PORTLAND— FamilyCare Inc. (FamilyCare) has filed a lawsuit against the Oregon Health Authority (OHA) in the Marion County Circuit Court alleging, among other things, breach of contract and tort claims relating OHA’s generation and treatment of FamilyCare’s 2015 rates.
The lawsuit is the culmination of months of attempts by FamilyCare to convince OHA to address serious problems relating to OHA’s 2015 rate setting process and results. Lack of actuarial soundness and transparency, inconsistencies in the process, unexplained variation in the rates, and OHA’s inability to follow contract terms contributed to FamilyCare’s decision to pursue this course of action.
Federal law and the Centers for Medicare and Medicaid Services (CMS) require capitation rates to be set on an actuarially sound basis. However, OHA refused to respond to numerous problems cited by FamilyCare regarding the structure and methodology used by the agency to set the rates -- all of which pointed to significant actuarial problems. CMS has raised many of the same questions with OHA following OHA’s submission of the 2015 rates for CMS approval.
FamilyCare has suffered significant financial harm as a result of OHA’s flawed process. FamilyCare’s 2015 rates decreased by 9% overall, resulting in an actual loss of more than $4.7 million a month, or $56.4 million for the year, when compared to the 2014 rates. Additionally, the 2015 rate changes for individual Coordinated Care Organizations (CCOs) vary widely across the state, ranging from FamilyCare’s loss of 9% to a 7% rate increase for another CCO.
“FamilyCare’s interest is in ensuring that OHA follows a process that is actuarially sound, transparent, and fair.” says Jeff Heatherington, President & CEO of the company. “OHA not only breaches its contract with FamilyCare, but it also undermines the commitments, good faith, and efforts made by CCOs across Oregon to transform health care. While OHA has committed to recalculate the rates for all of the CCOs with an external actuary, it has not accepted responsibility for repairing the harm done by its original rates.”
OHA has refused to respond substantively to FamilyCare’s questions and requests for information regarding the 2015 rates. Nor did it respond to FamilyCare’s notice of breach of contract.
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FamilyCare, Inc. is a Medicare and Medicaid managed care organization providing patient‐centered healthcare to Oregonians for more than 30 years. FamilyCare was the first health plan in Oregon to integrate models of physical and mental health and was the first Coordinated Care Organization in the tri‐county area certified by the Oregon Health Authority. The health plan serves more than 135,000 Medicare and Medicaid members. FamilyCare’s mission is, “Creating healthy individuals through innovative systems.”
