Heppner gazette-times., November 05, 2003, Image 12

S E N A T O R DAVID NELSON: L E G I S L A T I V E
REPORT
20 0 3
Better Services for Oregonians
Far left, Karen Whittaker, Sandy Ryman (AH EC). Far right,
Art Hill, Workforce Development Board & SBD C, with Senator Nelson.
In January 2003, the 72nd Legislature encountered an Oregon Health Plan
(OHP) that was costing far more than the state had in available resources.
Even after benefits were reduced to the newly created OHP Standard
population in February 2003, costs continued to increase.
A special committee to create accountability and reform of the plan was
created. The premise behind the reform was to identify cost-saving actions
and ensure a more stable program for the future. Some of the cost-saving
actions were to decrease the number of covered services on the state’s
prioritized list, utilize supplemental drug rebates and conduct drug utilization
reviews. The hard work from legislators and key stakeholders resulted in
several pieces of legislation.
Foremost, is the first legislative action since the inception of the OHP
that reprioritized both populations and benefits. The impetus behind this act
was to allow the legislature flexibility in determining the populations to be
covered and the benefits to be offered. Ultimately, this will provide more
tixtls to control costs when developing the OHP budget in the future.
A limited set of core benefits was defined that must be provided to the
mandatory and optional populations. Core benefits for the OHP Plus
(mandatory) population include: federal mandatory services, physician
services, prescription drugs, lab and x-ray services, medical supplies, mental
health services, chemical dependency services, emergency dental services,
non-emergency dental services, other provider services and inpatient and
outpatient hospital services. Core benefits for the OHP Standard (optional)
population include the same benefits as the OHP Plus except: non-emergency
dental services, other provider services, and inpatient and outpatient hospital
services. Services beyond the core package may or may not be covered by the
legislature based on funds available.
In addition, populations were prioritized to allow the legislative assembly
to determine who should be covered in any given biennium based on available
funds. By prioritizing populations based on income, need and cost, the
legislature will now he able to cover specific populations based on available
resources.
The Office of Medical Assistance Programs (OMAP), administrators of
the OHP will have more flexibility to increase enrollment in the OHP
managed care program. This is expected to increase access and quality of care
for enrollees — limiting the utilization of costly emergency services. However,
managed care can only work in areas where utilization of resources at the
community level is maximized to best serve Oregonians.
As well, the state is directed to develop a benchmark for setting payment
rates for managed care entities. This information will allow all parties to
compare benchmark rates to any rates set in a legislative budget, which will
permit a more transparent and open process.
An emergency hospital benefit will be provided to the OHP Standard
population pending approval from the federal government on the state’s
Medicaid provider assessment. Revenue generated through the assessment will
be dedicated to fund the emergency hospital benefit.
The 72nd Legislature attempted to pick up where the 71st left off by
making prescription drugs more affordable. A prescription drug program will
be established in the Department of Administrative Services to purchase drugs
in order to receive discounted prices and rebates; make drugs available at the
lowest possible cost; and maintain a list of recommended drugs that are the
most effective at the best prices. Also, the drug rebates will apply to the
following groups: state agencies that directly or indirectly purchase
prescription drugs, Public Employees’ Benefit Board, Oregon Health and
Sciences University, local governments and special districts, enrollees in the
Senior Prescription Drug Assistance Program and residents 55 and over who
meet certain qualifications.
As health insurance costs continue to burden employers and employees
and the number of Oregonians without private health insurance is increasing,
legislators tried to help alleviate their financial burdens by controlling
mandated coverage and with legislation.
One bill of note will make health insurance more affordable by allowing
small employers - between 2 and 50 employees and who did not offer coverage
as of July 1, 2003 - to offer benefit packages that are free of state mandates;
therefore allowing standard benefit coverage, which would include
inpatient/outpatient hospitalization, laboratory and diagnostic services and
physician services.
Of particular importance to rural Oregonians, this session all funding ($1.3
million) for rural Emergency Medical Services (EMS) was sacrificed to salvage
the Poison Control Center. In the past two sessions, the Office of Rural
Health has appropriated funds from the Criminal Fines and Assessment
account for grants to rural EMS organizations. Legislation to further assist
rural health clinics stalled in Ways and Means; however, a bill has been signed
by the Governor that requires the Oregon Medical Assistance Provider and
private insurance carriers to pay certain rural health clinics for dispensing
prescription drugs.
