A Medicaid provider that was poised to sever ties with the state at the end of the year has agreed to a 30-day contract extension, its chief executive said Thursday, giving its 113,000 Portland-area clients more time to transfer to another health carrier.

FamilyCare president and CEO Jeff Heatherington said the coordinated care organization had reached an agreement with the Oregon Health Authority, the agency that oversees the state's Medicaid program, to continue operating until Jan. 31.

"We'll lose money in this process, but from our point of view, the clients come first," Heatherington said.

The Oregon Health Authority confirmed the arrangement Thursday afternoon and said it had already begun the work of transferring FamilyCare members to other carriers, a job it expected to complete by Feb. 1.

The two organizations have long battled over reimbursement rates, with FamilyCare saying it wasn't receiving enough funding to remain solvent.

Under the terms of the extension, Heatherington said that FamilyCare would receive reimbursement for care under the health authority's 2018 rates, plus $5 million. He said his company would still lose about $2 million over the 30-day extension.

The state on Wednesday gave FamilyCare 24 hours to decide whether it would agree to the state's 2018 contract. FamilyCare declined and announced it would close its doors, laying off 322 employees.

The company said its coordinated care oreganization contract with the state accounted for 90 percent of its business.

The uncertainty had raised concerns for providers and patients, and state officials said they were already hearing reports about denied care. Heatherington disputed that patients had been turned away.

Clients won't lose their Medicaid coverage, and Medicaid rules will allow them to continue seeing their current providers for at least 90 days.

The state said it is working with three other coordinated care organizations to take on FamilyCare's members: Health Share of Oregon, Yamhill Community Care and Willamette Valley Community Health.

FamilyCare sued the Oregon Health Authority earlier this year over its rate-setting practices, and Heatherington said it doesn't intend to drop the litigation even after the company shuts down its business operations.

Public records released earlier this year revealed top agency staffers had drafted a plan to damage FamilyCare's reputation amid its dispute, and Brown asked then-director Lynne Saxton to resign.

"We are going to aggressively pursue it, first of all, so that the public will know exactly what went on in this process," Heatherington said. "There was no reason for this. It didn't have to happen. We did one hell of a good job taking care of these patients."

Oregon Health Authority said FamilyCare members with questions can call the Oregon Health Plan client services line at 800-273-0557.

-- Elliot Njus

enjus@oregonian.com

503-294-5034

@enjus