Oregon – The National Academy for State Health Policy

State Medicaid Approaches to Doula Service Benefits

November 14, 2022/in Maternal, Child, and Adolescent Health Minnesota, New Jersey, Oregon Charts, Featured News Home /by Taylor Platt, Veronnica Thompson and Anoosha Hasan

Emerging State Innovations in Developing a Medicaid Community-Based Palliative Care Benefit

August 19, 2022/in Palliative Care, Policy California, Colorado, Hawaii, Maine, Oregon Blogs, Featured News Home Palliative Care /by Salom Teshale and Wendy Fox-Grage

State Drug Price Transparency Programs Identify Critical Data on High Cost Drugs

April 25, 2022/in Policy, Prescription Drug Pricing Maine, Oregon, Washington Blogs, Featured News Home Prescription Drug Pricing /by Johanna Butler and Jennifer Reck

States’ drug price transparency programs are effectively analyzing and reporting data — an important tool for informing the public, holding drug supply chain entities accountable for high costs, and identifying potential policy approaches. Leading states are highlighting high prices for anti-inflammatory drugs, the impact of pharmacy benefit manager (PBM) regulation on drug spending and the use of rebates, and a discrepancy between prices along the supply chain that reduces the potential savings from decreasing generic costs.

Maine, Washington, and Oregon, three of the 14 states with drug price transparency laws, recently published comprehensive reports analyzing collected data in late 2021 and early 2022. This blog shares some key findings from these reports.

Identifying High Cost Drugs

Drug price transparency laws enable states to identify specific high cost drugs that are creating affordability challenges for consumers and payers. For example, Oregon’s drug price transparency program found that there was more money spent on anti-inflammatory drugs than on any other class in the state, and most of that was spent on AbbVie’s Humira. Anti-inflammatory drugs treat autoimmune conditions, such as arthritis, Crohn’s disease, ulcerative colitis, and plaque psoriasis.

Oregon’s program requires manufacturers to report price increases for drugs with a cost of more than $100 a month that increase greater than 10 percent in the prior calendar year. Although Humira did not meet this threshold in 2021, Oregon’s program looked further into the impact of the drug’s high price because it has been the costliest drug for Oregon’s health system every year since the program began collecting data in 2019.[1]

Oregon’s program also collects patients’ stories on high priced drugs and received submissions about the affordability challenge Humira poses. AbbVie increased Humira’s wholesale acquisition cost (WAC) by 7.3 percent in 2019 and 7.4 percent in 2020, despite no new evidence of safety or efficacy. In total, Oregon carriers reported spending over $153 million on anti-inflammatory drugs in the reporting year.

In Maine, multiple insurers reported that Humira ranked among drugs with the highest plan spending during the reporting year. Similarly, Washington highlighted that drugs treating autoimmune conditions were ranked highest on carriers’ lists of top 25 drugs with the highest net price and top 25 drugs with highest manufacturer rebates retained by the health plan. Other classes of drugs among the highest-priced or with the highest cost increases seen by plans, include those that treat cancer, diabetes, blood clots, and HIV.

Identifying high priced drugs is an essential first step for targeting further efforts to address drug prices, such as establishing a prescription drug affordability board (PDAB). Oregon and Washington are among the six states with PDABs and data emerging from transparency laws will support these new programs. For example, Oregon’s transparency data will inform affordability reviews and policy recommendations for the legislature while Washington’s transparency data will support efforts to establish upper payment limits.

Understanding the Impact of PBM Regulation

Using transparency program data, Maine explored the relationships between PBMs, consumers, and health plans in an analysis of the impact of a 2019 state law which required PBMs to pass rebates on to consumers at the point of sale or for carriers to use retained rebates to offset premium costs. Maine’s transparency program confirmed that PBMs are indeed passing on more savings to plans than before the law went into effect.

The Maine Health Data Organization (MHDO) found that PBMs, on average, retained payments from payers in the form of spread or administrative fees at a rate of 11 percent over what PBMs reimbursed to pharmacies in 2019, before the law went into effect, compared to just 2 percent in 2020 after the law was in place.

The 2019 PBM law also required health plans to count PBM compensation as an administrative cost under medical-loss ratio (MLR) calculations.[2] MHDO found that there was an almost 98 percent correlation between what payers reported as a benefit under the health plan to what PBMs reported as having reimbursed to pharmacies. Before the law went into effect, during 2019, this measure showed only an 88.9 percent correlation. This means that after the law went into effect, plans were more accurately reporting costs associated with providing medical benefits versus administrative costs in compensating their PBM.