T O R T REFORM /M EDICAL M A LPR A C TICE
The LJ.S. Department of
Health and Human Services
recently published documents
stating that medical liability is now
a significant threat to health care
quality for all Americans. A
problem intensified as a result of an
Senator Nelson vuits with rural health care
increasingly unpredictable, costly
providers & Dr. Goldberg, Governor's
an^ sl° w litigation system,
policy advisor.
Expensive litigation results in
increased medical malpractice premiums. In Oregon as in many other states,
qualified physicians are retiring early or relocating to states that have
reformed their litigation systems. This has led to decreased access to
providers, compromised patient safety and increased health care costs.
States that have been able to control medical malpractice rates have
implemented caps on the awards for non-economic damages. For example,
in 2C01, the average loss ratio (ratio of claims paid to premiums collected by
insurers) in states without caps was 100.86 compared to 68.98 in states with
reasonable limits on non-economic damages.
A 1999 Oregon Supreme Court decision determined that capping
non-economic damages (pain & suffering) was unconstitutional. Since this
decision, legislators have been considering alternative ways to approach tort
reform.
The 2003 legislative session began with a myriad of bills attempting to
reign in the spiraling costs of medical malpractice insurance. The goal was
to impose a cap on non-economic damages that may be awarded in civil
action seeking damages arising out of bodily injury, death, or damage. Other
bills attempted to modify the medical litigation process, but were equally
unsuccessful in getting through the legislative process.
While unable to “fix” the problem, to alleviate the detrimental impact of
high malpractice insurance rates on niral medical providers, legislation was
passed requiring the State Accident Insurance Fund Corporation to establish
a reinsurance program for medical liability policies for specific rural
providers. The fund is expected to help lessen the burden on rural providers
and thus, prevent migration of providers from rural areas.
Additionally, the legislation establishes a Professional Panel for Analysis
of Medical Professional Liability Insurance to study the medical malpractice
insurance industry and report back to the governor and the legislature by
December 15, 2004 with data on why insurance prices are climbing so
rapidly.
* Other professionals are experiencing similar rapid insurance rate
increases for liability coverage (i.e. Contractors, pilots and others). Next
legislative session, the entire issue of tort reform for cost containment of
professional liability, particularly non-economic damages will likely get a
closer look.
SUMMARY OF LEGISLATIVE ACTIONS AFFECTING THE 2003-05 BUDGET
•T h e 2003 Legislature reduced state agency budgets by $86.5 million total
funds by eliminating funding for merit step increases and cost of living
adjustments for all state employees.
• The statewide balanced budget plan calls for elimination of vacant positions,
unless justified. The 2003 Legislature eliminated 1,019 of 3,785 actual vacant
positions, reducing state agency budgets by $68.7 million total funds. In the
2003-05 adopted budget, there was no increase in the number of state agency
full time positions overall, and a decline of 306 if Higher Education is
excluded. In addition, a total of 759 state employees were laid off during the
2001-03 biennium and another 149 demoted in lieu of layoff.
• The legislature required all state agencies to identify Other Funds savings
from implementation of PERS reforms and transfer these amounts, with few *
exceptions, to the General Fund. This action is expected to generate
approximately $40-$50 million.
• The Legislature required all state agencies to track and revert General Fund
savings achieved from compliance with various administrative restrictions and
from actions taken that increased government efficiency.
• Due to constraints on the state budget, General Fund support for certain
agencies and programs determined to be non-essential for the health, safety and
welfare of Oregonians was suspended for the 2003-05 biennium.
•T h e 2003 Legislature passed a number of reforms to the Public Employees
Retirement System (PERS) that had a direct impact on budgets of all participating
employers. (See above PERS section.) While legal challenges have been filed
against all or a part of this legislation, the PERS Board was required to adjust
employer contribution rates for the effects of the bills. The reductions to employer
contribution rates that resulted from these reforms were significant. Substantial
savings to state and local employers for the 2003-05 biennium have been recognized
as a result. The legislature also approved (and voters agreed in the September Special
Election) the use of less costly long-term debt to pay down the state's portion of the
PERS unfunded actuarial liability. Combined, these Legislative actions caused
savings of approximately $300 million General Fund for the biennium.
• Additionally, each agency budget review included a review of performance measures
to be used in the future for determining agency progress in attaining expected
performance toward approved goals and outcomes.