FamilyCare Says It Will Close Its Doors

One of two Medicaid providers in the Portland-metro area, the nonprofit disputed its reimbursement rates for years and blames an inability to agree with state officials for its demise.

Oregon’s second largest coordinated care organization told its 300 employees Friday morning that most will be out of a job by Jan. 1 of the coming year.

FamilyCare will either keep a handful of workers on staff to handle the Medicare side of its business, or will find another provider to take over, and will otherwise shut down and donate its assets to another nonprofit, President and CEO Jeff Heatherington told The Lund Report in an exclusive interview – though he hinted that a sliver of hope may remain for the organization he founded.

“It’s not too late until the fat lady sings,” he said. “We could arrive at an agreement with the state on December 31st, and we would like to arrive at an agreement. But we have not been offered virtually anything.”

The organization’s governing board voted Thursday night not to sign any contract to provide Medicaid services in Oregon that produces deficits for the organization, and has lost $100 million on past contracts with the Oregon Health Authority, Heatherington said. “That means we go out of business at the end of this month.”

Founded by Heatherington in 1984, FamilyCare Health covers about 120,000 Oregonians, who will continue to be eligible for Medicaid even though their CCO may no longer provide it. HealthShare, the Portland metro area’s other coordinated care organization, has a provider network that largely overlaps with that of FamilyCare, and has said that it has the capacity to take on additional Medicaid patients if its competitor were to fail.

“They are losing their health plan, not their coverage,” Heatherington said. “We will keep staff on board to help our patients even after we have closed down, to make sure they don’t get lost in the shuffle. But as of today, the state was not prepared to talk about what they were going to do.”

FamilyCare has been engaged in a long-running dispute over the reimbursements it receives from the Oregon Health Authority, and is currently suing the state.

When 2018 CCO reimbursement rates were announced last month, FamilyCare learned it would get $377.57 per member per month – compared to $409.75 at HealthShare. State officials maintain that those rates are sound and reflect differences in the populations of the two organizations. Two recent reports appeared to largely back the state – while also pointing out flaws in the Oregon Health Authority’s rate-setting process.

But Heatherington has repeatedly rejected any claims that rates were set fairly or followed actuarilly sound standards.

“FamilyCare is losing approximately $75 million based on the 2017 rates and will have an equal or higher loss in 2018,” he after the state announced the most recent review of its rates.  “You cannot have an actuarially sound process that produces a deficit three years in a row.”

Reach Courtney Sherwood at [email protected].



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