A multimillion-dollar administrative deal between two Oregon Medicaid insurers is ending.
Yamhill Community Care Organization, which serves about 23,000 members in Yamhill County, will stop using CareOregon as its third party administrator in January, ending a deal totaling upwards of $29 million over the last six years. CareOregon, which serves 190,000 members in the Portland area, has handled Yamhill’s claims processing, provider network, customer service, financial reporting, enrollment and marketing, social media and human resources.
Most of Yamhill’s members will be able to see the same primary care providers, but some existing providers may not be covered by the new plan, CEO Seamus McCarthy told The Lund Report.
McCarthy said Yamhill will contract with Performance Health Technology and Providence Plan Partners to manage its administrative services and provider network starting January 2019. The insurer will use another company for human resources beginning in 2020. A third firm is in the process of taking over Yamhill’s social media services.
McCarthy said the deal will save the organization “a few hundred thousand dollars.” He said the cost-savings were just a part of the decision, which he said is mutual.
“It just wasn’t right going forward for either organization,” McCarthy said. “We’re not parting with resentment.”
Ginny Rake, a member of Yamhill’s board, said the relationship with CareOregon was smooth.
“It was a good partnership, Rake said. “They delivered what they promised, and it worked for the most part fairly well.”
The switch will give Yamhill more access to its data and save money in some areas, Rake said.
Jeremiah Rigsby, CareOregon’s chief of staff, told The Lund Report that Yamhill’s desire to operate independently of CareOregon makes sense for the community it serves. CareOregon has helped launch five community-based coordinated care organizations including Health Share of Oregon, Jackson Care Connect, Columbia Care CCO, Yamhill CCO and PrimaryHealth of Josephine County. It has also started initiatives like nonprofit health technology organization, OCHIN. Doing so is in the best interest of the Medicaid population the CareOregon serves because the state’s Medicaid program encourages innovative and community-based care, Rigsby said.
“We have always started new ventures recognizing the potential for future independence from CareOregon, and we work to make sure that our projects have the stability and autonomy to stand on their own,” Rigsby said in a statement.
“That innovation is really important for this population,” he told The Lund Report.
The deal between the coordinated care organizations has been “winding down” for months, Rigsby said in a statement. While CareOregon made some money from the arrangement, the payments of nearly $30 million over six years represents a drop in the bucket for CareOregon, which had more than $886 million in revenue in 2016.
Still, CareOregon has faced almost $100 million in losses over the last three years, The Oregonian reported.
Rigsby indicated in a statement that the deal with Yamhill ended on good terms. “They know they can count on us if they ever need support in the future,” he said.
CareOregon gave the Yamhill Medicaid insurer at least $3.5 million to help with its launch in 2012, according to a financial analysis by The Lund Report. Of that, $2.4 million went to Yamhill’s reserves; $600,000 went to operational start-up costs; and $500,000 went toward starting a so-called transformation fund to pay for innovative projects that support better health and health care.
Around the same time, Yamhill chose CareOregon to manage its administrative services following a selection process, McCarthy said.
The two insurers also worked out a deal whereby CareOregon paid for a part of Yamhill’s reinsurance premiums for several years, and in exchange received a piece of those reimbursements from the state. Oregon uses reinsurance to help cover the cost of particularly expensive patients by reimbursing unexpected costs.
“They helped us get started as a CCO,” McCarthy, the CEO, said. “They were very generous in helping us stand up this company.”
Yamhill Community Care Organization intends to apply for the state’s next five-year round of coordinated care contracts, which start in 2020, McCarthy said. The state will call for bids in January and will award the contracts in May. The procurements are the biggest in Oregon history, with the state’s Medicaid budget totalling $6.4 billion in fiscal year 2018.
Yamhill is one of the smaller insurers. Most of its members are in Yamhill County, but the organization also covers some Zip codes in Polk, Marion, Washington and Clackamas counties. Its territory includes two cities -- McMinnville and Newberg -- and five towns.
“We do have a pretty good rural population with needs specific to that,” said Rake, the board member.
She said the organization has focused on prevention. “It’s a lot better for people and a lot better for the bottom line to keep people well,” Rake said. “We work hard on community wellness not just on community fixing.”
Last week, the Oregon Health Authority announced that it will ask coordinated care organizations to follow county lines when it comes to their coverage areas, but will consider exceptions.
Yamhill’s coverage territory overlaps with CareOregon’s in Washington and Clackamas counties. CareOregon covered about 190,000 members in 2016, according to its tax return. That includes the members that CareOregon serves through two other coordinated care organizations it owns. Jackson Care Connect had about 29,000 and Columbia Pacific CCO has about 24,000 as of June 2017.
McCarthy said he hopes the two organizations stay on friendly terms.
“They’ve been great partners over the years,” McCarthy said. “I would hope they wouldn’t see us as competitors.”
Right now, Yamhill is focused on growing its community efforts that align with the state’s health reform goals, McCarthy said. That includes investing in behavioral health care and social determinants of health such as housing and childhood trauma and shifting toward an outcome-based payment model.
“We are going to take our community to the next level and continue to be a CCO that stands out as one of the best,” McCarthy said.
You can reach Jessica Floum at [email protected].