# Healthy Oregon Act

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Senate Bill 329 of the 74 Oregon Legislative Assembly
HEALTHY OREGON ACT
Printed pursuant to Senate Interim Rule 213.28 by order of the President of the Senate in conformance with presession filing rules, indicating neither advocacy nor opposition on the part of the President (at the request of Senate Interim Commission on Health Care Access and Affordability)
AN ACT Relating to the Oregon Health Fund program; creating new provisions; amending ORS 414.221, 414.312, 414.314, 414.316, 414.318, 414.320 and 442.011 and sections 2 and 3, chapter 314, Oregon Laws 2005; appropriating money; limiting expenditures; and declaring an emergency.
Whereas improving and protecting the health of Oregonians must be a primary issue and an important goal of the state; and
Whereas the objective of Oregon's health care system is health, not just the financing and delivery of health care services; and
Whereas health is more than just the absence of physical and mental disease, it is the product of a number of factors, only one of which is access to the medical system; and
Whereas persons with disabilities and other ongoing conditions can live long and healthy lives; and
Whereas Oregonians cannot achieve the objective of health unless all individuals have timely access to a defined set of essential health services; and
Whereas Oregonians cannot achieve the objective of health unless the state invests not only in health care, but also in education, economic opportunity, housing, sustainable environmental stewardship, full participation and other areas that are important contributing factors to health; and
Whereas the escalating cost of health care is compromising the ability to invest in those other areas that contribute to the health of the population; and
Whereas Oregon cannot achieve its objective of health unless Oregonians control costs in the health care system; and
Whereas Oregon cannot control costs unless Oregonians:
* Develop effective strategies through education of individuals and health care providers, development of policies and practices as well as financial incentives and disincentives to empower individuals to assume more personal responsibility for their own health status through the choices they make;
* Reevaluate the structure of Oregon's financing and eligibility system in light of the realities and circumstances of the 21st century and of what Oregonians want the system to achieve from the standpoint of a healthy population; and
* Rethink how Oregonians define a 'benefit' and restructure the misaligned financial incentives and inefficient system through which health care is currently delivered; and
Whereas public resources are finite, and therefore the public resources available for health care are also finite; and
Whereas finite resources require that explicit priorities be set through an open process with public input on what should and should not be financed with public resources; and
Whereas those priorities must be based on publicly debated criteria that reflect a consensus of social values and that consider the good of individuals across their lifespans; and
Whereas those with more disposable private income will always be able to purchase more health care than those who depend solely on public resources; and
Whereas society is responsible for ensuring equitable financing for the defined set of essential health services for those Oregonians who cannot afford that care; and
Whereas health care policies should emphasize public health and encourage the use of quality services and evidence-based treatment that is appropriate and safe and that discourages unnecessary treatment; and
Whereas health care providers and informed patients must be the primary decision makers in the health care system; and
Whereas access, cost, transparency and quality are intertwined and must be simultaneously addressed for health care reform to be sustainable; and
Whereas health is the shared responsibility of individual consumers, government, employers, providers and health plans; and
Whereas individual consumers, government, employers, providers and health plans must be part of the solution and share in the responsibility for both the financing and delivery of health care; and
Whereas the current health care system is unsustainable in large part because of outdated federal policies that reflect the realities of the last century instead of the realities of today and that are based on assumptions that are no longer valid; and
Whereas the ability of states to maintain the public's health is increasingly constrained by those federal policies, which were built around 'categories' rather than a commitment to ensure all citizens have timely access to essential health services; and
Whereas the economic and demographic environment in which state and federal policies were created has changed dramatically over the past 50 years, while the programs continue to reflect a set of circumstances that existed in the mid-20th century; and
Whereas any strategies for financing, mandating or developing new programs to expand access must address what will be covered with public resources and how those services will be delivered; otherwise, those strategies will do little to stem escalating medical costs, make health care more affordable or create a sustainable system; and
Whereas incremental changes will not solve Oregon's health care crisis and comprehensive reform is required; now, therefore,
Be It Enacted by the People of the State of Oregon:

## SECTION 1 (name of Act)

{ + Sections 2 to 13 of this 2007 Act shall be known and may be cited as the Healthy Oregon Act. + }

