72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
HA to HB 3624
LC 3547/HB 3624-4
HOUSE AMENDMENTS TO
HOUSE BILL 3624
By COMMITTEE ON AUDIT AND HUMAN SERVICES BUDGET REFORM
May 14
On page 1 of the printed bill, line 3, after 'ORS' delete the
rest of the line and insert '414.705, 414.720 and 414.725; and
declaring an emergency.'.
Delete lines 5 through 31 and delete pages 2 through 6 and
insert:
' { + SECTION 1. + } { + Sections 2, 3, 5, 5a, 6, 9, 10, 11,
12 and 13 of this 2003 Act are added to and made a part of ORS
414.705 to 414.750. + }
' { + SECTION 2. + } { + As used in sections 3, 5, 5a, 9,
10, 11, 12 and 13 of this 2003 Act and ORS 414.725:
' (1) 'Able to serve additional enrollees' means a prepaid
managed care health services organization that is able to assign
an enrollee to a person or entity that is primarily responsible
for coordinating the physical health, dental, mental health or
chemical dependency services provided to the enrollee.
' (2) 'Designated area' means a geographic area of the state
defined by the Department of Human Services by rule that is
served by a prepaid managed care health services organization.
' (3) '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 the health services
described in ORS 414.705.
' (4) 'Physician care organization' means an organization that
contracts with the Department of Human Services on a prepaid
capitated basis under ORS 414.725 to provide the health services
described in ORS 414.705 (1), (4) and (5). A physician care
organization may also contract with the department on a prepaid
capitated basis to provide the health services described in ORS
414.705 (2).
' (5) 'Prepaid managed care health services organization '
means a managed health, dental, mental health or chemical
dependency organization that contracts with the Department of
Human Services on a prepaid capitated basis under ORS 414.725. A
prepaid managed care health services organization may be a dental
care organization, fully capitated health plan, physician care
organization, mental health organization or chemical dependency
organization. + }
' { + SECTION 3. + } { + (1) Except as provided in
subsections (2) and (3) of this section, a person who is eligible
for or receiving physical health, dental, mental health or
chemical dependency services under ORS 414.705 to 414.750 must be
enrolled in the prepaid managed care health services
organizations to receive the health services for which the person
is eligible.
' (2) Subsection (1) of this section does not apply to:
' (a) A person who is a noncitizen and who is eligible only for
labor and delivery services and emergency treatment services;
' (b) A person who is an American Indian and who is a member of
a federally recognized tribe; and
' (c) A person whom the department may by rule exempt from the
mandatory enrollment requirement of subsection (1) of this
section, including but not limited to:
' (A) A person who is also eligible for Medicare;
' (B) A woman in her third trimester of pregnancy at the time
of enrollment;
' (C) A person under 19 years of age who has been placed in
adoptive or foster care out of state;
' (D) A person under 18 years of age who is medically fragile
and who has special health care needs; and
' (E) A person with major medical coverage.
' (3) Subsection (1) of this section does not apply to a person
who resides in a designated area in which a prepaid managed care
health services organization providing physical health, dental,
mental health or chemical dependency services is not able to
serve additional enrollees. + }
' { + SECTION 4. + } ORS 414.725 is amended to read:
' 414.725. { - Upon meeting the requirements of section 9,
chapter 836, Oregon Laws 1989: - }
' (1) { + (a) + } 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.
' { + (b) + } 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 - } { + use, to
the greatest extent possible, prepaid managed care health
services organizations to provide physical health, dental, mental
health and chemical dependency + } services under ORS 414.705 to
414.750.
' { + (c) + } 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 - } { + The + } contracts may be with
hospitals and medical organizations, health maintenance
organizations, managed health care plans and any other qualified
public or private { - entities - } { + prepaid managed care
health services organization + }. The department { - shall - }
{ + may + } not discriminate against any contractors
{ - which - } { + that + } 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 { + physical health, dental, mental health or
chemical dependency + } services provided under the health
services contracts for persons eligible for health services under
ORS 414.705 to 414.750 { + in designated areas of the state in
which a prepaid managed care health services organization is not
able to serve additional enrollees + }. 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 5. + } { + (1) If the Department of Human
Services has not been able to contract with the fully capitated
health plan or plans in a designated area, the department may
contract with a physician care organization in the designated
area.
' (2) The Office for Oregon Health Policy and Research shall
develop criteria that the department must use to determine the
circumstances under which the department may contract with a
physician care organization. The criteria developed by the office
shall include but not be limited to the following:
' (a) The physician care organization must be able to assign an
enrollee to a person or entity that is primarily responsible for
coordinating the physical health services provided to the
enrollee;
' (b) The contract with a physician care organization does not
threaten the financial viability of other fully capitated health
plans in the designated area; and
' (c) The contract with a physician care organization must be
consistent with the legislative intent of using prepaid managed
care health services organizations to provides services under ORS
414.705 to 414.750. + }
' { + SECTION 5a. + } { + (1) A fully capitated health plan
may apply to the Department of Human Services to contract with
the department as a physician care organization rather than as a
fully capitated health plan to provide services under ORS 414.705
to 414.750.
