Moda Health’s Unfair, Bad Faith, Unethical, and Fraudulent Contracting Practices: An Insidious Threat to Oregon’s Healthcare System
A Discussion Paper
Moda Health Complaint and Legislative Analysis (5 page Brief and 65 page Comprehensive Analysis)
Introduction: The Urgent Need for Accountability
The whistleblower complaint submitted to the Oregon Health Authority (OHA) and the Attorney General’s Office presents a deeply troubling picture of fraudulent, unethical, and anti-competitive contracting practices by Moda Health. The complaint alleges that Moda systematically manipulates value-based payment (VBP) models, deceives providers, misuses public funds, and undermines competition in Oregon’s healthcare system. By imposing hidden financial risks, deceptive contract terms, and coercive business tactics, Moda ensures its corporate profits remain protected at the expense of patients, healthcare providers, and taxpayers.
The practices detailed in the complaint represent more than isolated instances of corporate misconduct, they reveal a calculated effort to monopolize healthcare services, suppress provider independence, and weaken the effectiveness of public health programs such as the Oregon Education Benefit Board (OEBB), the Public Employee Benefit Board (PEBB), and Oregon Health & Science University (OHSU). If left unchallenged, these predatory tactics will become standard practice, making it impossible for ethical providers to participate in value-based care (VBC) models without unfair financial risks and professional consequences.
IMHPA declined to sign a Moda contract that would pay members 6.5% more. Declining was a principled stance against misuse of public funds, and unlawful, unethical contracting. This is not a financial grievance; it is about safeguarding the integrity of Oregon’s healthcare system. IMHPA and MRI are committed to addressing these issues to ensure fair treatment for providers, protect patients, and competing health plans, while ensuring transparency in the use of taxpayer dollars.
This paper expands on key concerns expressed in the complaint, explaining their implications and regulatory and legislative reforms to prevent health plans from continuing to exploit Oregon’s healthcare system. Following are 6 examples:
1. Bad Faith Practices in Contracting
Moda Health exploits its dominant position by forcing providers into unfair and deceptive contracts that expose them to hidden financial risks, unreasonable administrative burdens, and unfair performance evaluations. These contracts are designed to benefit Moda financially while imposing excessive liability and compliance burdens on providers, leaving them little recourse to challenge or renegotiate.
A. Shifting Metrics and Retroactive Penalties
Problem:
Moda’s contracts allow mid-term modifications of performance metrics, which can then be applied retroactively to justify financial clawbacks from providers. This means that even providers initially met all contract requirements, Moda can introduce new performance targets and penalize them for failing to comply with rules that did not exist when the contract was signed.
Quote from Complaint:
"Providers who believed they met initial targets may be penalized based on newly imposed criteria or confusing policy. This leaves them without reasonable recourse to question policies or renegotiate terms."
Why It Matters:
Retroactive penalties violate the principle of good faith contracting by imposing unforeseen obligations on providers.
Financial clawbacks can cause significant revenue losses, especially for independent practitioners and small clinics.
Unstable financial conditions discourage providers from participating in VBP models, reducing the overall effectiveness of value-based care.
Moda retains total control over the contract, making it impossible for providers to plan their budgets or resources.
Regulatory Solutions:
Ban retroactive application of new performance metrics in all Oregon health plan contracts.
Require health plans to provide written notice and a dispute resolution process before imposing financial penalties.
B. Bait-and-Obfuscate Negotiation Strategy
Problem:
Moda engages in a bait-and-Obfuscate tactic, offering contracts that appear reasonable at first glance, retaining their ability to impose hidden administrative requirements, financial penalties, and/or additional compliance burdens that were not disclosed upfront.
Quote from Complaint:
"Moda’s negotiations follow a bait-and-switch model. Providers are offered acceptable terms upfront but will be burdened with hidden administrative requirements and unexpected performance targets."
Why It Matters:
Providers have signed contracts under false pretenses, unaware of hidden compliance risks.
Moda retains asymmetric power, ensuring that their contract terms always favor their financial interests.
Such strategies discourages provider participation in VBP models, ultimately harming patient care and public health.
Regulatory Solutions:
Require health plans to disclose performance expectations and administrative burdens upfront in standardized contract templates.
Mandate 90-day contract review periods to allow providers to assess risks before signing.
2. Unlawful Contracting: Antitrust Violation and Market Manipulation
Moda’s contracting practices violate Oregon’s antitrust laws by artificially inflating its market dominance, restricting provider choice, and deceiving public purchasers into selecting Moda plans rather than competitors’.
A. Phantom Networks and Deceptive Representation
Problem:
Moda falsely represents the size of its provider network by listing clinicians as “in-network” even if they are not accepting new patients or refuse to sign Moda’s exploitative contracts.
Quote from Complaint:
"Moda lists providers as in-network, even though many are unable to accept new patients due to deception and their unwillingness to participate in voidable contracts."
Why It Matters:
Public purchasers (OEBB, PEBB, OHSU) rely on Moda’s data when awarding contracts, believing they are securing broad provider access.
Patients face delays, provider shortages, and reduced healthcare access due to Moda’s false promotion of network capacity.
