Committee hears testimony on HB 2560 to restructure adult foster home reimbursement rates

The House Committee on Early Childhood and Human Services on Feb. 11 heard testimony on House Bill 25 60, which would require the Oregon Department of Human Services to adopt an acuity-based methodology for calculating reimbursement rates to adult foster home providers by Jan. 1, 2026, and to increase base rates of payment. Jane Ellen Whitehead, deputy director of policy for the Office of Aging and People with Disabilities, presented the department’s proposal and answered committee questions.

The bill would replace the state’s current add-on model — created in the 1980s — with a points-based acuity system that assigns scores to activities of daily living, cognition, challenging behaviors and medical treatments. Under the proposal, points convert to five tiers that determine the rate a provider receives. Whitehead said the department’s analysis shows that adult foster homes serve a high share of the state’s highest-acuity consumers, and that the current system has produced a large number of exception-rate requests.

"The current model does not fund the core business that providers need to do," Whitehead said. She told the committee that roughly 54% of adult foster home placements currently rely on exception payments and that the department estimates the proposed model would reduce exceptions by about 82% and that 95% of providers would see a rate increase under the plan. The department described an investment of $21 million in general funds that would convert to about $59 million in total funds because of the Medicaid match.

Health-care stakeholders urged support. Troy Duker, director of government affairs for the Oregon Association of Hospitals and Health Systems, said higher rates would help hospitals discharge patients who no longer need acute care. "Increasing reimbursement rates for adult foster homes can reduce discharge delays and help ensure patients receive timely and appropriate care," Duker said. Providence St. Vincent Medical Center CEO Raymond Moreno testified that long waits for exception approvals have contributed to extended hospital lengths of stay; he described a patient who was ready for discharge in three days but stayed 42 days while exception requests were considered.

Provider groups and individual operators generally supported the move to an acuity model but raised concerns and suggested changes. Rachel Hansen, policy strategist for SEIU Local 503, said the bill should be expanded to include adult foster homes serving developmental disability and behavioral health populations and asked that the committee ensure no provider would see a rate decrease. Joan Schroeder, an adult foster home operator, asked for an explicit validation step tying rate assignments to each resident’s federally required person-centered plan so the payment would align with documented needs. Benjamin Peterson, an AFH provider, described the home-like model and asked the department to clarify how the wage and rate study compared AFH pay to other care settings.

Whitehead said federal regulations require reassessment of clients at least once a year and any time a change of condition is reported; she said medical treatments would be weighted by frequency and other components would receive point values to determine tier placement. She described the model as aligned with, but not identical to, the Office of Developmental Disability Services rate model.

The department and supporters argued the proposal would speed hospital discharges, provide payment certainty to providers and reduce administrative burdens created by frequent exception requests. Opponents or providers seeking clarification asked for stakeholder engagement during implementation and a validation process linking rates to person-centered plans.

The hearing record includes testimony from AARP Oregon, SEIU Local 503, the Oregon Association of Hospitals and Health Systems and multiple adult foster home operators. The committee did not take final action on the bill during the hearing.