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LEGISLATIVE UPDATE
Prepared for OAFP
May 7, 2017
SB 934 – Primary Care Payment Reform passes Senate floor
The Senate passed Sen. Steiner Hayward’s (D-Beaverton) primary care payment reform bill unanimously on Tuesday. “Ultimately, this bill aims to keep Oregonians healthy and to cut costs all around,” Steiner Hayward said. “Any dollar put towards primary care is a good investment.”
The bill in its current version requires commercial insurers, CCOs, OEBB and PEBB to spend 12% of their overall budget on primary care. A payer who fails to meet the target spend must submit a plan to their respective oversight agency, detailing how they will increase their primary care spend by 1% in the next year. The bill also extends the primary care payment reform collaborative to 2027.
The bill now goes to the House for consideration.
HB 3085 – Funding for Healthcare Workforce Training Programs
Sen. Elizabeth Steiner Hayward (D-Portland) told the House Revenue Committee that her proposal for an assessment of a penny per day per member for commercial insurers, third party administrators (for self-insured companies) and CCOs would raise $22 million per biennium to fund health care workforce training programs.
“I will be working on an amendment to strip out the assessment for now but so we can go ahead and set up the structure.” She added “This year probably isn’t the right year to ask insurers for more money, as they are stepping up to help fund Medicaid.”
Morgan Floric, a second-year medical student at Comp NW, says she was born and raised in Lebanon, and is “dedicated to working and serving in rural Oregon.”
She said she is in the rural health track with 40 other students but worries she won’t be able to find a family medicine residency program in Oregon, much less in rural Oregon which is what she really wants. “Bringing residencies here will help keep doctors here,” she said.
Doug Barber, representing the Oregon Academy of Family Physicians, said we need more residency programs for physicians but “family physicians do not work in isolation, especially as they increasingly develop patient-centered primary care homes. We need nurses, nurse practitioners, physician assistants and especially behavioral health providers to provide team-based care for patients.”
Sen. Steiner Hayward said if revenues were available, she would consider raising the assessment to two-cents per member per day to also fund Oregon’s healthcare workforce incentive programs.
HB 2751 – OTs in Loan Repayment
Rep. Greg Barreto (R-Cove) requested this bill on behalf of the Occupational Therapy Association of Oregon. The bill would add occupational therapists to the list of providers who qualify for Oregon’s loan repayment program.
There is an abundance of evidence supporting older adults staying at home independently lowers hospital admissions, says Katie Smith, an occupational therapy student.
Doug Barber on behalf of the Oregon Rural Health Association testified in reluctant opposition to the bill. He said, “We have no doubt that occupational therapists provide a great service to their clients. However the loan repayment program is the most oversubscribed incentive program we have… There were 124 MDs, NPs, PAs, and dentists that needed this program but were not awarded last year.”
Sen. Elizabeth Steiner Hayward (D-Portland) echoed this sentiment.
HB 2122 – CCO 2.0
Rep. Mitch Greenlick (D-Portland) and House Speaker Rep. Tina Kotek (D-Portland) offered what they thought was a compromise on new CCO requirements. It didn’t work.
Original Bill / CompromiseAll CCOs had to be nonprofit / Grandfathers in existing CCOs; new CCOs could be either nonprofit or B-corps (public benefit corporations)
Subject to public meetings law / Subject to public meetings law
Reserves beyond those needed for actuarial soundness need to be invested in social determinants of health / OHA & DCBS rulemaking to determine necessary level of reserves and how additional funds should be spent on social determinants
Measured outcomes / Deleted from the bill as “too complicated”
Alternative payment methodologies required / APM requirement modified to make it more gradual
Minority Leader Rep. Mike McLane (R-Powell Butte) quickly came to the defense of the for-profit CCOs asking, “Is there a difference in outcomes between nonprofits and for-profits? If not, why do you care?”
Rep. Greenlick responded, “The issue is what happens to the money invested on behalf of the community? We’ve already seen $131 million go back to stockholders rather than to the health of the community.”
Speaker Kotek added, “This isn’t about what’s wrong but about planning for the future.” She went on to say the CCOs are sitting on nearly $1 billion in reserves. “As it is, taxpayer money intended to provide healthcare to vulnerable Oregonians could end up in investors pocket.”
Courtney Johnston, representing COHO which includes most of the for-profit CCOs, asked if the CCOs are subject to public meetings law, whether all of their subcontractors including hospitals and clinics are also subject to public meetings law too?
Jennifer Johnston, Primary Health CCO in Josephine County, said, “I think the unintended consequence of this bill is that we remove some of the flexibility from the CCOs.” She went on to say, “I find it somewhat offensive the implication that a for-profit organization would be a less careful steward of public dollars.”
Josh Balloch, AllCare Health CCO, said, “We either make the health of the community better or we go bankrupt. It is both simple and elegant.”
The committee ran out of time and did not hear all of the planned testimony. Additional hearings are expected.
Kicker Could Kick
Despite the $1.6 billion hole in the current service level budget for 2017-19, word came from Legislative Revenue this week that personal income tax revenue to the state is coming in higher than projected and the personal kicker could kick. That means some $400 million could be returned to taxpayers.
