Subcommittee hears Oregon Medical Board budget; agency details fee changes, stalled IT project and staffing needs

The Joint Interim Subcommittee on Human Services held a public hearing Feb. 11 on HB 5022, the Oregon Medical Boardbudget bill, where board leaders described a budget built largely on licensure fees, planned fee changes to cover rising costs, and a stalled IT replacement project that the agency said must be rebooted.

Nicole Krishnaswamy, executive director of the Oregon Medical Board, told the committee the board regulates more than 27,000 licensees and is "100% other funded," relying primarily on fees rather than general fund dollars. Kendra Beck of the Department of Administrative Services summarized the governor's recommendation as a current-service-level budget that adds a part-time associate medical director, raises limitation for the Health Professional Services Program (HPSP), and increases limitation for pass-through expenses.

The budget package includes proposed fee adjustments the board says are intended to meet long-term revenue needs. Materials presented to the committee show license application and registration fees represent about 98% of the agency's revenue. The boardincludes a proposed 20% increase for full and limited license registration fees, a 20% increase on late registrations for physician assistants and acupuncturists, and the establishment of a $25-per-year surcharge to support the HPSP.

Krishnaswamy and board business manager Carol Brandt said the HPSP surcharge is separate from a separate legislative request for general fund support for an "Oregon wellness program." "These are two different programs," Krishnaswamy said, explaining the $1.6 million general fund request discussed elsewhere would support a free, confidential counseling program, while the HPSP is a contracted monitoring program for licensees with impairing health conditions.

The board also described a multi-biennial effort to replace its core business suite, intended to consolidate licensing, investigation case management and other functions into a single configurable system. "Disappointingly, the implementation is now stalled with little systems configuration completed as we find that the implementation vendor is unable to fulfill their contracted responsibilities," Brandt told the committee. Agency testimony said a notice of default was issued and the board is working with state procurement and the Department of Justice to terminate the integrator contract and develop a new project plan.

Officials said the board had a contract for Salesforce licenses and a separate contract with a systems integrator to configure Salesforce. The agency told the committee it does not plan to continue with the Salesforce licensing model because of high licensing costs and instead expects to pursue an "in-house configuration" built with commercially available tools and contracted help for configuration.

On project spending, Brandt said the agency's estimated costs for the current biennium were about $540,000 (which includes internal staff time) and that the integrator had been paid about $300,000 for delivered functionality; the board said remaining deliverables were incomplete and unpaid under the deliverables-based contract. The agency said it will request additional limitation for project expenses in 2025-27, and that it does not anticipate additional fee increases beyond those in the governor's package to complete the work.

Committee members asked about succession and medical expertise at the agency. The board requested a permanent part-time associate medical director in order to avoid gaps when its single medical director is absent. "With only a single employee with medical expertise, agency business processes are impacted by the volume of work assigned and the availability of the individual," testimony said. The board said the temporary associate medical director position created during the 2023-25 biennium proved helpful and the permanent position would provide continuity for licensing and investigations.

The board also described cost drivers that affect fees: the number of licensees (27,431 as of Jan. 1, 2025, according to the presentation), investigation and compliance costs (including attorney general services and contracted professional expertise), personnel costs and rising state service charges. Pass-through fees paid to other state entities (including partial funding for Oregon Health & Science University library services, the statewide prescription drug monitoring program, and workforce data collection) are projected at about $2.1 million for 2025-27.

There was no public testimony and no committee action at the hearing. Presenters answered policy and technical questions from senators and representatives about project contracting, prior fee increases (including a July 2024 increase), cash-flow constraints caused by the boardrenewal cycle and anticipated timing of revenue increases. The board said the proposed fee changes are intended to phase in revenue across 2025-27 and 2027-29 so it can maintain required reserves in the months before renewals.

The committee announced it will hold a public hearing on the Board of Nursing budget bill (HB 5023) the following day. The hearing on HB 5022 closed with no vote; committee members had no final recommendations at that time.