SENATE SPECIAL COMMITTEE ON

ACCESS TO THE OREGON HEALTH PLAN

 

 

September 10, 2002   Hearing Room 50

1:15 p.m.  Tapes 13 - 14

 

MEMBERS PRESENT:            Sen. John Minnis, Chair

                                                Sen. Bev Clarno

                                                Sen. Ted Ferrioli

Sen. Gary George

Sen. Avel Gordly

Sen. Rick Metsger

Sen. Frank Shields

Sen. Cliff Trow

 

MEMBER EXCUSED:             Sen. Bill Fisher

 

 

STAFF PRESENT:                  Rick Berkobien, Administrator

                                                Craig Prins, Counsel

                                                Patsy Wood, Committee Assistant

 

 

MEASURE/ISSUES HEARD:            Invited Testimony Only

   Family Health Insurance Assistance Program (FHIAP) and OHP2

                                                   DHS Budget Overview and Potential Cuts

 

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 13, A

004

Sen. Clarno

Calls the meeting to order at 1:35 p.m.

009

Sen. Ferrioli

Informs the committee that he heard the OHP waiver is on hold in Washington, D.C. and wonders if Mr. King has any information relative to that.

011

Rocky King

Administrator, Insurance Pool Governing Board (IPGB).  Explains where the waiver is in the system.  Submits an agency overview and discusses OHP2, the waiver and the impact on the Family Health Insurance Assistance Program (FHIAP) (EXHIBITS A – C).  Lists key points about the FHIAP program:

1.          State Funds only

2.        Private-sector based

3.        Program is capped

4.        Targeted for Oregonians who can’t afford health insurance

070

King

Lists the FHIAP program principles (page 10 of Exhibit C). 

108

King

Describes the eligibility requirements (page 12 of Exhibit C)

128

King

Describes the two options under FHIAP (page 13 of Exhibit C).

154

Sen. Ferrioli

Expresses his concern that people in rural areas would not be enrolled in numbers equal to those in the I-5 corridor.  Asks where the “Individual Market” FHIAP-certified carriers listed on page 13 have their base of operations.

165

King

Points out that page 23 of Exhibit C shows the distribution of enrollment, by area, in Oregon.  Tells where the certified carriers are located.  Notes that these plans are the same as those offered to people who purchase insurance in the regular, private-sector market.

185

Sen. Trow

Asks if there is bias in this program against serving people in rural Oregon.

189

King

Doesn’t think so.  Says this program has not been marketed since 1998.  Gives historical background as to the statewide marketing of the initial program.

215

Chair Minnis

Asks about the correlation between the FHIAP program and the waiver.

218

King

Describes the waiver implications on the back of Exhibit A.

235

Chair Minnis

Asks if the expansion occurs by the waiver allowing access to federal money.

240

King

Says, yes.

241

Chair Minnis

Asks what the dollar amount will be from federal funds.

245

King

Responds $14 or $15 million this biennium which will grow to about $70 million next biennium.

249

Sen. Trow

Asks if that money is just for the expansion of FHIAP.

250

King

Responds affirmatively.  Discusses the emphasis on group coverage as provided in HB 2519 (EXHIBIT D) which helps small businesses provide the dependent employee coverage through the workplace. 

278

King

Cites the change in HB 2519 of the Insurance Pool Governing Board establishing a benchmark benefit plan.  Describes the benchmark plan and says it will be adjusted soon. 

302

King

Cites eligibility changes regarding non-citizens.  Discusses the monitoring and evaluation component (required by the federal government) that they are working on now. 

319

King

Discusses the legislative concept of the Oregon Medical Insurance Pool (OMIP) assessment – using more federal dollars to lessen the impact of insurance costs.  Summarizes the waiver implications of the OHP. 

373

King

Discusses issues of accountability and sustainability: 

§         Audits eligibility

§         Audits those who apply for the program

§         Subject to Secretary of State audit –  requested a risk management audit (EXHIBIT E)

462

Sen. Clarno

Asks him to expand on the high risk pool.  Also asks if the OMIP assessment on private insurance industry is subsidized by them.

