Oregon Health Authority (OHA) is working closely with multiple partners to make necessary adjusts to protect quality health care access for Medicaid members, despite increasing health care costs, federal changes, increased utilization, and changes to insurance contracts.

To help stabilize Oregon’s Medicaid system in the face of escalating costs and utilization, OHA will increase payments to Oregon Health Plan (OHP / Medicaid) insurers, also known as coordinated care organizations (CCOs), by an average of 10.2% in 2026. These rates reflect OHA’s commitment to maintaining quality care for OHP members, while recognizing the financial strain facing CCOs statewide. The increase will also require the agency to take targeted policy steps to contain costs and ensure long-term program sustainability.

“We’re investing more now to protect the stability of our Medicaid system, but that means we must be equally disciplined about controlling future costs,” said OHA Director Sejal Hathi, M.D., M.B.A. “Our focus is on safeguarding access to care today while keeping the program strong for years to come.”

Stabilizing the system through partnership

OHA previously announced that collectively, Oregon CCOs had a nearly break-even 2024, with all 16 CCOs having a small average net operating income of $129,000, resulting in a net operating margin of 0.001%. Total CCO expenditures per member grew by more than 10% between 2023 and 2024. Through June 30, 2025, CCOs collectively had a 0.02% profit margin this year. While these are averages there is variation between CCO experience.

The 2026 rate adjustment is designed to help CCOs manage these pressures and maintain provider networks, even as OHA works to balance program costs with available funding.

More than 1.4 million people in Oregon – including adults with lower incomes, children, older adults, and people with disabilities – receive coverage through OHP. OHA contracts with 16 CCOs across the state to coordinate physical, behavioral, and dental health care for members.

Cost containment

A large driver of recent OHP cost growth has been behavioral health care, demand for which grew following the pandemic. While OHA established directed behavioral health payments to help providers meet that need, demand continued to grow and CCOs have paid more than anticipated in recent years. To further contain costs, CCOs may negotiate lower payments with their contracted providers. At the same time, providers are looking to right-size their own finances. Today’s challenges mean everyone is being forced to make difficult decisions.

To offset higher CCO rates, OHA has been working in partnership with CCOs to evaluate a variety of cost-containing measures; these include:

Offering additional funding if CCOs have behavioral health costs that exceed revenue in 2026, while also requiring CCOs to refund OHA if they have low behavioral health costs next year.
Reducing funding for the CCO Quality Incentive Program, which offers an annual financial bonus for improving care quality. The program is one of many ways that OHA encourages quality improvement.
Narrowing eligibility requirements for enhanced directed behavioral health payments to providers who offer team-based care, which better supports people with the most complex behavioral health conditions. Pending federal approval, this change could be effective Jan. 1, 2026.

These changes are part of ongoing efforts to ensure that every public dollar continues to deliver maximum value for the people of Oregon.

CCOs respond to changes

OHA’s collaborative efforts with CCOs and partners have led to renewed contracts for 2026 in most regions. One CCO did decline service for a specific market, but OHA is working to confirm coverage through another CCO.

PacificSource notified OHA on Sept. 18 that it would not renew its CCO contract for Lane County. About 92,000 people living in Lane County currently have their Medicaid benefits managed by PacificSource, while another CCO, Trillium Community Health Plan, serves another 36,000 people in that county.

Based on OHA’s review of information provided by Trillium, with the interest to ensure clarity for providers and members and time for Trillium to take meaningful actions to expand their network, OHA is moving forward to allow the CCO to broaden coverage to all OHP members in Lane County for 2026. To allow more than 90 days for the transition of members between CCOs, OHA is working with PacificSource on the potential to continue to serve as a CCO in the region until Feb. 1, 2026. This agreement is still in process and OHA is confirming details. Already included in the agreement is a mandatory “transition of care” period, where Trillium would be required to ensure that members have uninterrupted, appropriate access to services previously authorized by their former CCO and make accommodations for OHP members in specific care circumstances.

Members can expect communication from OHA and PacificSource in the coming weeks. OHA has also been working on plans for OHP member, provider and community forums to discuss these updates throughout November and December.

Looking ahead

OHA acknowledges that everyone in Oregon’s Medicaid system – from state government and CCOs to hospitals and health care providers – must respond in ways that sustain access to quality care. The agency will continue working with partners across the state to develop durable solutions that protect coverage, sustain provider networks, and preserve OHP’s long-standing commitment to equitable, high-quality care.

Source: Oregon Health Authority

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