Chapter 898 Oregon Laws 2001

AN ACT

HB 2519

Relating to the Oregon Health Plan; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Preamble. It is the primary goal of sections 1 to 11 of this 2001 Act to increase access by Oregon’s low-income, uninsured children and families to affordable health care coverage.

SECTION 2. Findings. The Legislative Assembly finds that:

(1) The Oregon Health Plan has provided access to health care services to over one million Oregonians who would otherwise not have been able to afford health care services.

(2) The Oregon Health Plan has improved health outcomes by expanding access to timely preventive services and primary health care services.

(3) In spite of the Oregon Health Plan’s important achievements, thousands of Oregonians still do not have health insurance coverage, often seeking health care services through the emergency department late in the course of their illness when costs are higher and outcomes are less favorable.

(4) The costs incurred by the health care delivery system by providing health care services through emergency departments are shifted to patients with health insurance coverage, driving up the costs of health care services and health insurance for all Oregonians.

(5) The lack of flexibility in current federal Medicaid policy forces the state into “one-size-fits-all” benefit packages and “all-or-nothing” coverage decisions, preventing the state from using federal resources to develop a system of subsidies for public and private insurance coverage based on the relative medical need and financial vulnerability of those being served.

(6) The lack of adequate reimbursement rates creates unwanted cost-shifting and barriers to health care providers at all levels in providing health care services to enrollees of the Oregon Health Plan.

(7) The current trends in increases in health care costs create concern for:

(a) The future sustainability of the Oregon Health Plan and the private insurance market;

(b) The State of Oregon in administering benefit plans for its employees;

(c) Individuals unable to pay for all or part of the costs of their health care;

(d) Employers providing health care coverage for their workers and their dependents;

(e) Health care providers providing services; and

(f) Insurers and other organizations providing health care coverage.

(8) Complex factors affect the balance between public and private health care programs and need to be better understood in order to establish policies that result in necessary access to health care. These factors include, but are not limited to:

(a) Whether the current structure of Medicare, Medicaid and the private insurance market is cost-sustainable;

(b) The reasons behind general health care cost trends;

(c) Appropriate reimbursement methods that reduce cost-shifting and optimize access to providers and plan choices;

(d) Whether public programs for low-income Oregonians that ensure adequate coverage are cost-effective and provide a realistic transition to private coverage; and

(e) Whether private coverage that is affordable offers sufficient benefit choices and is based on a market-based system.

(9) Employer-sponsored health coverage:

(a) Provides coverage for a majority of all Oregonians; and

(b) Must be supported by public policies that remove barriers to obtaining private health insurance coverage.

SECTION 3. Policy. It is the policy of the State of Oregon that:

(1) The state, in partnership with the private sector, move toward providing affordable access to basic health care services for Oregon’s low-income, uninsured children and families;

(2) Subject to funds available, the state provide subsidies to low-income Oregonians, using federal and state resources, to make health care services affordable to Oregon’s low-income, uninsured children and families and that those subsidies should encourage the shared responsibility of employers and individuals in a public-private partnership;

(3) The respective roles and responsibilities of government, employers, providers, individuals and the health care delivery system be clearly defined;

(4) All public subsidies be clearly defined and based on an individual’s ability to pay, not exceeding the cost of purchasing a basic package of health care services, except for those individuals with the greatest medical needs; and

(5) The health care delivery system encourage the use of evidence-based health care services, including appropriate education, early intervention and prevention, and procedures that are effective and appropriate in producing good health.

SECTION 4. Increased Access for Uninsured Individuals. In order to carry out the policy established in section 3 of this 2001 Act, subject to funds available, the State of Oregon shall increase access to basic health care services provided through Medicaid, the Children’s Health Insurance Program or private insurance for uninsured Oregonians with an income of up to 185 percent of the federal poverty guidelines.

SECTION 5. Waiver for Private Insurance Coverage. (1)(a) In order to make progress toward the goal set forth in section 1 of this 2001 Act, the Department of Human Services shall apply to the Centers for Medicare and Medicaid Services for waivers to obtain federal matching dollars for public subsidies for low-income, working Oregonians for the purpose of making private health insurance more accessible and affordable.

(b) Prior to the submission of the waiver application, the department shall comply with ORS 291.375 (1) and (2).

