Critique of Oregon’s Value-Based Payment (VBP) 2024 Roadmap for Coordinated Care Organizations (CCOs)
A Discussion Paper
Summary of Background for This Critique
The Oregon Health Authority (OHA) Complaint against Moda Health outlines significant allegations of fraudulent, deceptive, and anti-competitive contracting practices. The complaint highlights unilateral contract amendments, financial manipulation, phantom networks, coercive contracting, and retaliation against providers who challenge unfair terms. Moda’s Behavioral Health Incentive Program (BHIP) and other value-based payment (VBP) contracts shift excessive financial risk onto providers, while Moda retains control over reimbursement calculations and performance metrics. These practices raise serious concerns about transparency, regulatory compliance, and the impact on patient access to care.
The Critique of Moda Health’s Behavior, considering their Published Code of Conduct, outlines a commitment to integrity, transparency, and ethical business practices, stating that the company will accurately represent contract terms, engage in fair dealings, and prioritize patient care. However, the allegations in the OHA complaint suggest that Moda systematically violates these principles by misrepresenting contract terms, failing to disclose financial risks, and using retaliatory measures against providers who question unfair policies. Moda is creating barriers between patients and services. Moda’s failure to uphold its own Code of Conduct underscores the need for regulatory intervention and independent oversight.
The Oregon Health Authority’s Value-Based Payment (VBP) Roadmap was designed to promote fair, transparent, and sustainable healthcare payment models that align incentives between payers and providers. The roadmap emphasizes contract clarity, financial predictability, shared risk, and quality-based incentives. However, Moda Health’s alleged contract manipulation directly contradicts the OHA roadmap’s objectives, undermining provider trust, financial sustainability, and the effectiveness of value-based payments in Oregon. The lack of independent auditing, transparency, and regulatory enforcement has allowed Moda and other health plans to exploit contractual loopholes to their financial advantage at the expense of providers and patients.
This analysis will examine Moda Health’s deviations from its own Code of Conduct, violations of the OHA roadmap’s principles, and the broader implications of its contracting practices on Oregon’s healthcare system.
Oregon’s Value-Based Payment Roadmap for Coordinated Care Organizations
THIRD ANNUAL PROGRESS REPORT, December 2023
https://www.oregon.gov/oha/HPA/dsi-tc/Documents/OHA-CCO-VBP-Roadmap.pdf
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Oregon’s Value-Based Payment Roadmap for Coordinated Care Organizations
1. Introduction
Oregon’s Value-Based Payment (VBP) Roadmap aims to transition Coordinated Care Organizations (CCOs) away from traditional fee-for-service (FFS) models toward risk-based contracting that rewards quality and cost efficiency. While this shift intends to improve patient outcomes and provider accountability, the implementation raises significant concerns regarding contract transparency, financial risk allocation, provider autonomy, and regulatory oversight. The following critique, based on extensive documentation, highlights structural weaknesses, potential for health plan abuse, and the unintended consequences of Oregon’s VBP framework.
2. Lack of Transparency and Contract Clarity
Many VBP contracts suffer from poorly defined terms, shifting benchmarks, and opaque incentive structures. Health plans often retain the ability to unilaterally modify performance metrics, making it difficult for providers to anticipate financial risks and contractual obligations.
A major issue is the presence of undefined performance metrics. Providers are held accountable for achieving ill-defined benchmarks, which are often altered mid-contract without fair and good faith negotiation. Health plans, including Moda Health, frequently reserve the right to change unfair contract terms without provider consent based on good faith information, undermining contractual fairness. This results in bait-and-switch incentives, where initial financial incentives appear attractive, but post-signing amendments create hidden risks that disproportionately burden providers.
In addition, many contracts use technical, ambiguous, and misleading language, making it difficult for providers to fully comprehend their obligations. A clear, plain-language standard should be mandated to ensure transparency in financial and clinical expectations. Oregon’s failure to implement plain language requirements has led to misinterpretations, disputes, and unnecessary financial penalties for providers who lack access to legal counsel to decipher complex agreements.
