FamilyCare CEO Insists His Organization Isn't Going Anywhere

In the latest salvo in its chess game with the Portland-area coordinated care organization FamilyCare, the Oregon Health Authority issued a memorandum on the eve of Thanksgiving to the other 15 CCOs asking for takers to displace FamilyCare in case of an emergency.

In his countergambit, FamilyCare CEO Jeff Heatherington insisted his organization is not going anywhere before the end of its five-year contract with the state to serve the Oregon Health Plan population.  

The revised 2015 reimbursement rates, as well as the 2016 rates, give Health Share up to 25 percent more funding than FamilyCare for new members which the CCOs started serving as a result of the Affordable Care Act Medicaid expansion, with a funding scheme based on reported medical costs rather than a risk-adjusted model.

The “reported costs” the state has cited must be taken on faith, as the state has blocked requests, not only to FamilyCare officials, but to Sen. Alan Bates, D-Ashland, that the agency show its math to explain why Health Share’s members are so much more expensive to treat than FamilyCare’s, stopping Bates from analyzing the data and second guessing its conclusions, citing litigation from FamilyCare over the rates.

Heatherington accused Health Authority Director Lynne Saxton of changing her reason to block the information each time she’s  called on it. “That is public information and it doesn’t suddenly become nonpublic because of the lawsuit,” he said. “We went into litigation because they wouldn’t give us the information. They just keep making excuses to not to produce the information.”

Saxton defended the embargo on the public information, claiming she was only acting under the guidance of the Department of Justice. But her agency’s behavior diverts sharply from other state agencies.

Because of a lawsuit between Disability Rights Oregon and the Department of Human Services, The Lund Report was unable to get an interview with DHS in December 2013 over the sheltered workshops controversy for people with intellectual disabilities, but DHS did direct The Lund Report to public information about its Employment First program, which was intended to integrate these clients into the general workforce, but had been under-utilized.

Department of Justice spokeswoman Kristina Edmundson would not provide an answer when asked about her agency’s involvement in blocking Bates’ request, noting that any Justice counsel to the Health Authority is privileged and referred The Lund Report back to the Health Authority.

“You have the governor calling for transparency and then the agency does this stuff,” said Cindy Becker, vice president of community and government relations at FamilyCare. “There is clearly a disconnect.”

Bates was busy at his osteopathic medical practice in Medford and unable to provide any further comment, but the office of Sen. Chip Shields, D-Portland, said he has asked legislative counsel for an opinion on which statute allows the Health Authority to renege on agreed-upon rates and demand repayment from the CCOs and when the Health Authority can block otherwise public information.

The $55 million the Health Authority insists that it overpaid FamilyCare during the first eight months of this year -- and now wants back so it can be redistributed to the other CCOs -- is largely attributable to the differences in payment to the expansion population between the initial and revised 2015 rates.

The request for a backup CCO, which the letter from the Health Authority to the other CCOs says is just precautionary, appears designed to put pressure on FamilyCare to either drop its lawsuit against the state or capitulate in mediation to the state’s demand that it return $55 million in Medicaid payments or else lose its ability to remain as a CCO.

This summer, the Health Authority issued an emergency rule giving it authority to bring in new coordinated care organizations before the end of the five-year contracts, but most of the CCOs protested -- including both FamilyCare and Health Share.

Last week FamilyCare sent a memo to the other seven CCOs that are members of the Coalition for a Healthy Oregon, asking them to rally again against the Health Authority’s actions. No CCOs had responded to FamilyCare’s request by press time.

Health Share, which is not a member of COHO, submitted a letter of intent to serve as the backup CCO, arguing it had the capacity to assume FamilyCare’s 128,000 members.

In her response, Oregon Health Authority spokeswoman Alissa Robbins claimed Saxton had already mentioned to legislators the possibility for a contingency plan in case FamilyCare held out on signing the contract amendment.  ​“Continuity of services for Oregon Health Plan members is OHA's top priority. In early November, we were pleased to hear FamilyCare intends to sign a contract for services in 2016.  Due to the uncertainty that remains, however, OHA communicated our need to have contingency plans in place to ensure stability for OHP members under all possible scenarios.”

CCOs with Hospital Monopolies Paid More

The 2016 Medicaid rates for the CCOs hew closely to the revised and controversial 2015 rates, tilting the scale toward Eastern Oregon and markets with only one hospital system and furthering a divide in reimbursement for the two Portland CCOs.

While FamilyCare will receive about a 3 percent increase from the revised 2015 rates, Health Share is getting a 5 percent increase, from rates that were already significantly better than FamilyCare’s. FamilyCare will receive $348 to $621 per member per month for its ACA expansion members, while Health Share will get $406 to $767 for the same population, with differences set by age.

The highest rates in the state -- $527 to $989 per member per month -- went to the Eastern Oregon CCO -- which relies primarily on expensive safety-net hospitals in the sprawling rural and frontier quarters of the state. The second-highest average rates -- $471 to $940 -- went to Western Oregon Advanced Health in Coos Bay, followed by the Cascade Health Alliance in Klamath Falls ($437 to $892) and the PacificSource CCO in Central Oregon ($516 to $808).

The South Coast CCO is dominated by the Bay Area Medical Center in Coos Bay, but also relies on several rural hospitals. But high rates at the other two CCOs -- all built upon reported costs -- coincide with hospital monopolies -- Sky Lakes Medical Center in Klamath Falls and St. Charles Health System across central Oregon.

Health Share falls in the middle of the pack with most other CCOs statewide, comparable to Willamette Valley Community Health in Salem, where CEO Bill Guest told The Lund Report that the CCO will be able to stay in business while still paying its providers and hospitals much less than commercial insurance.

FamilyCare has by far the lowest rates -- 13 percent less than the second-most efficient CCO, AllCare Health Plan in Medford.

Southern Oregon, which enjoys healthy competition between the Asante and Providence hospital systems, has CCOs that were all at the low end of the payment scale for the expansion population, much as they were with the revised 2015 rates.

FamilyCare is the lone holdout in accepting the revised 2015 rates, although Bates told the Joint Committee on Ways & Means last month that the southern Oregon CCOs caved to the Health Authority’s demands that they return overpayments because “they felt they had a gun to their head.”

Heatherington said FamilyCare plans to sign its 2016 contract but will likely later dispute the rates, since they are based on the same low rates it is now fighting in mediation and the courts.

FamilyCare’s Becker said mediation between FamilyCare and the Health Authority would resume Dec. 11.

Chris can be reached at [email protected]. 

Editor's Note: An earlier version of this story suggested that the OHA was favoring CareOregon because of perceived nepotism. We have retracted this information following a request from Jeff Heatherington who insisted he did not make such allegations. We apologize for the errors.