## SECTION 2 (definitions)

{ + As used in sections 2 to 13 of this 2007 Act, except as otherwise specifically provided or unless the context requires otherwise:
* Accountable health plan means a prepaid managed care health services organization described in ORS 414.725 or an entity that contracts with the Oregon Health Fund Board to provide a health benefit plan, as defined in ORS 743.730, through the Oregon Health Fund program.
* Core health care safety net provider means a safety net provider that is especially adept at serving persons who experience significant barriers to accessing health care, including homelessness, language and cultural barriers, geographic isolation, mental illness, lack of health insurance and financial barriers, and that has a mission or mandate to deliver services to persons who experience barriers to accessing care and serves a substantial share of persons without health insurance and persons who are enrolled in Medicaid or Medicare, as well as other vulnerable or special populations.
* Defined set of essential health services means the services:
** Identified by the Health Services Commission using the methodology in ORS 414.720 or an alternative methodology developed pursuant to section 9 (3)(c) of this 2007 Act; and
** Approved by the Oregon Health Fund Board.
* Employer has the meaning given that term in ORS 657.025.
* Oregon Health Card means the card issued by the Oregon Health Fund Board that verifies the eligibility of the holder to participate in the Oregon Health Fund program.
* Oregon Health Fund means the fund established in section 8 of this 2007 Act.
* Oregon Health Fund Board means the board established in section 5 of this 2007 Act.
* Safety net provider means providers that deliver health services to persons experiencing cultural, linguistic, geographic, financial or other barriers to accessing appropriate, timely, affordable and continuous health care services. 'Safety net providers' includes health care safety net providers, core health care safety net providers, tribal and federal health care organizations and local nonprofit organizations, government agencies, hospitals and individual providers. + }

## SECTION 3 (principles)

{ + The Oregon Health Fund program shall be based on the following principles:
* Expanding access. The state Medicaid program, the Oregon State Children's Health Insurance Program and the Family Health Insurance Assistance Program must be expanded to include the current uninsured population in Oregon to the greatest extent possible.
* Equity. All individuals must be eligible for and have timely access to at least the same set of essential and effective health services.
* Financing of the health care system must be equitable, broadly based and affordable.
* Population benefit. The public must set priorities to optimize the health of Oregonians.
* Responsibility for optimizing health must be shared by individuals, employers, health care systems and communities.
* Education is a powerful tool for health promotion. The health care system, health plans, providers and government must promote and engage in education activities for individuals, communities and providers.
* Effectiveness. The relationship between specific health interventions and their desired health outcomes must be backed by unbiased, objective medical evidence.
* Efficiency. The administration and delivery of health services must use the fewest resources necessary to produce the most effective health outcome.
* Explicit decision-making. Decision-making will be clearly defined and accessible to the public, including lines of accountability, opportunities for public engagement and how public input will be used in decision-making.
* Transparency. The evidence used to support decisions must be clear, understandable and observable to the public.
* Economic sustainability. Health service expenditures must be managed to ensure long-term sustainability, using efficient planning, budgeting and coordination of resources and reserves, based on public values and recognizing the impact that public and private health expenditures have on each other.
* Aligned financial incentives. Financial incentives must be aligned to support and invest in activities that will achieve the goals of the Oregon Health Fund program.
* Wellness. Health and wellness promotion efforts must be emphasized and strengthened.
* Community-based. The delivery of care and distribution of resources must be organized to take place at the community level to meet the needs of the local population, unless outcomes or cost can be improved at regional or statewide levels.
* Coordination. Collaboration, coordination and integration of care and resources must be emphasized throughout the health care system.
* The health care safety net is a key delivery system element for the protection of the health of Oregonians and the delivery of community-based care.

