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County will get health contract Jackson County has settled a lawsuit against the state over a plan to bid mental health services to HMOs. The Board of Commissioners dropped the lawsuit Wednesday after a governor's task force recommended the state award the entire contract -- through the Oregon Health Plan -- to the county. The state also agreed not to rebid for two years. The county sued in November 1997 after the state added mental health services to its coverage under the health plan and invited HMOs to compete for contracts. The health plan covers about 350,000 low-income Oregonians, including about 17,000 residents of Jackson County. Medicaid underwrites the plan. The county alleged the state violated its own rules in selecting bids and, as a result, wrongly awarded a chunk of the county's mental health contract to two HMOs. Josephine County also sued. According to state officials, the goal was to offer a wider choice of providers through innovative "public/private partnerships" and expand the kinds of treatment available to Oregonians. But county officials argued that giving HMOs the money to administer programs and subcontract the work added an unnecessary layer of red tape, leaving less money for clients. The dispute was settled by a special task force appointed by Kitzhaber to study the financial effect of HMOs on community mental health programs. Of the 17,000 county residents eligible for benefits under the Oregon Health Plan, about 3 percent seek mental health services. Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA