PORTLAND — Oregon’s second largest Medicaid carrier will shut down after the company and state failed to agree on a contract for next year.

FamilyCare President and CEO Jeff Heatherington said he met with Gov. Kate Brown on Wednesday afternoon and declined the state’s offer because the rates were too low.

A spokeswoman for the governor declined to describe the conversation but wrote in an email that Brown found reports that Medicaid members in FamilyCare’s network already were being denied services unacceptable.

FamilyCare and the state have a long-running dispute over reimbursement rates. FamilyCare contends the rates are too low and would force the company into bankruptcy next year.

The state now must transfer the approximately 113,000 children and adults in the Portland area currently under the provider to other Medicaid administrators.

The situation does not affect patients’ eligibility for Medicaid, and those currently undergoing treatment can continue to see the same health care providers for at least 90 days, said Patrick Allen, director of the Oregon Health Authority.

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Oregon’s second-largest Medicaid carrier will close