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Oregon Health Authority Budget Slated To Grow By $3 Billion 

Lawmakers have dedicated extra money to cover a demand for Medicaid and there's new money for behavioral health care, an area that's been neglected for years.
June 24, 2021

State lawmakers have crafted a 12% bigger budget for the Oregon Health Authority, with much of the increase driven by the state’s growing Medicaid enrollment, behavioral health needs and spending on racial equity.

For the 2021-2023 budget cycle, the proposed spending plan has far more winners than losers. Coordinated care organizations, which insure Medicaid members, would continue to be eligible for their full inflation-based 3.4% increase. The budget has enough money to cover the increase in demand for Medicaid, which added about 300,000 people during the pandemic. The program provides health care coverage to one in four Oregonians.

The agency’s budget is the biggest spending item in state government: a $29.8 billion juggernaut over the next two years, up from $26.5 billion in the current two-year budget cycle, which ends June 30. Of that, $3.6 billion would come from  the state’s general funds, up from $2.4 billion. Much of the rest comes from the federal government, the main funder of Medicaid.

The funding increase stems from a  variety of sources. For example, additional tobacco tax revenue is providing $414 million for Medicaid because voters passed Ballot Measure 108 in November. The budget also factors in a higher federal matching rate for Medicaid that started last year due to  the pandemic. That accounts for an estimated $240 million during the first three quarters of the budget cycle, which starts in July. 

Besides that, the state’s economic outlook has improved and lawmakers have extra money in the forecast. In May, state economists told lawmakers to expect an extra $1.18 billion in the current budget cycle, which ends June 30 and an extra $1.25 in the state’s next two-year budget cycle. 

The Joint Ways and Means Committee has passed the budget, which still faces a vote on the House and Senate floor before the Legislature adjourns by its deadline of midnight Sunday.

Here’s a look at what the budget proposal does

Medicaid Stays Whole 

For starters, the Medicaid budget for the Oregon Health Plan will not face any cuts. This was a concern for coordinated care organizations earlier in the budget planning cycle. In December, Gov. Kate Brown’s budget proposal had recommended that the state trim the annual increase for coordinated care organizations from 3.4% to 2.9%. That’s no longer the case.

“There's no reduction in eligibility,” said Rep. Rob Nosse, D-Portland and a member of the Joint Ways and Means Committee. “There's no cut in benefits and nobody -- no providers, CCOs or hospitals --  are getting a cut in any of their compensation.”

That means coordinated care organizations would get the full 3.4%. The health authority contracts with 16 CCOs that are assigned to different regions of the state. The budget would add $2 billion in state and matching federal funds to cover the costs of increased caseloads and inflation, said Janell Evans, the authority’s budget director.

Evans said Medicaid membership has continued to grow during the pandemic and will slowly come back down. Membership now stands at 1.31 million.

The increased Medicaid spending comes after a pandemic that has put primary care at the forefront. The Oregon Primary Care Association, which represents 34 federally qualified health centers in the state, has seen that first-hand as centers have scrambled to provide COVID-19 vaccinations to patients in their communities

In Oregon, the health centers serve about one-quarter of the state’s Medicaid population -- more than 466,000 people. They are the state’s largest provider network for Oregon’s Medicaid population.

“OPCA and its membership are pleased to see the Legislature adopt a budget that is reflective of our commitments as a state to meet the growing needs of the Oregon Health Plan population,” said Marty Carty, the group’s government affairs director. “In particular, we are happy to see increased investment in health equity, behavioral health, and public health. Oregon’s health centers have been and continue to be on the front lines of the state's response to the global pandemic.”

Besides the budget, lawmakers are also weighing a bill that would provide Medicaid coverage to adults regardless of their immigration status, adding potentially 55,000 more members to the Oregon Health Plan. That bill would allot $100 million for that coverage initially.

That investment “is a major down payment in moving that direction,” said Holly Heiberg, director of government relations for the authority.

Under the bill, Oregon would submit a waiver to the federal Medicaid program to cover that group. 

Federally qualified health centers cover migrant and international groups, including farm workers in rural Oregon. The primary care group praised that bill, called “Cover All People.”

“OPCA and health centers fully support the additional resources made available because we know that when people have access to health care, they are able to lead healthier lives — leading to their ability to maintain jobs, education, medication adherence, and housing, which all improve outcomes and drive down the total cost of care for the health care delivery system,” Carty said. 

More Than $450 Million For Mental Health

Oregon ranks at or near the bottom in various national studies of access to behavioral health care services. Oregon plans to pump hundreds of millions more into the system in different ways. OHA’S Heiberg said the behavioral health package makes “once in a lifetime shift to make health care work” and provide more accountability. 

The package would put at least $451 million -- and possibly more -- into mental health services and programs.

For now, advocates are reluctant to weigh in on the package: They want it to yield long-term results and that may take years as programs take shape.

