The lawsuit filed by FamilyCare against the Oregon Health Authority this week could have been avoided had the state agency not “stonewalled us the entire way,” Jeff Heatherington, CEO and president, told The Lund Report. “They just refused to come to the table with any information at all, and now we’re left with a considerable financial loss.”
FamilyCare’s lawsuit alleges breach of faith and tort claims, contending that its 2015 rates were not made on an “actuarially sound basis” as required by the federal Medicaid act. Unlike other coordinated care organizations whose reimbursement rates decreased by 2.1 percent this year, FamilyCare’s rates fell by 9.2 percent, which has left a $4.7 million monthly hole in its operating budget, amounting to $57 million for the entire year. The CCO has more than 132,000 members, and derives approximately 92 percent of its revenue from Medicaid.
In setting the 2015 rates, the OHA used outdated encounter data, said Heatherington who contends he had insufficient time to review the proposed contract rate changes after not receiving the document until December 12, when no one from the state agency was available to respond to his questions or requests for information until the contract needed to be signed, which was done under duress.
That same problem won’t happen again when the 2016 reimbursement rates are developed if Heatherington and the only seven CCOs that belong to the Coalition for a Healthy Oregon succeed in getting Senate Bill 833 passed, which is now sitting in Rep Mitch Greenlick’s healthcare committee, after unanimously passing the Senate.
That bill would require the OHA to provide timely notification about the reimbursement rates for CCOs, giving them the ability to negotiate and also includes some performance standards on the part of the state agency.
“I hope the Legislature gives some direction to the Health Authority about how business should be conducted. This lawsuit is a waste of time, energy and resources and was filed because the Authority refused to talk to us,” said Heatherington, who’s heard the Authority is attempting to derail this legislation.
Now that the lawsuit has been filed in Marion County, attorneys can proceed with discovery, obtaining evidence about how the OHA actually determined the 2015 rates and learn who actually made the policy decisions impacting FamilyCare, “to see if they were prejudiced against us,” Heatherington added.
The OHA refused to comment on FamilyCare’s lawsuit.
FamilyCare’s Profits
The $70 million in projects earned by FamilyCare during the first nine months of 2014 could have been the reason his CCO was paid lower reimbursement rates, admitted Heatherington, who was unwilling to say how much his CCO earned during the entire year. The Lund Report is still awaiting those financial reports from the OHA.
Heatherington insisted the CCOs cannot be compared in terms of profitability because of their different corporate structures which affect the way they calculate expenses and report profits. It’s not a straightforward exercise because some CCOs pass along money straight through to their shareholders or delegated entities and record them as expense, which are actually profits, he said, and “that’s why it’s not a true statement that we were the most profitable health plan during the first nine months of last year.”
With FamilyCare’s rates lowered by 9.2 percent, the CCO could face a crunch with expenses going up since many members, particularly those in the expansion population who became eligible last year, have just begun accessing physical, mental health and dental services and getting up to full speed.
FamilyCare makes a practice of calling every new member, informing them about their primary care provider and doing a risk assessment. Recently, 30 percent of those reached had no idea they even had health insurance, Heatherington said.
The profits earned by FamilyCare are also going back into the community, and the CCO intends to give more than $3 million this year to community mental health programs such as Cascadia Behavioral Health to build a residential treatment center and to early childhood learning programs. “And, we’re continuing to look at more projects to fund,” Heatherington added.
Diane can be reached at [email protected].