' (2) The Office for Oregon Health Policy and Research shall
develop the criteria that the department must use to determine
the circumstances under which the department may accept an
application by a fully capitated health plan to contract as a
physician care organization. The criteria developed by the office
shall include but not be limited to the following:
' (a) The fully capitated health plan must show documented
losses due to hospital risk and due diligence in managing those
risks; and
' (b) Contracting as a physician care organization is
financially viable for the fully capitated health plan. + }
' { + SECTION 6. + } { + Notwithstanding section 5 (1) of
this 2003 Act, the Department of Human Services shall contract
under ORS 414.725 with a prepaid group practice health plan that
serves at least 200,000 members in this state and that has been
issued a certificate of authority by the Department of Consumer
and Business Services as a health care service contractor to
provide health services as described in ORS 414.705 (1), (2), (4)
and (5). The Department of Human Services may accept financial
contributions from any public or private entity to help implement
and administer the contract. The Department of Human Services
shall seek federal matching funds for any financial contributions
received under this section. + }
' { + SECTION 7. + } ORS 414.705 is amended to read:
' 414.705. 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) Prescription drugs; and + }
' { - (4) - } { + (5) + } Health promotion and disease
prevention services.
' { + SECTION 8. + } 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 { - ; - } { + ,
representatives of commercial carriers, representatives of small
and large Oregon employers + } 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 { + :
' (a) + } 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.
' { + (b) Shall consider both the clinical effectiveness and
cost effectiveness of health services in determining their
relative importance using peer-reviewed medical literature as
defined in ORS 743.695. + }
' (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 9. + } { + (1) The Health Services Commission
shall retain an actuary to determine the benchmark for setting
per capita rates necessary to reimburse prepaid managed care
health services organizations and fee-for-service providers for
the cost of providing health services under ORS 414.705 to
414.750.
' (2) The actuary retained by the commission shall use the
following information to determine the benchmark for setting per
capita rates:
' (a) For hospital services, the most recently available
Medicare cost reports for Oregon hospitals;
' (b) For services of physicians licensed under ORS chapter 677
and other health professionals using procedure codes, the
Medicare Resource Based Relative Value system conversion rates
for Oregon;
' (c) For prescription drugs, the most recent payment
methodologies in the fee-for-service payment system for the
Oregon Health Plan;
' (d) For durable medical equipment and supplies, 80 percent of
the Medicare allowable charge for purchases and rentals;
' (e) For dental services, the most recent payment rates
obtained from dental care organization encounter data; and
' (f) For all other services not listed in paragraphs (a) to
(e) of this subsection:
' (A) The Medicare maximum allowable charge, if available; or
' (B) The most recent payment rates obtained from the data
available under subsection (3) of this section.
' (3) The actuary shall use the most current encounter data and
the most current fee-for-service data that is available,
reasonable trends for utilization and cost changes to the
midpoint of the next biennium, appropriate differences in
utilization and cost based on geography, state and federal
mandates and other factors that, in the professional judgment of
the actuary, are relevant to the fair and reasonable estimation
of costs. The Department of Human Services shall provide the
actuary with the data and information in the possession of the
department or contractors of the department reasonably necessary
to develop a benchmark for setting per capita rates.
' (4) The commission shall report the benchmark per capita
rates developed under this section to the Director of the Oregon
Department of Administrative Services, the Director of Human
Services and the Legislative Fiscal Officer no later than August
1 of every even-numbered year.
' (5) The Department of Human Services shall retain an actuary
to determine per capita rates for health services that the
department shall use to develop the department's proposed
biennial budget.
' (6) The Department of Human Services shall submit to the
Legislative Assembly no later than February 1 of every
odd-numbered year a report comparing the per capita rates for
health services on which the proposed budget of the department is
based with the rates developed by the actuary retained by the
Health Services Commission. If the rates differ, the department
shall disclose, by provider categories described in subsection
(2) of this section, the amount of and reason for each
variance. + }
' { + SECTION 10. + } { + (1) Subject to the provisions of
subsections (2) and (3) of this section, the Department of Human
Services shall contract with fully capitated health plans to
provide administrative services as follows for eligible persons
who receive one or more health services as defined in ORS 414.705
on a fee-for-service payment basis:
' (a) Prescription drug management services for all
prescription drugs except antipsychotic drugs;
' (b) Inpatient and outpatient hospital services;
' (c) Utilization of nonemergency medical transportation in
designated areas where transportation brokerage services are not
available; and
' (d) Durable medical equipment and supplies.