474

King

Responds affirmatively.

TAPE 14, A

018

Sen. Clarno

Asks him to clarify a statement he made earlier at the Leadership Commission on Health Care Costs and Trends that the OHP was far richer than small employers are able to provide.

025

King

Talks about the benefits contained in the small group, individual market as being less than the OHP.

036

Chair Minnis

Asks him to expound on his dialogue with small employers interested in this program.

040

King

Describes the dialogue that has occurred with small employers.  Says the small business community has been a “hard sell” on the sustainability and amount of paperwork involved in the program, but they have been great in terms of the waiver.  Talks about FHIAP being a “qualifying event” to allow someone to enroll in an insurance company’s program.  Refers to subsidy levels (on the backside of Exhibit C).

094

Chair Minnis

Comments that FHIAP seems like a good program to invest money in, but wonders why the state’s commitment is dwindling.

103

King

Discusses cuts that have occurred in the past.

114

Chair Minnis

Asks if 20,000 people are on the current waiting list.

115

King

Replies that about 100,000 people are uninsured between 100% - 170% of the federal poverty level, but not all want to buy insurance, even if a subsidy is provided.  Describes assets which disqualify them for eligibility. 

126

Sen. Clarno

Indicates this program could be expanded with funds from the federal match if the waiver is approved.

133

King

Wants it noted that Medicaid is an entitlement and FHIAP is not (they can close intake).  Says the waiver will provide tools to mitigate expansion.  Reiterates, FHIAP is controlled to the state dollar.

146

Sen. Gordly

Inquires how the agency is doing with their goal of expanding participation and representation of minority and underserved populations in FHIAP.

153

King

Indicates they were initially doing well in this area, but they have not done well lately because the program has not been marketed since 1998.  Mentions a recent audit that looked at the Oregon Medical Insurance Pool (high risk pool) and found that they were very underrepresented in non-English speaking and racial minority groups.

182

Sen. Gordly

Appreciates his forthright response.  Asks if he has seen the April 2000 Progress Board report which looked at the progress of Oregon’s racial and ethnic groups.

190

King

Responds, affirmatively saying they have been a part of the Racial Minority Task Force.

192

Sen. Gordly

Speaks to the benchmarks of the Oregon Progress Board (from 1990-1996) where racial and ethnic minority groups lost ground.  Says that the agency overview (Exhibit B) is helpful, but the information doesn’t go far enough to capture the numbers of racial and ethnic groups.  Indicates she would like to see those numbers and have them provided to the committee.

221

King

Says that information is captured and will be supplied to the committee.

227

Chair Minnis

Recesses the committee at 3:20 p.m.

229

Chair Minnis

Reconvenes the committee at 3:34 p.m.

232

George Dunford

Assistant Director, Department of Human Services (DHS).  Submits figures and testifies on reduction options of the Oregon Medical Assistance Program (OMAP) within DHS (EXHIBIT F). 

256

Dunford

Points out some figures that need to be changed on the portion titled “Reductions which do not require statutory change.”

313

Chair Minnis

Asks for clarification on the total reduction across DHS.

315

Dunford

Responds that reduction is $121 million.

316

Chair Minnis

Inquires if the OMAP portion is $30 million.

317

Dunford

Responds affirmatively.  Explains that these cuts are listed by division because of the line-item appropriation from the 2001 session, but will change into a “cluster” format for the 2003 session.

338

Sen. Gordly

Asks for the purpose of looking at this document.

343

Chair Minnis

Explains this is background information.

349

Dunford

Clarifies that these cuts are actually being implemented today.

353

Sen. George

Asks if this is in response to the Governor’s news conference today.

355

Dunford

Says, somewhat, but it is also statutory.  Continues discussing the reductions by categories.

388

Sen. Gordly

Asks for identification of the areas where the reductions will have an impact on mental health.

394

Dunford

Replies that Jerry Fuller, Medicaid Policy Expert, DHS, will be looking for those items.

