In December 2014, OHSU agreed to lend Moda Health Plan $50 million to support its ongoing participation in the health care exchange. The loan is in the form of a surplus note — a common financial instrument in the insurance industry to provide capital. The note matures in 2024 with an interest rate of 4 percent. The $50 million was a reallocation from previously invested reserve funds. The OHSU board of directors reviewed the investment and approved it unanimously.
While the decision was made at a private board meeting, the transaction was not secret. The transaction was reviewed and approved by the State Insurance Commissioner. OHSU President Dr. Joe Robertson notified the Governor’s office and sent a message to faculty and staff explaining the strategic investment. Additionally, the surplus note has been covered in more than a dozen news stories, including the Portland Business Journal.
With a mission to improve the health and well-being of all Oregonians, OHSU has taken a leadership role in health care transformation. A long-time collaborator, Moda Health also leaned into transformation by participating in the health care exchange, providing coverage for Oregonians who had previously been uninsured. The risks associated with the exchange caused some health insurance organizations not to participate.
The intent of the surplus note was to support Moda Health Plan’s continued participation in the exchange. What OHSU gets, in addition to the interest, is close alignment with a health plan that is capitalized to support OHSU’s implementation of population health and health care transformation in Oregon.
As health care reimbursement changes from fee-for-service to value-based care, more health care providers will align with health care payers to implement population health. For example, OHSU and Moda are founding members of Propel Health, an innovative collaborative established to accelerate the move toward value-based care. Legacy Health also recently announced a partnership with PacificSource Health Plans.
Moda is current on the surplus note and has made all payments on time. OHSU expects to be repaid in full when the $50 million note matures.