Governor John Kitzhaber signed legislation (H.B. 3650) on July 1 that seeks to improve coordination of physical health, mental health, addiction services, and dental services for 600,000 Medicaid recipients served through 40 managed care organizations under the Oregon Health Plan.   The legislation authorizes contracts with regional coordinated care organizations (CCOs) throughout Oregon to promote the use of preventive services and better care management, especially with respect to individuals with high cost, chronic conditions who often need services and supports that must be obtained through multiple community-based organizations. Oregon’s “health care transformation bill” (as it is widely known) has been strongly supported by Governor Kitzhaber and championed in the legislature by a state senator with 35 years experience as a practicing family physician and a state senator who is a public health nurse. Oregon seeks to save $240 million in state general fund expenditures by the end of its 2011-2013 biennium largely by using CCO contracts to reduce avoidable emergency room visits and inpatient admissions to hospitals. Initial steps to implement the new law over the next six months will include creation of work groups to develop CCO participation criteria; global budgeting methodologies that will apply to CCOs; outcomes, quality, and efficiency metrics that will be applied to CCOs to evaluate their performance; and Medicare-Medicaid integration initiatives for dually entitled recipients served through the CCOs. The Oregon Health Authority will adopt rules on CCO participation criteria and standards for patient-centered primary care homes and the Oregon Home Care Commission will present training sessions on comprehensive care coordination.