Watch Governor Kitzhaber announce the Medicaid agreement here.

The U.S. Department of Health and Human Services (HHS) has given preliminary approval of a five-year, $1.9 billion demonstration of a Federal-State partnership to transform the way that care is delivered in Oregon’s Medicaid program. The initial investment of $620 million in the second year of the State’s current biennium will allow Oregon’s new care organizations to better deliver higher-quality, coordinated care for Medicaid patients while reducing preventable errors. Oregon estimates that this will achieve $11 billion in savings over the next decade.

Healthcare transformation is a key initiative of the Oregon Business Plan.  Without major reforms in the way care is delivered, the costs of the Oregon Health Plan (Oregon’s version of Medicaid) are projected to rise rapidly over the next decade, threatening the ability of Oregonians who need care to receive it, and squeezing out the state’s ability to invest in education.  Business groups have worked closely with Governor Kitzhaber over the past year and a half to design and advocate for reforms that simultaneously improve quality and reduce costs.  In February, the legislature approved SB 1580 that will help Medicaid patients improve health while preventing expensive hospital visits through better care coordination.

“The $1.9 billion is an obvious vote of confidence in Oregon’s health care transformation,” said George Brown, CEO of Legacy Health Systems.  “I give very high praise to the Governor for his leadership and vision on health care transformation. He worked tirelessly with a bi-partisan legislature to enable and enact legislation that will allow for meaningful change in health care delivery.”

Read more here.