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Former Oregon governor John Kitzhaber opposes CareOregon merger

Influential health leader says the Oregon nonprofit's absorption by a California Medicare insurer would undermine care for low-income people. Leadership of the two entities say the critics are off-base.
December 14, 2023
This article has been expanded to incorporate additional comment.

Former Oregon Gov. John Kitzhaber on Wednesday announced his opposition to merging CareOregon with The SCAN Group, a California-based nonprofit, calling it counter to the Oregon Health Plan’s intent and not “in the best interest of Oregon consumers.”

Detailed in a blog post, Kitzhaber’s stance adds to the challenges faced by the proposed transaction, which must survive the review of the Oregon Health Authority and the state Department of Consumer and Business Services. Kitzhaber is considered the father of the  low-income program's creation in 1993 and a chief champion of the reforms that remade it in 2011.

Recently, the state Medicaid Advisory Committee came out against the proposed CareOregon deal, saying significant questions about its potential effects had not been answered.

Deal closely watched

The issue has been closely watched due to the prominence of CareOregon, which oversees free care for about 500,000 low-income members of the Oregon Health Plan, the state’s version of Medicaid.

In December 2022, CareOregon and the SCAN Group, a nonprofit, announced their intent to combine operations under the name HealthRight Group, with operations in Oregon, California, Arizona, Nevada and Texas.

SCAN’s primary focus is providing Medicare Advantage insurance, but it has also branched out into service delivery to seniors and people experiencing homelessness. Modern Healthcare magazine recently named its president and CEO, former Obama administration official Sachin Jain, as among the 100 most influential people in health care — the same honor previously awarded to Kitzhaber.

Leaders of the groups involved in the proposed transaction said CareOregon would continue to operate in Oregon with a separate board and maintain its state-mandated community advisory councils.

CareOregon leaders have defended the deal, saying it’s been mischaracterized, and suggested state bungling has contributed to the questions they’ve faced. They say the information they’ve shared with the state’s hired law firm is not getting to the public and to regulators in a timely way.

In any event, despite some public criticisms of the state’s delayed and seemingly haphazard public outreach process around the deal, opposition has grown

SCAN Group and CareOregon sent a joint statement from Jain and Hunter in response to a request for comment from The Lund Report. In it, they praised Kitzhaber but said “There is nothing in our agreements with SCAN for HealthRight Group ... that adds another level of engagement or oversight of any of (CareOregon's) work.  The relationship of HRG will be with CareOregon, Inc regarding our overall administrative opportunities and potential other lines of business.” 

They said the “only impact”  CareOregon operations would see “from our HealthRight Group collaboration is in systems and/or programs which we can enact or improve to let them serve their members and communities in a better way.”

Kitzhaber cites Oregon Health Plan reforms’ intent

Kitzhaber, a former emergency room physician, served as Oregon's governor from 1995 to 2003 and again from 2011 to 2015. While president of the Oregon Senate in 1993, he and Portland activist Dr. Ralph Crawshaw drafted the Oregon Health Plan to provide health care to low-income Oregonians, with Kitzhaber encouraging physicians to organize services in communities where insurers weren’t willing.

The plan changed in 2011 with a new round of reforms establishing what were known as coordinated care organizations -- essentially regional insurer-like entities that worked with networks of public and private health-care providers to serve low-income people.

CareOregon participated in the largest such group, Health Share of Oregon, to cover people in Clackamas, Multnomah and Washington counties. It has since taken over operation of two more regional care groups in the Jackson and Tillamook regions.

In his blog post, Kitzhaber reiterated that the reforms of 2011 were undertaken with a vision of local control that was supposed to represent a departure from traditional managed care.

"This merger runs counter to the original vision for Oregon’s coordinated care organizations, and instead, represents a de facto shift toward traditional Medicaid managed care," Kitzhaber wrote. He said the merger “raises concerns about losing both the local governance and the grounded community flavor of each CCO.”

Any change of direction should be debated by Oregon leaders, he said.

"Such a change in public policy should be led by Oregon policymakers and should be the product of an intentional, forward-looking vision for Oregon’s CCOs," he said.

While the two nonprofits have said they must grow to be able to compete against for-profit companies that lack patients’ best interests, Kitzhaber called it a false choice.

"The argument is that Oregon CCOs must choose the lesser of two evils -- merging with a multi-state, multi-billion-dollar Medicare Advantage company like SCAN, or being purchased by an even bigger for-profit insurance company such as UnitedHealthcare," he said.

He echoed critics who’ve focused on an aspect of the merger in which $120 million in CareOregon reserves would be shifted to the new HealthRight Group based in Long Beach.

"Oregon funds, intended for investment in Oregon communities, could leave the state for other purposes," he said.

CareOregon defends funds transfer

In a recent statement emailed to The Lund Report, CareOregon President and CEO Eric Hunter said the funds will support improvements in Oregon led by HealthRight. 

He said the $120 million shifted from CareOregon's Oregon Health Plan reserves would be matched by $240 million from SCAN and also that $50 million would be “dedicated exclusively to Oregon projects and the remainder is only contributed if we have positive net income and meet our (reserve requirements). The investments made from that fund will allow us to use expanded buying power for things that we would otherwise not be able to afford or would pay for out of our Oregon dedicated reserves.”

Review of the proposed merger by the state continues, with at least one or two more public hearings on the horizon. The review process is expected to wrap up over the next few months.


Submitted by Thomas S Duncan on Mon, 12/25/2023 - 13:07 Permalink

Any partnership with an unaccountable out-of-state organization could only be regarded as colonialism.

Look what happened to Trillium in Eugene.  Made the upper management rich, no improvment in health care or services.  Granted, that was a private equity deal, but I haven't seen anything about SCAN that would suggest that it is much different from a private equity organization despite its supposed "non-profit" status.