3. Shifting Financial Risk to Providers
Oregon’s VBP model allows health plans to manipulate risk pools to their financial advantage, often reclassifying patient populations in ways that lower reimbursements while maintaining high financial risk for providers.
One concern is the use of artificially inflated risk scores. Health plans alter risk classifications to justify lower provider reimbursements while maximizing their own profit margins. Additionally, selective risk adjustment is used to steer high-cost patients away from VBP contracts, while lower-risk patients are retained to improve financial metrics. Providers also report excessive delays in incentive payments, making financial planning unpredictable and unsustainable.
Providers are further forced to absorb operational costs related to data reporting, electronic health record (EHR) integration, and compliance with evolving quality measures. Excessive reporting requirements force providers to spend significant time on documentation rather than direct patient care. Unfunded technology costs, such as required interoperability upgrades for EHRs, create additional financial strain on small and independent providers. Moreover, there is a lack of standardized compensation for administrative work, meaning providers are not adequately compensated for the additional time and effort required to comply with complex reporting demands.
4. Erosion of Provider Autonomy and Clinical Integrity
Health plans increasingly rely on automated systems to dictate treatment guidelines, undermining clinical expertise. Rigid utilization review processes driven by AI-driven approvals and denials limit provider discretion in delivering personalized care. Standardized outcome tracking, such as PHQ9 and GAD7, while beneficial for data collection, can be misused to enforce overly simplistic, one-size-fits-all treatment mandates. Providers also feel pressured to alter clinical decisions to align with financial incentives rather than patient-centered care.
Oregon’s VBP Roadmap fails to address power imbalances in health plan-provider negotiations, allowing CCOs to impose non-negotiable contracts. Providers are often excluded from contract development, reducing their ability to advocate for fair terms. Those who challenge contract terms risk referral reductions, reimbursement clawbacks, or termination from the network. Additionally, providers are often given insufficient recourse to contest unfair contract modifications or disputes, with limited appeal mechanisms in place.
5. Regulatory and Oversight Failures
The Oregon Health Authority (OHA) does not mandate independent audits of health plan financials and contract performance, enabling potential fraud and abuse. This lack of oversight allows health plans to operate without accountability, creating an environment where providers are left vulnerable to financial exploitation.
OHA’s failure to act on complaints further exacerbates these issues. Research published by Mentor Research Institute (MRI) indicates that when oversight agencies fail to respond to reports of systemic fraud and contract manipulation, the likelihood of moderate to catastrophic harm to public health and mental health providers increases significantly. By failing to investigate and enforce compliance, OHA allows unethical contracting practices to persist, placing financial strain on providers and reducing access to essential mental health services for vulnerable populations.
Additionally, OHA is structured in a manner that insulates it from criticism and provider complaints. MRI research has found that regulatory bodies with self-protecting structures are inherently resistant to external accountability, creating a culture where provider grievances are ignored, and systemic violations of law go unaddressed. This lack of responsiveness not only erodes trust in the regulatory system but also emboldens health plans to continue exploitative practices without fear of consequences.
Mandatory external audits conducted by Certified Internal Auditors (CIAs) should be required to oversee contract adherence and ensure fair application of incentive models. Ethics Point Portals must be established to provide providers with a secure and anonymous channel to report contractual abuse without fear of retaliation. Regular public disclosure of audit findings is necessary to ensure transparency in financial and performance reviews, deterring unethical contracting practices.
Currently, public reporting on audit findings is lacking. Publicly available audit results, contract evaluations, and financial disclosures should be required to prevent manipulation of reimbursement models. Legislative mandates should require health plans to publish performance data in an accessible format to improve accountability.
6. Recommendations for Reform
To ensure that VBP contracts are implemented fairly and effectively, several key reforms must be enacted.
First, contract transparency and fairness must be enforced. Plain language contracts should be mandated to eliminate ambiguity and ensure that providers fully understand their obligations. Health plans should be prohibited from making unilateral amendments to contract terms mid-contract without provider consent. Additionally, disclosure requirements must be enhanced to ensure all financial risk-sharing details are disclosed before contract execution.
