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Legislative Report for March 24, 2017


The legislature has entered its “hurry up and wait” phase as we near the first major milestone of session: the chamber of origin deadline. If a bill has not been scheduled for a work session in the chamber in which it was introduced by Friday, April 7, the bill would be considered effectively dead. There is a lull in activity while leadership and power brokers hammer out policy negotiations.


Negotiations on a budget framework are ongoing, but there is still a public standoff between members of the budget and revenue committees. Legislators on the budget-writing committee are frequently referencing their desire for the revenue committee to define a framework for a tax package before any balancing occurs. The negotiations on a potential revenue package will last throughout session, and we should not expect any clarity until the final days before sine die. In a perfect world, the revenue committees would use a budget framework to determine the amount of money needed to balance the budget priorities. The absence of activity on either side of the equation only perpetuates the budget stalemate. Eventually, the budget-writing process will move forward and identify the needs to guide the revenue discussion. The lackluster pace of defining a budget plan is concerning, however, because the number of weeks remaining in session is limited.


All eyes were on the drama unfolding in Washington, D.C. this week as congressional leadership canceled two votes on the much-discussed plan to repeal and replace the Affordable Care Act. The plan would significantly defund and reprogram the health care reform, changing the pillars of the healthcare system for states and the industry. Besides the individual policy considerations, Republican leaders have boxed themselves into a proposal seen by moderates as too conservative and by conservatives as not conservative enough. Speaker Paul Ryan, a self-professed policy wonk, and his leadership team have advanced a policy proposal they believe to be the right response to the current system created under a liberal administration. However, the policy has fractured the caucus’ coalition in the chamber and is requiring leadership to fight a policy war on two fronts. Regardless of one’s personal opinions of Obamacare or the plan to replace the program, the repeal conversation has created strong uncertainty for state governments as they draft their operating budgets.


Speaker Ryan held a press conference earlier this afternoon to brief reporters on his discussion with his leadership team and the administration that resulted in abandoning the current effort. He referred to the failure and ultimate demise of the proposal as “growing pains” for Republicans given their newfound control over the federal government. Speaker Ryan said the conversation regarding changes to Obamacare will continue but, for now, the conversation has ended and congressional leadership will shift its attention to the equally challenging task of federal tax reform.


Closing the chapter on repealing the Affordable Care Act may bring additional certainty to state governments and their Medicaid budgets, but the proposals to reform the federal tax code also pose a significant challenge for states crafting their operating budgets. The congressional blueprint for tax reform, called the “Better Way” agenda, calls for the largest rewrite of the tax code since the Reagan-era reforms. The blueprint calls for significant tax cuts funded by a broadening of the tax base and elimination of tax breaks for individuals. Depending on the specific details of tax reform, state legislatures could be faced with either a windfall of new revenue or budget shortfalls further collapsing. Before anyone reacts to the possibility of federal tax reform, we need to remember how healthcare unfolded and realize that talk about reform is very different from reform itself.


OMT reimbursement bill


This week, the Senate Committee on Health Care held a public hearing on SB 963, which seeks to address the issue of insurers denying payment for evaluation and management when osteopathic manipulative treatment (OMT) occurs during the same office visit. The bill states that insurers cannot deny reimbursement for either service based solely on the fact that they happened on the same day.


David Walls, Executive Director of the Osteopathic Physicians and Surgeons of Oregon, testified in support of the bill, along with Dr. Paul Weaver. The two provided some background on OMT, the issue at hand, and how the bill works. Walls and your Pac/West lobbyist Sabrina Riggs met with committee members prior to the hearing, so members did not have many questions during the hearing.


Cambia Health provided the only testimony in opposition to the bill, and it was clear that their lobbyist did not understand what osteopathic manipulative treatment is. He testified that the evaluation and management piece of the office visit is included in the osteopathic manipulative treatment piece. Sen. Elizabeth Steiner Hayward (MD; D-NW Portland) made the point that the two services are distinct and separate, using examples from her own practice.


Following Sen. Steiner Hayward’s comments, Chair Laurie Monnes Anderson (D-Gresham) asked the committee staff to post the bill for a work session, which is occurring on March 30. We expect the bill to move out of the committee and onto the Senate floor.


