Exclusive: Trillium Badgers Hospitals In Fight For Lucrative Portland-Area Medicaid Market
In a behind-the-scenes test of wills, Trillium Community Health Plan has hammered resistant Portland-area hospitals to sign service contracts vital for the company’s expansion as a Medicaid insurer into the three-county market in 2020.
Trillium has battled with a weapon supplied by the state: Early last month the Oregon Health Authority hastily implemented new rules that require hospitals and other health care providers to negotiate and sign contracts with Medicaid insurers.
Under the rules, providers can refuse to sign contracts only in certain circumstances, for example, if the proposed insurance payments are inadequate or the contract puts an unreasonable financial, administrative or other burden on the provider.
For-profit Trillium, a subsidiary of insurance giant Centene Corp., has thumped the three major hospital systems -- Providence Health & Services, Legacy Health and Oregon Health & Science University -- with the rules. CEO Chris Hummer also warned all three in letters that “concerted refusal” by “dominant” health care providers to sign contracts may violate state and federal antitrust laws.
After resisting this summer, Legacy and OHSU have buckled and begun to meet with Trillium, according to public records obtained by The Lund Report.
Providence appears to be holding out. Trillium has begun an arbitration process against the system as allowed under the state rules.
The records show how the OHA’s decision this summer to let Trillium into the Multnomah/Washington/Clackamas market and compete for its 300,000 Medicaid members stirred up a vicious fight for the lucrative market which is worth more than $1.5 billion a year. It is currently served by a single insurer, nonprofit Health Share of Oregon, which is overseen by officials from Portland-area hospitals, government agencies and other health care providers.
Trillium faced a wall of resistance from hospitals and county governments after the health authority this summer tapped Trillium to enter the market and compete with Health Share.
For Trillium the stakes are big and the need is urgent. The company must show it has service contracts with a comprehensive range of health care providers to secure a final Medicaid contract for the Portland market in 2020 and beyond. Hospitals are a crucial component of this provider network. Trillium in letters in mid-August stressed to the three hospital systems that it needs contracts with them in order to “properly serve” the region’s Medicaid members.
‘Work Together Reasonably’
The Oregon Health Authority has urged all sides to “work together reasonably and in good faith” to let Trillium enter the market and compete against Health Share. The metro area is “fortunate” to now have two Medicaid insurers, OHA Director Pat Allen told hospitals in a letter last month.
The health authority’s push for Trillium appears to be part of an agenda favoring a Medicaid landscape in Oregon that’s made up of a few big insurers.
But the hospital systems and county governments in Portland don’t want another insurer to deal with. They have a strong relationship with Health Share and fear wasteful administrative headaches caused by multiple Medicaid insurance contracts. This summer the hospital systems and other big providers gave Trillium the cold shoulder by refusing to talk with the company or dragging their feet.
Trillium didn’t relent. Instead, it complained to the health authority. On Aug. 7, OHA quickly and quietly implemented the new rules – which fine-tuned existing rules -- and the next day sent warning letters to all Portland’s hospital systems.
Then, in letters in mid-August, Trillium began pressuring the hospitals, setting dates for when they must come to the table and talk. If they refused, Trillium said it would invoke arbitration.
OHSU and Legacy met with the insurer late last month, the records show. It’s unclear whether they’ll reach contracts.
Trillium, Legacy, Providence and OHSU did not respond to requests for comment from The Lund Report or declined to comment.
The records show that with Providence, Trillium is invoking arbitration. This involves the sides picking an arbitrator who evaluates the arguments and declares whether the provider’s refusal to sign a contract is justified. OHA makes a final decision. If the health authority decides a health care provider has “unreasonably refused to contract” with an insurer, the agency may withhold “fee-for-service” government reimbursements to the health care provider, under the rules. That could hurt a hospital.
Fee-for-service is the costly market rate that a health care provider charges when an insurance company doesn’t have a contract with the provider. For example, if a Medicaid patient went to the emergency room of a hospital that had been deemed by the state to have unreasonably refused to sign a contract with the region’s Medicaid insurer, the hospital, under federal law, would have to provide service to the patient, but the state could refuse to reimburse the hospital.
Contracts Between Insurers, Providers Are Crucial
In justifying the speedy rule change last month, OHA said the agency and Medicaid insurers need the procedures to work toward contracts between the state and the insurers.
The conflict goes to the heart of the competition between Medicaid insurers that the state welcomed with its CCO 2.0 revamp of Medicaid. In addition to allowing Trillium into the Portland market, the state let PacificSource into the 90,000-member Lane County market to compete against long-time insurer Trillium. The market is worth more than half a billion dollars a year. In contrast to the Portland-area imbroglio, PacificSource’s entry into Lane County doesn’t appear to face opposition from providers.
Service contracts between insurers and providers are crucial for the insurer. They give the insurer big discounts from the fee-for-service rates that the insurer would otherwise have to pay. As part of its “readiness review” of Medicaid insurers to determine whether they merit final state contracts for the next round, the state examines whether the insurer has agreements with hospital systems and other big providers, OHA has said.
A lack of such contracts can diminish chances of approval because the state wants to get the maximum amount of provider services for the Medicaid dollars it allocates to insurers.
So Trillium has badgered Portland area hospitals for contracts.
Its push for Providence, ongoing in emails, calls and meetings since March, has turned nasty, with Trillium complaining in a letter to the hospital group in an Aug. 13 letter about the lack of progress. The hospital system didn’t budge.
Providence regional CEO Lisa Vance wrote to Trillium that Providence already has a binding contract with the Portland area’s other Medicaid insurer. That “has an effect on our capacity to contract with other” insurers, she wrote. She also stressed there are other hospital systems Trillium can sign contracts with.
“It is our position that Providence’s participation in your network is not necessary for the organization of your (Medicaid insurance system), as there are other health care entities in Multnomah, Clackamas and Washington County regions,” she wrote. Under the state’s rules, the arbitration process applies only if the state determines it is “necessary” for a particular health care provider to have a contract with the insurer in order for that insurer to be awarded a particular Medicaid territory.
Vance also stressed that Providence’s refusal to sign a contract “has been strictly made by Providence independently and has not been discussed with other providers in the market.”
As part of its push, Trillium’s Hummer has repeatedly met and emailed with OHA’s Allen, updating him on Trillium’s progress in getting Portland-area hospitals and county governments to begin contract negotiations.
Other topics with Allen have included how the state will allocate members in a market where two insurers compete for Medicaid members. The state is developing a complex, multi-step process in which members get to choose their insurer, but in which the state also may allocate members based on which insurer has the provider network that is best for the member.
That process will ramp up later this year as the state decides which insurers will land a final contract.
That’s the deadline Trillium is aiming for.
You can reach Christian Wihtol at [email protected].