(2) The waiver application shall provide for the establishment of a basic benchmark health benefit plan or plans, or approved equivalent, for subsidized employer-sponsored coverage that is comparable to coverage common in the small employer health insurance market. Consideration shall be given to the appropriate inclusion of preventive services for children and innovative means of ensuring access to such coverage. Options in the development of the benchmark health benefit plan may include, but are not limited to, provision of supplemental coverage for preventive services.

(3) The Insurance Pool Governing Board, in consultation with the Health Insurance Reform Advisory Committee, shall identify and recommend to the Waiver Application Steering Committee created under section 13 of this 2001 Act and the Leadership Commission on Health Care Costs and Trends created under section 14 of this 2001 Act a basic benchmark health benefit plan or plans that qualify for a subsidy under the waiver program, taking into account employer-sponsored health benefit plans currently in the market.

(4) The waiver application shall be based on a consideration of various models to maximize subsidies for employer-sponsored coverage with special attention given to creative means of increasing dependent coverage under the employer-sponsored health benefit plans.

(5) The waiver application shall ensure that:

(a) Coverage under the proposed program does not reduce employer-sponsored coverage presently available; and

(b) The risk distribution of the current population covered by the state’s Medicaid program is not adversely affected.

(6) The waiver application shall strive to minimize administrative complexities for enrollees, employers, providers, health insurance plans and public agencies that participate in the proposed program.

(7) Prior to its submission for legislative review under subsection (1) of this section, the department shall submit the waiver application to the Leadership Commission on Health Care Costs and Trends for review.

SECTION 5a. Family Health Insurance Assistance Program. Upon receipt of the waiver, the Insurance Pool Governing Board shall focus on expanding group coverage provided by the Family Health Insurance Assistance Program, with the goal of having available funds equally distributed between providing group coverage and individual coverage.

SECTION 6. Levels of Coverage for Medicaid. In the Medicaid portion of the Oregon Health Plan, the state shall provide levels of benefit packages of health care services as described in sections 7 and 8 of this 2001 Act. One level shall provide a basic benefit package of health care services and be called “OHP Standard.” The second level shall provide a benefit package of health care services for persons with greater medical needs and be called “OHP Plus.”

SECTION 7. Basic Benefit Package. (1) The Health Services Commission, in consultation with the legislative committees with oversight of health care issues, shall develop a basic benefit package of health care services for the Medicaid portion of the Oregon Health Plan, the cost of which shall be actuarially equivalent to the minimum level of care mandated by the current federal Medicaid law.

(2)(a) In addition to the basic benefit package of health care services developed under subsection (1) of this section, the commission shall develop and rank in priority order additional benefit packages of health care services that may be provided to the extent the Legislative Assembly has provided funds for additional benefit packages.

(b) When developing the benefit packages of health care services to be provided, the commission shall consider that those benefit packages of health care services may be provided through managed care organizations with contracts to provide services to enrollees of the Oregon Health Plan as well as commercial carriers.

(3) The commission shall obtain from an independent actuary the costs of providing the benefit packages of health care services identified in subsections (1) and (2) of this section.

(4) The commission shall recommend whether Oregonians receiving subsidies for OHP Standard be required to pay premiums and copayments based on the individual’s ability to pay and how to structure the copayments and premiums in a manner that encourages the use of preventive services.

(5) The commission shall submit its report on benefit packages for health care services by July 1 of the year preceding each regular session of the Legislative Assembly to the Governor, the Speaker of the House of Representatives and the President of the Senate.

SECTION 8. Prioritized List. The Health Services Commission shall continue to develop and report to the Legislative Assembly the prioritized list of health care services required in ORS 414.720. The list shall be used to establish the OHP Plus benefit package of health care services to be provided to Oregonians who are categorically eligible for medical assistance as defined by rule by the Department of Human Services and persons receiving general assistance as defined in ORS 411.010.

SECTION 9. Written Report of Costs. (1) For the biennium beginning July 1, 2001, and no later than November 1, 2001, the Health Services Commission shall prepare and give to the interim legislative committee with oversight of health care issues, the chairpersons of the Emergency Board and the Waiver Application Steering Committee created under section 13 of this 2001 Act a written report of the costs developed by the actuary under section 7 of this 2001 Act of a basic benefit package of health care services and the additional benefit packages of health care services in priority order.

(2) The Waiver Application Steering Committee shall recommend the level of benefits to be included in the waiver application for the OHP Standard benefit package.