Unpacking Prices across a Complex System

Maine’s drug price transparency report identified an unexpected finding: when generic drug prices decrease, payers and consumers may continue paying higher prices. This dynamic is due to the complicated relationship between WAC, the list price set by manufacturers, and average wholesale price (AWP), a benchmark used for pharmacy reimbursement, as well as differentials between pharmacy acquisition costs and AWP-based reimbursement rates for generics versus brand-name drugs. In 2020, about 6% of active NDCs had WAC decreases.

The negotiated price between pharmacies and payers are typically set based on a discount off AWP. For brand-name drugs, AWP is generally a mark-up of 20% above WAC and changes as WAC is changed over time. For generic drugs, AWP is often set as a discount off WAC or AWP for the reference brand product when a drug was first introduced to market. Unlike with brand-name drugs, generic AWP values are not changed as the value of WAC changes over time. This means that while the WAC for generic drugs will differ between manufacturers, the price that payers reimburse pharmacies for, which is highly correlated with AWP, will remain the same even if WAC decreases.

Due to this dynamic, pharmacies are incentivized to buy generic drugs from manufacturers with the lowest WAC to reduce acquisition costs. But payers do not see any benefit from the lower WAC as AWP remains static. Maine found that multisource generic drugs, which made up most of the drugs with price decreases, had an average decrease of 49 percent, but the average amount paid by payers after WAC decreases fell by only 11 percent. After the WAC decreases, AWP for multisource generic drugs had an average markup from WAC of 1,629 percent.

Although it did not highlight the discrepancy between WAC and AWP, Washington showed that reimbursement from the top four PBMs to pharmacies ranged from 0 percent to more than 100 percent of WAC for individual drugs. This aligns with Maine’s findings that pharmacies may be reimbursed at amounts higher than WAC for generics. Some of this disproportionate reimbursement for generics may be used to offset pharmacy losses in case where pharmacies aren’t reimbursed enough to cover brand-name drug acquisition costs.

Public Use of State Drug Price Transparency Program Data

State transparency programs enable states to identify drugs causing affordability challenges to consumers and payers, analyze the impact of PBM regulation, and to better understand pricing across a complex supply chain as described in this blog. Additionally, programs may provide important data sources to the public and researchers. States like Texas and California regularly publish collected price increase and launch WAC data that is accessible for the public and researchers. The Institute for Clinical and Economic Review (ICER) recently announced that it will leverage California’s public data to evaluate whether there is new evidence that could justify manufacturer reported price increases. To learn more about state transparency legislation, review the National Academy for State Health Policy’s state strategy implementation tracker or the Transparency Law Comparison Chart.

[1]According to the research group 46Brooklyn, Humira’s annual median WAC increase rose from 2014 to 2018 when it approached a 9.7 percent annual price increase, before dropping in 2019 and remaining around a 7 percent annual increase in recent years. Since state transparency programs began collecting pricing data, states have seen fewer drug price increases trigger reporting requirements; however, launch prices and overall spending on prescription drugs have continued to increase.

[2] Under federal MLR requirements, health plans must spend 80 or 85 percent of premium dollars on medical care and only 20 or 15 percent on administrative costs.

Moving Toward Prevention: Oregon Launches Kindergarten Readiness Metric

February 22, 2022/in Behavioral/Mental Health and SUD, Policy Oregon Blogs, Featured News Home Back to School, Behavioral/Mental Health and SUD, COVID-19, Maternal, Child, and Adolescent Health, Relief and Recovery /by Elinor Higgins

Oregon has launched a new kindergarten readiness metric in its Medicaid program. Early childhood is a critical time for growth and development, and the services and supports children and their families receive early on can have a large impact on health outcomes later in life. Because COVID-19 has exacerbated existing health disparities, including for young children, state officials are looking for new ways to support healthy child development and advance health equity. Oregon has promoted healthy child development for decades, with a particular focus on the social-emotional health of young children. The state’s new kindergarten readiness incentive metric focused on social-emotional health renews that commitment and helps solidify the connection between a child’s health and their success in school and beyond.

In the 2000s, Oregon worked with the National Academy for State Health Policy (NASHP) in the Assuring Better Child Health and Development (ABCD) Program. One of the state’s major goals at the time was to increase developmental screening for young children. One of the levers Oregon used to achieve this goal was to include developmental screening as an incentive measure for coordinated care organizations (CCOs)—a successful approach that led to one of the best developmental screening rates in the country. At that time, there was also interest in outcome-based kindergarten readiness metrics and a sense that CCOs could help ensure that children have their health-related needs met before entering the school system. NASHP staff recently interviewed state officials in Oregon about how the state has progressed from incentivizing developmental screening to creating a kindergarten readiness incentive measure that prioritizes children’s social-emotional health.

