HMO sues Health Plan

BEND, Ore. -- A managed care company in Central Oregon has filed a suit against the state-run Oregon Health Plan, saying it routinely underpays its physicians and hospitals.

Bend-based Central Oregon Independent Health Services, which provides care to 25,000 Central and Eastern Oregon residents, is seeking at least $10 million to reimburse losses it says it has accrued since 1997.

The firm also hopes to compel the state to turn over information it uses in setting rates it pays the company.

The breach of contract suit names the Office of Medical Assistance Programs, a branch of the Oregon Department of Human Services. That agency pays the Bend managed care company and similar organizations a fixed rate per patient per month. Company officials claim the state is shirking its legal obligation to set rates that are "actuarially sound."

"Based on the information we have, there are significant differences and problems with their rate setting methods," said Patricia Gibford, chief executive officer for Central Oregon Independent Health Services.

On Friday, September 6, state officials declined to discuss the case or how it might affect the long-term viability of the Oregon Health Plan, saying they had not seen the lawsuit.

The suit comes at a bad time for the Oregon Health Plan, which pays for health care for low-income people. Several managed health care providers have defected from the program in the past two years. Now it may lose $30 million as lawmakers struggle to plug the state's $482 million budget shortfall.

Central Oregon Independent Health Service officials said they don't want to withdraw from the Oregon Health Plan and will continue to enroll Oregon Health Plan patients while their lawsuit is pending.

However, at this point they're not making any guarantees and could pull out.