Chapter 735 Oregon Laws 2003

AN ACT

HB 2511

Relating to Department of Human Services; creating new provisions; amending ORS 414.705, 414.720, 414.725 and 414.839 and section 3, chapter 683, Oregon Laws 2003 (Enrolled House Bill 2160); repealing ORS 414.821, 414.823, 414.827, 414.829, 414.833, 414.834, 414.835 and 414.837; and declaring an emergency.

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

SECTION 1. ORS 414.705 is amended to read:

414.705. (1) As used in ORS 414.705 to 414.750, “health services” means at least so much of each of the following as are approved and funded by the Legislative Assembly:

[(1) Provider services and supplies;]

[(2) Outpatient services;]

[(3) Inpatient hospital services; and]

[(4) Health promotion and disease prevention services.]

(a) Services required by federal law to be included in the state’s medical assistance program in order for the program to qualify for federal funds;

(b) Services provided by a physician as defined in ORS 677.010, a nurse practitioner certified under ORS 678.375 or other licensed practitioner within the scope of the practitioner’s practice as defined by state law, and ambulance services;

(c) Prescription drugs;

(d) Laboratory and X-ray services;

(e) Medical supplies;

(f) Mental health services;

(g) Chemical dependency services;

(h) Emergency dental services;

(i) Nonemergency dental services;

(j) Provider services, other than services described in paragraphs (a) to (i), (k), (L) and (m) of this subsection, defined by federal law that may be included in the state’s medical assistance program;

(k) Emergency hospital services;

(L) Outpatient hospital services; and

(m) Inpatient hospital services.

(2) Health services approved and funded under subsection (1) of this section are subject to the prioritized list of health services required in ORS 414.720.

SECTION 2. Sections 3, 4, 4a and 11 of this 2003 Act are added to and made a part of ORS 414.705 to 414.750.

SECTION 3. The Legislative Assembly shall approve and fund health services to the following persons:

(1) Persons who are categorically needy as described in ORS 414.025 (2)(n) and (o);

(2) Pregnant women with incomes no more than 185 percent of the federal poverty guidelines;

(3) Persons under 19 years of age with incomes no more than 200 percent of the federal poverty guidelines;

(4) Persons described in section 11 of this 2003 Act; and

(5) Persons 19 years of age or older with incomes no more than 100 percent of the federal poverty guidelines who do not have federal Medicare coverage.

SECTION 4. (1) Subject to funds available:

(a) Persons who are categorically needy as described in ORS 414.025 (2)(n) and (o), and persons under 19 years of age and pregnant women who are eligible to receive health services under section 3 of this 2003 Act, are eligible to receive all the health services approved and funded by the Legislative Assembly.

(b) Persons described in section 11 of this 2003 Act are eligible to receive the health services described in ORS 414.705 (1)(c), (f) and (g).

(c) Persons 19 years of age and older who are eligible to receive health services under section 3 of this 2003 Act are eligible to receive the health services described in ORS 414.705 (1)(b) to (m).

(2) Persons who are categorically needy as described in ORS 414.025 (2)(n) and (o), and persons under 19 years of age and pregnant women who are eligible to receive health services under section 3 of this 2003 Act, must be provided, at a minimum, the health services described in ORS 414.705 (1)(a) to (g).

(3) Persons 19 years of age and older who are eligible to receive health services under section 3 of this 2003 Act must be provided, at a minimum, health services described in ORS 414.705 (1)(b) to (h).

(4) Persons described in section 11 of this 2003 Act must be provided, at a minimum, the health services described in ORS 414.705 (1)(c).

(5) The Department of Human Services shall:

(a) Develop at least three benefit packages of provider services to be offered under ORS 414.705 (1)(j); and

(b) Define by rule the services to be offered under ORS 414.705 (1)(k).

(6) Notwithstanding ORS 414.735, the Legislative Assembly shall adjust health services funded under ORS 414.705 (1) by increasing or reducing benefit packages or health services and, subject to section 4a of this 2003 Act, by increasing or reducing the population of eligible persons.

SECTION 4a. (1) Except as provided in subsection (2) of this section, if insufficient resources are available during a biennium, the population of eligible persons receiving health services may not be reduced below the population of eligible persons approved and funded in the legislatively adopted budget for the Department of Human Services for the biennium.

(2) The Department of Human Services may periodically limit enrollment of persons described in section 11 of this 2003 Act in order to stay within the legislatively adopted budget for the department.

SECTION 4b. If House Bill 2152 does not become law, section 4a of this 2003 Act is amended to read:

Sec. 4a. (1) [Except as provided in subsection (2) of this section,] If insufficient resources are available during a biennium, the population of eligible persons receiving health services may [not] be reduced below the population of eligible persons approved and funded in the legislatively adopted budget for the Department of Human Services for the biennium.

(2) The Department of Human Services may periodically limit enrollment of persons described in section 11 of this 2003 Act in order to stay within the legislatively adopted budget for the department.