Second, independent oversight and whistleblower protections should be implemented. External auditors should be required to oversee financial reporting and contract adherence. Secure Ethics Point Portals should be established to protect providers from contract-related fraud and coercion. Stronger legal protections must also be enacted to shield whistleblowers from retaliation.
Finally, power imbalances in contract negotiations must be addressed. Contracts of adhesion should be prohibited, ensuring that providers have meaningful bargaining power in contract discussions. Legislative protections against retaliation must be strengthened to safeguard providers from unfair contract terminations and reimbursement clawbacks. Additionally, mandatory mediation mechanisms should be introduced to allow providers to dispute unfair contract terms through an independent third party.
7. Conclusion
While Oregon’s VBP Roadmap aims to promote quality-driven, cost-effective care, its current implementation disproportionately benefits health plans at the expense of providers and patients. Without contract transparency, fair risk-sharing mechanisms, and regulatory oversight, VBP contracts risk exacerbating financial instability, eroding provider autonomy, and limiting access to care.
Furthermore, OHA’s failure to respond to good-faith and legitimate provider complaints signals a broader systemic issue. When regulatory agencies prioritize self-preservation over enforcement, they allow unethical contracting practices to persist, increasing the likelihood of widespread harm. Immediate reforms, including independent audits, contract standardization, and stronger regulatory enforcement, are essential to ensure that VBP contracts achieve their intended goals without compromising ethical care delivery. Without such changes, Oregon’s mental health providers and the patients they serve will continue to bear the burden of a fundamentally flawed system.
References
Moda Code of Conduct.
https://www.modahealth.com/pdfs/comp/code_of_conduct.pdf
Saved Copy: Moda Code of Conduct UploadGlossary and Definitions For Alternative and Value-Based Payment Contract Design.
https://www.mentorresearch.org/healthy-contracts-bill-definitionsWhistleblower Complaint: Allegations of Bad Faith, Fraud and Antitrust Violations by Moda Health
https://www.mentorresearch.org/whistleblower-complaint-allegations-of-bad-faith-fraud-and-antitrust-violations-by-moda-healthOregon’s Value-Based Payment Roadmap for Coordinated Care Organizations
https://www.oregon.gov/oha/HPA/dsi-tc/Documents/OHA-CCO-VBP-Roadmap.pdf
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https://www.mentorresearch.org/plain-language-contract-agreement-and-use-case-exampleThe Macroeconomic Patterns which Ensure Profitable Failure of Value-Based Contracts in Oregon.
https://www.mentorresearch.org/the-macroeconomic-patterns-which-ensure-profitable-failure-for-health-plansContract “Gaming”: Reasons Why Value-Based Contracts Can Fail.
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https://www.mentorresearch.org/healthcare-fraud-measurement-an-valuebased-payment-contractsBait and Switch Tactics - A Hypothetical Contract Recruitment Scenario?
https://www.mentorresearch.org/bait-and-switch-tacticsA Case For The Value and Importance Of Independent Internal Auditors In Contracting For Fee-For-Service, Alternative, and Value-Based Mental And Behavioral Health Services. https://www.mentorresearch.org/value-and-importance-of-independent-internal-auditors
How Can an Independent Certified Internal Auditor Support Mental and Behavioral Health Contracting.
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https://www.mentorresearch.org/what-is-a-controlWhat is a Control Library?
https://www.mentorresearch.org/control-libraryControls, Tests of Design (TOD) and Tests of Effectiveness (TOE) in Measurement and Value-Based Contracting For Mental and Behavioral Health Services.
https://www.mentorresearch.org/tests-of-design-and-tests-of-effectivenessEthics Point Portal: Definition and Benefits for Value-Based Contracts in Mental and Behavioral Health Services.
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Good Faith Disclaimer and Purpose of Analysis
This discussion document is intended for training, education, legislation, and research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge. This is not an indictment of Moda Health, but rather an effort to highlight concerns, encourage education, and constructive dialogue to ensure that value-based contracting aligns with the best interests of providers, health plans, and patients.
For more information see: https://www.mentorresearch.org/disclaimer-and-purpose