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Senate Sends Hospital and Nursing Home Assessment Tax to Kitzhaber

After weeks of filibustering, the Republicans allowed a vote on the bill that will continue funding for the Oregon Health Plan and other human services through an assessment tax on hospitals and long-term care facilities.
June 27, 2013


June 27, 2013 — The Senate passed the hospital and long-term care assessment tax Wednesday, ensuring that Oregon will be able to raise $1.4 billion from the federal government over the next two years to fund health and human services, including the state’s Medicaid program.

The hospital assessment was renewed and expanded for just two years, while the long-term care facility, or nursing home assessment, will run through 2020.

“This will help assure vital services for hundreds of thousands of Oregonians,” said Sen. Laurie Monnes Anderson, D-Gresham. “These funds help to employ tens of 1000s of healthcare workers.”

Oregon is able to leverage such a large amount of money from the federal government by assessing the value of its hospitals and nursing homes, then repaying these facilities based on their number of Medicaid patients. The facilities agree to tax themselves, on the risk that they will be reimbursed later.

Sen. Jackie Winters, R-Salem, carried House Bill 2216 on the floor with Sen. Alan Bates, D-Medford. She reminded her colleagues that she was part of the Legislature that passed the first hospital and long-term care facility assessment in 2003 when the Oregon Health Plan was in dire straits and looking for a way to survive.

“There were people in our community who faced death-threatening experiences,” Winters said. “While we were trying to save the Oregon Health Plan, it was these two groups (the Oregon Hospital Association and the Oregon Health Care Association) who offered the solution, and that solution was self-assessment.”

Part of the federal funds will help hospitals reduce the overuse of emergency rooms and hospital re-admissions by working more closely with coordinated care organizations that integrate physical, mental and dental services.

Republican Budget Strategy

The 25-5 Senate vote came six weeks after the House ushered through House Bill 2216 on a 55-4 vote. Republicans waited until the last scheduled week of the session to drop their filibuster.

“The Republican caucus released their hold,” Bates told The Lund Report, allowing the bill to reach the governor. “Without the passing of this bill, we can’t close our budget.”

The Republicans also dropped their opposition to the state education budget on Wednesday. The GOP had been holding up approval of these measures, both of which had broad support, in order to wring out public employee pension cuts and tax cuts for investors and small business owners.

While discussions surrounding those issues continue, the Republicans were unable to get any concessions from Democrats beyond the cuts already agreed to on public pensions.

“We’re at the beginning of the end. It’s time to go home,” said Sen. Brian Boquist, R-McMinnville. The five-month legislative session is tentatively scheduled to end on Friday but could spill over into next week.

The Republicans had little room for obstruction, as HB 2216 had nearly every healthcare entity and advocacy group in the state clamoring legislators to support it, including the Oregon Health Leadership Council, comprised of business groups, hospitals and insurers.

“A sustainable Oregon Health Plan is central to overall transformation of Oregon's healthcare delivery system and success of coordinated care organizations throughout the state,” according to Gary Conkling, spokesman for the leadership council.

Gov. John Kitzhaber will eagerly sign HB 2216 into law, noting after the vote the bill is “a critical part of our overall state budget that is key to delivering better health, better care, and lower costs to Oregonians.”

In the end, only four Republicans along with one Democrat, Sen. Chip Shields of Portland opposed HB 2216.

Anti-Trust Exemption for Nursing Homes

Shields told The Lund Report he was concerned about a provision that would carve out a new exception to anti-trust laws.

The governor’s policy advisors, along with Jim Carlson, president of the Oregon Health Care Association, devised a strategy to reduce excess capacity in nursing homes by having the Department of Human Services convene meetings among nursing home owners to negotiate the closure of unneeded facilities.

HB 2216 allows these meetings to occur by creating a safe harbor from anti-trust laws, enabling competitors to meet and consider reducing capacity in a collaborative fashion while avoiding laws against collusion.

But Shields said that the Department of Human Services could convene these meetings without creating an anti-trust provision, a point that Carlson disputed as a red herring.

“The only reason we put that in there was because the lawyers told us we had to have it,” Carlson told The Lund Report. “The anti-trust issue was thoroughly vetted and discussed in the House.”

Carlson added that the anti-trust provision was narrowly written to only allow for such meetings if they are called and presided over by the state agency.

Rep. Jason Conger, a Bend Republican and attorney who helped vet the bill in both the House Health and Revenue committees, agreed with Carlson. He said while some attorneys might argue that the anti-trust provision was unneeded, the safe harbor provision was both prudent and narrow.

“You don’t want to leave it in doubt … there’s no reason not to put it in statute,” Conger told The Lund Report. “We want the conversations to be both legal and productive, and not go beyond the point of what’s necessary.”

Another reason Shields may have opposed HB 2216 is that his district includes Holladay Park Plaza, a continuing care retirement community in Northeast Portland.

Republican Sen. Larry George of Sherwood spoke out against HB 2216 based on an obscure but controversial provision that will apply the assessment tax to affluent continuing care retirement communities, even though they do not accept Medicaid patients and will not get paid back by the state.

“[The tax is] a fraction of 1 percent of their business,” Bates said. He earlier told The Lund Report that the retirement home owners had been scaring senior citizens in their facilities to avoid paying a very small tax.

The nursing home assessment is levied based on the number of staffed nursing beds that are occupied each night. In continuing care retirement communities, where residents move through several options including apartments, assisted living and a staffed nursing facility, only the occupied beds with the most intensive services would be taxed.

Bates said the retirement communities are now being included because exempting them costs the state millions in federal tax dollars under federal rules that could be used to care for low-income elderly.

Image for this story by Edmund Garman (CC BY 2.0) via Flickr.

Christopher David Gray can be reached at [email protected].