Kindergarten Readiness and Social-Emotional Health

For many children, kindergarten is their first contact with the education system. Those who arrive in the classroom with the skills and supports they need are more likely to have a positive experience, to succeed in school, and to have a healthy life. With the leadership of the Children’s Institute in collaboration with the Oregon Health Authority and Oregon Pediatric Improvement Partnership, Oregon formed the Health Aspects of Kindergarten Readiness Technical Workgroup in 2018 to identify the health aspects of kindergarten readiness and to offer recommendations about how to measure them. The workgroup, which was made up of pediatricians, early learning partners, families, and others, identified physical, oral, developmental, and social-emotional health as key aspects of kindergarten readiness in a 2019 report. The workgroup identified a need for systems-level change with social-emotional health as a priority focus area.

In conversations with NASHP, stakeholders in Oregon described unidentified or untreated social-emotional health delays as a factor that contributes to long-term educational inequities by increasing both the likelihood of classroom behaviors that are viewed as difficult and the likelihood of disciplinary action. Additionally, national data shows that children of color, particularly those who are Black or Indigenous, are more likely to have one or more adverse childhood experiences (ACEs) than white children—which can negatively impact social-emotional development. An Oregon health official shared that when children have ACEs and also experience racism, the supports available are often not matched to cultural needs and the response to social-emotional delays can further perpetuate health inequities.

In Oregon, children with social-emotional delays are not as likely to receive follow-up care as children who screen positive for other health needs. The Oregon Pediatric Improvement Partnership (OPIP) has led improvement work in 13 counties to focus on follow-up to developmental screening and consistently found that children with social-emotional delays rarely received follow-up services and a contributing factor is the lack of services available for children birth to age five.

Development of a CCO Incentive Measure for Kindergarten Readiness

In Oregon, the Medicaid CCOs, the state’s version of an “accountable care organization,” share financial and medical responsibility for physical, behavioral, and oral care with the state for providing coordinated care in order to limit unnecessary spending. The Oregon Health Authority (OHA) provides CCOs with a fixed global budget that allows them the flexibility to implement new ways of paying for and delivering care, using strategies that are best suited for their members. In addition to standard performance measures, a set of incentive measures is linked to a CCO quality pool fund. CCOs must meet benchmarks for performance on these measures to be eligible for incentive payments from the quality pool.

The Health Aspects of Kindergarten Readiness Technical Workgroup was tasked with identifying and assessing existing kindergarten readiness metrics to identify gaps and ultimately recommending metrics that could address health and be part of the CCO incentive measure set. After the 2019 measure recommendations were unanimously endorsed by state measurement committees, in 2020, Oregon began implementing readily available incentive metrics for children’s preventive dental and well-child visits. Then, informed in part by the OPIP pilot programs and the lack of services to address children’s social-emotional needs, the group recommended that CCOs work to incorporate a child-focused social-emotional kindergarten readiness incentive metric. The group recommended a strategy for building capacity to provide follow-up services and care: the suggested incentive measure would first require CCOs to do the community outreach and planning to develop needed resources and strengthen connections to services.

A team made up of individuals from the Children’s Institute and OPIP developed the novel metric, which was supported by the Oregon Health Authority. The team presented a proposal to Oregon’s Metrics and Scoring Committee in November 2020 and then carried out pilot activities with the CCOs in early 2021. The resulting Health Aspects of Kindergarten Readiness Measure: System-Level Social-Emotional Health Metric was endorsed a metric and is included in the 2022 incentive measure set. As the CCO Metrics 2020 Final Report shows, distribution of quality pool funds is based on the number of total incentive measures a CCO meets and the CCO’s size.

Implementation and Next Steps

The kindergarten readiness metric is transformative and anchored to community engagement, stakeholder input, and hearing from marginalized communities in order for the CCO to attest to completing specific activities. Over the four years that the system-level incentive metric is in place, the CCOs will be asked to complete activities that fall into four specific components that require:

Social-Emotional Health Reach Metric Data Review and Assessment
Development of an Asset Map of Existing Social-Emotional Health Services and Resources
CCO-Led Cross-Sector Community Engagement
Development of an Action Plan to Improve Social-Emotional Health Service Capacity and Access

The CCOs will engage communities, create asset maps to identify what services are available, and review data for populations with historical inequities—breaking out the data by ACEs, medical complexities, race and ethnicity, zip codes, and more. At the end of the first year, the CCOs will design an action plan with community input about where to focus improvements. Over the remaining years the CCOs will continue to track and analyze the data to identify barriers and facilitators and to inform the transition to a child-focused social-emotional kindergarten readiness incentive metric at the end of the fourth year.