Extended stay at ambulatory surgery centers


There has been an ongoing discussion in the legislature and in stakeholder workgroups over the past three years to find a compromise between the hospital association and ambulatory surgery center association allowing extended stay facilities. The change in policy would enable surgery centers to conduct more expansive procedures and provide patients additional time to recover without the added risk of transport to a hospital. The hospital association has been concerned the expansion of the surgery centers would result in a market loss for their members as more patients would be allured to the surgery centers.


The ambulatory surgery centers introduced a compromised approach to the policy change that would establish a pilot program allowing 16 surgery centers to have extended stay abilities. Of the 16 centers, eight would be required to be joint-ventures with a hospital, five would be independently owned and three would be approved on a first-come-first-serve basis. The pilot program would expire in 2023, requiring the legislature to either extend or make permanent the provisions in order for surgery centers to continue operating the expanded facilities.


On Friday, the House Health Care Committee held a hearing on HB 2664, the compromise legislation introduced by the surgery center association. The association introduced new amendments that would redefine statutory definitions that had confused certain provider groups (there is language in the original bill that would require all surgery centers to be associated with a hospital).


Two members of the hospital association, Asante and Salem Health, raised eleventh-hour concerns regarding the proposal, suggesting they had been left out of the process and the matter needed further examination before a pilot project could begin. These criticisms were poorly received by many members of the committee, who have worked tirelessly for the past several years to find a compromise between the hospitals, health systems and surgery centers. Some members of the committee were receptive to the concerns from the two hospital systems, saying they felt the lobbyist for the surgery center had been disingenuous to the committee by suggesting there was an agreement.


Chair Mitch Greenlick (D-Portland) informed the committee he would give proponents and opponents an additional week to reach common ground or the bill would not move out of his committee before the chamber deadline.


Contraception in House Health Care


This week, the House Committee on Health Care heard two bills regarding contraception. The first, HB 2527, allows pharmacists to prescribe self-administered forms of hormonal birth control, such as vaginal rings. This bill is a follow-up to a bill that this legislative body passed last session, which allows pharmacists to prescribe the birth control pill.


The committee also held a public hearing on HB 3135, which requires medical assistance coverage of long-acting, reversible contraceptive devices during hospital stays for labor and delivery. Currently, the Oregon Health Plan (OHP) does not allow coverage of immediate insertion, which is problematic because 10-40 percent of women do not attend their postpartum visit, and 4-75 percent of women who plan to use an Intrauterine Device (IUD) after pregnancy do not obtain one.


There was no opposition to the bill, and supporters stated that The American Congress of OBGYNs (ACOG) recommends that women who want IUDs should have them placed immediately after birth, rather than waiting until their postpartum checkup visit.


A fascinating roundtable discussion on prescription drugs


The prescription drug bill brought by Rep. Rob Nosse (D-Portland) had an extraordinary public hearing on Wednesday. HB 2387 is a culmination of the workgroup led by Rep. Nosse in the interim that was widely praised for its process, despite unresolved differences of the workgroup members along party lines.


The House Health Care Committee met in a basement conference room to accommodate the larger-than-usual gallery. Chair Mitch Greenlick (D-Portland) started by asking each member of the committee to go around and give comments about what they think about the bill. (Committee members, especially Republicans, complained about not being prepared to give statements, despite Chair Greenlick’s insistence that he had warned them ahead of time.)


Rep. Cedric Hayden (R-Roseburg) said the bill was a little too aggressive and experimental. He noted that some people rely on life-saving drugs, and if the legislature imposes such novel and burdensome requirements on drug manufacturers, there is a risk of patients losing that access. Rep. Hayden called for sideboards on the bill, such as limiting the scope of the bill to only certain categories of drugs—starting small instead of going the “full mile.”


Reps. Sheri Malstrom (D-Beaverton) and Teresa Alonso Leon (D-Woodburn), freshmen legislators who are new on the committee, shared stories they heard in their campaigns about the need for reducing the high cost of prescription drugs. However, they offered few specifics about the bill.