SECTION 5. ORS 414.821, 414.823, 414.827, 414.829, 414.833, 414.834, 414.835 and 414.837 are repealed.

SECTION 6. (1) Except as provided in section 7 of this 2003 Act, sections 3, 4 and 11 of this 2003 Act and the amendments to ORS 414.705 by section 1 of this 2003 Act become operative the day after the date the Department of Human Services is notified by the Centers for Medicare and Medicaid Services that the request by the department to amend the necessary waivers has been approved.

(2) The Director of Human Services shall notify the Legislative Counsel upon receipt of the approval or disapproval of the request to amend the necessary waivers.

SECTION 7. The Director of Human Services may take any action before the operative date of sections 3, 4 and 11 of this 2003 Act and the amendments to ORS 414.705 by section 1 of this 2003 Act that is necessary to enable the director to exercise, on and after the operative date of sections 3, 4 and 11 of this 2003 Act and the amendments to ORS 414.705 by section 1 this 2003 Act, all the duties, functions and powers conferred on the director by sections 3, 4 and 11 of this 2003 Act and the amendments to ORS 414.705 by section 1 of this 2003 Act.

SECTION 8. For the biennium beginning July 1, 2003, the health services provided to persons currently receiving services under ORS 414.705 to 414.750 shall be the services provided on June 30, 2003, until sections 3, 4 and 11 of this 2003 Act and the amendments to ORS 414.705 by section 1 of this 2003 Act become operative.

SECTION 9. ORS 414.839, as amended by section 7, chapter 684, Oregon Laws 2003 (Enrolled House Bill 2189), is amended to read:

414.839. (1) Subject to funds available, the Department of Human Services may 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 200 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 health benefit plans that meet or exceed the basic benchmark health benefit plan or plans established under section 11, chapter 684, Oregon Laws 2003 (Enrolled House Bill 2189) [of this 2003 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 10. ORS 414.720 is amended to read:

414.720. (1) The Health Services Commission shall conduct public hearings prior to making the report described in subsection (3) of this section. The commission shall solicit testimony and information from advocates [for] representing seniors[;],[handicapped] persons[;] with disabilities, mental health services consumers[;] and low-income Oregonians[;] and providers of health care, including but not limited to physicians licensed to practice medicine, dentists, oral surgeons, chiropractors, naturopaths, hospitals, clinics, pharmacists, nurses and allied health professionals.

(2) The commission shall actively solicit public involvement in a community meeting process to build a consensus on the values to be used to guide health resource allocation decisions.

(3) The commission shall report to the Governor a list of health services[, including health care services of the aged, blind and disabled pursuant to section 14, chapter 753, Oregon Laws 1991, including one list into which those mental health and chemical dependency services recommended pursuant to ORS 414.730 are integrated,] ranked by priority, from the most important to the least important, representing the comparative benefits of each service to the entire population to be served. [The report shall be accompanied by a report of an independent actuary retained for the commission to determine rates necessary to cover the costs of the services. Until federal waiver approval is obtained and funding authorized for the integrated list including mental health and chemical dependency services, the coverage for mental health and chemical dependency services shall not be considered to be mandated.] The list submitted by the commission pursuant to this subsection is not subject to alteration by any other state agency. The recommendation may include practice guidelines reviewed and adopted by the commission pursuant to subsection (4) of this section.

(4) In order to encourage effective and efficient medical evaluation and treatment, the commission may include clinical practice guidelines in its prioritized list of services. The commission shall actively solicit testimony and information from the medical community and the public to build a consensus on clinical practice guidelines developed by the commission.

(5) The commission shall make its report by July 1 of the year preceding each regular session of the Legislative Assembly and shall submit a copy of its report to the Governor, the Speaker of the House of Representatives and the President of the Senate.

(6) The commission may alter the list during interim only under the following conditions:

(a) Technical changes due to errors and omissions; and

(b) Changes due to advancements in medical technology or new data regarding health outcomes.

(7) If a service is deleted or added and no new funding is required, the commission shall report to the Speaker of the House of Representatives and the President of the Senate. However, if a service to be added requires increased funding to avoid discontinuing another service, the commission must report to the Emergency Board to request the funding.

(8) The report listing services to be provided pursuant to ORS 414.036, 414.042, 414.065, 414.107, 414.705 to 414.725 and 414.735 to 414.750 shall remain in effect from October 1 of the odd-numbered year through September 30 of the next odd-numbered year.

SECTION 11. (1) A person is eligible to receive the health services described in section 4 (1)(b) of this 2003 Act when the person is a resident of this state who:

(a) Is 65 years of age or older, is a blind person as defined in ORS 412.005 or is a person who is disabled as defined in ORS 412.510;

(b) Has a gross annual income that does not exceed the standard established by the Department of Human Services; and

(c) Is not covered under any public or private prescription drug benefit program.