A key focus is assessing how the data, asset map, community engagement, and action plans can be informed by and address the specific needs of historically marginalized populations. Oregon has adopted the strategic goal to end health inequities in the state of Oregon by 2030. Implementing strategies among young children that promote health equity and equitable educational achievement is one way that Oregon is working toward a more equitable future for all inhabitants. As children’s health, mental health, and development opportunities continue to be a primary focus of COVID-19 recovery efforts, incentive-based approaches hold great promise to eliminate disparities experienced by children from historically marginalized communities.

Drug Price Transparency Laws Position States to Impact Drug Prices

January 10, 2022/in Prescription Drug Pricing California, Maine, Nevada, Oregon, Vermont Blogs, Featured News Home Prescription Drug Pricing /by Johanna Butler and Jennifer Reck

Drug price transparency laws enable state policymakers to understand opaque drug pricing and payment systems to formulate appropriate policy solutions to high prices, while also creating the data infrastructure to effectively realize those policy solutions. Since Vermont passed the first state drug price transparency law in 2016, more than a dozen states have enacted and implemented similar laws.

State-level transparency legislation shines light on drug pricing by requiring manufacturers and other supply chain entities such as prescription drug benefit managers (PBMs), health plans, and wholesalers to provide information on drug pricing. Transparency programs also establish accountability around manufacturers’ price increases or high launch prices. Since programs began collecting pricing data, states have seen fewer drug price increases trigger reporting requirements; however, launch prices and overall spending on prescription drugs have continued to increase.

Transparency laws can also create a foundation for additional strategies to lower drug costs. Policies like prescription drug affordability boards (PDABs), rely on having access to and expertise with drug pricing data. This blog provides an update on state drug price transparency laws and their impact.

Current State Transparency Landscape

Vermont passed the first state drug price transparency law in 2016. Since then, 13 other states have passed transparency laws focused on drug manufacturers and other actors within the supply chain – CA, CT, ME, MN, NV, NH, ND, OR, TX, UT, VA, WA, and WV. Most state programs require reporting from manufacturers when they increase the wholesale acquisition cost (WAC) of a drug above a certain threshold or if they introduce a drug with a high launch price. Several states also require reporting from insurers and pharmacy benefit managers. A few states extend reporting to other supply chain actors – pharmacy service administrative organizations (WA) and wholesale distributors (ME, NV, VA).

Transparency programs vary state-by-state regarding which drugs are reported on, the level of data collected (in aggregate or on an individual drug level), and how data is published and analyzed by the state.

Maine’s transparency program offers one of the more robust approaches to drug price transparency. Maine collects and analyzes data with the goal to identify each supply chain entity’s average net income, including data on manufacturers, PBMs, insurers, pharmacies, and wholesale distributors. This allows the public and policymakers to “follow the money” through the supply chain.
California’s transparency program posts launch price information and five-year schedules of price increases reported by manufacturers to its website, creating one of the only freely available sources of WAC data.
Oregon’s transparency program holds an annual public hearing that acts as a forum for sharing data analysis, discussion with stakeholders, and policy recommendations.
Nevada took a unique approach with its transparency program, first focusing reporting on diabetes drugs when its program was enacted in 2018 and then including asthma medications in 2019. In 2021, the state expanded its program to include all prescription drugs.

Impact of Transparency Programs

As states investigate and work to lower high drug costs, drug price transparency has become an important foundation and launch pad for efforts to lower costs. Data collected by state transparency programs can provide insights into the types of price increases and types of drugs driving high spending in a state. Pricing data can provide policymakers state-specific information to direct policy.

Moderated Price Increases Over Time

Since state transparency laws were first enacted, the number of price increases that trigger reporting based on state thresholds has decreased over time. Vermont’s Medicaid program explained in its 2020 report that compared to 2016, there was a 79 percent decline in the number of drugs reaching the state’s per year price increase threshold. The program report concludes that fewer manufacturers are excessively increasing the price of drugs. Similarly, Oregon’s transparency program reported that compared to its first year of implementation in 2019, the program received 70 percent fewer reports for price increases in 2020. However, during that same time, Oregon saw a 15 percent increase in the number of drugs with high launch prices.

