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Oregon Lawmakers Pump Money And Oversight Into Health Care

Residents will have to wait to see whether the Oregon Legislature’s increased spending and regulation of the health care industry will yield results.
The Oregon State Capitol building in Salem. | BEN BOTKIN/THE LUND REPORT
June 29, 2021

Oregon legislators made systemic changes to health care this session. Lawmakers expanded Medicaid access to undocumented Oregonians, reshaped the behavioral health system and required the state to regulate mergers in the health care industry.

The COVID-19 pandemic put health care at the forefront of a session that unfolded virtually through Zoom meetings because public health restrictions prevented public access at the capitol. Lawmakers, lobbyists and the public dialed in to meetings from their offices, living rooms and homes. 

They also managed to pass far-reaching legislation. 

Health care companies will face government scrutiny during mergers and will need the state to sign off on major deals. The state will pour hundreds of millions more into its behavioral health system. Oregon will get a new board to scrutinize pharmaceutical prices.  

State spending on health care is growing -- and it will continue to grow beyond the pandemic. The state is not cutting Medicaid -- the program that provides health coverage for about 1.3 million low-income Oregonians. Providers and coordinated care organizations that insure Oregonians on the Oregon Health Plan, the state’s Medicaid program, will not face any rate cuts. 

The Oregon Health Authority budget is $3 billion more than the last one. Much of the increase is tied to inflation and increased Medicaid caseloads. Lawmakers also decided to expand Medicaid eligibility to residents regardless of their immigration status.

Now, the question is whether the Oregon Legislature’s work will bring lasting, systemic change to persistent long-standing problems.  Will the state rein in rising per-capita health care costs, even as it expands access to Medicaid? Will Oregon’s bottom-of-the-barrel rankings in access to mental health services improve? Will state efforts to regulate hospital mergers and acquisitions control costs, or prove to be detrimental to partnerships, as the hospital industry warned? 

Those questions may take years to answer, given the time to set up new systems, start serving Oregonians and gather enough data to compare them to earlier periods. 

Here’s a look at how Oregon Legislature addressed major health care issues (also see related story: Legislature Approves Spate Of Other Health Care Bills): 

Health Care Mergers Scrutinized

Lawmakers passed House Bill 2362, which will let the Oregon Health Authority regulate health care industry mergers. The authority will be able to approve, deny or approve with conditions any proposed mergers that would involve companies with at least $25 million in annual net patient revenue or mergers that would add at least $10 million in net patient revenue to an entity. 

Through the legislation, the authority can set up a review board that scrutinizes the proposed mergers, with input from health care experts and communities in the provider service areas. The review board will submit recommendations to the health authority. 

Advocates and lawmakers in support of the measure said it’s needed  because health care consolidation can drive up health care costs and undermine the ability of insurers to negotiate with larger providers. 

“Sixty percent of health care is paid for with public dollars,” said Sen. Deb Patterson, D-Salem, and chair of the Senate Health Care Committee.  “Public dollars need public accountability. With this bill, we are providing that accountability. Health care is deeply personal. As such, it should not be treated simply as a business transaction. House Bill 2362 puts patients first, ahead of profits, and it will improve oversight, public accountability and transparency.”

Rising health care costs have a “huge impact on workers’ ability to negotiate wages and a full set of benefits,” said  Felisa Hagins, political director of  the Service Employees International Union Local 49. The SEIU represents about 85,000 people in Oregon and southwest Washington, including about 12,000 workers in hospitals.

Hagins said the bill will move Oregon’s focus on affordable, quality health care forward, calling it “another step in that really critical trend in transforming our health care system.”

But the health care industry, which opposed the bill, warned that the legislation would make it harder for hospitals and clinics to collaborate in innovative ways. 

Becky Hultberg, president and CEO of the Oregon Association of Hospitals and Health Systems, called the bill a “misguided policy” that will discourage hospitals and clinics from forming partnerships that improve access and care in their communities.

“OAHHS and other stakeholders in the health care community raised significant concerns about the fatal flaws of the bill, but our concerns were lightly considered and ultimately discounted,” Hultberg said. “We continue to have significant concerns about the impact of the bill on the delivery of care and quality of care for Oregon patients, as well as the costs these new regulations will add to the health care system.”

Hultberg said Oregon has avoided losing any rural hospitals through provider partnerships, adding that there’s “no evidence” that affiliations and partnerships drive up the cost of health care.

Mergers and acquisitions are common in Oregon’s health care landscape.

In 2018, nonprofit PeaceHealth acquired for-profit ZoomCare, a network of primary and specialty care clinics, for an undisclosed sum. Portland-based nonprofit hospital system Legacy Health absorbed nonprofit Silverton Hospital in 2015. That year, Tennessee-based for-profit Quorum Health bought McKenzie-Willamette Medical Center in Springfield as part of a purchase of a roster of hospitals around the nation. The city-owned Ashland Community Hospital, in financial trouble, was absorbed into Medford-based nonprofit Asante Health Systems in 2013. In 2010, hospitals in Baker City and Ontario were absorbed by the nonprofit Saint Alphonsus Health System.  

Coverage For Undocumented Immigrants 

Oregon is expanding Medicaid eligibility to include undocumented Oregonians through House Bill 3352. 

In 2022, Oregon will begin to cover residents regardless of their immigration status. The work is far from complete, though.The legislation, despite its “Cover All People” moniker, may not necessarily do that  -- at least at the start. The Pew Research Center estimates there are 110,000 undocumented people in Oregon. The state would need an estimated $400 million to $500 million in future two-year budget cycles to fully fund the expansion. But for the 2021-2023 biennium, the state only has set aside $100 million.

The law allows the state to limit coverage to certain of groups within the undocumented population to stay within budget.

Eventually, lawmakers hope everyone who qualifies for Medicaid will be covered, regardless of their immigration status, possibly using federal money. The legislation directs the health authority to seek a waiver from the federal government to qualify for as much federal funding as possible.Oregon is working on its Medicaid waiver -- which covers other issues -- to submit to federal officials in early 2022. The state’s existing five-year waiver expires on June 30, 2022.

In the long-run, costs for the program could grow considerably for Oregon -- especially if the federal government balks at the waiver application.

This builds upon the Cover All Kids Medicaid program, which covers undocumented children under 19. That expansion started in 2018 after lawmakers passed Senate Bill 557 in 2017. Since then, the program has enrolled nearly 6,000 children, according to a 2020 state report.

Republican lawmakers who opposed the bill, including House Republican Leader Christine Drazan raised concerns about fiscal estimates that suggested the coverage could cost upwards of $400 million in future bienniums. 

More Money For Behavioral Health Care

Access to behavioral health care in Oregon ranks among the worst among other states in numerous national studies.

Oregon’s behavioral health system will get an infusion of $474 million package on multiple fronts, from housing and residential services to community programs to incentives to attract people to the workforce and developing mobile crisis units. The new funding represents a series of bills, not one single fix. Separate from that package, marijuana tax revenues will fund addiction recovery centers and community services to treat people. 

There’s a lot of work to do -- and it will take time. Still, lawmakers are hopeful the multi-pronged approach will provide a breakthrough that has eluded Oregon policymakers.

“I’m hoping this time we might have caught a big fish,”Courtney said in a press briefing when asked about the Legislature’s work on behavioral health care.

Courtney said it’s critical that Oregon reach that point where behavioral health care is “mainstreamed” -- viewed the same as other health care without any stigma. 

But the pathway there does not offer a simple or quick solution. The investments are wide-ranging. 

It includes $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 state’s also putting $121 million toward certified community behavioral health clinics that also provide primary care, to help them offer mental health care and substance abuse disorder treatment around the clock. Of the $121 million, just $24.5 million would come from state funds; the rest would be paid by the federal government. 