Rep. Alissa Keny-Guyer (D-Portland) called out a line of argumentation of the bill’s opponents: that change must happen at the federal, not state, level. However, things are stuck at the federal level, she said. States can be innovative. She called the bill bold and thoughtful, painting it as a cost-sharing measure among patients (for their copays), insurance (for its responsibility to insure patients’ pharmacy benefits at a certain level) and pharmaceutical manufacturers, who are subject to the bill’s controversial rebate requirements. Right now, she said, we (the United States) are picking up the cost of research and development, and drug companies need to pay their fair share.


Rep. Bill Kennemer (R-Oregon City), who served on workgroup, criticized the bill for singling out one “boogeyman” (the pharmaceutical companies). He said, “You need to start somewhere—cost. But there are a lot of costs. Providers are charging outrageous rates. Pharmaceuticals are part of that.” He noted too the role of the federal government, but agreed with Rep. Keny-Guyer that things are totally gridlocked at the federal level. Rep. Kennemer also noted the importance of life-saving innovations in medicine, fearing this bill could stifle innovation. He shared a poignant story of his first wife, who died of breast cancer. “Today, she would have a 99 percent chance of survival,” he said.


Rep. Knute Buehler (R-Bend) said he feared the unintended consequences of the bill. “Price controls rarely, if ever, work,” he said. He disapproved of setting a price cap that’s tied to mean drug prices in Organization for Economic Cooperation and Development (OECD) countries. Those are very different health care systems, he said.


Rep. Buehler also said he is particularly concerned about the effect of this bill on Oregon’s burgeoning bioscience industry. Later in the debate, Rep. Keny-Guyer made the point that this bill applies to all pharmaceutical companies selling drugs in Oregon, not just those that are based here. Rep. Buehler said he understood that, but it’s more about the message it would send to those companies. Rep. Buehler also said this bill would be windfall for payers. Why should they capture future savings when drug manufacturers bear all the risk and innovation?


Chair Greenlick concluded opening remarks by saying he has been hearing the same thing about prescription drugs since the 1950s, but since then, little has been done. He then asked Rep. Nosse to go through the bill section by section, giving each member of the committee an opportunity to react.


Lorey Freeman of Legislative Counsel presented each section. Section 1 establishes the “foreign price cap” as an average of the five OECD countries with the highest prices for a particular drug—for any price in excess of this amount, the manufacturer must issue a rebate to the payer. There is also a notice requirement, which is designed to give insurers predictability in their rate-setting process.


Responding to Rep. Buehler’s comments about price control, Rep. Keny-Guyer said she doesn’t think of it as a price control. She said, “We put floor and ceilings on all sorts of business activity, like payday loan sharks.” Referencing a comment by Rep. Hayden, she said she supports value-based pricing. However, there are no proposed amendments to the bill that would do that.


Freeman then described Section 2, which is the price cap for consumers. Rep. Hayden said this could inflate drug costs. Drug companies would be happy because instead of putting costs on patients, which they can struggle to pay, the burden now goes to the insurer.


Chair Greenlick responded, saying that might be true if the section were implemented alone, but the other sections of the bill constrain that possibility. That’s why there are four sections of the bill, he said. Chair Greenlick told the story of a mother whose two children suffer from hemophilia, and their drugs cost $120,000 per year. Since their out-of-pocket maximums are $6,500, she has to write a check for $13,000 every January to give her children the medicine they need. Chair Greenlick agreed that that provision would be problematic by itself. But including it with the other parts is what makes it work. He said he was told by MODA that a $100 cap would lead to a 1 percent increase in premiums. It’s worth the additional costs across the system to reduce costs on families like this, he said.


Rep. Hack asked, What happens to the increase in premiums? Does it get passed on to the consumer? Where’s our guarantee that that $1,300 check they have to write doesn’t lead to increases in premiums or other increases?


The committee debated those hypotheticals, then concluded discussion of the bill. The members praised the round-table process, but complained again about a lack of advance notice. Jokingly, Chair Greenlick asked Rep. Hayden if he could compound his frustration by asking for a closing statement. Jovially, the committee adjourned with neither public comment nor bipartisan agreement.

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