Vermont and Oregon’s findings align with what drug pricing researchers have found – from 2016 to 2020 the amount of WAC price increases have decreased but launch prices have continued to rise. Although the rate of price increases may be moderating, launch prices may still cause increased state spending on prescription drugs.

Accountability for High Launch Prices

Transparency programs can establish accountability around manufacturers’ high drug price increases and high launch prices. For example, manufacturers of Semglee, the first generic insulin product deemed interchangeable by the U.S. Food and Drug Administration, recently announced it will price the new insulin product at almost $270 per vial, only $20 cheaper than Lantus, the brand-name biologic competitor. Based on this launch price, Semglee would trigger Virginia’s reporting requirements under the state’s 2021 transparency law which requires manufacturers to report information on the launch of biosimilar products that are not at least 15 percent below the cost of the reference biologic. While the law is not yet implemented, Virginia’s program would be one of the most immediate tools to create some accountability for Semglee’s high list price.

Data Infrastructure for Policy Solutions

In addition to establishing accountability, transparency programs can provide the necessary data infrastructure for the successful implementation of efforts to lower drug prices. Since 2020, several states have enacted prescription drug affordability boards (PDAB), entities with the authority to review high cost drugs and in some states set an upper payment limit to ensure no one pays more than that amount in the state. A first step for a PDAB to review high drug costs and potentially set payment limits is to gather the necessary drug pricing data – whether that’s leveraging existing data sources or establishing manufacturer or insurer reporting like transparency programs. States without transparency laws already in place must include transparency requirements. For example, Colorado’s PDAB law, enacted in 2021, requires insurers to report top-spend drugs to help inform which drugs the PDAB will review.

States that already have transparency programs in place however, are well-positioned to take steps to rein in high drug costs through a PDAB. Oregon’s new PDAB law leverages the state’s existing drug price transparency programto identify high-cost drugs that should be reviewed by the board. Each quarter the transparency program will provide the PDAB with a list of drugs with high price increases or high launch prices as well as a list of insulin products sold in the state in the previous year. Based on this information, the PDAB will identify nine drugs and one insulin product to review. Oregon’s PDAB will be supported and housed in the same agency that manages the drug price transparency program, the Department of Business and Consumer Services, allowing the PDAB to capitalize on the drug pricing data expertise developed by the transparency program since it was enacted in 2018.

In these ways, transparency can be seen not only as a steppingstone to future action, but often a necessary building block to sustain other efforts. The data gathered and expertise developed by transparency programs could be applied to any number of drug pricing policies beyond PDABs – direct negotiations for supplemental Medicaid rebates, implementing reference rates, or prohibiting price gouging.

Federal Efforts on Transparency

While a variety of federal transparency efforts are in process, state transparency programs go beyond proposed or recently enacted language. The Build Back Better Act that passed the House in November 2021 but continues to be debated in the Senate, would require pharmacy benefit managers to report certain information related to spending, cost, utilization, and formulary placement to health plan sponsors. Additionally, the Centers for Medicare and Medicaid Services (CMS) recently published an interim final rule requiring health plans to report certain information on the most costly drugs, most frequently utilized drugs, and drugs with the greatest year over year spending increases, among other data elements, to the Departments of Health and Human Services, Labor, and the Treasury. This interim final rule is similar to the insurer reporting requirements of many existing state transparency programs. For states that do not have transparency laws, this federal data, if shared with state leaders, could be helpful to identify top-spend drugs in each state and fuel other strategies to lower costs such as a PDAB. However, it’s unclear to what extent the data could be accessed or used by states, though states are eager to coordinate with the federal government to enhance data-sharing on drug prices. Importantly, none of these initiatives focus on requiring reporting from manufactures – who actually set drug prices – leaving state officials to continue this important work.

To learn more about state transparency legislation, review the National Academy for State Health Policy’s state strategy implementation tracker or the Transparency Law Comparison Chart.

State Medicaid Financing of Home Visiting Services in Seven States

October 8, 2021/in Health Coverage and Access Colorado, Kentucky, Michigan, Minnesota, New York, Oregon, Wisconsin Charts, Featured News Home Health Coverage and Access /by Eddy Fernandez

How Oregon is Limiting Hospital Payments and Cost Growth For State Employee Health Plans

August 30, 2021/in Health System Costs Oregon Blogs, Featured News Home /by Adney Rakotoniaina

High and rising health costs impact all purchasers of care, including state employee health plans (SEHPs) that are funded by both state residents’ taxpayer dollars and public employees who contribute to their coverage. Increasingly SEHP administrators must balance providing comprehensive coverage and access to care for state employees while striving to contain costs to ensure long term health plan sustainability. Oregon’s SEHP is implementing multiple approaches to contain high costs and ensure a level of predictability for its public employees and their health plan.

