Oregon health officials are preparing to transfer the roughly 113,000 Portland-area Medicaid recipients to a new health care provider in January after their current carrier, FamilyCare, announced it would likely close.
On Monday, FamilyCare president and CEO Jeff Heatherington put the company’s chance of survival at “probably about 5 percent at the best.” He said the state’s proposed reimbursement rates for 2018 are too low and estimated that medical costs would exceed revenues by $95 million, forcing the company into bankruptcy.
Oregon Health Authority employees met with FamilyCare representatives Monday to map out the transition, after the company asked the state on Friday to start the process for moving its Medicaid members to other providers, according to Heatherington and the state.
The threatened closure is not a done deal. A FamilyCare lobbyist emailed lawmakers over the weekend about the health agency’s alleged role in shutting down the company. And on Monday, health authority director Patrick Allen did not rule out another contract with FamilyCare.
“We continue to work with FamilyCare and hope that they will continue serving the Portland market in 2018,” Allen said in a statement. “This is their business decision to make. If they decide that their business model is not financially viable, we look forward to working with them to ensure an orderly transition of their clients.”
The company’s anticipated closure will not affect its members’ eligibility for the Oregon Health Plan, which is the state’s Medicaid program. They would be transferred to another coordinated care organization under contract with the state. FamilyCare is one of 16 such organizations that manage care for approximately 1 million poor children and adults on Oregon’s free insurance program.
FamilyCare’s board voted Thursday to decline any state contract that would result in an operating deficit, Heatherington said. An initial round of 250 layoffs will take effect Jan. 5, he said, and 70 employees will be retained to help with the transition. The company receives at least $550 million annually, depending on the number of Medicaid members it serves, according to the state.
FamilyCare has a long-running dispute with the state over what the company says are insufficient reimbursement rates and a lack of clarity in how the state settles on the figures. The company has twice sued the state over rates it maintains are too low, most recently in February. The lawsuit is ongoing, and a trial is scheduled to begin Feb. 5, although FamilyCare has asked for it to be pushed back.
The health care company gained some ammunition for its claim that state health officials were trying to undermine it over the summer, when public records revealed the agency drafted a communications plan intended to damage FamilyCare’s reputation. Instead, news of that plan led Gov. Kate Brown to ask the health agency’s director Lynne Saxton to resign.
Rep. Julie Parrish, a Republican from West Linn, said Monday that she’d been receiving emails from constituents who work in the health care industry and are concerned about FamilyCare’s possible closure.
Parrish said she has been asking the state health agency for months whether it had a backup plan in the event of a closure, to no avail. She questioned why the state would stand firm on the $378 average monthly rate offered to FamilyCare in 2018, when another health provider in the area called Health Share will receive an average rate of $410.
If the state shifts people to Health Share, it will have to pay the higher rate anyway, Parrish said. Allen has noted that each company serves a different mix of Medicaid patients, and when the state accounted for population variations Health Share’s average monthly rate was only $8 more than FamilyCare.
Rep. Mitch Greenlick, a Democrat from Portland and chair of the House Interim Committee on Health Care, said he was annoyed that FamilyCare has not provided any specifics about how it will help transfer its members to other coordinated care organizations.
“If they really are going to quit at the end of the month if their blackmail scheme doesn’t work, they have a responsibility to help to transition over their 112,000 members into whatever new system is going to take care of them,” Greenlick said. “I think it’s a moral, ethical and perhaps even legal obligation for them to do that.”