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OHA Forces FamilyCare to Close its Doors

Portland, Ore. –- December 20, 2017 – Today, OHA demanded FamilyCare sign a 2018 CCO contract by noon tomorrow that would generate a loss of over $95 million, and force the company into bankruptcy by June 2018. FamilyCare is now forced to close its doors on December 31.

In doing so, OHA Director Patrick Allen refused to follow through on his commitments to work collaboratively and provide information needed by FamilyCare to resolve differences related to the 2018 reimbursement rates. FamilyCare told Director Allen in September that it could not sign a contract for 2018 that generates significant losses.

The $95 million loss on the 2018 contract is based on independent analysis by nationally recognized actuary, Milliman. The 2018 loss would be on top of the more than $90 million in operating losses FamilyCare has incurred in 2016 and 2017.

Since 2015, OHA has developed rates for FamilyCare that are the lowest of all 16 CCOs. The rates paid to FamilyCare are not sufficient to cover FamilyCare’s reasonable costs as required by federal regulations. OHA has staunchly refused to make any adjustment to either the 2017 or 2018 rates.

In a meeting between FamilyCare and Governor Kate Brown following Allen’s announcement, Governor Brown recognized and praised FamilyCare’s excellent business model for serving its members. However, she refused to pursue any changes to the 2018 rates that would allow FamilyCare to remain in business. As a result, FamilyCare’s 322 employees will permanently lose their jobs.

OHA’s tactics are similar to the ones employed by the Department of Justice in FamilyCare’s lawsuit over the 2017 rates. We believe the DOJ has encouraged the OHA not to adjust the rates for 2018 because it will hurt its case against FamilyCare.

FamilyCare has pledged to ensure a smooth and orderly transition for its members. Despite knowing for months that FamilyCare could not sign the 2018 contract as is, no planning was done by OHA to protect FamilyCare’s 120,000 members in a potential transition.

FamilyCare CEO, Jeff Heatherington, said, “This business decision by the state brings FamilyCare’s 32-year history serving Oregon’s most vulnerable population to an end. As a lifelong citizen of this state, I am deeply troubled that the leadership of Oregon is intentionally closing a valued partner in the care of Oregon’s most vulnerable citizens.”

About FamilyCare Health

For more than 30 years, FamilyCare Health provided patient-centered health care to Oregonians. FamilyCare Health was the first health plan in Oregon to integrate models of physical and mental health and the first CCO in the tri‐county area certified by the Oregon Health Authority.

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