Collectively, Oregon’s SEHPs – the Oregon Educator’s Benefit Board (OEBB) and Public Employees’ Benefit Board (PEBB) – cover approximately 290,000 Oregonians, including employees of state agencies, school districts, universities, and local governments.

In 2015, utilizing their purchasing power as 13 percent of Oregon’s employer sponsored market, OEBB and PEBB sought to address particularly high-priced health care services by basing their payments for joint replacement surgeries on the prices paid by Medicare. Since Medicare pays a hospital based on its costs, rather than negotiating a discount off a hospital’s much higher chargemaster rates, it serves as a transparent reference for the state as it sought to limit wasteful spending by establishing cost-based payment rates.

States seeking to better understand a hospital’s costs can utilize the National Academy for State Health Policy (NASHP)’s Hospital Cost Tool.

The tool analyzes a hospital’s annually submitted Medicare Cost Reports to provide critical data to inform states’ cost-containment strategies.

View NASHP’s Hospital Cost Tool.

As this effort resulted in observed savings and price reductions for joint replacements, the state passed legislation in 2017 that expanded the initiative to all SEHP hospital payments. Specifically, the state limits or caps reimbursement rates paid by the insurers that contract with the SEHP (known as third party administrators or TPAs) at a multiple of Medicare’s reimbursement rate. Services and supplies provided by in-network providers are paid up to 200 percent of the Medicare rate and those provided by out of network providers are capped at payments of 185 percent of what Medicare pays.

OEBB and PEBB applied the hospital payment caps to 24 of the approximately 62 hospitals in the state, representing 60 percent of spending by the plans. The state recognized the differing needs of certain hospitals and exempted some from the cap. The roughly 38 hospitals not included in the cap were out-of-state hospitals, rural hospitals with fewer than 50 beds, critical access hospitals, and sole community hospitals that received at least 40 percent of their patient revenue from Medicare while being in a county with less than 70,000 people.

As one of the first states to pursue reference-based pricing to Medicare, Oregon’s experience has helped inform important considerations for other states. For instance:

Does a reimbursement cap that sets a ceiling become the new standard for reimbursement?
Are all services (e.g., maternity care, pediatric care) well-suited for comparison to the Medicare Diagnosis-Related Group codes? If not, what else can be used as a reference for reimbursement?
How might stakeholder groups (e.g., insurers, employee unions) influence public support for the cost-savings initiative?

Though the plans are still conducting a final analysis of cost-savings (made more challenging as the first full year of the strategy took place amidst the COVID-19 pandemic), initial reports estimated savings of at least $81 million, encompassing roughly five percent of total costs for each PEBB and OEBB. As the state anticipates savings through its payment caps, in turn lowering spending for plan members, it also serves to contribute to another important state cost-containment strategy: a cost growth target.

In the same bill that laid out the hospital payment caps, the state directed the plans to limit growth in per member health care expenditures and premiums to 3.4 percent annually, adopting a cost growth target that would later be expanded statewide through 2019 legislation.

As the responsible agencies craft the details of the statewide cost growth strategy, OEBB and PEBB have largely achieved success in keeping plan cost growth below 3.4 percent annually. While OEBB and PEBB joined other cost growth target states in experiencing a cost growth increase in 2019, the plans limited cost growth to less than two percent in 2020/2021. At the same time, the commercial insurers in the state experienced a six to eight percent increase in health care cost growth.

Policies in addition to the hospital payment caps likely also contributed to the SEHPs cost growth target success. However, reports of the Montana SEHP’s savings from similar hospital payment policies may support the idea that OEBB and PEBB’s caps played a significant role in their meeting of the cost growth target. As such, additional states seeking to meet their cost growth targets might consider adopting reference-based pricing to Medicare as a tool to do so.

As Oregon finalizes its analysis of cost-savings from the hospital payment cap for SEHPs, and more states implement innovate policies such as cost growth targets and reference-based pricing to Medicare, NASHP will track further developments and aid states in their efforts to ensure all patients and families can access quality, low-cost health care.

To join NASHP’s network of state employee health plans aimed at addressing health system costs, supported by Arnold Ventures, email arakotoniaina@oldsite.nashp.org.