398

Sen. Metsger

Clarifies that the General Fund savings listed are computed from the implementation date until the end of the biennium (June 30, 200).

405

Dunford

Says, correct.

406

Sen. Metsger

Asks if that also applies to the figures listed under FF (federal funds).

408

Dunford

Responds affirmatively.

411

Sen. Trow

Asks if the reduced payments to pharmacies are actual reductions or just cost shifting.

417

Dunford

Anticipates there will be some cost shifting.

425

Sen. Gordly

Expresses concern about the impact of these cuts on access to clients.

433

Dunford

Indicates he doesn’t know the full impact of these cuts on clients.

435

Sen. Gordly

Asks is there might be unintended consequences.

438

Dunford

Says, yes.

440

Sen. Ferrioli

Wonders how they got the figure of 17% below average wholesale.

TAPE 13, B

004

Jerry Fuller

Medicaid Policy Expert, DHS.  Indicates studies that have shown that the average wholesale price (AWP) doesn’t reflect the cost to the end pharmacy, so reductions could be made without completely eliminating access for their clients. 

020

Sen. Ferrioli

Discusses the average wholesale price (AWP) and its relative purchasing power.  Wonders if it averages large chains as well as single stores.

032

Fuller

Responds affirmatively.

034

Sen. Ferrioli

Makes note of small, rural pharmacies leaving the OHP because they can’t fill prescriptions lower than wholesale and asks if the agency is aware of that trend.

039

Fuller

Replies that he is not aware of that trend in terms of a study, but would agree that small pharmacies would be less able to deal with these reductions.

041

Sen. Ferrioli

Indicates the correspondence he has received from rural pharmacists refusing to fill prescriptions below cost, and the problems associated with not being able to get prescriptions filled. 

052

Fuller

Mentions mail-order pharmacy as an option.

054

Sen. Ferrioli

Asks if he’s heard of a program that pays people to travel to get their OHP prescriptions filled.

058

Fuller

Indicates that under OMAP, the state has to provide assurance of transportation to necessary medical services.  Comments on a courier service being used in Washington state.

065

Sen. Ferrioli

Wonders if he’s heard about pharmacists in rural areas having trouble getting co-payments that are voluntary from the OHP subscribers.

070

Fuller

Comments he has not heard that, but says he would not be surprised.

071

Sen. Ferrioli

Discusses co-pays being hard to collect because they are voluntary and the fact that some people are getting paid to go to a neighboring community to get prescriptions filled.  Wonders if the actuarial is based more on “gut level” than feedback from the market. 

092

Dunford

Replies that he would like to respond to this issue in writing.

095

Sen. Ferrioli

Seeks additional information of how many rural pharmacies have indicated they will no longer fill OHP prescriptions.

102

Dunford

Says he will give his response to staff to share with the committee.  Continues discussing the reductions in Exhibit F saying he will send an updated copy to staff.

119

Sen. Gordly

Takes note that failure to allocate funds to the safety net clinics may impose a financial hardship on some clinics with inadequate operating margins. Asks how many clinics have inadequate operating margins.

127

Dunford

Says that information will be provided with the information requested by Sen. Ferrioli.

129

Sen. Gordly

Would also like information on the number of clients who will not be served if these clinics go away.

137

Dunford

Will get that information.  Continues discussing Exhibit F with the change in the beginning date of the OHP eligibility for adults/couples.  Notes that this reduction makes the payment date to providers the date the application is approved rather than retroactively pay providers based on the date of application.  Changes the GF figure from $1,663,369 to $2,984,377.

151

Sen. Trow

Asks why the significant change.

153

Dunford

Indicates it is from an error they caught.  Continues discussing Exhibit F at eliminating outlier payment for DRG hospitals and reducing DRG unit value.

161

Sen. Gordly

Asks about the impact on mental health services based on the change in the OHP eligibility.

165

Fuller

Explains that some clients may not be eligible under the later date, and this might result in cost-shifting to local hospitals or crisis centers.

177

Sen. Gordly

Speaks to the unintended consequence of people without crisis center services ending up in jail.

