Ore. hospital offers mediation in dispute with coordinated care organization

Salem (Ore.) Hospital officials are offering to enter mediation with the local coordinated care organization in hopes of resolving a high-profile dispute that has drawn the ire of state lawmakers and threatens to undermine Oregon's effort to redesign Medicaid.

Hospital officials offered mediation because they want to establish a better working relationship with Willamette Valley Community Health, the coordinated care organization that administers Medicaid in Marion and Polk counties, said Sherryll Johnson Hoar, a hospital spokeswoman.

Salem Health, the hospital's parent company, has a minority state in the 10-month-old CCO but filed suit last year over the reimbursement rate paid to its hospitals in Salem and Dallas.

The hospital does not plan to withdraw its lawsuit unless mediation resolves the conflict, Hoar said.

The offer may raise a new dispute, however, as officials from both entities disagreed over what should be on the table at mediation. As of Friday, no mediation session had been scheduled.

Mediation should cover "all matters concerning the operation of the CCO," not just the contract dispute at the heart of the lawsuit, Hoar said. Hospital officials have complained that the balance of power in the CCO tilts heavily toward the local independent physicians association, and they say they've been denied access to contracts between the CCO and other providers.

CCO board chair Ruth Bauman said the CCO will consider the hospital's offer.

"We're perfectly happy to do mediation on the issues raised in the lawsuit," Bauman said. "If they have other issues, we'd like to know what they are and we would comment on those at that time."

Gov. John Kitzhaber's Medicaid overhaul created coordinated care organizations intended to get hospitals, independent physicians, mental health providers and others in the health care industry to work together. Many were previously competitors, but they're now supposed to coordinate care and create new payment models that tie their income to patient health, not the number of visits or procedures they perform.

The hospital's mediation offer comes as the Legislature advances a bill sponsored by two Salem lawmakers that would allow severe penalties for hospitals and other health care providers that join a CCO but can't make peace with the other members.

The bill would allow the coordinated care organization to petition the state to kick out the hospital, prohibit it from joining any CCO for five years and punish it with severely lower reimbursement rates. That's a daunting proposition for hospitals, which already tend to lose money on Medicaid patients.

Rep. Brian Clem, D-Salem, said he plans to keep pushing the legislation unless the lawsuit is dropped. Clem said he's concerned the lawsuit would create a model for health care providers around the state to avoid changing their practices to align with the new payment models envisioned in the Medicaid overhaul.

"Our whole effort could be undone by what seemed like a local dispute," Clem said. "That's why having the lawsuit gone is important."

Hoar rejected the suggestion that the hospital is trying to avoid adopting the new Medicaid model, saying the hospital offered its own proposal for sharing risk and profits.