## SECTION 4 (goals)

{ + The intent of the Healthy Oregon Act is to develop an Oregon Health Fund program comprehensive plan, based upon the principles set forth in section 3 of this 2007 Act, that meets the intended goals of the program to:
* As a primary goal, cover the current uninsured population in Oregon through the expansion of the state Medicaid program, the Oregon State Children's Health Insurance Program and the Family Health Insurance Assistance Program;
* Reform the health care delivery system to maximize federal and other public resources without compromising proven programs supported by federal law that ensure to vulnerable populations access to efficient and high quality care;
* Ensure that all Oregonians have timely access to and participate in a health benefit plan that provides high quality, effective, safe, patient-centered, evidence-based and affordable health care delivered at the lowest cost;
* Develop a method to finance the coverage of a defined set of essential health services for Oregonians that is not necessarily tied directly to employment;
* Allow the potential for employees, employers, individuals and unions to participate in the program, or to purchase primary coverage or offer, purchase or bargain for coverage of benefits beyond the defined set of essential health services;
* Allow for a system of public and private health care partnerships that integrate public involvement and oversight, consumer choice and competition within the health care market;
* Use proven models of health care benefits, service delivery and payments that control costs and overutilization, with emphasis on preventive care and chronic disease management using evidence-based outcomes and a health benefit model that promotes a primary care medical home;
* Provide services for dignified end-of-life care;
* Restructure the health care system so that payments for services are fair and proportionate among various populations, health care programs and providers;
* Fund a high quality and transparent health care delivery system that will be held to high standards of transparency and accountability and allows users and purchasers to know what they are receiving for their money;
* Ensure that funding for health care is equitable and affordable for all Oregon residents, especially the uninsured; and
* Ensure, to the greatest extent possible, that annual inflation in the cost of providing access to essential health care services does not exceed the increase in the cost of living for the previous calendar year, based on the Portland-Salem, OR-WA, Consumer Price Index for All Urban Consumers for All Items, as published by the Bureau of Labor Statistics of the United States Department of Labor.

## SECTION 5 (Health Fund Board membership)

* There is established within the Department of Human Services the Oregon Health Fund Board that shall be responsible for developing the Oregon Health Fund program comprehensive plan. The board shall consist of seven members appointed by the Governor, subject to confirmation by the Senate pursuant to section 4, Article III of the Oregon Constitution. The members of the board shall be selected based upon their ability to represent the best interests of Oregon as a whole. Members of the board shall have expertise, knowledge and experience in the areas of consumer advocacy, management, finance, labor and health care, and to the extent possible shall represent the geographic and ethnic diversity of the state. A majority of the board members must consist of individuals who do not receive or have not received within the past two years more than 50 percent of the individual's income or the income of the individual's family from the health care industry or the health insurance industry.
* Each board member shall serve for a term of four years. However, a board member shall serve until a successor has been appointed and qualified. A member is eligible for reappointment.
* If there is a vacancy for any cause, the Governor shall make an appointment to become effective immediately for the balance of the unexpired term.
* The board shall select one of its members as chairperson and another as vice chairperson, for such terms and with duties and powers necessary for the performance of the functions of such offices as the board determines.
* A majority of the members of the board constitutes a quorum for the transaction of business.
* Official action by the board requires the approval of a majority of the members of the board.
* A member of the board is not entitled to compensation for services as a member, but is entitled to expenses as provided in ORS 292.495 (2).

## SECTION 6 (executive director of OHFB)

* Within 30 days after the effective date of this 2007 Act, the Governor shall appoint an executive director of the Oregon Health Fund Board who will be responsible for establishing the administrative framework for the board.
* The executive director appointed under this section may employ and shall fix the duties and amounts of compensation of persons necessary to carry out the provisions of sections 2 to 13 of this 2007 Act. Those persons shall serve at the pleasure of the executive director.
* The executive director shall serve at the pleasure of the Governor.

## SECTION 7 (relevance of ORS chapter 279)

{ + Except as otherwise provided by law, and except for ORS 279A.250 to 279A.290, the provisions of ORS chapters 279A, 279B and 279C do not apply to the Oregon Health Fund Board. + }

