Hospitals Worry About Competition, Reimbursement by CCO

In documents, Southern Coos, Coquille Valley hospitals express concerns about WOAH.

As Oregon’s coordinated care organizations continue to solidify their role in the state’s Medicaid expansion, some hospitals in the state are worried that they’ve be put at a competitive disadvantage.

That’s according to documents obtained by The Lund Report that show that leaders at two hospitals near the Oregon Coast fear that they won’t be paid for some care provided to Medicaid recipients, and that they are frustrated with the phone calls and negotiations involved in authorizing treatment and payments associated with the only CCO in the region.

The conflicts revealed in meeting minutes and bond debt disclosures center around Western Oregon Advanced Health, or WOAH, the only CCO operating in a large stretch of Coos and northern Curry counties. WOAH has solidified agreements to treat patients through 129-bed Coos Bay-based Bay Area Hospital.

Two smaller hospitals, Southern Coos Hospital & Health Center and Coquille Valley Hospital, appear worried that those agreements between a monopoly Medicaid provider and Bay area are putting them at a disadvantage.

Reporter Courtney Sherwood reviewed files that disclosed these concerns while shewas traveling, and was not able to ask CCO or hospital officials to comment on her findings. The Lund Report will try to follow up with a future story that includes the full perspective.

Southern Coos concerns

Bandon-based Southern Coos Hospital & Health Center, located about 30 miles south of Bay Area Hospital, has 25 beds and is governed by Southern Coos Health District. Southern Coos Chief Financial Officer Robin Triplett outlined her concerns about WOAH in a report to the hospital district’s board on April 24.

According to meeting minutes, Triplett said that WOAH is generally paying bills for in-patient and emergency room care, unless it deems the treatment provided to be unnecessary.

Many new WOAH patents were previously enrolled in commercial health insurance, and were enrolled in the CCO health plan because of low incomes.

Once enrolled in WOAH, however, patients must receive certain services from approved medical providers. WOAH does not typically cover radiology at Southern Coos, for example, according to meeting minutes – instead they are referred to Bay Area, according to Southern Coos meeting minutes.

As WOAH sends its patients to Bay Area Hospital for care – a move aimed at reducing costs - Southern Coos and Coquille Valley are taking a financial hit, the minutes say.

When a patient cannot travel to Coos Bay for certain types of care, such as radiology, physicians at Southern Coos must write up clinical justifications. Triplett reported spending 1.5 hours on the phone with WOAH to get authorization for one ER patient to receive radiology service.

Some patients do not push for authorization to be treated locally, but also do not go to Coos Bay, “then end up sick and back in our ER,” Triplett told the hospital board.

“It is against the law for SCH (Southern Coos Health) to contract with another CCO,” Triplett said, according to minutes. “The result is SCH and Coquille Valley are not getting paid and the people in rural areas are not getting served, as citizens who cannot get to Coos Bay then end up sick and back in our ER and the hospital is again not paid.”

Coquille Valley concerns

Coquille-based Coquille Valley Hospital, located about 18 miles southeast of Bay Area Hospital, has 25 beds and is governed by an elected hospital district.  It outlined its own concerns with WOAH in an annual financial report filed with bond regulators at the end of 2013.

Coquille Valley CEO Dennis Zielinski’s feeling about WOAH could well be summed up in his note that the CCO’s acronym is pronounced “woe.”

From the hospital’s financial report:

If the Hospital wishes to continue to provide care to the Medicaid eligible people of its communities (historically, 11 +-2% of its service volume), it will need to do so through WOAH. Btu, WOAH is a monopolistic provider, in the Economics 101 sense of the word. There is NO OTHER ALTERNATIVE Medicaid insurer but WOAH. Which begs the question: How does one negotiate reimbursement rates with a monopoly? Yet, if CVH expects to receive some reimbursement for the indigent care it provides under the new health reform structure, and if it expects to be able to provide care for WOAH enrollees under the new reform structure, it will have to contract with WOAH. WOAH is all there is. It will be very interesting to see if long term common interests and collaboration will be able to reconcile the economic self-interests of all concerned.

Several times, Coquille Valley Hospital points out WOAH’s status as a virtual monopoly when it comes to providing health insurance and care for lower-income residents of the area – and that challenging with a monopoly that faces to real competition proves a challenge for the Coquille operation.

In its report, Coquille Valley Hospital also raises concerns that WOAH is “steering nearly all elective inpatient casework to another area provider.”

Furthermore, the hospital writes in its report, “the denials percentage and low levels of payment for the inpatient and ED (emergency department care that is provided to Medicaid enrollees” results in payments to Coquille Valley that are as much as 50 percent “less than the actual aggregate cost of providing the service. So, unless that changes, perhaps it is actually a benefit that Medicaid casework is being steered away from CVH to be provided elsewhere.”

But as implementation of the Affordable Care Act boosts enrollment in Medicaid plans, Coquille Valley officials wrote that they are worried about losing market share over the long run.

What’s next?

Both Coquille Valley and  Southern Coos hospitals acknowledge in their reports that health-reform is an ongoing process, and the sources of their frustrations are not set in stone.

In its report to bond regulators, Coquille Valley expressed hope that negotiations over critical access hospital reimbursement rates will improve its financial outlook. Those negotiations have continued in the months since the Coquille Valley document was filed, and appear to be nearing a conclusion.

Southern Coos, meanwhile, is watching to see how Cover Oregon’s vote to join the federal health reform system will affect its frustration. It also hopes that by opening a primary care clinic separate from its hospital, it may be able to get physicians credentialed by WOAH and authorized to provide outpatient tests, X-rays and other procedures.

“Resolving this issue is an ongoing effort,” Triplett told her hospital board, according to meeting minutes.

Do you have insight into negotiations between hospitals and Oregon’s CCOs? Email Courtney Sherwood at [email protected]. You can follow her on Twitter at @csherwood.

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