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State Blocks Trillium’s Medicaid Bid In Portland Area

November 11, 2019

The Oregon Health Authority has abruptly halted the controversial drive by Trillium Community Health Plan into the Portland-area Medicaid market for 2020.

The state told Trillium in a it cannot start managing Medicaid members in the Portland until at least next April 1, and then only if it proves it has contracted with an adequate number of hospitals and doctors.

Noting that as of Nov. 1 Trillium had failed to sign up any Portland-area hospitals for its provider network, the state barred the insurer from enrolling any more Medicaid members in the Portland area through March 30, 2020. The letter also said the Oregon Health Authority will shift all Medicaid members that had switched to Trillium to rival insurer Health Share of Oregon.

The letter was included in documents Trillium submitted as part of a lawsuit it filed late last month against Legacy Health, Providence Health & Services and Oregon Health & Science University officials, accusing them of collusion in trying to keep the insurer out of the lucrative Portland market. Trillium, which applied to the state for a Portland-area Medicaid contract for next year, has hit a wall of resistance in its drive to sign up the providers it needs to be a viable Medicaid insurer in Multnomah, Clackamas and Washington counties. Health Share currently has a monopoly on Medicaid in the area.

The state’s decision marks something of an about-face and throws further chaos into the rollout of the next five-year phase of the coordinated care organization system, which starts Jan. 1. The state in the summer tentatively approved Trillium’s application in the Portland-area, letting it compete with Health Share for a slice of the $1.5 billion per year, 320,000-member Medicaid market in the Portland-area. Then the state tweaked rules to try to force hospitals to negotiate with Trillium. This fall it assigned more than 43,000 Portland-area Medicaid recipients to Trillium for 2020. 

Medicaid members who will have a choice of insurers for next year are currently in an open enrollment period. It’s unclear when the state will notify members in the Portland area that they’ll have no choice after all or when it will tell members already assigned to Trillium that they are being flipped back to Health Share.

Neither the state nor Trillium responded to requests for comment by deadline.

On Nov. 9,  Trillium responded to the state’s letter with , court records show. In it, Trillium asked the health authority to reconsider its decision. It argued that under the state's own rules it has until Dec. 1 -- not Nov. 1 --  to sign up providers.

Contracts with providers are vital because they guarantee that Medicaid recipients can receive health care services. Plus, they lock in prices that insurers have to pay for those services.

In its letter, Trillium noted that it was suing the metro area’s three major hospital systems to try to force at least one of them to contract with Trillium by Dec. 1.

“We ask that OHA allow the lawsuit to play out and withhold judgment on the adequacy of Trillium’s network … until Dec. 1,” wrote Trillium CEO Christopher Hummer.

In its Nov. 8 letter, the state said Trillium had not only failed to meet the state-mandated Nov. 1 deadline to secure contracts with Portland-area hospitals, but also had failed to sign enough contracts with other health care providers such as doctors.

Now, Trillium must “promptly notify” providers that it has signed up in the Portland area that it “will not be providing (insurance) services in the tri-county area effective Jan. 1 2020,” wrote David Baden, chief financial officer of the Oregon Health Authority. Trillium must also change its website “and other communications to reflect this change,” Baden wrote.

State Sets June 30 Deadline 

But the state didn’t entirely shut the door on Trillium expanding into Portland. Rather, Trillium has until June 30 to “remedy the deficiencies in its network” by signing on hospitals and other health care providers and proving to the state that it has a sufficient provider lineup, the Nov. 8 letter said.

Baden did not explain why the state decided to offer a new deadline instead of permanently dropping the for-profit company from the Portland market for failing to meet the Nov. 1 deadline.

Privately and publicly, providers and other non-state officials involved in the Medicaid market have been critical of the health authority in allowing Trillium to enter the Portland-area market in the first place. They say the current system, a collaboration among providers involved in Health Share, has served patients well. The state has defended its decision, saying Trillium met initial qualifications.

Trillium said in its lawsuit that the refusal by the three hospital systems to sign provider contracts has made it impossible for it to meet the state’s requirements.

In court filings, Trillium has said that unless it signs up at least one Portland hospital system plus that system’s accompanying primary care physician groups, it can’t meet the state’s network threshold.

Since 2018, nonprofit Health Share has been the sole Medicaid insurer in the Portland area. Health Share is governed by a board that includes officials from Multnomah, Washington and Clackamas counties; OHSU; Legacy Health; Providence Health Plan; Kaiser Permanente; CareOregon, which is now owned by Providence; Central City Concern and others.

