FamilyCare Escalates Offensive Against Oregon Health Authority

The CCO is challenging the state agency’s rate setting process, as the health authority seeks to mold public opinion through a communication plan.

As FamilyCare’s latest lawsuit against the Oregon Health Authority continues to wend its way through the courts, the Portland-based coordinated care organization is continuing its push to increase how much it is paid to care for Medicaid patients. Two high-level officials at the CCO took their concerns to the Oregon Health Policy Board on Tuesday, and FamilyCare President and CEO Jeff Heatherington is urging the board to take a rigorous look at the state’s rate setting process.

Meanwhile, the health authority is engaging in its own efforts to control the message over the multi-year conflict between the state agency and the nonprofit, according to a document obtained by The Lund Report via public records requests. The file, a communications plan drafted by the Oregon Health Authority, suggests that state officials are worried about FamilyCare’s complaints, and hope to turn to media including The Lund Report, as well as to state legislators, as they respond.

At issue: the fact that FamilyCare receives fewer Medicaid dollars per member than other CCOs across Oregon, including HealthShare, which is also based in the Portland metro area. FamilyCare contends that reductions in what it receives from the Oregon Health Authority are the result of actuarially unsound calculations, which may include variables the law prohibits from considering. For its part, the state has countered by arguing that FamilyCare was overpaid by $55 million, and that its payments are based on differences in population characteristics across CCOs.

“For the last three consecutive years FamilyCare Health has been given the lowest rates of any of Oregon’s 16 CCOs,” Heatherington wrote in a letter to the Oregon Health Policy Board. “Because of this, we have consistently asked the OHA to be more transparent in its reporting and rate setting.”

FamilyCare, the state’s second-largest CCO, received $438.29 per member each month in 2014, and is receiving $369.82 per member each month this year. Heath Share, meanwhile, received $408.54 per member per month in 2014, compared to $444.46 this year.

Heatherington contends that the process used to set these rates is unfair, and through its pending lawsuit against the Oregon Health Authority it is asking for higher compensation as well as insight into how those rates are set. He believes FamilyCare is being penalized for making higher-than-typical payments to primary care providers, as part of its effort to increase primary care and keep patients out of the emergency room. In its lawsuit against the state, the CCO says this is not a legitimate consideration in setting rates.

FamilyCare staff also say they do not agree with how the Oregon Health Authority calculates net assets at the state’s CCOs, which leaves CCOs that pay subsidiary or related organizations looking as though they have far fewer assets on their books than FamilyCare, which handles these payments directly itself.

“We contract directly with our providers,” Art S uchorzewski, the CCO’s director of government affairs, testified before the health policy board this week. “We have to have assets and reserves to cover and insure that we provide healthcare to our members even in bad financial years. There’s a lot of profitability and assets that never get reported by the OHA, and that needs to be fixed.”

 “The purpose of financial reporting is to provide information that is useful,” added Bill Murray, chief operating officer at FamilyCare. “OHA has not met the requirement of making that information comparable so it can be useful to the OHPB and others.”

FamilyCare’s prolonged and extensive criticism of the Oregon Health Authority, through numerous lawsuits, Heatherington’s letter, testimony by employees, and through other means, appears to have put the state agency on the defensive, prompting it to develop a nine-page communications plan obtained by The Lund Report.

“OHA is seeking to successfully resolve a rate and contract dispute with Family Care,” the state document reads. “At risk are the soundness of CCO rates, OHA’s reputation, and continued federal matching funds for OHP (as well as $55 million in overpayments to Family Care that OHA is required to recover by CMS). OHA has provided Family Care a 14-day breach of contract notice. The dispute may accelerate and intensify toward a high stakes and high-visibility resolution in coming weeks.”

The document outlines multiple goals -- to counter FamilyCare's allegations, to bolster support for the Oregon Health Authority, and to reassure Oregon Health Plan members – by engaging with legislators, the media, and healthcare leaders across the state.

The Portland Business Journal, Willamette Week, Portland Tribune, Oregon Public Broadcasting, Oregonian and The Lund Report have all received targeted press releases aimed at bolstering the state’s case, as well as personalized emails to journalists and other outreach.

The argument OHA is putting forward: "OHA is working toward a fair settlement with FamilyCare that protects OHP members and Oregon taxpayers.” The document claims that if FamilyCare does not return $55 million it has received, the state could be penalized federally by as much as $500 million.

Heatherington maintains that if the state gets everything it wants, that could put FamilyCare out of business – and he told The Lund Report that that’s what he believes the Oregon Heath Authority is seeking to do.

The agency has consistently disagreed with this assertion – yet it has also held back the details of how it set the rates that result in FamilyCare receiving less than its competition.

“FamilyCare asserts that the allegations regarding OHA’s desire to target or put FamilyCare out of business are relevant to whether its rates are actuarily sound and whether OHA has complied with its own internal policies and best practices,” attorneys for the health authority wrote in court fiings. “But whether the rates are actuarily sound or whether OHA acted consistently with its policies and practices are not relevant to whether OHA used the settlement or 2016 rates to limit FamilyCare’s 2017 rates. And OHA’s secret intentions (which there were none) are not relevant to whether OHA in fact breached the Settlement Agreement. These allegations should be stricken as irrelevant and insufficient.”

Rates for 2018 CCO reimbursements are expected to be set by Aug. 15. The next court date for the Oregon Health Authority and Family Care is an Aug. 22 hearing in Salem.


Reach Courtney Sherwood at [email protected].

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It is unbelievable that OHA continues to punish and penalize FamilyCare.  Why would one CCO get a rate that is $100.00 lower per member per month in the Metro area for covering the exact same population as HealthShare? 

Is OHA favoring HealthShare which is dominated by the large hospital systems (Providence, Kaiser, and Tuality)?

As a provider, we find FamilyCare much more responsive to member and provider needs.  And, apparently they do it much cheaper (per OHA reimbursement rates) than does Healthshare.  If, in fact, OHA rates are accurate then why oh why does OHA send ANY members to HealthShare???  They could save $100.00 per member per month by assigning all OHP members to FamilyCare.  Thus saving 100s of million of dollars.

See how nonsensical this is? 

Scenario A:  FamilyCare provides better service at a lower cost. 

Scenario B:  OHA has cheated FamilyCare.

Scenario C:  OHA has a vendetta against FamilyCare

Either A or B would seem to benefit OHP by providing care at a lower cost thus saving the state significant resources.

C should be criminal.

I can't wait for this to come out in the courts.  More power to Jeff Heatherington!

I agree that OHA has low/substandard ethics, but that is par for the course in the business and politics of medicine. I give kudos to FamilyCare for attempting to appropriately pay primary care physicians who are egregiously underpaid by OHP. My question is why do those who work in the system and understand the system, continue to allow insurance companies and the Oregon health Authority to behave unethically?

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