FamilyCare Decries 2018 CCO Rates, Continuing Years-Long Battle with Oregon

The Portland-area nonprofit says even with a 9.8 percent rate hike, it faces a $75 million deficit and could go out of business.

Coordinated care organization reimbursement rates that were announced this week included a hike in how much FamilyCare will receive in 2018 – but not enough to appease the leaders of the Portland-area CCO, who say low reimbursements are putting their nonprofit organization at risk.

“When you’ve had the lowest rates in the state for three consecutive years, an increase in the fourth year does not solve the problem,” Jack Coleman, FamilyCare spokesman, told The Lund Report.

And FamiyCare’s CEO Jeff Heatherington, who has repeatedly complained of mistreatment by the Oregon Health Authority and who has led his organization in several lawsuits against the state over the issue, is voicing his concerns.

“The rates still put us considerably under everybody else and will produce a $75 million deficit, about the same we’re having this year and that essentially puts us out of business,” Heatherington told the Portland Business Journal. “The second-largest plan in the state may shut down after 35 years of operation.”

The 2018 rates, which were largely set before Pat Allen replaced Lynn Saxton as head of the Oregon Health Authority, give FamilyCare a 9.8 percent boost in reimbursements – to $377.57 per member per month. On average, most CCOs are receiving a 3.3 percent reimbursement hike. The other Portland-area CCO, HealthShare, will receive $409.75 per member per month.

According to legal documents filed in Marion County Court in defense of past rate decisions, the state maintains that the rates are set based on the assessments of actuaries who look at the health needs of each CCO’s members. But FamilyCare has repeatedly challenged this assertion, and the organization says it will run out of funds by August if it does not receive more in 2018.

FamilyCare officials say they are pursuing a number of avenues in their effort to boost reimbursements. The CCO’s lawsuit against the state is currently in discovery, and heads to trial on Feb. 5. Simultaneously, they are watching the health authority’s ongoing reviews of the announced rates in hopes that that process may yield the results they seek.

The Centers for Medicare and Medicaid Services has approved Oregon's CCO rates for past three years. OHA said it is taking extra steps this year to ensure the rate-setting process is fully transparent and independently verified, with reviews, by a Medicaid-qualified actuary and an independent law firm.

Reach Courtney Sherwood at sherwood@thelundreport.org.