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Oregon bill would make CCOs nonprofits

A bill proposed in the Oregon Legislature would force the coordinated care organizations that manage Oregon Health Plan patients to become nonprofits by 2023.

Seven of the 16 CCOs in the state are for-profit organizations. Critics of the for-profit CCOs say they should not be allowed to profit off health care for low-income Oregonians that is paid for by the state and federal governments.

Jackson County is served by two CCOs — Jackson Care Connect, a nonprofit, and the for-profit organization AllCare Health. About one in three county residents has OHP coverage.

AllCare had $11.3 million in profits through the third quarter of 2016, while Jackson Care reported a $338,080 loss, according to the most recent reports to the state.

Josh Balloch, AllCare's vice president of government affairs and health policy, has been testifying against the proposed mandate that CCOs become nonprofits.

"The biggest difference between nonprofit and for-profit organizations is whether you pay taxes or not. Some nonprofits are very aggressive and competitive and bank a lot of money. Nonprofit doesn't mean benevolent, and for-profit doesn't mean evil," he says.

According to state data, AllCare has generated nearly $40.8 million in profits from 2012 through the third quarter of 2016, with profits fluctuating from $4.3 million to $17 million per year.

It has paid almost $26.3 million in taxes since 2012.

The CCOs are working to meet a state goal to keep health care expense growth to 3.4 percent annually — a tall order in an era when medical costs nationwide are spiking, especially for health insurance premiums and prescription drugs.

Despite their differing business models, AllCare and Jackson Care Connect have both been targeted by protesters and online petitioners who say they are putting profits ahead of patients. The protests were triggered after the CCOs made moves to sever ties with Jackson County Mental Health, citing access problems and long waits for appointments.

Jackson Care Connect is transitioning its OHP patients to other mental health providers, including ColumbiaCare. AllCare and the county remain in negotiations.

AllCare is seeking an extension for when its March 31 contract with the county ends.

To ensure a smooth transition, Balloch says AllCare has lined up more than 35 private therapists and is also working with Options of Southern Oregon, which will have two new mental health clinics in the county. Other partners will include La Clinica, Rogue Community Health and Care and Counseling.

Jackson County Mental Health counselor Raelle Kaia says CCOs should not profit off of government health care dollars intended for low-income people. She opposes the transfer of county mental health services to other providers.

"They are siphoning money from the taxpayers into their own coffers," Kaia says. "The for-profit CCO system is inflicting damage on real people and real lives. I encourage the Oregon Health Authority, the governor and the state Legislature to put a stop to this reckless behavior."

The 16 CCOs in the state have accumulated $925 million in reserves. The House bill that would eventually force the CCOs to become nonprofits would also require those reserves to be held in escrow by the state, making the CCOs less attractive to potential buyers.

In 2015, Lane County's for-profit CCO, Trillium Community Health Plan, was sold to a for-profit Missouri corporation. The sale and a dividend paid from Trillium's reserves generated a $131 million windfall for shareholders of Trillium's parent company. Some big shareholders received multimillion-dollar payouts, the Eugene Register-Guard reported.

Meanwhile, Oregon is facing a $1.7 billion budget deficit for the coming two-year cycle, according to late February data from state economists.

Roughly $900 million of the deficit is due to health care expansion costs and changes in federal funding for care in Oregon.

— Reach staff reporter Vickie Aldous at 541-776-4486 or valdous@mailtribune.com. Follow her at www.twitter.com/VickieAldous.