' (2) The department shall contract with one or more fully
capitated health plans in a designated area to serve eligible
persons who are receiving health services on a fee-for-service
payment basis. If the department is not able to contract with a
fully capitated health plan in a designated area, the department
may contract with a plan that serves another designated area. If
the department is not able to contract with any plan, the
department may contract with a third party to administer the
services.
' (3) In awarding a contract, the department must ensure that
the contractor has the capacity and competence to administer
services for the additional persons and that the contract is
cost-neutral to the department.
' (4) The department shall adopt rules to implement this
section, including but not limited to defining eligible persons
who are exempt from the provisions of this section. + }
' { + SECTION 10a. + } { + Section 10 of this 2003 Act is
repealed on January 2, 2008. + }
' { + SECTION 11. + } { + The Department of Human Services
shall contract with fully capitated health plans to provide the
health services described in ORS 414.705 (4) except antipsychotic
drugs and establish capitation rates that include payment for
these health services. + }
' { + SECTION 12. + } { + (1) A hospital may not decline to
treat a person who receives health services from a fully
capitated health plan providing health services under ORS 414.705
to 414.750.
' (2) A hospital that does not have a contract to provide
health services under ORS 414.705 to 414.750 must accept the
reimbursement rates established by the Department of Human
Services under section 9 (5) of this 2003 Act as payment in full
for all services provided to eligible persons.
' (3) A fully capitated health plan may contract with a
hospital to provide inpatient or outpatient hospital services at
rates other than those established under section 9 (5) of this
2003 Act + }.
' { + SECTION 13. + } { + (1) The Department of Human
Services shall contract with a pharmacy benefit manager to manage
prescription drug benefits for the medical assistance program.
The pharmacy benefit manager shall purchase prescription drugs in
bulk or reimburse pharmacies for prescription drugs prescribed
for eligible persons in the medical assistance program.
' (2) The pharmacy benefit manager shall establish two programs
for the medical assistance program. One program shall purchase
prescription drugs for or reimburse fully capitated health plans
that use the pharmacy benefit manager under contract with the
department. The second program shall reimburse fee-for-service
pharmacy providers.
' (3) Fully capitated health plans may use the pharmacy benefit
manager under contract with the department under subsection (1)
of this section. + }
' { + SECTION 14. + } { + (1) The Department of Human
Services, in consultation with representatives of fully capitated
health plans, shall:
' (a) Develop a request for proposal for the pharmacy benefit
manager contract described in section 13 of this 2003 Act; and
' (b) Review administrative requirements for fully capitated
health plan contracts and implement changes that would decrease
the costs of administering the contracts. The department shall
report to the Emergency Board and the Joint Legislative Audit
Committee by November 30, 2003, on the department's findings.
' (2) As used in this section, 'fully capitated health plan '
has the meaning given that term in section 2 of this 2003
Act. + }
' { + SECTION 15. + } { + (1) The Department of Human
Services shall negotiate and enter into agreements with
pharmaceutical manufacturers for supplemental rebates that are in
addition to the discount required under federal law to
participate in the medical assistance program.
' (2) The department may participate in a multistate
prescription drug purchasing pool for the purpose of negotiating
supplemental rebates. + }
' { + SECTION 16. + } { + The Department of Human Services
shall seek approval from the federal Centers for Medicare and
Medicaid Services to amend Oregon's Medicaid waiver to adjust the
benefit package of health care services to persons who are
categorically eligible for medical assistance as defined by rule
by the department and persons receiving general assistance as
defined in ORS 411.010 by reducing or restoring the health
services in the order of priority recommended by the Health
Services Commission. + }
' { + SECTION 17. + } { + For each person applying for
health services under ORS 414.705 to 414.750, the Department of
Human Services shall fully document:
' (1) The category of aid as defined in ORS 414.025 that makes
the person eligible for medical assistance or the way in which
the person qualifies as categorically needy as defined in ORS
414.025;
' (2) The status of the person as a resident of the state; and
' (3) The financial income and resources of the person. + }
' { + SECTION 18. + } { + Except as provided in section 19
of this 2003 Act, sections 2, 3, 5, 5a, 10, 11, 12, 13, 14 and 15
of this 2003 Act and the amendments to ORS 414.705 and 414.725 by
sections 4 and 7 of this 2003 Act become operative on October 1,
2003. + }
' { + SECTION 19. + } { + The Director of Human Services may
take any action before the operative date of sections 2, 3, 5,
5a, 10, 11, 12, 13, 14 and 15 of this 2003 Act and the amendments
to ORS 414.705 and 414.725 by sections 4 and 7 of this 2003 Act
that is necessary to enable the director to exercise, on and
after the effective date of this 2003 Act, all the duties,
functions and powers conferred on the director by this 2003
Act. + }
' { + SECTION 20. + } { + 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 July 1, 2003. + } ' .
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