Oregon to pay $22.5 million to settle dispute with Medicaid contractor

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

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

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

In 1989, the state created the Oregon Health Plan, an ambitious effort to reform the health care system. The effort called for the creation of coordinated care organizations to manage the Medicaid system at the local level.

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

The company has repeatedly clashed with the health authority over rates, saying the state allowed another CCO in the suburbs to charge more than FamilyCare.

The state said Health Share deserved more because its customers tend to be poorer and sicker. FamilyCare sued in 2017.

The Oregon Health Authority acknowledged no wrongdoing in the settlement.

Oregon Health Authority Director Patrick Allen said, “I’m delighted we were able to resolve these proceedings with an agreement that invests in the future of Oregon’s health workforce and strengthens our healthcare system.”

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