## SECTION 8 (Oregon Health Fund)

* The Oregon Health Fund is established separate and distinct from the General Fund. Interest earned from the investment of moneys in the Oregon Health Fund shall be credited to the fund. The Oregon Health Fund may include:
** Employer and employee health care contributions.
** Individual health care premium contributions.
** Federal funds from Title XIX or XXI of the Social Security Act, and state matching funds, that are made available to the fund, excluding Title XIX funds for long term care supports, services and administration, and reimbursements for graduate medical education costs pursuant to 42 U.S.C. 1395ww(h) and disproportionate share adjustments made pursuant to 42 U.S.C. 1396a(a)(13)(A)(iv).
** Contributions from the United States Government and its agencies for which the state is eligible provided for purposes that are consistent with the goals of the Oregon Health Fund program.
** Moneys appropriated to the Oregon Health Fund Board by the Legislative Assembly for carrying out the provisions of the Healthy Oregon Act.
** Interest earnings from the investment of moneys in the fund.
** Gifts, grants or contributions from any source, whether public or private, for the purpose of carrying out the provisions of the Healthy Oregon Act.
** All moneys in the Oregon Health Fund are continuously appropriated to the Oregon Health Fund Board to carry out the provisions of the Healthy Oregon Act.
** The Oregon Health Fund shall be segregated into subaccounts as required by federal law.

## SECTION 9 (OHFB committee on federal law)

** The Oregon Health Fund Board shall establish a committee to examine the impact of federal law requirements on reducing the number of Oregonians without health insurance, improving Oregonians' access to health care and achieving the goals of the Healthy Oregon Act, focusing particularly on barriers to reducing the number of uninsured Oregonians, including but not limited to:
** With the approval of the Oregon Health Fund Board, the committee shall report its findings to the Oregon congressional delegation no later than July 31, 2008.
** The committee shall request that the Oregon congressional delegation:
* The Oregon Health Fund Board shall develop a comprehensive plan to achieve the Oregon Health Fund program goals listed in section 4 of this 2007 Act. The board shall establish subcommittees, organized to maximize efficiency and effectiveness and assisted, in the manner the board deems appropriate, by the Oregon Health Policy Commission, the Office for Oregon Health Policy and Research, the Health Services Commission and the Medicaid Advisory Committee, to develop proposals for the Oregon Health Fund program comprehensive plan. The proposals may address, but are not limited to, the following:
** Financing the Oregon Health Fund program, including but not limited to proposals for:
** Delivering health services in the Oregon Health Fund program, including but not limited to proposals for:
** Establishing the defined set of essential health services, including but not limited to proposals for a methodology, consistent with the principles in section 3 of this 2007 Act, for determining and continually updating the defined set of essential health services. The Oregon Health Fund Board may delegate this function to the Health Services Commission established under ORS 414.715.
** The eligibility requirements and enrollment procedures for the Oregon Health Fund program, including, but not limited to, proposals for:
* On the effective date of this 2007 Act, the Oregon Health Policy Commission, the Office for Oregon Health Policy and Research, the Health Services Commission and the Medicaid Advisory Committee are directed to begin compiling data and conducting research to inform the decision-making of the subcommittees when they are convened. No later than February 1, 2008, the Oregon Health Policy Commission, the Office for Oregon Health Policy and Research, the Health Services Commission and the Medicaid Advisory Committee shall present reports containing data and recommendations to the subcommittees as follows:
** The Oregon Health Policy Commission shall report on the financing mechanism for the comprehensive plan;
** The Administrator of the Office for Oregon Health Policy and Research shall report on the health care delivery model of the comprehensive plan;
** The Health Services Commission shall report on the methodology for establishing the defined set of essential health services under the comprehensive plan; and
** The Medicaid Advisory Committee shall report on eligibility and enrollment requirements under the comprehensive plan.
* The membership of the subcommittees shall, to the extent possible, represent the geographic and ethnic diversity of the state and include individuals with actuarial and financial management experience, individuals who are providers of health care, including safety net providers, and individuals who are consumers of health care, including seniors, persons with disabilities and individuals with complex medical needs.
* Each subcommittee shall select one of its members as chairperson for such terms and with such duties and powers necessary for performance of the functions of those offices. Each chairperson shall serve as an ex officio member of the Oregon Health Fund Board. Chairpersons shall collaborate to integrate the committee recommendations to the extent possible.
* The committee and the subcommittees are public bodies for purposes of ORS chapter 192 and must provide reasonable opportunity for public testimony at each meeting.
* All agencies of state government, as defined in ORS 174.111, are directed to assist the committee, the subcommittees and the Oregon Health Fund Board in the performance of their duties and, to the extent permitted by laws relating to confidentiality, to furnish such information and advice as the members of the committees, the subcommittees and the Oregon Health Fund Board consider necessary to perform their duties.
* The Oregon Health Fund Board shall report to the Legislative Assembly not later than February 29, 2008. The report must describe the progress of the subcommittees and the board toward developing a comprehensive plan to:
** Decrease the number of children and adults without health insurance;
** Ensure universal access to health care;
** Contain health care costs; and
** Address issues regarding the quality of health care services.
* The Oregon Health Fund Board shall present a plan to the Legislative Assembly not later than February 1, 2008, for the design and implementation of the health insurance exchange described in subsection (2)(a)(C) of this section. + }