State Policy Actions to Decriminalize Controlled Substances

July 26, 2021/in Opioid Center Oregon, Vermont, Washington Blogs, Featured News Home Behavioral/Mental Health and SUD, Opioid Use Disorder /by Eliza Mette and Jodi Manz

In the wake of a nearly 30% increase in drug overdose fatalities within a single year, states have been grappling with how to reduce overdose deaths, including exploring new approaches to penalizing the use of substances. Aligning to Biden administration priorities to increase access to treatment services and address racial inequities in drug policy, some state approaches specifically target interventions to respond to disproportionately high numbers of Black and Latinx Americans who are currently incarcerated for drug violations.

Since the fall of 2020, three states have enacted legislation that eliminates criminal penalties for some or all controlled substances, including, for example, methamphetamine, heroin, cocaine, and psilocybin. Some of these laws call for a significant overhaul of the state’s criminal code and revamp of substance use disorder (SUD) treatment infrastructure, while others simply decriminalize threshold amounts of certain controlled substances.

In November 2020, Oregon was the first state in the nation to decriminalize the possession of small amounts of all scheduled drugs for personal use through policy established by Ballot Measure 110. The law removes barriers to treatment and recovery services for people with SUD and eliminates criminal penalties for drug possession.
In May 2021, Washington took action by passing a law that similarly removes criminal penalties for drug possession and establishes a comprehensive plan to increase access to and engagement in treatment for SUD.
In June, 2021, Vermont’s governor signed H. 225 into law, making Vermont the first state to specifically decriminalize possession of non-prescribed buprenorphine. The new law also refers individuals under 21 found in possession if 224 milligrams or less of buprenorphine to a state-run court diversion program, and individuals under 16 found in possession of 224 milligrams or less of buprenorphine to delinquency proceedings in state family court.

Several other states introduced legislation in 2021 to decriminalize possession of scheduled substances that failed to pass. Maine’s proposed legislation died, while proposed measures in New York and Rhode Island were not decided upon before legislative sessions ended or went into recess. Massachusetts’ proposed legislation is still under consideration and will be further discussed at a hearing scheduled for September.

The table below summarizes themes across states with 2020-2021 legislation that decriminalizes at least one controlled substance.

Key features of state drug decriminalization legislation (enacted and proposed)

	NY*	OR	RI*	MA*	WA	VT
Eliminates criminal penalties	X	X	X	X	X
Imposes fine and/or screening	X	X	X	X	X
Tasks/creates a committee with assessment and recommendations	X	X			X
Establishes a SUD treatment funding plan		X			X
Language regarding SUD as a disease	X				X
Language regarding ineffectiveness of punitive interventions	X	X			X
Language regarding social determinants of health/racial equity	X			X	X
Amends paraphernalia law	X				X
Referral to treatment or counseling	X	X	X		X
Specifically decriminalizes possession of small amounts of non-prescribed buprenorphine						X

*Indicates proposed legislation

Expanded SUD treatment and recovery services, funding for those expanded services, and impacts on sentencing are emerging as themes in decriminalization policy out of recent introduced and enacted state legislation:

Oregon will fund existing government and community-based organizations to create Addiction Recovery Centers to provide people who use drugs with both acute care for immediate needs as well as intensive case management and referral services. Expanded treatment services provided in Oregon will be funded through marijuana tax revenue and savings from avoided drug-related arrests, incarceration, and prosecution. This is projected to provide over $100 million for services in the program’s first year.

Washington will develop a substance use recovery services plan that will connect people with SUD to low barrier treatment and recovery support services. The state has allocated just under $100 million in general funds to provide support to each local behavioral health administrative services organization for the development of recovery navigator programs. Both Washington’s and Oregon’s behavioral health administrative services organizations are also tasked with developing a recovery navigator program, which will be modeled after existing recovery programs and will be responsible for providing community-based outreach as well as intakes, assessments, and connection to ongoing treatment services.

In tandem with signing H. 225 into law, Vermont’s governor released an executive order, which cites the increase in fatal and non-fatal opioid overdoses, driven by COVID-19, as the impetus for the bill and indicates that decriminalizing buprenorphine is intended to decrease opioid overdose deaths and increase engagement in treatment for opioid use disorder (OUD). The executive order establishes the Decriminalized Buprenorphine Taskforce, which is responsible for assessing the impact of the new law and reporting them back to the governor.

