FamilyCare to repay OHA $29.7m in settlement agreement

Today, the Oregon Health Authority (OHA) and FamilyCare Health released a joint statement announcing that they have reached a settlement agreement in the dispute over 2015 and 2016 rates. In April, Judge Channing Bennett granted FamilyCare a temporary restraining order against the state agency, prohibiting OHA from terminating the CCO’s contract.

The settlement agreement is effective May 22, 2016. It includes the execution of two amendments. Amendment No. 9 will increase FamilyCare’s 2016 rates “from the 10th to the 20th payment percentile of the rate range,” meaning $2.7m in increased base capitation payments to the CCO for calendar year 2016, net of add-ons and the Hospital Reimbursement Adjustment amounts. OHA will pay this amount using state funds if CMS does not approve Amendment No. 9, according to the settlement document.

Through Amendment 6, both parties will agree to OHA’s 2015 overpayment to FamilyCare of $54m. However, OHA will reduce the repayment amount by $24.8m as “settlement credit,” not reportable for purposes of medical loss ration rebate for 2014, 2015, or 2016. FamilyCare must repay a total overpayment amount of $29.7m to OHA within 30 days of Closing.

In addition, OHA will withdraw its notice of breach of contract and Notice of Intent to withdraw FamilyCare’s contract.  FamilyCare will in turn dissolve its restraining order against the state without fees or costs to either party.


OHA and FamilyCare’s joint statement:

The Oregon Health Authority (OHA) and FamilyCare are pleased to announce they have reached a settlement agreement that resolves the financial issues in dispute between the parties for the 2015 and 2016 rate years, which initially arose from the rate-setting process started in 2014 in response to the federal Centers for Medicare & Medicaid Services’ (CMS) objections to the State’s previous rate-setting process.

Under the settlement agreement, FamilyCare has agreed to dismiss all pending litigation against OHA. OHA has agreed to withdraw its notice of termination of FamilyCare’s CCO contract. Both parties appreciate the efforts that were made to reach an agreement that will allow them to move forward and focus their full efforts and attention on providing quality care to Oregon Health Plan enrollees and transforming health care for Oregonians in the future.


A copy of the complete settlement agreement is available here.