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Oregon revises CCO rates to reflect rising costs; PacificSource signals Lane County exit
Summary
OHA revised its 2026 CCO rate proposal after updated financial data, increasing statewide growth from an initial 6.8% draft to roughly 10.2% and adding risk‑mitigation options; OHA also announced PacificSource's non‑renewal in Lane County and outlined a rapid transition process to protect continuity of care.
Oregon Health Authority officials told the House Interim Committee on Healthcare they updated 2026 Coordinated Care Organization (CCO) capitation rate recommendations after receiving new financial data showing accelerating utilization and cost pressures.
Chelsea Gast, OHA CCO finance director, said the agency initially released a draft on Aug. 1 reflecting a 6.8% statewide growth rate but, after CCO feedback and new Q2 data, revised its recommendation to a 10.2% average statewide increase to keep rates actuarially sound. "This adjustment was necessary to reflect the realities on the ground and ensure that capitation rates remained actuarially sound," Gast said.
OHA described risk‑mitigation measures negotiated with CCOs: narrowing certain directed behavioral‑health payments, an optional behavioral health risk corridor to limit CCO exposure, and carving out very‑high‑cost, low‑utilization drugs to fee‑for‑service (estimated state cost of about $15 million) to reduce CCO risk. Agency staff also said they will implement a $30 million rate investment the legislature funded for 2026 once rates are certified with CMS.
In a separate but related development, OHA informed the committee that PacificSource decided not to renew its CCO contract in Lane County, affecting roughly 90,000 members in that service area. Deputy director Dave Baden outlined the expedited transition steps if a service‑area need determination is made: a letter of intent to potential replacement CCOs, targeted procurement, a rapid community outreach and transition plan focused on continuity of care for high‑risk members and preserving provider networks.
CCO and provider representatives who testified stressed the importance of rate sufficiency and the quality‑pool funding that supports innovation and workforce development. Eastern Oregon CCO CEO Sean Jessop and other CCO leaders asked the legislature to consider longer‑term rate stabilization and to preserve quality incentives that fund preventive services and local innovations.
Committee members pressed OHA on budgetary context: OHA reiterated that rate setting is an actuarial process distinct from the legislative budget and that some policy levers (benefit design changes) would affect future rates. OHA committed to continued collaboration with CCOs and the legislature as final certification with CMS proceeds.