## SECTION 10 (public hearings)

{ + The Oregon Health Fund Board shall conduct public hearings on the draft Oregon Health Fund program comprehensive plan developed under section 9 of this 2007 Act and solicit testimony and input from advocates representing seniors, persons with disabilities, tribes, consumers of mental health services, low-income Oregonians, employers, employees, insurers, health plans and providers of health care including, but not limited to, physicians, dentists, oral surgeons, chiropractors, naturopaths, hospitals, clinics, pharmacists, nurses and allied health professionals. + }

## SECTION 11 (OHFB comprehensive plan)

* The Oregon Health Fund Board shall finalize the Oregon Health Fund program comprehensive plan developed under section 9 of this 2007 Act with due consideration to the information provided in the public hearings under section 10 of this 2007 Act and shall present the finalized comprehensive plan to the Governor, the Speaker of the House of Representatives and the President of the Senate no later than October 1, 2008. The board is authorized to submit the finalized comprehensive plan as a measure request directly to the Legislative Counsel upon the convening of the Seventy-fifth Legislative Assembly.
* Upon legislative approval of the comprehensive plan, the board is authorized to request federal waivers deemed necessary and appropriate to implement the comprehensive plan.
* Upon legislative approval of the comprehensive plan, the board is authorized immediately to implement any elements necessary to implement the plan that do not require legislative changes or federal approval.

## SECTION 12 (comprehensive plan must cover certain Oregonians)

* The Oregon Health Fund program comprehensive plan described in section 11 of this 2007 Act must ensure, except as provided in subsection (2) of this section, that a resident of Oregon who is not a beneficiary of a health benefit plan providing coverage of the defined set of essential health services and who is not eligible to be enrolled in a publicly funded medical assistance program providing primary care and hospital services participates in the Oregon Health Fund program. A resident of Oregon who is a beneficiary of a health benefit plan or enrolled in a medical assistance program described in this subsection may choose to participate in the program. An employee of an employer located in this state may participate in the program if Oregon is the location of the employee's physical worksite, regardless of the employee's state of residence.
* Oregon residents who are enrolled in commercial health insurance plans, self-insured programs, health plans funded by a Taft-Hartley trust, or state or local government health insurance pools may not be required to participate in the Oregon Health Fund Program.

## SECTION 13 (evaluation plan)

* The Administrator of the Office for Oregon Health Policy and Research, in collaboration with the Oregon Health Research and Evaluation Collaborative and other persons with relevant expertise, shall be responsible for developing a plan for evaluating the implementation and outcomes of the legislation described in section 11 of this 2007 Act. The evaluation plan shall focus particularly on the individuals receiving health care covered through the state Medicaid program, the Oregon State Children's Health Insurance Program and the Family Health Insurance Assistance Program and shall include measures of:
** Access to care;
** Access to health insurance coverage;
** Quality of care;
** Consumer satisfaction;
** Health status;
** Provider capacity;
** Population demand;
** Provider and consumer participation;
** Utilization patterns;
** Health outcomes;
** Health disparities;
** Financial impacts, including impacts on medical debt;
** The extent to which employers discontinue coverage due to the availability of publicly financed coverage or other employer responses;
** Impacts on the financing of health care and uncompensated care;
** Adverse selection, including migration to Oregon primarily for access to health care;
** Use of technology;
** Transparency of costs; and
** Impact on health care costs.
* The administrator shall develop recommendations for a model quality institute that shall:
** Develop and promote methods for improving collection, measurement and reporting of information on quality in health care;
** Provide leadership and support to further the development of widespread and shared electronic health records;
** Develop the capacity of the workforce to capitalize on health information technology;
** Encourage purchasers, providers and state agencies to improve system transparency and public understanding of quality in health care;
** Support the Oregon Patient Safety Commission's efforts to increase collaboration and state leadership to improve health care safety; and
** Coordinate an effort among all state purchasers of health care and insurers to support delivery models and reimbursement strategies that will more effectively support infrastructure investments, integrated care and improved health outcomes.