Competing health plans are unfairly excluded from public contracts, reducing market competition and limiting consumer choice.
Regulatory Solutions:
Require real-time provider availability reporting from all health plans.
Impose financial penalties on insurers found to be misrepresenting network capacity.
B. Moda’s Refusal to Disclose the Names of Providers in a Risk-Sharing Agreement
Moda’s refusal to disclose the names of providers participating in its risk-sharing arrangements is one of the most blatant examples of anti-competitive and deceptive contracting tactics. Transparency in risk-sharing models is critical to ensuring that providers can make informed financial decisions, collaborate on cost-effective care strategies, and negotiate fair terms.
Problem:
Moda intentionally withholds the names of providers participating in shared risk agreements, making it impossible for providers to determine which others are affected, to compare contract terms, or to collectively challenge unfair conditions.
Quote from Complaint:
"Moda isolates providers from one another by refusing to disclose who else is participating in the risk-sharing agreement, preventing transparency, collaboration, and accountability."
Why It Matters:
Prevents Providers from Comparing Terms: Without knowledge of who else is in the risk pool, providers cannot verify whether risk-sharing terms are being applied fairly or whether they are bearing a disproportionate financial burden.
Allows Moda to Manipulate Risk Adjustments: Moda can selectively assign financial risk, shielding large corporate providers from penalties while forcing independent independent add group clinicians to absorb the financial downside.
Suppresses Collective Bargaining: If providers knew which providers were in the risk pool, they could collaborate to renegotiate contracts, advocate for fairer reimbursement, and push back against Moda’s manipulations.
Blocks Transparency in Performance Metrics: Shared risk models require shared data. By keeping providers in the dark, Moda ensures that no provider can verify whether financial penalties and performance targets are being applied consistently.
Regulatory Solutions:
Mandate full disclosure of all participating providers in a risk-sharing agreement.
Require health plans to submit risk-adjustment methodologies for third-party auditing.
Prohibit health plans from selectively concealing provider data to create competitive advantage.
C. Moda’s Phantom Networks: False Advertising and Deceptive Practices
Problem:
Moda misrepresents the size and availability of its provider network, listing clinicians as “in-network” even though many are not accepting new patients or have refused to sign Moda’s exploitative contracts. This misrepresentation is designed to mislead both public purchasers (OEBB, PEBB, OHSU) and consumers into believing Moda provides adequate access to care, when in reality, many patients cannot find an available provider within Moda’s network.
Quote from Complaint:
"Moda lists providers as in-network, even though many are unable to accept new patients due to Moda deception and their reluctance or unwillingness to participate fully in unlawful or voidable contracts."
Why It Matters:
Public purchasers like OEBB, PEBB, and OHSU award contracts based on Moda’s claims, wasting taxpayer funds on incomplete provider networks.
Patients face longer wait times, travel burdens, and disrupted continuity of care due to Moda’s deception regarding network adequacy.
Competing health plans are at a disadvantage, as Moda’s provider listings create an illusion of a superior network, influencing purchasing decisions in an anti-competitive and deceptive manner.
Legal Implications:
Violations of Oregon’s Unlawful Trade Practices Act (UTPA): Moda may be fraudulently advertising its provider network to public purchasers, violating Oregon consumer protection laws.
Potential violations of False Claims Act (FCA): If Moda submitted fraudulent data to obtain government-funded contracts, it could be held liable under state and federal FCA provisions.
Antitrust violations: If Moda intentionally misrepresents network size to block competitors from securing public contracts, this could constitute a restraint of trade under Oregon’s antitrust laws.
Regulatory Solutions:
Mandate real-time reporting of actual provider availability in all health plan networks.
Impose financial penalties and contract cancellations for insurers found to have misrepresented their networks.
Require public purchasers to verify network adequacy before awarding contracts.
3. The Human Cost: Provider Burnout and Reduced Access to Care
Moda’s exploitative contracts both harm providers and directly impact patients by reducing the number of clinicians available to deliver high-quality mental health and primary care services.
A. Moral Injury and Provider Burnout
Problem:
Providers are forced into ethical dilemmas when they must choose between meeting financial targets imposed by Moda or delivering optimal patient care.
Quote from Complaint:
"The emotional and financial strain of operating under Moda’s contracts will lead to moral injury for providers. They are forced to either compromise patient care to meet financial and utilization targets or experience financial penalties, loss of employment, cognitive dissonance, denial, repression, emotional exhaustion, and burnout."
Why It Matters:
Burnout leads to higher turnover, reducing access to experienced healthcare professionals.
Patients suffer when providers must prioritize cost-cutting over patient-centered care.
Regulatory Solutions:
Mandate limits on uncompensated administrative burdens for mental health providers.
Create contract opt-out provisions for providers experiencing contract-based burnout.
DISCLAIMER and PURPOSE: This discussion document is intended for training, education, legislation, and or research purposes. 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.
For more information see:
https://www.mentorresearch.org/disclaimer-and-purpose
https://www.mentorresearch.org/challenging-moda-healths-unfair-practices-why-filing-a-complaint-matters