One of the biggest items in the package is $130 million to boost housing and residential treatment for people with behavioral health needs. That item would be split equally between state and federal funding. 

The goal would be to increase housing for behavioral health patients across the state. Under the plan, the health authority would award up to $5 million total across the state, to tribes, regional health groups, community mental health organizations and others to study the issue and develop plans. Then, the state would seek proposals and make a recommendation to lawmakers in March 2022. 

Also in the mix: $121 million for certified community behavioral health clinics. These clinics are part of a federal pilot program that combines primary care and behavioral health care. Oregon’s pilot is ongoing, but advocates have faced challenges securing state matching dollars to keep the federal funds flowing. In the 2020 session, a funding bill died along with most legislation during the GOP-led walkout to kill a carbon tax bill.

Of the $121 million, just $24.5 million would come from state funds; the rest would be paid by the federal government. The proposal also would put $50 million into making the fragmented behavioral health system more efficient. For that work, the state would contract with a third-party evaluator to analyze programs, budgets, staffing, and contracts. The evaluator would provide the state with a roadmap for increasing financial transparency and accountability, including for behavioral health needs and outcomes.

Kevin Fitts, executive director of the Oregon Mental Health Consumers Association, said putting more money toward behavioral health needs is just part of the equation. The state needs to reach people who need the services and have measurable outcomes that prove the spending is working, Fitts said.

“The challenge is we’re spending an awful lot of new money but is that new money doing anything new?” Fitts said. 

Fitts said the state needs a dashboard to show the public where the money is being spent and whether programs are succeeding.

The  budget also includes $302 million for addiction and recovery services required by Ballot Measure 110, which voters passed in November to legalize low-level drug possession. Marijuana tax revenues will fund addiction recovery centers and community services to treat people. 

The state could put even more money into behavioral health. House Bill 2949 would put $80 million towards efforts to recruit and retain behavioral health care providers to enter the field and work in Oregon. 

Money For Oregon State Hospital

Lawmakers also plan to put $72 million more into the Oregon State Hospital, the state-run psychiatric residential care facility based in Salem. The state hospital has struggled with an increase in new patients who are defendants in so-called “aid and assist” criminal cases. A defendant will go to Oregon State Hospital when a judge determines they need their mental health to improve before they can stand trial and aid in their defense. The state hospital has faced litigation because it’s fallen short of a requirement to admit a patient within seven days of a judge’s aid-and-assist order. Caseloads from aid-and assist-patients have increased over the years. 

The budget proposal would put $21.5 million toward aid-and -assist needs and provide those people with community and clinical services and rental assistance and other wraparound services. Of that, $19.2 million would come from the state general fund and $2.3 million would be paid by the  federal government.

The hospital is also planning to boost capacity. The budget would put $31 million in state funding to cover 110 new positions. That would allow the hospital system to open  two 24-bed patient units at the Junction City campus, increasing its capacity by about one-third. There are now 144 beds in Junction City. The Salem and Junction City campuses have 687 beds combined.  

That plan is intended to free up space on the hospital’s main Salem campus for more aid-and-assist patients.

Those two units would be licensed to serve people who no longer need hospital-level care and are preparing to move to community placement, said hospital spokeswoman Rebeka Gipson-King. The funding would cover staff who provide treatment and support.

Separately, lawmakers are setting aside $20 million so the Legislature’s emergency board can add staff. The budget plan requires the hospital and its employees to develop a staffing plan for lawmakers.

The hospital has a workforce of 2,321 budgeted positions at both campuses, not including contract and temporary workers. 

But they have not been enough during the pandemic. The strain of the pandemic laid bare the hospital’s shortage of workers and a need to expand its resources as workers quarantined because of the virus. The authority even asked the Oregon National Guard to send in troops to help.Those staffing needs will continue after the pandemic subsides, said Kim Thoma, president of the Services Employees International Union Sublocal 392, which represents about 2,100 of the hospital employees.

“These are things that even in the next year aren’t going to be fixed,” Thoma said. 

“People don’t realize that it’s a constant fight,” she said.

The situation has been stressful for staff at the hospital, where it’s not unusual to have to work a double shift.

“The staff that have been showing up are so exhausted and have been doing this for so long,” Thoma said. “We’re losing a lot of people that worked at the hospital for a long time.” 

New Focus On Equity

People of color were hard hit during the pandemic, drawing attention to the need for more equity in health care. As a result, lawmakers have earmarked $45 million to boost health care outcomes with help from county public health agencies, community organizations and tribes. 

The idea is to encourage  local communities to develop health equity plans tailored to their specific needs.

The budget proposal highlights a long-term goal of eliminating inequities in the health care system by 2030. To get there, the state budget puts $6.8 million towards 17 new positions in the authority's Division of Equity and Inclusion. Separately, Oregon has a $33.9 million federal grant to advance health equity and provide resources to community-based groups and tribes.

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1