## SECTION 14 (ORS 442.011)

ORS 442.011 is amended to read:
   442.011
   * There is created in the { - Oregon Department of Administrative Services - } { + Department of Human Services + } the Office for Oregon Health Policy and Research. The Administrator of the Office for Oregon Health Policy and Research shall be appointed by the Governor and the appointment shall be subject to Senate confirmation in the manner prescribed in ORS 171.562 and 171.565. The administrator shall be an individual with demonstrated proficiency in planning and managing programs with complex public policy and fiscal aspects such as those involved in the Oregon Health Plan. Before making the appointment, the Governor must advise the President of the Senate and the Speaker of the House of Representatives of the names of at least three finalists and shall consider their recommendation in appointing the administrator.
   * In carrying out the responsibilities and duties of the administrator, the administrator shall consult with and be advised by the Oregon Health Policy Commission { + and the Oregon Health Fund Board + }.

## SECTION 15 (ORS 442.011)

ORS 442.011, as amended by section 14 of this 2007 Act, is amended to read:
   442.011
   * There is created in the Department of Human Services the Office for Oregon Health Policy and Research. The Administrator of the Office for Oregon Health Policy and Research shall be appointed by the Governor and the appointment shall be subject to Senate confirmation in the manner prescribed in ORS 171.562 and 171.565. The administrator shall be an individual with demonstrated proficiency in planning and managing programs with complex public policy and fiscal aspects such as those involved in the Oregon Health Plan. Before making the appointment, the Governor must advise the President of the Senate and the Speaker of the House of Representatives of the names of at least three finalists and shall consider their recommendation in appointing the administrator.
   * In carrying out the responsibilities and duties of the administrator, the administrator shall consult with and be advised by the Oregon Health Policy Commission { - and the Oregon Health Fund Board - } .

## SECTION 16 (ORS 414.221)

ORS 414.221 is amended to read:
   414.221.
   The Medicaid Advisory Committee shall advise the Administrator of the Office for Oregon Health Policy and Research and the { - Department - } { + Director + } of Human Services on:
   * Medical care, including mental health and alcohol and drug treatment and remedial care to be provided under ORS chapter 414; and
   * The operation and administration of programs provided under ORS chapter 414.