188

Fuller

Replies that could happen.

190

Sen. Shields

Wonders about the cost-shifting that might occur when individuals are in a crisis situation, but not eligible for the OHP.

202

Fuller

Says, that would be correct.

203

Sen. Shields

Asks if there have been any calculations for the savings because of cost shifting.

209

Fuller

Speculates that the savings would represent the cost shifting to different providers.

219

Sen. Shields

Asks if we would actually save any money with cost shifting.

231

Fuller

Suggests there isn’t really any savings – it’s a cost shift to the private side.

235

Sen. Trow

Guesses that people won’t be getting services until they qualify.

238

Fuller

Responds that could be the outcome, except in emergency cases.

241

Sen. Clarno

Notes the new copies from DHS on reduction options (EXHIBIT G). 

248

Dunford

Points out the federal funds lost on the new document for the change to the beginning OHP eligibility date.  Also notes that eligibility is the first of the month following the date of approval.

261

Sen. Shields

Implies that could be a difference of six or seven weeks.

263

Dunford

Concurs, depending upon the date of the request.  Goes back to discussing Exhibit G at eliminating outlier payment for DRG hospitals and reducing DRG unit value.

279

Sen. Gordly

Asks if there is a list of hospitals that are operating with an inadequate margin which could impact services.

288

Fuller

Replies that they will attempt to provide that information.

291

Dunford

Continues discussing Exhibit G and the savings from the elimination of the Mental Health/Alcohol & Drug portion of the Oregon Children’s Plan.

303

Sen. Trow

Expresses concern about eliminating this portion of the program.

310

Fuller

Says this program was added during the last legislative session and this is just the leftover money.  Notes these are children and families that are not eligible for CHIP (Children’s Health Insurance Program).

324

Sen. Gordly

Clarifies that these are families and children not eligible for CHIP.

328

Fuller

Believes so.

333

Sen. Gordly

Asks if these are the poorest of the poor – the most vulnerable.

336

Fuller

Replies, not the poorest of the poor, but not able to afford insurance.

352

Dunford

Continues discussing Exhibit G at eligibility for pregnant women moving federal poverty level from 170% to 133%.

362

Sen. Clarno

Inquires what percentage match this is.

367

Fuller

Replies it is the Medicaid match of 60-40.

371

Sen. Gordly

Wants the impact put on the record – not just in writing.

379

Dunford

Notes this will impact 2500 pregnant women and children.  Says it is a tragic reduction, but they don’t have any options.

385

Sen. Gordly

Reads the impact of item number 6 from Exhibit G.

396

Dunford

Continues discussing Exhibit G with the CHIP elimination.

403

Sen. Trow

Asks if this cut will continue into the next biennium.

406

Dunford

Indicates he doesn’t know the answer to that.

412

Sen. Gordly

Reads the impact note (item number 7) saying the reductions are “uncivilized.”

429

Dunford

Continues discussing Exhibit G with the elimination of the medically needy program.

444

Sen. Trow

Asks if there will be anything left of the OHP after these reductions this biennium.

447

Dunford

Responds that the OHP will still be in place, but reduced by $31 million.

454

Sen. Gordly

Questions where the hospitalization mentioned in the impact note for number 8 would occur.

466

Fuller

Indicates that people could end up in the emergency room or come to the attention of the Department of Justice.

TAPE 14, B

022

Sen. Gordly

Repeats that the impact note mentions “psychiatric issues that would require hospitalization” and wonders where this would occur.

028

Fuller

Responds this is another tragedy being discussed today.  Says treatment could come from an emergency room, but the system is overloaded.

032

Chair Minnis

Asks how many layoffs are occurring with these reductions.

033

Dunford

Points out that most cuts are with provider payments – not staff.  Says there may be some administrative layoffs from fewer checks written, but no direct-service layoffs.

053

Sen. Shields

Inquires about projected layoffs which might occur with their providers.

059

Dunford

Replies that state layoffs would be minimal, but provider layoffs could be substantial because these are small providers.