(2) A person receiving prescription drug services under section 4 (1)(b) of this 2003 Act shall pay up to a percentage of the Medicaid price of the prescription drug established by the department by rule and the dispensing fee.

SECTION 12. If House Bill 2160 becomes law, section 3, chapter 683, Oregon Laws 2003 (Enrolled House Bill 2160), is amended to read:

Sec. 3. (1) The Family Health Insurance Assistance Program shall provide coverage of age-appropriate immunizations or other health care services when an eligible individual is enrolled in a health benefit plan that does not provide coverage of age-appropriate immunizations or other health care services required by the [waiver program described in ORS 414.829] state medical assistance program and the eligible individual is receiving a subsidy described in ORS 414.839.

(2) The Insurance Pool Governing Board shall adopt rules implementing subsection (1) of this section.

SECTION 13. ORS 414.725 is amended to read:

414.725. [Upon meeting the requirements of section 9, chapter 836, Oregon Laws 1989:]

(1) Pursuant to rules adopted by the Department of Human Services, the department shall execute prepaid managed care health services contracts for [the] health services [funded pursuant to section 9, chapter 836, Oregon Laws 1989] funded by the Legislative Assembly. The contract must require that all services are provided to the extent and scope of the Health Services Commission’s report for each service provided under the contract. Such contracts are not subject to ORS 279.011 to 279.063. It is the intent of ORS 414.705 to 414.750 that the state move toward utilizing full service managed care health service providers for providing health services under ORS 414.705 to 414.750. The department shall solicit qualified providers or plans to be reimbursed [at rates which cover the costs of providing] for providing the covered services. Such contracts may be with hospitals and medical organizations, health maintenance organizations, managed health care plans and any other qualified public or private entities. The department [shall] may not discriminate against any contractors which offer services within their providers’ lawful scopes of practice.

(2) In the event that there is an insufficient number of qualified entities to provide for prepaid managed health services contracts in certain areas of the state, the department may institute a fee-for-service case management system where possible or may continue a fee-for-service payment system for those areas that pay for the same services provided under the health services contracts for persons eligible for health services under ORS 414.705 to 414.750. In addition, the department may make other special arrangements as necessary to increase the interest of providers in participation in the state’s managed care system, including but not limited to the provision of stop-loss insurance for providers wishing to limit the amount of risk they wish to underwrite.

(3) As provided in subsections (1) and (2) of this section, the aggregate expenditures by the department for health services provided pursuant to ORS 414.705 to 414.750 [shall] may not exceed the total dollars appropriated for health services under ORS 414.705 to 414.750.

(4) Actions taken by providers, potential providers, contractors and bidders in specific accordance with ORS 414.705 to 414.750 in forming consortiums or in otherwise entering into contracts to provide health care services shall be performed pursuant to state supervision and shall be considered to be conducted at the direction of this state, shall be considered to be lawful trade practices and [shall] may not be considered to be the transaction of insurance for purposes of the Insurance Code.

(5) Health care providers contracting to provide services under ORS 414.705 to 414.750 shall advise a patient of any service, treatment or test that is medically necessary but not covered under the contract if an ordinarily careful practitioner in the same or similar community would do so under the same or similar circumstances.

SECTION 14. The amendments to ORS 414.725 by section 13 of this 2003 Act apply to prepaid managed care health services contracts entered into on or after the effective date of this 2003 Act.

SECTION 15. Section 16 of this 2003 Act is added to and made a part of ORS 414.705 to 414.750.

SECTION 16. (1) As used in this section, “fully capitated health plan” means an organization that contracts with the Department of Human Services on a prepaid capitated basis under ORS 414.725 to provide an adequate network of providers to ensure that all health services described in ORS 414.705 are reasonably accessible to enrollees.

(2) A fully capitated health plan that does not have a contract with a hospital to provide inpatient or outpatient hospital services under ORS 414.705 to 414.750 must pay for hospital services as follows:

(a) For inpatient hospital services, based on the capitation rates developed for the budget period, at the level of the statewide average unit cost, multiplied by the geographic factor, the payment discount factor and an adjustment factor of 0.925.

(b) For outpatient hospital services, based on the capitation rates developed for the budget period, at the level of charges multiplied by the statewide average cost-to-charge ratio, the geographic factor, the payment discount factor and an adjustment factor of 0.925.

(3) A hospital that does not have a contract with a fully capitated health plan to provide inpatient or outpatient hospital services under ORS 414.705 to 414.750 must accept payment for hospital services as follows:

(4) This section does not apply to type A and type B hospitals, as described in ORS 442.470, and rural critical access hospitals, as defined in ORS 316.143.

(5) The Department of Human Services shall adopt rules to implement and administer this section.

SECTION 17. This 2003 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2003 Act takes effect on its passage.

Approved by the Governor August 29, 2003

Filed in the office of Secretary of State September 2, 2003

Effective date August 29, 2003

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