Structures vary for CCOs


0912 Dispatches CoordinatedCareOrgsThe state’s 13 newly forming coordinated care organizations are choosing a variety of business and tax structures, arguing for different reasons that it’s the best way to do business and provide patient-centered coordinated care.

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BY AMANDA WALDROUPE

0912 Dispatches CoordinatedCareOrgsThe state’s 13 newly forming coordinated care organizations are choosing a variety of business and tax structures, arguing for different reasons that it’s the best way to do business and provide patient-centered coordinated care.

Coordinated care organizations, or CCOs, were created by 2011 and 2012 legislation pushed by Gov. John Kitzhaber. CCOs are charged with providing higher quality health care at a cheaper rate to the state’s 650,000 Medicaid (Oregon Health Plan) patients by coordinating and integrating the patient’s medical, mental and dental health care using patient teams.

Six CCOs are limited liability companies (LLCs), four are nonprofit organizations and three are business corporations.

The legislation creating CCOs doesn’t require or favor one business structure over another. Alissa Robbins, the Oregon Health Authority’s spokeswoman, says the Oregon Health Authority certifies a CCO based upon whether it meets statutory requirements, which may be done in a for-profit or nonprofit tax structure.

Some health care organizations forming CCOs chose to keep the same business structure. Terry Coplin, CEO of Eugene-based Trillium Community Health Plan, says Trillium decided to remain a corporation to save time, as well as several million dollars in legal fees and in obtaining new contracts with providers and the federal government. “There was no real advantage to change from our current [structure],” he says.

But some groups are choosing different business structures. CareOregon, a 501c3 Portland-based managed-care organization, and Greater Oregon Behavioral Health Inc., a 501c4 managed-care organization based in The Dalles, teamed up to create the Columbia Pacific Coordinated Care Organization, which will provide care along the north Coast. That CCO is a limited liability company (LLC).

Kevin Campbell, GOBHI’s CEO, says the organizations went that route because the flexible nature of an LLC’s business structure allows the new CCO to easily maintain contractual relationships with a variety of health care providers. It also takes less time to form than becoming a nonprofit. As GOBHI and CareOregon chose the business structure, Campbell says one of the guiding thoughts was “how we create an umbrella organization that allows the broadest spectrum of community ownership.”

CCOs are under significant financial pressure. They are expected to save the state budget $239 million; a recent agreement between the state and the Centers for Medicaid and Medicare Services also requires CCOs to cut Medicaid spending by 2% in two years. At the same time, the Medicaid reimbursement rate has been cut 11% by the Legislature.

All those factors, Campbell and others say, make the requirement that LLCs pay minimal taxes advantageous. He also says that any profits will be small and will not be made in the shortterm. “I think that the concept of profit … is about the furthest thing from anybody’s mind right now,” Campbell says.


Robin Henderson, acting executive director of the Central Oregon Health Council, the governing board of Central Oregon’s CCO, thinks it’s impractical for CCOs to be for-profits. “I would be hard-pressed to see how any organization would make a profit off Medicaid,” she says.

Henderson says there was never any question that Central Oregon’s CCO would be a nonprofit, in part because the nonprofit structure reinforces the CCO’s mission-driven nature.

“Our mission is serving a population that has a tough time,” not focusing on how to make a profit and “give bonus checks” to executives, Henderson says.

Being a nonprofit allows the Central Oregon Health Council to do things such as cap administrative costs at 8%, and direct any savings back toward services and programs helping Oregon Health Plan patients.

In some ways, the four nonprofit CCOs could weather growing pains better than others. They will be tax-exempt and are accustomed to the transparent reporting now required by the Oregon Health Authority. Also, nonprofit laws dictate that the organization be controlled by a board of directors, similar to the governing board each CCO must have.

That board must have representation from each organization participating in the CCO, including county government, local hospitals, independent practice associations, mental health and substance abuse treatment providers. The structure ensures that each health organization in the CCO has an equal voice, participation and influence in the CCO’s development — which will be crucial if CCOs function as intended.

At the end of the day, advocates and CCO leaders alike think it doesn’t matter what business structure a CCO has as long as they’re able to get the job done.

“The main issue — however these CCOs organize — is whether they are going to be mission driven, and whether they are going to fulfill the vision of person-centered care,” says John Mullin, Oregon Law Center lobbyist, who has followed the development of CCOs.




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