Looking forward

Policy makers anticipate these laws will help address historic overrepresentation of people of color in corrections systems: Oregon estimated that its new law will result in a nearly ninety-one percent overall decrease in convictions with a projected 93.7% reduction among Black Oregonians and 94.2% reduction among Native American Oregonians. Washington’s newly created Substance Use Recovery Services Advisory Committee is tasked with creating recommendations on the collection and reporting of drug possession-related interactions with law enforcement and prosecutors; the Committee will report on racial, demographic, and geographic disparities therein. New York’s proposed legislation acknowledged that Black and Latinx communities have been disproportionately affected by drug criminalization laws, noting that policy change is intended to shift the state’s “approach to drug possession from one based on criminalization and stigma to one based on science and compassion.”

As overdose deaths have continued to rise – both before and during the COVID-19 pandemic – decriminalization represents a shift in how states might address the SUD crisis. New policies have the potential for far-reaching impact not only within state treatment systems but also across courts, pre-trial services, and incarceration settings as well. As these laws take effect, states will be evaluating the outcomes of decriminalization on programs, budgets, and systems alignment, and NASHP will continue to monitor these efforts and their outcomes.

Nine States Advance Prescription Drug Affordability Board Legislation

March 15, 2021/in Prescription Drug Pricing Arizona, Colorado, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Virginia, Wisconsin Blogs, Featured News Home Model Legislation, Newly-Enacted Laws, Prescription Drug Pricing, State Rx Legislative Action /by Jennifer Reck and Trish Riley

More than 200 bills to lower drug prices have been filed across states during this session and nine states are proposing prescription drug affordability board (PDAB) legislation.

PDABs are somewhat analogous to public utility commissions. They investigate high-priced drugs and, when necessary, set more affordable rates for certain drugs for purchasers within a state. Establishing health care provider and hospital payment rates is a common approach states use to ensure services are affordable. State PDABs extend this strategy to a subset of very costly prescription drugs, while avoiding unlawful patent preemption because they establish drug payment rates – not prices. The National Academy for State Health Policy (NASHP) developed model legislation for this approach in 2017 and in 2019 Maryland became the first state in the nation to enact PDAB legislation.

This chart highlights nine states’ bills to create prescription drug affordability boards, including their implementation timelines, funding sources, enforcement, and purchasers impacted.

Nine states (AZ, CO, MN, NJ, NM, OR, RI, VA, and WI) are currently advancing PDAB bills in their legislatures. While a number of these bills are similar to Maryland’s approach that phases in upper payment limits by initially limiting them to public purchasers before potentially expanding them to include private purchasers, the majority of the currently proposed bills map more closely to NASHP’s original model legislation, which implements payment limits across all payers (public and private) in a state in a more expedited fashion.

The bills are generally similar in two approaches:

They use similar price thresholds to identify a drug for investigation by their PDABs, and
They apply the same factors when setting an upper payment limit for drugs found to be otherwise unaffordable – such as weighing the cost of administering the drug and delivering the drug to consumers.

Minnesota’s bill, however, includes unique language that empowers its PDAB to consider both the “the range of prices at which [a] drug is sold in the United States and the range at which pharmacies are reimbursed [for it] in Canada.” This language creates a bridge between the PDAB model and a newer approach in a recently released NASHP model law that creates payment rates for certain high-priced drugs based on Canadian pricing. This approach, reflected in NASHP’s Act to Reduce Prescription Drug Costs Using International Pricing, offers states a more streamlined approach than establishing a PDAB, which requires the complex task of determining the appropriate value of a drug in order to set an affordable payment rate. Five states (HI, ME, OK, ND, and RI) are currently considering international reference rate bills that use (or “reference”) Canadian prices to set more affordable rates.

As states consider PDABs and international reference rate approaches to achieve the goal of setting more affordable payment rates for drugs, there are several key factors to consider.

While international reference rates look to Canada’s drug prices when establishing appropriate payment rates, PDABs keep the task of identifying affordable rates within a state.
While PDABs may be conceptually preferable for this reason, the time and resources required to implement this approach may not make PDABs feasible for all states. For those states, using Canadian prices to set rates may be the most viable option.

Minnesota’s bill, however, points to a third option, a hybrid approach in which a PDAB would consider Canadian pricing as part of its process.

Explore this chart to compare the different state approaches and implementation timelines of the nine PDAB bills proposed as of March 9, 2021.

Oregon’s Community Care Organization 2.0 Fosters Community Partnerships to Address Social Determinants of Health

February 5, 2021/in Medicaid Managed Care Oregon Featured News Home, Reports Accountable Health, Health Equity, Housing and Health, Medicaid Managed Care, Population Health, Program Design, Quality and Measurement, Social Determinants of Health /by Neva Kaye