All eyes will be on the Revenue Forecast to be released May 16 for news about the kicker, though economists may not know for certain until summer whether the kicker would kick.,
Oregon’s unique kicker law says if revenues come in more than 2% above projections, all of the revenue above the projection must be rebated to taxpayers.
Oregon Education Investment Initiative
House Speaker Tina Kotek (D-Portland), Ways and Means co-chair Rep. Nancy Nathanson (D-Eugene) and House Revenue Committee chair Rep. Phil Barnhart (D-Eugene) used the new corporate tax structure unveiled by Sen. Hass (see above) for what they call the Oregon Education Investment Initiative, released later in the week.
Their plan eliminates the current corporate income tax and replaces it with a.95% Corporate Activity Tax (on revenues, not profits) for business receipts above $5 million. An estimated 8,000 companies would be subject to that tax. All other companies would pay a $250 corporate minimum tax.
Their proposal also includes $400M in cost containment and $250M in targeted cuts this biennium. Areas for potential savings include PERS, PEBB and OEBB, no new prisons and administrative reductions.
Combined, the new tax plus budget savings would give legislators an additional $3B this biennium.
Rep. Nathanson outlined $2B in new investments legislators would like to make. These include:
- $1.4B in Ed investments including
- $1B K-12 which would buy an additional two weeks to the school year and smaller classes;
- $200M in strategic educational investments
- Up to $150M in Early Childhood
- $350M to pay for BM 96, 98, 99
- $250M Invest in essential services (eg., public safety, child welfare)
House Speaker Rep. Tina Kotek (D-Portland) asked, “Are we going to make students wait another generation for the adults to figure this out?”
Either tax proposal would require a three-fifths vote by both houses of the legislators. More likely, legislators would send the tax measures to voters in a special election this fall.
Business Tax Reform conversation reignited
The legislature has formed a new joint committee, featuring members of the House and the Senate, to reform the state’s tax law. Chair Sen. Mark Hass (D-Beaverton) debuted his proposal that would eliminate the corporate income tax and replace it with a broad gross receipts tax on all corporations, regardless of type. “There have been no backroom deals. The proposal is just that—a proposal. And if anyone has a better idea on how to do this, bring it forward,” said Hass.
Paul Warner, Legislative Revenue, spoke about the advantages and disadvantages of different corporate tax structures.
One advantage of a gross receipts tax, he says, is that it taxes where something is sold. That means it gathers revenue based on the privilege of selling something in the state rather than where a business is incorporated, and gathers revenue from more entities than a corporate income tax.
Under Hass’s proposal, all business entities with more than $150,000 in receipts would be taxed a flat amount of $150. Those entities with more than $1,000,000 in receipts would pay according to a specified rate. This model allows for a lower tax rate across a broader base, says Warner. The downside is you do see some cost shifting to consumers, though it is always debatable how much that is, he says.
Washington and Ohio both have corporate activity taxes such as this one, but they have different ways of tailoring what income is taxed. In Washington, they exempt certain types of transactions such as Medicaid and Medicare payments and governmental transactions, whereas in Ohio they exempt certain business types such as non-profits.
There are also ways to mitigate the impact of cost shifting on low-income individuals such as:
- Earned-income tax credit
- Lower bottom personal income tax credit
- Increase in standard deduction
- Increase in Oregon’s personal exemption credit
Rep. Rob Nosse (D-Portland) asked, “What is the difference between this and measure 97?”
Warner replied, “One of the key distinctions is that this is looking at a new tax, and a new tax base, whereas Measure 97 was looking at the existing corporate tax structure.”
HB 3439 – Corporate Practice of Medicine
The Oregon Nurses Association proposed this bill to allow nurse practitioners and physician assistants in addition to physicians to own a clinic. Under current statute, only a physician may be the majority shareholder in a practice.
There was no opposition. Sen. Laurie Monnes Anderson (D-Gresham) says that they will schedule a work session for the bill.
HB 3404 – Rear-facing car seat for young children
This bill changes Oregon’s rear-facing child car seat requirement from age 1 to age 2. Rep. Sheri Malstrom (D-Beaverton) said, “Children under 2 are 75% less likely to die in an accident if they are rear facing.”
Benjamin Hoffman, MD, a pediatrician who works with families to use car seats safely says, “Car crashes, the leading cause of death for young children.” He demonstrated for the Senate Health Committee the physics of why young children are so much safer in rear-facing child seats.
Kevin Campbell, representing sheriffs and Oregon State Police, said, “Our officers are far more interested in education than penalties for violations of this law.”
There is no opposition to the bill.
SB 719 – Senate passes Extreme Risk Protection Orders
The bill creates a process for obtaining an extreme risk protection order which prohibits a person from possessing a deadly weapon when the court finds that someone is a risk in the near future to themselves or others.
The Senate passed the bill 17-11 on Monday. Sen. Brian Boquist (R-Dallas) carried the bill on the floor but was unable to persuade any of his Republican colleagues to join him in supporting it.
The bill now goes to the House for consideration.
SB 964 – Admitting Privileges for PAs
This bill adds physician assistants to the statute that allows hospitals to give licensed health care practitioners admitting privileges.
Elizabeth Remley, Oregon Society of Physicians Assistants, says this bill clarifies in statute what is already common practice by most hospitals in Oregon. However, there was one hospital that stopped the practice over fear that it was not legal.
The House Health Committee passed the bill unanimously.
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