In May, Providence Health Plan, a mainstay of the Oregon health insurance market, announced it would be shuttering at the end of the year—with an exception. Leaders at the insurer said it would seek to keep operating its Medicare Advantage line “through a new agreement with a national carrier.”
The upshot was that while hundreds of thousands of Providence Health Plan members would get thrown off their insurance and have to find new coverage—and potentially, with it, new doctors—the roughly 60,000 on its private version of Medicare might be able to keep their insurance after all
But on Thursday, Providence reported a new development: The negotiations with the national carrier had failed, and it would be shuttering its Medicare Advantage line at the end of the year too
“Despite significant effort on all sides, we were unable to reach an agreement that would support a sustainable future for the Medicare Advantage that would allow us to transfer these members smoothly,” Providence Health & Services CEO Erik Wexler said in a message to staff, which was reviewed by WW. “As a result, our MA line of business will also be wound down as part of our previously announced decision to exit the health insurance markets.”
Wexler noted that members soon to get kicked off the Medicare Advantage plans would have multiple alternatives to choose from. A Providence spokesperson says the company is in discussion with regulators about this latest development, and would share more information with members and the public as it is able
The hospitals and clinics tied to Providence Health & Services, which is Oregon’s biggest employer, will continue to operate. But the Renton, Wash.-based health care conglomerate has produced ugly financial returns in recent years, and the decision to shut down its Portland-based insurance company, which primarily covers Oregonians, comes as part of a broader retreat from non-“core” lines of business, like labs and hospice care
Even before its end was announced, the Providence Health Plan, which as of March had more than 1,100 employees, has had a rough go lately. It was the locus of major layoffs last year. Efforts to outsource a major line of business to Silicon Valley this year hit major snags, disrupting the health care for untold Oregonians. And last spring, more than a dozen workers told WWthat resentment within the company had surged in recent years as new leadership seemed disdainful of the perspective of longtime staff, undermining the character of a once-vital local institution.
Still, runaway medical cost inflation has hit his health insurers hard, and Providence leadership emphasized the formidable headwinds facing regional insurance companies
In their notes Thursday, executives encouraged remaining staff to hold their heads high. Providence Health Plan CEO Don Antonucci told them, “Your commitment to members, partners and one another reflects the very best of who we are, and it does not go unnoticed.”
And Wexler, the CEO of all of Providence, invoked structural shifts in the health care world. The closing of the Providence Health Plan is not, he wrote, “a reflection of the quality of the plan or the extraordinary work of those caregivers. Rather, it reflects our responsibility to respond to a rapidly changing environment and remain focused on our core clinical calling.”