Trillium, which is owned by Centene Corp., a Fortune 500 company based in St. Louis, Missouri, has enjoyed a monopoly for years as the sole Medicaid insurer in Lane County. But it would like a piece of the Portland market. It also faces competition in 2020 on its own turf with PacificSource being approved for a Medicaid contract in Lane County.

Portland Providers Snub Trillium

Health Share has had no trouble re-upping hospitals and other providers for 2020.

But from the start, those same hospitals and other providers spurned Trillium, balking at signing contracts to become in-network with the company.

After spending this summer and fall prodding, warning and pressing to negotiate with all three hospital systems, Trillium filed its suit in U.S. District Court in Portland, accusing them of violating federal antitrust law.

In court filings, Trillium alleged the hospitals were engaged in an “anticompetitive group boycott” and have an “illegal agreement” amongst themselves to keep out Trillium. That “illegal contract, combination or conspiracy” is an “unreasonable restraint of trade,” Trillium alleged.

Trillium says the three hospital systems in effect control the entire Portland-area hospital market, and that the three systems’ primary care physician groups – which have also not signed on with Trillium – constitute about 50 percent of the market’s primary care physicians.

Trillium asked the judge to order the three hospital systems to sit down with Trillium and negotiate contracts. If the hospital systems refuse to sign, they should be forced to explain why to the judge, Trillium argued. All this needs to be done by Dec. 1 so Trillium can meet the state’s deadline, Trillium said in court filings.

In his Nov. 9 letter to OHA, Trillium’s Hummer said he understood that the state deadline for showing network adequacy was Dec. 1. 

Trillium Seeks Proof Of A Conspiracy

In court filings, Trillium said the hospitals’ “boycott” will cause it “irreparable harm.” It asked the court to order expedited disclosure of relevant records by the three hospital systems. Trillium said it wants to uncover “conspiratorial communications amongst the hospital systems showing the formation of a secret anti-competitive agreement.”

The three systems have not yet responded to the allegations in detail.

But they are waging a preliminary legal skirmish over Trillium’s request for a rapid production of records. The hospitals argued that Trillium has given no evidence of any kind of an inter-hospital secret agreement or conspiracy; that Trillium itself is responsible for delays in negotiations with the hospitals over Medicaid contracts; and that there are no legal grounds for urgency because Trillium faces “no threat of going out of business or ceasing its operations.” The hospitals noted that Trillium still has its Lane County Medicaid contract for 2020 and is a wholly-owned part of Centene, a corporation with $60 billion in annual revenues and operations in 32 states.

In a declaration submitted to the court, OHSU’s CEO Dr. John Hunter denied that OHSU had refused to negotiate with Trillium. OHSU has been negotiating with the company “in good faith for over two months,” he wrote.

“On multiple occasions OHSU … has offered contract terms that include OHSU physician providers along with corresponding financial terms. OHSU… made its most recent offer to Trillium in a letter given to Trillium on Oct. 24, 2019. Trillium waited until almost 4 p.m. today, Oct. 31, 2019, to respond with a counteroffer. OHSU is currently considering that belated response,” Hunter wrote.

Hunter also said OSHU’s primary care providers have limited capacity “and cannot support a significant influx of new patients.” He said OHSU had asked Trillium how many members Trillium would assign to OHSU and said Trillium has not responded.

In a letter this fall to the state, Trillium acknowledged that Legacy had offered contract financial terms, but said they were excessively high.

Seeking to buttress its allegations of a covert conspiracy by the hospitals, Trillium alleged in its lawsuit that the hospitals had all used similar language to rebuff the insurer.

Also, because the hospital systems are the founders of Health Share and help oversee it, they have a vested interest in protecting Health Share and keeping out any rivals, Trillium argued.

Trillium said the three hospital systems have a financial incentive to keep Health Share as a Medicaid monopoly. Part of the roughly $1.5 billion the state pays annually to Health Share comes in the form of  “quality incentive” awards for Health Share achieving certain goals. Health Share can pass along some of that money to providers. In 2017 and 2018 combined, Health Share distributed a total of about $50 million of that money to OHSU, Providence and Legacy, Trillium asserted. Trillium’s entry into the Portland market “would result in a reduction in the amount of quality incentive payments allotted to Health Share for the upcoming year,” Trillium asserted.

The sides are slated to continue their arguments in filings and appearances later this month.

You can reach Christian Wihtol at [email protected].