Other items include $80 million for incentives to increase Oregon’s behavioral health care workforce. This includes programs such as scholarships and grants for providers to offer supervised clinical experience so professionals in training can qualify for licenses to practice psychology, marriage and family therapy, professional counseling and clinical social work.

The package also puts $50 million into making the fragmented behavioral health system more efficient. For that work, the state will 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.

The state also will spend $31 million on opening two 24-bed units at Oregon State Hospital’s Junction City campus and hiring 110 staff for the expansion. The move is intended to free up space at the hospital for so-called “aid and assist” cases -- patients who need mental health care before they can stand trial in criminal cases and aid in their defense.

Rep. Rob Nosse, D-Portland, pushed the package through alongside Sen. Kate Lieber, D-Beaverton. 

The goal is to “bring about the promise of the deinstitutionalization of people with mental illness and start making community-based treatment an actual reality,” Nosse said.

The rest of the package goes towards a variety of needs: $20 million for incentives to provide housing for people with behavioral health needs; $10 million for mobile crisis intervention teams that will go to calls instead of police officers, among others. Lawmakers also are putting $6.5 million for mobile crisis response services for children and $6 million will fund four peer respite centers that give people experiencing a mental health crisis a place to decompress. One center will be in each of the four regions: the Portland metropolitan area, southern Oregon, central and eastern Oregon and the Oregon Coast. 

The state is spending $5 million to fund and set up a 9-8-8 crisis hotline center. When operational, the hotline will serve as the equivalent of a 9-1-1 line for people to call when they have a mental health crisis.

Besides the behavioral health package, Oregon will get another $302 million for addiction and recovery services through Ballot Measure 110, which voters passed in November to legalize low-level drug possession. . Marijuana tax revenues will pay for the services. 

An Eye On Pharmaceutical Costs

Oregon lawmakers targeted pharmaceutical costs, cited as a concern in a survey this spring of 900 Oregonians. Even many earning at least $100,000 a year said they were worried about drug costs.

Medication accounts for about 11% of overall health care costs in the state, according to the 2020 Oregon Prescription Drug Price Transparency report

The report estimates the Oregon Health Authority alone spent $1.2 billion on prescription drugs in 2013-2015 through its programs, including for Medicaid and benefits for government employees and public school teachers through the Oregon Educators Benefit Board and Public Employees Benefit Board.

To help rein in costs, lawmakers passed a bill that will cap insulin costs at $75 a month in out-of-pocket costs for consumers. And separately they created a prescription drug affordability board through Senate Bill 844.

The five-member board will identify and report on nine drugs annually that pose potential affordability challenges. The board will send reports and recommendations to the Legislature.The bill is narrowed down compared to an earlier version that would have allowed the board to set price limits on prescription drugs. But supporters say the creation of an affordability board alone is a step in the right direction. 

“It ended up a little less ambitious,” said Charlie Fisher, state director of the Oregon State Public Interest Research Group, a consumer advocacy group. “They took out the upper payment limit provision but I think the good news is there's a path to get that in future sessions.”

Lawmakers have targeted drug prices in recent years. In 2018, the Legislature passed House Bill 4005, which requires drug companies to submit reports on drugs that had a wholesale price increase of more than 10% for a one-month supply that cost at least $100. In 2019, the Legislature passed House Bill 2658, which requires drug manufacturers to report price increases to the state at least 60 days before they take effect. 

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


Submitted by Kimberly Sordyl on Tue, 06/29/2021 - 12:58 Permalink

Was there any explanation as to why Sen Rob Wagner blocked legislation that would allow legislative audits of public universities' handling of sexual assault/misconduct and racism? OHSU has been in the spotlight for both. OHSU's Connie Seeley was Peter Courtney's Chief of Staff before becoming OHSU's Chief of Staff.  Also, the Governor got in trouble for conflicts of interest with another OHSU staff lobbyist.  National Title IX administrators org. wrote a letter to Wagner asking him to pass the legislation.  This smells bad.