Trillium Retreats From Aggressive Legal Push Into Portland-Area Market
Trillium Community Health Plan has stepped back from its push for an injunction against three Portland-area hospital systems.
The company asked the U.S. District Court in Portland for a preliminary injunction against Legacy Health, Providence Health & Services and a top official at Oregon Health & Science University, accusing them of thwarting its drive to build a Medicaid provider network in the lucrative tri-county area.
The Eugene-based insurer, owned by Centene Corp., a Missouri-based Fortune 500 company, wanted a judge to force the hospitals to negotiate contracts. But last week it withdrew that motion and cancelled a Nov. 21 court hearing to argue for the injunction.
That leaves the lawsuit in limbo, with no future court dates set.
To win a preliminary injunction, Trillium would have had to prove it stood a good chance of prevailing in the lawsuit, was likely to suffer irreparable harm without the injunction and that the injunction was in the public interest.
By withdrawing the request, Trillium is essentially backing away from its demand for speedy action against the hospitals.
The withdrawal came a day after the Oregon Health Authority, which oversees Medicaid, rejected Trillium’s request to be given more time to contract with at least one hospital system in the Portland area.
That decision means that Trillium won’t be able to expand into the Portland Medicaid market until April 1, if at all. The market has 320,000 members worth about $1.5 billion a year.
Trillium’s next steps are unclear. What is certain: the financial stakes for Trillium are big.
The company has said it needs to have a sizeable number of Medicaid members in Oregon to turn a profit.
For years, Trillium has held a monopoly on Medicaid insurance in Lane County. That business, with 90,000 Medicaid members, has been marginally profitable, the company’s financial reports to the state show. In 2018, Trillium had operating revenues of $488 million. After paying out health claims along with administrative expenses of $44 million, it reported a loss of $7 million. The previous year, it had a slim profit of $4 million on operating revenues of $450 million.
Expanding into the Portland market held the prospect of adding 40,000 or more members generating operating revenues of about $200 million per year and creating a larger revenue base over which to spread administrative costs. But that expansion scenario is now on hold, with Trillium unable to secure a single hospital contract.
Meanwhile, Trillium faces competition in the Lane County Medicaid market from PacificSource, a nonprofit insurer. The state has assigned about 50,000 members to PacificSource for 2020, leaving Trillium with just 40,000. That more than cuts in half Trillium’s expected Lane County revenues.
In a Nov. 6 filing in the federal court case, Justin Lyman, Trillium’s vice president of finance, wrote that one of his jobs is to determine “the minimum member allocation that would be needed for Trillium’s business to be viable.”
If Trillium were operating in both the Portland and Lane markets, it would need more than 45,000 Medicaid members “to cover our fixed cost in order to stay in the region,” Lyman wrote. Lyman didn’t state how many members Trillium would need in order to remain viable if it operated in Lane County only.
A Trillium spokesperson said the company won’t comment on the lawsuit, but that the firm remains “deeply committed” to serving Lane County Medicaid members in 2020 and beyond.
Trillium Pushed For Fast Action
This summer, Trillium’s fortunes appeared bright when the Oregon Health Authority approved its bid to compete against Health Share of Oregon, the sole Medicaid insurer in the Portland-area market. But Trillium was unable to persuade any of the Portland-area’s three major hospital systems - Oregon Health & Science University, Providence and Legacy Health – to join its network. Without at least one hospital system and its accompanying physician groups, Trillium said it is unable to assemble a network that meets state adequacy requirements.
So Trillium on Oct. 24 sued the three systems, alleging they were secretly conspiring to block Trillium from the Portland market.
In its lawsuit, Trillium told the court the company had until Dec. 1 to prove to the state it had signed up at least one hospital system to its network. To meet that deadline, Trillium asked the judge to order the three hospitals to have “at least one face-to-face meeting” with Trillium and that if any hospital system refused to sign a contract, to order it to explain its reasons for the refusal.Trillium said this had to be done by Nov. 27.
Also, on Oct. 28, the company asked the judge to order “expedited discovery” in which the hospital systems would have to turn over records to Trillium in a speedy fashion. Trillium said it hoped to find “conspiratorial communications.”
The hospitals objected, saying Trillium had failed to show there was a conspiracy, that there was any need for haste and that it would suffer irreparable harm.
Judge Denies Trillium Request
Trillium’s demand for speed began to unravel on Nov. 5, when the judge denied the company’s request for expedited discovery.
Then on Nov. 7, the Oregon Health Authority abruptly halted Trillium’s expansion into the Portland market, saying the company had failed to meet a Nov. 1 deadline for showing it had a sufficient hospital network. The state said Trillium couldn’t begin offering Medicaid insurance in the Portland market until at least April 1, and that it would first have to prove it had an adequate provider network.
Trillium CEO Chris Hummer immediately protested to the health agency, saying he had understood Trillium had until Dec. 1 to line up a hospital system.
But on Nov. 13, the state’s chief financial officer, David Baden, rejected that appeal.
The state has given Trillium until June 30 to line up an adequate hospital network in the Portland area.
You can reach Christian Wihtol at [email protected].
Nov 18 2019