Oregon Health Authority budget package moves to House floor

Today the Joint Committee on Ways and Means passed the Oregon Health Authority’s proposed budget package.

The package is made up of three bills, House Bills 2391, 3398, and 5026, which passed out of the Subcommittee on Human Services last week.

The OHA currently has a budget hole of $917 million due to a reduction in federal funds from the 2015-17 biennium. Oregon is facing a budget deficit of $1.4 billion.

The package would raise $934 million for the 2017-19 biennium and would maintain coverage for the 1 million Oregonians on the Oregon Health Plan.

The CCO rate of growth reduction, which is already below the rate of medical inflation, would hold CCOs to a rate lower increase in the next biennium.

The hospital transformation performance program is currently in its fourth year and will be discontinued to redirect nearly $200 million with the federal match back to the state.

The increased hospital tax assessment will raise the current rate of 5.3 percent to 6 percent. The 0.7 percent increase will be assessed as a true tax and will not be returned to hospitals through enhanced payments, until the other 5.3 percent. The true tax of 0.7 percent will sunset in two years and will apply to 28 hospitals in Oregon.

The rural hospital assessment program will apply to Oregon’s 32 rural hospitals. The hospitals will continue to receive cost-based reimbursement and the 4 percent provider tax will be returned in the aggregate through enhanced payments.

Instead of a hospital tax, OSHU will provide funds through an Intergovernmental Transfer, which will provide the state with $105 million for the Medicaid budget.

The new managed care and insurer tax would be used to fund the Oregon Health Plan, with some funds supporting individual market stabilization with a temporary reinsurance program. The tax will last two years and will apply to plans renewed on or after January 1, 2018.

The Department of Consumer and Business Services would seek a 1332 waiver to leverage federal funds to support the reinsurance program, which will reduce premiums by 4.9 percent.

The package would also place a freeze on current fee-for-service rates paid to providers when a Medicaid patient is not yet enrolled in a CCO. The freeze will save $10 million in state funds and result in a reduction of $38 million to hospitals and providers.

The budget package has received support from providers, carriers, and associations.

The bills now have been sent to the House floor.