurance plans, which had an 11.6% increase. (This plan ended in December 2024 and is no longer available.)
• UHC Company’s Medicare Advantage insurance plans, which had a 6.4% increase.
• Oregon Medical Group, a primary and specialty care clinic group based in Eugene, which had a 6.5% increase in costs for its patients with commercial health insurance.

Starting next year, OHA will begin requiring organizations that exceed the target without an acceptable reason to submit a performance improvement plan, outlining an organization’s specific proposed steps to make health care more affordable.

OHA will report on health plan and hospital and medical group cost growth between 2022 and 2023 this May, and will begin requiring performance improvement plans for organizations that unreasonably exceed the target. If health care entities consistently fail to meet the cost growth target, OHA can administer financial penalties starting in 2026.

The Sustainable Health Care Cost Growth Target Program is among several OHA efforts to improve health care affordability, accessibility and equity in Oregon. Others include:

• Encouraging the use of value-based payments, which tie the amount that providers earn to patient outcomes instead of the volume of care provided. This form of health care payment can reduce expensive emergency room visits and save patients money.
• Limiting how much state-administered health insurance plans pay hospitals. Insurance plans administered by the Public Employee Benefits Board plan, which serves state employees, and the Oregon Educators Benefit Board, which serves the state’s educators, cap how much they pay for inpatient and outpatient hospital care.
• Increasing health insurance coverage statewide. In 2023, a record 97% of Oregonians were covered by a combination of commercial and public insurance. And in July 2024, Oregon launched a free insurance option for people who make too much to be eligible for Medicaid, but don’t earn enough to easily afford insurance on their own.