SECTION 10. Funding by Legislative Assembly. (1) The Legislative Assembly shall determine the health care services provided under the Medicaid portion of Oregon Health Plan by funding:

(a) OHP Standard, which shall be the combination of the basic benefit package of health care services developed in section 7 (1) of this 2001 Act and any additional benefit packages, added in priority order, from the packages developed under section 7 (2) of this 2001 Act.

(b) OHP Plus, which shall be the benefit package developed in section 8 of this 2001 Act.

(2) The cost of the benefit package of health care services provided under OHP Standard may not exceed the cost of the benefit package of health care services provided under OHP Plus.

SECTION 11. Subsidies for Health Insurance Coverage. (1) Subject to funds available, the waiver program described by section 5 of this 2001 Act shall provide public subsidies for the purchase of health insurance coverage provided by public programs or private insurance, including but not limited to the Family Health Insurance Assistance Program, for currently uninsured individuals based on incomes up to 185 percent of the federal poverty level. The objective is to create a transition from dependence on public programs to privately financed health insurance.

(2) Public subsidies shall apply only to the cost of the basic benchmark health benefit plan or the approved equivalent established in section 5 of this 2001 Act.

(3) Cost-sharing shall be permitted and structured in such a manner to encourage appropriate use of preventive care and avoidance of unnecessary services.

(4) Cost-sharing shall be based on an individual’s ability to pay and may not exceed the cost of purchasing a plan approved as provided under subsection (2) of this section.

(5) The state may pay a portion of the cost of the subsidy, based on the individual’s income and other resources.

SECTION 12. Rates. (1) The Department of Human Services shall recommend to the Seventy-second Legislative Assembly an alternative method of determining the capitation rate paid to fully capitated health plans, mental health organizations, dental organizations and other managed care entities providing services to enrollees of the Oregon Health Plan.

(2) Rates recommended under subsection (3) of this section shall:

(a) Be sufficient to provide appropriate access to services covered by the Oregon Health Plan; and

(b) Ensure that the current health care delivery system of fully capitated health plans, mental health organizations and dental care organizations used to deliver health care services to enrollees of the Oregon Health Plan is maintained and enhanced as needed to provide appropriate access to covered health care services for all enrollees of the Oregon Health Plan.

(3) The recommendation regarding the capitation rate shall:

(a) Provide for the rate to be constructed in a manner that allows providers, patients and policymakers to easily understand how the rate is developed and the components that are used to develop the rate;

(b) Use nationally recognized comparators for constructing the rate including but not limited to:

(A) The Medicare Resource Based Relative Value conversion factor for physician services;

(B) The Medicare hospital reimbursement principles; and

(C) Medical inflation rates used by the Centers for Medicare and Medicaid Services;

(c) Seek to equitably reimburse the different providers at rates necessary to provide appropriate access to services covered by the Oregon Health Plan; and

(d) Consider reasonable estimates of health care service utilization based on an actuarially appropriate model for projecting such utilization.

SECTION 13. Waiver Application Steering Committee. (1) The Department of Human Services shall establish a Waiver Application Steering Committee to assist and advise the department in the preparation of the application for federal waivers from the Centers for Medicare and Medicaid Services necessary to carry out sections 1 to 11 of this 2001 Act. The committee shall ensure that the concerns and views of Oregonians interested in the Oregon Health Plan are fully considered in the preparation of the waiver application.

(2) The committee shall consist of, but not be limited to, the following:

(a) Two members of the House of Representatives appointed by the Speaker of the House of Representatives, one of whom shall be a member of the Emergency Board;

(b) Two members of the Senate appointed by the President of the Senate, one of whom shall be a member of the Emergency Board;

(c) A representative of a statewide association representing hospitals and health systems;

(d) A representative of a statewide association representing physicians licensed under ORS chapter 677 to practice medicine in this state;

(e) A representative of community-based health plans with contracts to provide health care services under the Oregon Health Plan;

(f) A representative of dental care organizations with contracts to provide health care services under the Oregon Health Plan;

(g) A representative of commercial carriers;

(h) A representative of safety net clinics;

(i) Advocates for health care consumers and persons without health insurance;

(j) Advocates for persons with mental illness;

(k) One representative each of small and large businesses;

(L) A representative of insurance agents; and

(m) A representative of organized labor.

(3)(a) When preparing the waiver application, the Department of Human Services and the Waiver Application Steering Committee shall carefully consider the connection between the coverage provided through the state Medicaid program and coverage provided through private insurance.