066

Sen. Ferrioli

Asks how a level of reduction can be determined or if dollars are being expended appropriately without accountability in the prescription drug program.

086

Dunford

Disagrees with the lack of accountability.

094

Sen. Ferrioli

Notes that the agency agreed with the audit that there is no feedback mechanism to correlate prescriptions with encounter data.  Questions the basis for setting the actuarials for prescription reimbursements.

111

Dunford

Says the DHS workers are good workers, but agrees there are issues to deal with and will get information on determining reimbursements.

120

Sen. Ferrioli

Indicates he is anxious for that information.

127

Chair Minnis

Notes the disparity between what the agency says, what the audit says and the witness’s testimony. 

138

Dunford

Informs the committee he will get answers to the previous questions.  Feels the agency is trying to be accountable and do a good job.

152

Chair Minnis

Cites the committee’s main concern: what control systems exist within the OHP.  Gives example of the lack of controls for prescription medications.

170

Dunford

Prefers to answer that question in writing.

171

Sen. Ferrioli

Contends there may be a corporate culture surrounding the OHP where people feel the need to protect it.  Discusses the lack of accountability, the appropriateness and methodology of rate setting and reimbursements, as well as capitation. 

272

Chair Minnis

Feels the legislature is partly at fault for not putting the right kind of controls in place for costs and accounting of the OHP.  Says they need to spend more time looking at the sustainability of the program.

310

Dunford

Says he will make it his life’s work to help the legislature understand the program and will get the information requested.

322

Sen. Shields

Appreciates this forthright approach in sharing information.

341

Chair Minnis

Requests input from committee members if there are areas they wish to cover. 

361

Sen. Trow

Asks the chair to clarify an earlier statement about the waiver being on hold.

365

Chair Minnis

Replies that the federal government has placed the current waiver application on hold.

368

Sen. Trow

Asks for his sources.

369

Chair Minnis

Declines to divulge his sources, but says the office in Washington, D.C. could be contacted for verification.

372

Sen. Shields

Wonders if this is new information.

374

Chair Minnis

Confirms this was learned just yesterday afternoon.

375

Sen. Shields

Inquires if page 3 (Exhibit G) is going to be discussed.

387

Dunford

Indicates that he is prepared to talk about “Reductions which require statutory change” (page 3 of Exhibit F) but says it is not part of the allotment reduction.  Prefers that Legislative Counsel discuss this area with the committee.

400

Sen. Shields

Points out he is referring to page 3 of Exhibit G. 

438

Dunford

Discusses number 9 and its impact on page 3 of Exhibit G. 

462

Sen. Trow

Asks if those are vital services.

463

Dunford

Responds affirmatively.

474

Sen. Gordly

Thanks the committee administrator for the draft Background Brief on Mental Health and Chemical Dependency Treatment (EXHIBIT H).

481

Chair Minnis

Adjourns the committee at 3:40 p.m.

 

Submitted By,                        Reviewed By,

 

 

 

Patsy Wood                        Rick Berkobien,

Committee Assistant                        Administrator

 

EXHIBIT SUMMARY

 

A – Presentation Outline of Family Health Insurance Assistance Program (FHIAP), submitted by Rocky King, dated 9/9/02, 2 pgs.

B – Agency Overview on Insurance Pool Governing Board (IPGB) and FHIAP, submitted by Rocky King, dated 9/5/02, 24 pgs.

C – Oregon FHIAP Program Summary, submitted by Rocky King, dated 8/1/02, 2 pgs.

D – HB 2519 (2001), submitted by staff, 8 pgs.

E – Secretary of State Report on (IPGB) and FHIAP, submitted by Rocky King, dated 8/30/02, 6 pgs.

F – Reduction Options: Oregon Medical Assistance Program (OMAP), submitted by George Dunford, DHS, dated 9/3/02, 4 pgs.

G – Reduction Options: Department of Human Services, submitted by George Dunford, DHS, dated 9/10/02, 15 pgs.

H – Background Brief on Mental Health and Chemical Dependency Treatment, submitted by staff, dated September 2002, 3 pgs.