Legislature tackles Salem Medicaid dispute

Salem Hospital and its affiliate in Dallas have a minority ownership stake in the CCO for Marion and Polk counties, Willamette Valley Community Health. They sued the CCO in October over reimbursement rates paid to the hospital. The suit is pending in Marion County Circuit Court.

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.

Lawmakers said the original Medicaid overhaul legislation created a process to resolve disputes before CCOs were formed, but the Salem conflict made it clear that there was no mechanism to do so after the organizations existed.

They said the tension in Salem exposed that lapse, but the hospital and CCO weren’t specifically being targeted.

In addition to the mediation process, the measure approved Monday would extend a state law requiring smaller payments for health-care providers that don’t participate in the CCO. The law was set to expire in January but will now continue for two more years.

Sen. Alan Bates, D-Ashland, said Salem Hospital has been reluctant to get on board with the health care reforms and the legislation would help encourage them to do so.

“It makes it more likely that Salem Hospital will realize it needs to come to the table and work with the CCO,” said Sen. Alan Bates, D-Ashland. He said the hospital

Sherryll Hoar, a spokeswoman for Salem Health, the hospital’s parent company, said the organization is committed to the health care overhaul efforts.

“We are absolutely on board with where the rest of the state’s going, and it needs to happen,” Hoar said.

Salem Health supported the measure, she said.

The measure, Senate Bill 568, next goes to the House. It’s part of a package of bills negotiated between the governor’s office, hospitals and other entities that also includes the extension of a tax on hospitals used to pay for Medicaid services.

A separate measure introduced in the House would go further, allowing the coordinated care organization to petition the state to kick out the hospital and punish it with severely lower reimbursement rates.

Republican Rep. Kevin Cameron of Salem, one of two lawmakers sponsoring the legislation, said he hopes it will encourage Salem Hospital and the CCO to resolve their dispute. The measure, House Bill 3309, does not have a committee hearing scheduled.

Copyright 2013 The Associated Press.