(b) The waiver application shall set forth the circumstances under which persons covered under the waivers may use coverage provided through the state Medicaid program and when they may use coverage provided by private insurance. These circumstances shall ensure that the viability of the community-based health plans currently with contracts to provide health care services under the Oregon Health Plan will be maintained.

(c) The department and the committee shall consider the following factors when setting forth the circumstances described in paragraph (b) of this subsection:

(A) Personal choice;

(B) The ability of a family to obtain employer-sponsored group coverage;

(C) The cost to a family to obtain employer-sponsored group coverage;

(D) The cost to the department to obtain or supplement employer-sponsored group coverage for a person and the person’s family; and

(E) The medical needs of the person and the person’s family.

SECTION 14. Leadership Commission on Health Care Costs and Trends. (1) In order to provide a sound basis for future consideration of strategies to improve access to an adequate level of high quality health care at an affordable cost for all Oregonians, the Leadership Commission on Health Care Costs and Trends is created, consisting of eight members. The commission shall consist of:

(a) The President of the Senate or a member of the Senate designated by the President;

(b) The Speaker of the House of Representatives or a member of the House of Representatives designated by the Speaker;

(c) Two members of the Senate appointed by the President of the Senate, one of whom shall be a member of the Emergency Board;

(d) Two members of the House of Representatives appointed by the Speaker of the House of Representatives, one of whom shall be a member of the Emergency Board; and

(e) One member each appointed by the minority leadership of the Senate and the House of Representatives.

(2) The commission shall develop an Oregon Health Care Cost Index. The index shall categorize health care cost components and health care trends to inform future policymakers about potential implications of trends in health care programs provided by public and private programs.

(3) The commission shall review the health care cost trends that are reducing the affordability and availability of private coverage and thereby increasing dependence on publicly funded health care services.

(4) The commission shall monitor developments of possible federal health benefit tax credit programs and determine ways to maximize opportunities to expand health insurance coverage through a state income tax credit.

(5) The commission may contract with a private entity to develop the index.

(6) The commission shall recommend to the Seventy-second Legislative Assembly methods to:

(a) Update and distribute the index annually; and

(b) Report to policymakers and the public on potential implications for health care coverage available in Oregon.

(7) Except as provided in this section, the commission is subject to the provisions of ORS 171.605 to 171.635 and has the authority contained in ORS 171.505 and 171.510.

(8) The President of the Senate and the Speaker of the House of Representatives shall develop a work plan for the commission. The work plan shall be filed with the Legislative Administrator.

(9) The Legislative Administrator, in cooperation with the President of the Senate and the Speaker of the House of Representatives, shall provide staff necessary to the performance of the functions of the commission.

(10) Members of the Legislative Assembly who serve on the commission shall be entitled to an allowance as authorized by ORS 171.072. Claims for expenses incurred in performing functions of the commission shall be paid out of funds appropriated for that purpose.

(11) Subject to approval of the Emergency Board, the commission may accept contributions of funds and assistance from the United States Government or its agencies, or from any other source, public or private, and agree to conditions thereon not inconsistent with the purposes of the commission. All such funds are to aid in financing the functions of the commission and shall be deposited in the General Fund of the State Treasury to the credit of separate accounts for the commission and shall be disbursed for the purpose for which contributed in the same manner as funds appropriated for the commission.

(12) Official action taken by the commission shall require the approval of the majority of the members of the commission. All legislation recommended by official action of the commission must indicate that it is introduced at the request of the commission. Such legislation shall be prepared in time for presession filing pursuant to ORS 171.130.

SECTION 15. Benefit Packages for 2001-2003 Biennium. For the 2001-2003 biennium, the benefit package of health care services provided to individuals currently receiving services under the Oregon Health Plan shall be the benefit package funded by the Seventy-first Legislative Assembly until sections 6 and 11 of this 2001 Act become operative.

SECTION 16. Operative Date. (1) Sections 6, 10 and 11 of this 2001 Act become operative the day after the date of receipt by the Department of Human Services of the necessary waivers from the Centers for Medicare and Medicaid Services.

(2) The Director of Human Services shall notify the President of the Senate, the Speaker of the House of Representatives and the Legislative Counsel upon receipt of the waivers or denial of the waiver request.

SECTION 17. Effective Date. This 2001 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2001 Act takes effect on its passage.

Approved by the Governor August 2, 2001

Filed in the office of Secretary of State August 3, 2001

Effective date August 2, 2001

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