## SECTION 17 (ORS 414.312)

ORS 414.312, as amended by section 1, chapter 2, Oregon Laws 2007 (Ballot Measure 44 (2006)), is amended to read:
   414.312.
   * As used in ORS 414.312 to 414.318:
   ** 'Pharmacy benefit manager' means an entity that, in addition to being a prescription drug claims processor, negotiates and executes contracts with pharmacies, manages preferred drug lists, negotiates rebates with prescription drug manufacturers and serves as an intermediary between the Oregon Prescription Drug Program, prescription drug manufacturers and pharmacies.
   ** 'Prescription drug claims processor' means an entity that processes and pays prescription drug claims, adjudicates pharmacy claims, transmits prescription drug prices and claims data between pharmacies and the Oregon Prescription Drug Program and processes related payments to pharmacies.
   ** 'Program price' means the reimbursement rates and prescription drug prices established by the administrator of the Oregon Prescription Drug Program.
   * The Oregon Prescription Drug Program is established in the { - Oregon Department of Administrative Services - } { + Department of Human Services + }. The purpose of the program is to:
   ** Purchase prescription drugs or reimburse pharmacies for prescription drugs in order to receive discounted prices and rebates;
   ** Make prescription drugs available at the lowest possible cost to participants in the program; and
   ** Maintain a list of prescription drugs recommended as the most effective prescription drugs available at the best possibleprices.
   * The Director of { - the Oregon Department of Administrative Services - } { + Human Services + } shall appoint an administrator of the Oregon Prescription Drug Program. The administrator shall:
   ** Negotiate price discounts and rebates on prescription drugs with prescription drug manufacturers;
   ** Purchase prescription drugs on behalf of individuals and entities that participate in the program;
   ** Contract with a prescription drug claims processor to adjudicate pharmacy claims and transmit program prices to pharmacies;
   ** Determine program prices and reimburse pharmacies for prescription drugs;
   ** Adopt and implement a preferred drug list for the program;
   ** Develop a system for allocating and distributing the operational costs of the program and any rebates obtained to participants of the program; and
   ** Cooperate with other states or regional consortia in the bulk purchase of prescription drugs.
   * The following individuals or entities may participate in the program:
   ** Public Employees' Benefit Board;
   ** Local governments as defined in ORS 174.116 and special government bodies as defined in ORS 174.117 that directly or indirectly purchase prescription drugs;
   ** Enrollees in the Senior Prescription Drug Assistance Program created under ORS 414.342;
   ** Oregon Health and Science University established under ORS 353.020;
   ** State agencies that directly or indirectly purchase prescription drugs, including agencies that dispense prescription drugs directly to persons in state-operated facilities; and
   ** Residents of this state who do not have prescription drug coverage.
   * The state agency that receives federal Medicaid funds and is responsible for implementing the state's medical assistance program may not participate in the program.
   * The administrator may establish different reimbursement rates or prescription drug prices for pharmacies in rural areas to maintain statewide access to the program.
   * The administrator shall establish the terms and conditions for a pharmacy to enroll in the program. A licensed pharmacy that is willing to accept the terms and conditions established by the administrator may apply to enroll in the program.
   * Except as provided in subsection (9) of this section, the administrator may not:
   ** Contract with a pharmacy benefit manager;
   ** Establish a state-managed wholesale or retail drug distribution or dispensing system; or
   ** Require pharmacies to maintain or allocate separate inventories for prescription drugs dispensed through the program.
   * The administrator shall contract with one or more entities to provide the functions of a prescription drug claims processor. The administrator may also contract with a pharmacy benefit manager to negotiate with prescription drug manufacturers on behalf of the administrator.
   * Notwithstanding subsection (4)(f) of this section, individuals who are eligible for Medicare Part D prescription drug coverage may participate in the program.

## SECTION 18 (ORS 414.314)

ORS 414.314 is amended to read:
   414.314.
   * An individual or entity described in ORS 414.312 (4) may apply to participate in the Oregon Prescription Drug Program. Participants shall apply annually on an application provided by the { - Oregon Department of Administrative Services - } { + Department of Human Services + }. The department may charge participants a nominal fee to participate in the program. The department shall issue a prescription drug identification card annually to participants of the program.
   * The department shall provide a mechanism to calculate and transmit the program prices for prescription drugs to a pharmacy. The pharmacy shall charge the participant the program price for a prescription drug.
   * A pharmacy may charge the participant the professional dispensing fee set by the department.
   * Prescription drug identification cards issued under this section must contain the information necessary for proper claims adjudication or transmission of price data.

## SECTION 19 (ORS 414.316)

ORS 414.316 is amended to read:
   414.316. The Office for Oregon Health Policy and Research shall develop and recommend to the { - Oregon Department of Administrative Services - } { + Department of Human Services + } a preferred drug list that identifies preferred choices of prescription drugs within therapeutic classes for particular diseases and conditions, including generic alternatives, for use in the Oregon Prescription Drug Program. The office shall conduct public hearings and use evidence-based evaluations on the effectiveness of similar prescription drugs to develop the preferred drug list.

## SECTION 20 (ORS 414.318)

ORS 414.318 is amended to read:
   414.318. The Prescription Drug Purchasing Fund is established separate and distinct from the General Fund. The Prescription Drug Purchasing Fund shall consist of moneys appropriated to the fund by the Legislative Assembly and moneys received by the { - Oregon Department of Administrative Services - } { + Department of Human Services + } for the purposes established in this section in the form of gifts, grants, bequests, endowments or donations. The moneys in the Prescription Drug Purchasing Fund are continuously appropriated to the { - Oregon Department of Administrative Services - } { + department + } and shall be used to purchase prescription drugs, reimburse pharmacies for prescription drugs and reimburse the department for the costs of administering the Oregon Prescription Drug Program, including contracted services costs, computer costs, professional dispensing fees paid to retail pharmacies and other reasonable program costs. Interest earned on the fund shall be credited to the fund.

