Trillium Accuses 'Big Three' Hospitals In Lawsuit Of Collusion To Keep It Out of Portland-Area Medicaid Market

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Following through on earlier threats, Trillium Community Health Plan on Thursday filed a federal PDF iconantitrust lawsuit against the Legacy, Providence and Oregon Health & Science University systems alleging they illegally colluded to block Trillium from the Portland-area Medicaid market.

Trillium, based in Eugene, claims the three Portland-area hospital systems have refused to negotiate contracts with Trillium that would allow the insurer to sign up Medicaid members in the Portland area starting next year.

Trillium alleges the refusals represent a “group boycott” of Trillium by the hospital systems, which have “collusively agreed to refuse to contract their hospitals and physician networks with Trillium.”

Trillium is asking a federal judge to order what it calls the “Big Three” to “negotiate with Trillium” in time for Trillium to begin offering Medicaid insurance in the Portland market in 2020.

The hospital systems have not yet filed answers in court. But all denied the allegations.

Renton, Wash.-based Providence said the lawsuit is “baseless” and “inaccurate.”

Portland-based Legacy said: “We strongly disagree with the assertions made by (Trillium). We look forward to letting the legal process occur in the appropriate venue.”

And OHSU said: “Although OHSU cannot comment on specific allegations, we have, and continue to negotiate in good faith with all who endeavor to contract/affiliate with us and remain dedicated to serving the Medicaid population of Oregon.”

The lawsuit was filed in U.S. District Court in Portland. It alleges violations of the Sherman Antitrust Act. The 129-year-old law prohibits activities that restrict interstate commerce and competition in the marketplace. The law typically is used by federal officials to break up large monopolies. It was used to break up Standard Oil in 1911 and AT&T in 1984.

At issue in this lawsuit will be whether it applies to three hospital systems that decline to contract with an insurer that aspires to offer Medicaid insurance in a single metro area.

The lawsuit shatters what is left of the Oregon Health Authority’s dream of a peaceful introduction of amicable competition into the Portland-area Medicaid market, which is currently handled by a single entity, nonprofit Health Share of Oregon.

The Multnomah-Washington-Clackamas market has about 320,000 Medicaid members. All are currently insured Health Share under the nonprofit’s contract with the Oregon Health Authority, which oversees Medicaid in Oregon. Legacy, Providence and OHSU are all founding members of Health Share and have a say in its governance.

Trillium is a for-profit owned by Centene Corp., a Fortune 500 company based in Missouri that offers Medicaid and Medicare plans. 

Earlier this year, the state asked Medicaid insurers to bid for 2020-2024. Health Share applied for the Portland metro market and so did Trillium. The OHA tentatively approved both and said they must develop adequate provider networks before they receive final state approval.

At stake is a huge sum, about $1.6 billion in 2020 from the state, or about $5,000 per Medicaid member. 

With many supporters in the Portland area, Health Share has had no trouble signing up a robust lineup of hospitals and physician groups to serve Medicaid members in 2020. Some Portland-area medical providers have said they are baffled why the OHA approved Trillium to enter the market, creating needless administrative and marketing burdens and expenses. Because the state sets how much it pays Medicaid insurers and how much their spending can grow each year, and also scrutinizes their profits, there is no benefit to competition, some experts have said.

Trillium has found doors in Portland slammed in its face. In its lawsuit, it recounted how the three hospital systems and their provider groups effect refused to negotiate contracts. The contracts are crucial for the insurer in multiple ways. First, they lock in place low-budget prices for services for Medicaid members. Second, they guarantee the insurer and Medicaid members a wide range of service providers, especially primary care providers. The state is allocating Portland-area Medicaid members to either Health Share or Trillium based largely on which insurer has the member’s primary care provider in network.

An initial allocation made by the state this month gave Health Share 276,000 Portland-area members and Trillium 43,000. Members can change insurer now and in early 2020.

In its lawsuit, Trillium said the refusal of the three hospital systems and their physician networks to contract with Trillium have in effect crippled Trillium’s attempt to offer Medicaid in the Portland market.

“The Big Three dominate the provider market, collectively controlling the 11 largest hospitals in the Tri-County Area and their associated physician groups,” Trillium wrote. “Contracts with Legacy, Providence and OHSU are essential to serving the Medicaid population in the Tri-County Area. There are no substitutes for the Big Three’s physician networks, and these primary physician provider contracts with the Big Three are necessary for (an insurer) to reach network adequacy” in the Portland area, Trillium wrote.

The “Big Three’s illegal boycott against Trillium … aims to block Trillium from obtaining a sufficient health network, and either force it from the market or reduce its member allocation to a point at which Trillium’s business is not viable,” the lawsuit alleges.

As evidence of the three hospital systems’ collusion, Trillium said all three are founding members of Health Share and retain governing roles; all three earlier this year each pondered forming their health insurance entity to offer Medicaid insurance in the Portland area, but they then collectively resolved to stick with Health Share; and all three hospital systems this spring and summer effectively refused to negotiate with Trillium to come in-network.

Their activities have “artificially restrained competition” in the tri-county Medicaid market, Trillium alleged. Medicaid members are being “deprived of the benefits of free and open competition,” it said.

Aside from seeking a judge’s order to negotiate, Trillium is also seeking “treble damages” from the nonprofit Legacy and Providence systems. Trillium didnot specify an amount. 

You can reach Christian Wihtol at [email protected].

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