Oregon to pay $22.5M to settle Medicaid contractor dispute

A long, acrimonious legal battle between state Medicaid contractor FamilyCare Inc. and the Oregon Health Authority has ended with the state agreeing to pay $22.5 million to the company.

FamilyCare has agreed to donate that money to a medical school in Lebanon, Oregon. The Oregonian/OregonLive reported. It was a Pyrrhic victory for FamilyCare’s founder and CEO Jeff Heatherington. The company has shrunk from 370 employees to four.

“Nothing will change the fact that we had the company going and we had 370 of the finest people I have ever worked with,” Heatherington said.

In 1989, the state created the Oregon Health Plan, an ambitious attempt to reform the healthcare system. The effort called for coordinated care organizations to be formed to administer the Medicaid system at a local level.

FamilyCare was one of two such organizations in the metro area.

The company clashed with the health authority repeatedly over rates, saying the state allowed the other metro-area CCO to charge more than FamilyCare.

The state claimed Health Share deserved to be paid more because its customers tended to be poorer and sicker. FamilyCare sued in 2017.

The Oregon Health Authority admitted no wrongdoing in the settlement.

Oregon Health Authority Director Patrick Allen said, “I am glad we could resolve these proceedings with an agreement that invests in the future of Oregon’s healthcare workforce and strengthens our healthcare system.”