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CareOregon Winds Up with $86.9 Million at Year’s End

The health plan also gave $5 million to help jump start the Oregon Health CO-OP, and another $1.2 million loan after its membership fell below expectations.
October 8, 2015

FamilyCare wasn’t the only health plan that walked away with a huge bundle of cash for taking care of people on the Oregon Health Plan.

CareOregon actually did better, ending 2014 with $86.9 million in net income, better known as profit, according to financial reports filed with the Oregon Health Authority. Although not officially registered as a coordinated care organization, CareOregon manages the financial books for three CCOs -- Jackson Care Connect, Columbia Pacific CCO, and the majority of Health Share’s members. In addition, it’s responsible for providing physical healthcare benefits to members of Yamhill County Care Organization, but not its financial risk.

That $86.9 million windfall came about because fewer people used healthcare services, Pat Curran, CareOregon’s CEO and president, told The Lund Report. As a result, CareOregon’s net income increased by 294 percent from 2013, when it only had $2.9 million at year’s end, while its net assets grew by 47 percent – from $182.9 million to $269.5 million; its unrestricted investments reached $307.3 million – a 60 percent increase; pay for performance incentives also had an astounding 97 percent growth -- $25.1 million, and CareOregon’s liabilities grew by 55 percent, to $154.6 million.

“Many of us thought there’d be pent up demand and high utilization which didn’t pan out,” Curran said.

Multnomah County Health Department provides dental services to Oregon Health Plan members enrolled in Health Share, FamilyCare or diretly through the state through a contract with several dental care organizations, including CareOregon Dental. Multnomah County received $4.6 millon in CCO-related paid claims from CareOregon Dental (a subcontrator of FamilyCare, Health Share and the state) because of the huge membership growth.

In 2013, before CareOregon Dental contracted with the CCOs, Multnomah County received $4.1 million from CareOregon dental.

What exactly is CareOregon doing with that $86.9 million? When pressed, Curran wouldn’t say how much money is being spent on specific projects, but did say that up to 75 percent of those dollars are being invested in community programs and beefing up provider capacity, with the remaining money heading into the reserve accounts of the local CCOs.

“Out of respect for those CCO leaders,” he said, “each has their own executive directors and leadership, and makes its own decisions about investments, and I respect the confidentiality of organizations and their providers.”

All told, CareOregon represents roughly 210,000 people on the Oregon Health Plan. Of those, 160,000 are members of Health Share and include, among other providers, Oregon Health & Science University, Legacy Health and the Multnomah, Clackamas and Washington County health departments.

Health Share’s other 80,000 members come from Kaiser Permanente, Providence Health & Services and Tuality Health. CareOregon does not handle their finances – and it’s unknown how much money these healthcare organizations have in net income because that information is not disclosed on public records and is considered proprietary.

All the CCOs rely on public dollars for their operations with the majority of that money -- $1.9 billion -- coming from the federal government after former Gov. John Kitzhaber convinced officials Oregon would transform its healthcare delivery system and save billions of dollars in return.

Of the CCOs that had excess revenue at the end of 2014, FamilyCare is being asked to pay back $55 million, while Health Share and Columbia Pacific aren’t penalized. Jackson Care Connect, on the other hand, is being dinged for $10.4 million.

In total, five CCOs are being asked to return $100 million for alleged overpayments in the first eight months stemming from two wildly different but equally controversial rate calculations, while Rep. Mitch Greenlick agrees with some of the calculations but argues that the rates for the Medicaid expansion were more arbitrary and could threaten the CCOs’ ability to innovate and transform the delivery system.

Is Centene on the Lookout?

With the imminent sale of Trillium Health’s parent company Agate Resources to a Fortune 500 company, there’s speculation about other CCOs following its lead and selling out to Centene Corporation. But those conversations haven’t reached the Curran’s desk.

“I really believe that our participation with those CCOs has been great,” Curran said. “What we hope it accomplishes for these CCOs is a spirit of being community driven and having local governance, combined with, hopefully, the resources and expertise of the mission of CareOregon. I like to think that this combination will help those CCOs be more successful.”

In other ways, CareOregon is growing its health resilience program where employees are embedded in primary care clinics and do community work helping people with stable housing and behavioral health problems.

A clinical pharmacy residency program places pharmacy resident in primary care clinics to coordinate the medication needs of OHP members.

“We’re investing dollars to help improve access,” Curran said. “When you look at CareOregon, we actually run a fairly complex business and do various activities for CCOs, offering a dental plan, for example, and have a fairly large Medicare Advantage Plan and perform administrative services for several different organizations."

CareOregon Bails out CO-OP

CareOregon was also instrumental in creating the Oregon Health CO-OP, giving the insurer $1 million for marketing activities and another $4 million after its administrative costs exceeded the amount of money on hand because of lower enrollment. The CO-OP also carries a $1.2 million interest-free surplus note due in September 2018. The Insurance Division wouldn’t allow CareOregon to charge interest on that note because of surplus concerns.

Since then, the CO-OP has shifted administrative functions away from CareOregon. “It was an amicable parting; we wanted the CO-OP to succeed,” Curran said.

At the end of 2014, the CO-OP had 1,570 members but projects having 20,500 members by year’s end.

Diane can be reached at [email protected].