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Sen. Shields Want to Strip CCOs of Special Anti-Trust Exemption

In the Portland Democrat’s latest attempt to bring daylight into the murky operations of the state’s Medicaid health plans and providers, Shields has introduced Senate Bill 18, which eliminates their protection against charges of collusion. A recent U.S. Supreme Court ruling likely means the exemption is unconstitutional anyway and without legal grounds.
February 27, 2015

Sen. Chip Shields, D-Portland, has introduced legislation that would strip the coordinated care organizations of their anti-trust status that makes them immune from anti-competitive business practices.

“If the goal is to encourage coordination and competition, the present immunity is simply too broad and creates a perverse incentive for private carriers and third-party purchasers to avoid competition,” Shields told his colleagues on the Senate Health Committee at a public hearing Wednesday.

Ingrid Brydolf, an attorney for Health Share, testified that the CCOs need to maintain their anti-trust status so that the competing interests which provide care through the CCO could collaborate privately about alternative payment structures that move the system away from paying providers based on the type and number of procedures they perform -- a critical cost-driver that plagues American healthcare.

She said Senate Bill 18 would cripple efforts to meet the so-called triple aim of lower costs, better care and better outcomes and would cast a silencing effect on healthcare managers’ attempts to reform the system by exposing them to legal liabilities: “Why change a law that works and expose CCOs and providers to criminal and civil investigations, and possible jail time?”

Shields argued that Brydolf’s testimony was filled with red herrings and scare tactics. “I’m unpersuaded by their arguments,” Shields said. “I think they could do that [collaborate] without the anti-trust exemption.”

Keith Dubanevich, an anti-trust lawyer and former associate attorney general, said the only real protection an anti-trust exemption might provide the CCOs would occur if the state’s 16 organizations came together to fix prices. He said there was nothing wrong with the collaboration that Legacy, Providence and Kaiser and their other providers have created to manage care for the Medicaid population, since they are all co-owners of Health Share of Oregon. “I’m not seeing how they’d need immunity,” he said.

The anti-trust exemption that state law has granted the CCOs may likely be unconstitutional, anyway. The U.S. Supreme Court this week ruled for the Federal Trade Commission against the North Carolina dental board, determining that the dental board had colluded to bar a teeth whitening practice by non-dentists that would cut into dentists’ profits, and the board did not enjoy exemption from anti-trust laws it had assumed.  

The high court ruled that a state may not give private market participants unsupervised authority to suppress competition even if they act through a formally designated ‘state agency.’  Given the CCOs’ exemption from open government laws, they likely have even less immunity from federal anti-trust laws than a more public agency like the North Carolina dental board.

Dubanevich said for a governmental entity to avoid anti-trust laws, its decision-making must be controlled directly by the state. It’s not good enough that CCOs have state officials advising them on healthcare transformation and putting a county commissioner on their board of directors doesn’t cut it, either, he said.

Health Share was the only CCO that brought anyone to testify for or against SB 18. The other CCOs may have not taken Shields’ legislation seriously, as it appeared unlikely the bill would advance out of the Senate Health Committee.

SB 18 is not the first time Shields has gone after the CCOs with legislation designed to shine daylight on the opaque ways they spend billions of Medicaid dollars. In addition to anti-trust protections, CCOs are exempt from public meeting and public records laws that apply to other governmental bodies, and the public is not allowed to attend CCO board meetings.

“Unless someone puts pressure on them, they’re going to continue to operate behind closed doors and divvy up the pot,” Shields told The Lund Report.

At least one CCO, Umpqua Health Alliance in Roseburg, bars the public from its community advisory councils, which are required by law and designed to provide a public opportunity for Medicaid members to solicit input to the organization.

Shields and Rep. Mitch Greenlick, D-Portland, tried in vain, both at the creation of the CCOs in 2012 and again in 2013 to subject the organizations to public meetings law. They also tried to guarantee that at least the community advisory councils would be public, but that also failed. Umpqua Health Alliance does not even disclose who sits on their secret advisory council.

Greenlick finally mustered through a watered-down transparency law that requires CCOs to have at least two public events a year, and four events starting this year. It's unclear whether all the CCOs have gone along. But at least one CCO, Willamette Valley Community Health in Salem, decided last year as a result of Greenlick's efforts to publicly open the business of its advisory council, which met six times in 2014. 

In his closing remarks, Shields conceded that SB 18 was really another vehicle to crack open transparencies at the CCOs, which may only become more necessary as the local organizations get bought up by out-of-state corporate interests. Trillium Health Plan, the CCO in Lane County, is in the midst of selling its operation to the Centene Corporation, a Fortune 500 company, headquartered in St. Louis, Missouri.

“Coordinated care organizations are in charge of millions of dollars of public money,” Shields said. “However, CCO boards make decisions behind closed doors without any transparency to the public. Without transparency, we need to remove the anti-trust exemption to ensure that CCOs are not colluding on price to the detriment of the public.”

Correction: The original article incorrectly stated that the Willamette Valley Community Health does not allow the public to attend its community advisory council meetings. We regret the error.