## SECTION 21 (ORS 414.320)

ORS 414.320 is amended to read:
   414.320. The { - Oregon Department of Administrative Services - } { + Department of Human Services + } shall adopt rules to implement and administer ORS 414.312 to 414.318. The rules shall include but are not limited to establishing procedures for:
   * Issuing prescription drug identification cards to individuals and entities that participate in the Oregon Prescription Drug Program; and
   * Enrolling pharmacies in the program.

## SECTION 22 (Oregon Laws Section 2, chapter 314)

Section 2, chapter 314, Oregon Laws 2005, is amended to read:
   { + Sec. 2. + } In addition to the notices required under ORS 183.335 (15), the { - Oregon Department of Administrative Services - } { + Department of Human Services + } shall give notice to the individual members of any interim or session committee with authority over the subject matter of the rule if the department proposes to adopt a rule under ORS 414.320.

## SECTION 23 (Oregon Laws Section 3, chapter 314)

Section 3, chapter 314, Oregon Laws 2005, is amended to read:
   { + Sec. 3. + } Section 2 { + , chapter 314, Oregon Laws 2005, + } { - of this 2005 Act - } applies to rules adopted by the { - Oregon Department of Administrative Services - } { + Department of Human Services + } for the Oregon Prescription Drug Program on or after { - the effective date of this 2005 Act - } { + June 28, 2005 + }.

## SECTION 24 (appropriation)

* There is appropriated to the Oregon Health Fund Board, for the biennium beginning July 1, 2007, out of the General Fund, the amount of $1 for the purpose of carrying out the provisions of sections 2 to 13 of this 2007 Act.
* Notwithstanding any other law limiting expenditures, the amount of $1 is established for the biennium beginning July 1, 2007, as the maximum limit for payment of expenses from fees, moneys or other revenues, including Miscellaneous Receipts, but excluding lottery funds and federal funds, collected or received by the Oregon Health Fund Board. + }

## SECTION 25 (DHS appropriation)

* There is appropriated to the Department of Human Services, for the biennium beginning July 1, 2007, out of the General Fund, the amount of $1,215,350 for the purpose of carrying out the provisions of sections 2 to 13 of this 2007 Act.
* Notwithstanding any other law limiting expenditures, the amount of $671,971 is established for the biennium beginning July 1, 2007, as the maximum limit for payment of expenses from federal funds collected or received by the Department of Human Services, for the purpose of carrying out sections 2 to 13 of this 2007 Act. + }

## SECTION 26 (expenditures)

* The unexpended balances of amounts authorized to be expended by the Oregon Department of Administrative Services for the biennium beginning July 1, 2007, from revenues dedicated, continuously appropriated, appropriated or otherwise made available for the purpose of administering and enforcing the duties, functions and powers transferred by the amendments to statutes and session laws by sections 14 and 16 to 23 of this 2007 Act are transferred to and are available for expenditure by the Department of Human Services, for the purposes of administering and enforcing the duties, functions and powers transferred by the amendments to statutes and session laws by sections 14 and 16 to 23 of this 2007 Act.
* The expenditure classifications, if any, established by Acts authorizing or limiting expenditures by the Oregon Department of Administrative Services remain applicable to expenditures by the Department of Human Services under this section. + }

## SECTION 27

{ + Sections 1 to 13 of this 2007 Act are repealed on January 2, 2010. + }

## SECTION 28

{ + The amendments to ORS 442.011 by section 15 of this 2007 Act become operative on January 2, 2010. + }

## SECTION 29 (emergency clause)

{ + This 2007 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2007 Act takes effect on its passage. + }

## Passage

* Passed by Senate June 20, 2007
* Passed by House June 22, 2007
* Received by Governor:
* Filed in Office of Secretary of State:

## External links

* Enrolled version of the bill, as approved by the House and Senate and signed by the Governor.
* Earlier versions, and HTML versions may be found by searching this site for Senate Bill 329 of 2007.