1. Pam Mariea-Nason RN, MBA CareOregon Director of Health Policy & Community Engagement The Oregon “Provider” Tax

2. The largest of the 14 fully capitated health plans (Medicaid MCOs) that are the backbone of the delivery system in Oregon. The only non-profit, non-taxable 501(c)3. Serve 111,000 members, including approx 6,000 dual-eligibles (in our SNP). Serve members in 16 counties, very urban and very rural Over 4,000 primary care providers and specialists …MDs, DOs and NPs are PCPs. Contract with more than 330 hospitals & clinics. Reimbursement rates are low, which means finding enough access is an ongoing challenge. 2

3. Population 3,800,000 Oregon is facing a $4 billion budget gap for the next biennium (2 year cycle) 600,000 Oregonians without health insurance – 116,000 of them are children 2003 - 100,000+ adults cut from the Oregon Health Plan 2004 - Hospitals saw almost 3 fold increase in uncompensated care… 3

4. “Specifically, we found that, on average, disenrollment of a single OHP adult leads to a $852 increase in hospital uncompensated care, and an estimated $1,352 increase in total uncompensated care. When the federal match for OHP spending is considered, it appears that any savings that may have accrued through disenrollment of OHP members may have been offset by increases in uncompensated care that take the form of a hidden tax on commercial premiums.” Oregon’s Cost-Shift: The Effect of Public Insurance Coverage on Uncompensated Care K. John McConnell PhD Oregon Health & Science University Neal Wallace, PhD Portland State University 4

5. Lots of people meet, we create a “roadmap” for change. Good news! There is general recognition of the need to build on Medicaid as a base for system reform. The not so good news… There is a complicated, unprecedented funding proposal of “transaction taxes” to get started. Like a bad first date ~ Practical experience meets the desire for health care reform… Fast Forward 5

6. CareOregon has been a strong supporter of the state’s reform efforts. BUT….we recognized the need for the continuation of the existing MCO tax while also supporting the restructure of the provider tax. This is Oregon after all, and we get very cranky about new taxes (no sales tax & only state to decrease tobacco tax through ballot measure system). 6

7. The 2003 Oregon Legislature passed HB 2747 creating industry-supported “provider” taxes. The hospital provider tax and the Medicaid managed care tax generate revenue to pay for costs associated with the Oregon Health Plan (OHP) Standard program, (Oregon’s Medicaid Expansion program operating under an 1115 waiver), which receives no General Fund support. Medicaid MCO tax alone generates nearly $180 million per year with Federal Match Both taxes sunset October 1, 2009. 7

8. By the end of the 2009-2011 biennium… The hospital provider tax will fund an expansion of OHP Standard by another 35,000 people, to a total of 60,000. The tax on commercial managed care organizations will fund 80,000 children through a new Healthy Kids Plan. ~20,000 will be in commercial products through our FHIAP program. 8

9. We began a series of meetings well in advance of the legislative session and the release of the draft reform plan. Stakeholders included: Commercial Insurance plans, Hospital Association, Governor’s office, Media Meetings challenged these players to step into leadership role and develop proposal to continue the tax, rather than leave it to the Legislature… 9

10. We all got the job done - Weeks of closed door meetings. Fewer people covered than we’d like. Still risk of a referendum, because this is Oregon. No money dedicated for access or quality improvement. A lot more people will have coverage and we’ll be able to draw down about a billion dollars. 10

11. [1] "Net Revenue" is the total amount of charges for inpatient or outpatient care provided by the hospital to patients, less charity care, bad debts, and contractual adjustments. HB 2116 SECTION 9. (2) Medicaid managed care organization shall pay an assessment at a rate of one percent of the gross amount of capitation payments received by the Medicaid managed care organization HB 2116 SECTION 17. (1) The hospital tax rate will be based on the net revenue of each hospital subject to assessment, not to exceed 1.5 percent. The current rate is.63% of net revenue [1]. 11 * Pending CMS Approval

12. Pam Mariea-Nason 503-416-5758 mariea-nasonp@careoregon.org 12