Offices for Willamette Valley Community Health, which oversaw health care for low-income people in the region. The board underwent a schism last year. (Jessica Floum/The Lund Report)

Nearly a year ago, an email landed in Craig Pope’s inbox that would quietly destabilize the order that oversaw health care for about 100,000 people in the mid-Willamette Valley.

It was a Friday afternoon in mid-August. The email alerted the Polk County commissioner that a little-known governing body on which he serves, which controls the use of federal Medicaid dollars in Marion and Polk counties, was about to undergo a bureaucratic break-up.

When the body’s contract expired soon, the email said, three of its 17 board members would apply for the next contract – without the others.

“Most of us… were stunned,” Pope said.

This month, the stun shifted.

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The Oregon Health Authority announced July 9 the contracts for the new governing bodies, known as coordinated care organizations, or CCOs. For Marion and Polk counties, the agency chose a somewhat new entity, led in part by Pope.

Salem Health, Salem Clinic and an association of independent providers called WVP Health Authority have appealed the switch, arguing thousands of people could have their medical coverage impacted under the new organization, and the local economy could bleed millions of dollars.

Oregon Health Authority spokeswoman Allyson Hagen declined to comment on the applications or appeal. She said a decision could be made this week.

Meanwhile, some clinics and health care providers say they are worried about a new care manager holding their purse strings.

Still, the care manager coming to town, PacificSource Health Plans, headquartered in Springfield, told Salem Reporter it is ready to get to work.

“I think we’re going to make significant investments in the community,” said Ken Provencher, CEO of the health insurer.

Coordinated care organizations are Medicaid insurers, managing health care for the state’s low-income patients. Medicaid can also fund treatment for, among others, children, pregnant women and people with disabilities.

There are 15 CCOs in the state. Marion and Polk counties’ CCO has been Willamette Valley Community Health since 2015, when it won a five-year contract from the Oregon Health Authority.

The state agency has been taking bids for the next five-year contracts. Collectively, the contracts are worth several billion dollars and have been described as the largest procurement in Oregon history.

That August email made it clear to the current CCO, Willamette Valley Community Health, that it faced an uphill battle.

“It is with great consideration that our combined organizations wish to inform you… that we are actively considering submitting an application as a coordinated care organization for Marion and Polk counties during the upcoming procurement period,” wrote the Aug. 17 email, obtained by Salem Reporter, signed by representatives from the three entities.

“Our goal is to establish a CCO capable of developing new models of quality care while being financially secure and stable,” they wrote.

By late January, Willamette Valley Community Health decided not to compete for a new contract.

According to Pope, some board members of Willamette Valley Community Health decided to recruit another outfit or else be "frozen out" of the Medicaid process.

They found PacificSource, already running CCOs in central Oregon and the Columbia River Gorge. Pope said he and several other board members met with company officials last fall.

“I’d been very pleased with what I learned from other commissioners around the state about PacificSource’s model,” Pope said. “So I said to my team, let’s go talk to them and learn what they’re doing and ask if they’re interested in applying.”

PacificSource typically establishes a local council to guide services to the community.

Lindsey Hopper, the company’s vice president of Medicaid, said the council promotes transparency.

By October, PacificSource had been meeting with regional doctors, clinics and other health care providers to discuss potentially doing business; and it started to form the council, according to Pope.

Half-a-year later, the Oregon Health Authority awarded the CCO contracts. The agency detailed its decisions in evaluations often longer than 40 pages.

Evaluators rated contracts across six criteria that, according to agency spokesman Robb Cowie, included the applicants’ financial solvency, ability to cover costs of claims, and ability to deliver healthcare in line with the state’s changing goals.

Marion Polk Coordinated Care, the effort led by Salem Health and others, failed all six categories. PacificSource’s application passed all six.

Evaluators said in Marion Polk Coordinated Care “did not demonstrate (an) understanding of CCO goals and requirements,” and its answers “are vague and missing detail,” and its profit projections are “overly optimistic.”

Evaluators did raise some concern about PacificSource’s footprint – its new contract would be its fourth CCO to run, spanning nine Oregon counties – but concluded those concerns could be remedied.

Marion Polk Coordinated Care’s score surprised Executive Director Dean Andretta.

“We’re stunned by that decision and we are protesting that decision,” he told Salem Reporter.

Andretta noted that while the CCO as an organization is new, Salem Health, Salem Clinic and WVP Health Authority have long worked with the region’s Medicaid patients with no problems. They also represent nine out of 10 providers in the region, he said.

“The point is that we’ve done this work,” he said. “We’ve done it very well and not ever been afoul of anything within (past contracts). It’s a surprise to us we weren’t awarded another one because we are a local, going concern that has done a good job managing this contract for 20 years.”

Andretta also has specific concerns about PacificSource, according to the appeal he authored July 15.

One concern he told the Oregon Health Authority is that there are 104,000 Medicaid-eligible people in the region and PacificSource, he said, can care for 82,000 people at most. He wrote many may not have the same doctors to choose from.

Andretta also said PacificSource’s “extraordinarily high administrative expense” would siphon up to $20 million per year from the area.

“There is no question, if this decision to reject (our) application is upheld, that patients, providers… and our entire community will be seriously adversely affected and negatively impacted,” Andretta wrote.

When reached for a comment about whether Salem Health, the largest private employer in the region, will be impacted by the CCO shake-up, CEO Cheryl Wolfe echoed those concerns.

Wolfe said that while Salem Health will care for anyone who comes to the hospital, people whose coverage has changed may seek out care only when it becomes a more expensive emergency.

“This will cause more of these patients to appear at the emergency room as a last resort when they are very ill, and the care will be more costly,” she said in an email.

She added that she worried about the CCO going to an out-of-town firm.

“Bringing in a large, outside insurance company to own and run the CCO threatens the good work and increasing cooperation and ends much of the local re-investments in our community,” she said.

Those sentiments were shared by independent providers who will now have to contract with PacificSource to treat low-income patients.

Mary Miller, a nurse practitioner in Salem, said she hasn’t negotiated her contract with PacificSource, but she will soon in order to treat roughly half of the 18 to 20 patients she sees every day.

When Miller sees these clients, she is reimbursed through Medicaid. The reimbursement pays the cost of treating the patient and helps cover administrative costs.

Miller said she doesn’t know how the reimbursement will change in a new contract.

“They’re not telling us,” she said of PacificSource. “Our manager here asked for a contract, asked what that was going to look like, but so far we haven’t gotten anything.”

Representatives from PacificSource, however, say they can allay those concerns.

Hopper, the company’s Medicaid executive, told Salem Reporter that the CCO will be able to handle the full populace of Medicaid enrollees. She said the number cited by Andretta reflects what PacificSource could handle in April. It has since added more providers, she said, strengthening its capacity.

“Folks were instructed to produce network reporting that said ‘As of this week, in the first week of April, how many folks can you serve based on your contracted and based on your network,’” she said. “It’s clear that the state expects folks will add providers to their network after the April reporting date. Absolutely it’s our intent to serve all members in this CCO.”

Provencher added that the firm, which has done business in Salem since the 1990s, plans to invest money to improve health care in the region, not skim off the top as others suggested.

“Rather than pulling resources from the community, I think we’re going to make significant investments in the community,” he said.

Hopper and Provencher declined to comment on PacificSource’s negotiations with providers.

Reporter Rachel Alexander contributed to this article.

Have a tip? Contact reporter Troy Brynelson at 503-575-9930, troy@salemreporter.com or @TroyWB.