OHA details Medicaid budget drivers, school billing work and multi-year timeline for child behavioral-health changes

Oregon Health Authority officials briefed the Joint Subcommittee on Human Services on Feb. 3 about Medicaid budget drivers, implementation of the Section 1115 waiver and a package of policy option proposals intended to shore up services and federal funding.

The presentation identified caseload growth and changes to federal matching rules as the primary budget drivers, highlighted declining tobacco-tax revenue used for Medicaid, and flagged two expiring financing mechanisms — a hospital assessment due to lapse Oct. 1, 2025, and an insurer assessment that expires in December 2026 — as risks to the state share of Oregon Health Plan financing.

Why it matters: Medicaid accounts for the largest single program share in the governor’s budget; financing changes, caseload swings and federal policy shifts could materially affect what services the state can sustain and when new services come online.

Dr. Sejal Hathi, Oregon Health Authority director, said the “stability and care-expansion portions of the 1115 waiver really focus on two main things: eligibility and enrollment, and expanded services for people.” She described several specific program changes the waiver supports, including continuous enrollment rules to reduce churn, expansion of early and periodic screening, diagnostic and treatment services (EPSDT) for children, the new Young Adults with Special Health Care Needs (WiSHEN) benefit, and newly launched housing and nutrition benefits under the health-related social needs program.

Hathi and Emma Sando, Medicaid director, told the panel the waiver and related authorities are intended to reduce interruptions in care caused by administrative redeterminations and to increase access to services that address social drivers of health. Hathi said the housing benefit launched in November and a nutrition benefit began in January; she said it is still “too early” for robust outcome data but that similar pilots elsewhere have shown reductions in emergency department use.

School-based billing and behavioral health: Several legislators pressed OHA on expediting school-based Medicaid billing and bringing behavioral-health services into school settings. Hathi said OHA received a three-year federal planning grant to identify barriers and provide technical assistance so local education agencies can enroll as Medicaid providers and bill for eligible services. She described state plan amendments already secured that broaden the array of services and provider types that may bill Medicaid in school-based health centers.

A federal-funded technical-assistance contract with WestEd is underway to provide one-on-one support to local education agencies and school districts, Hathi said, and OHA officials reported growth from 54 to 78 participating LEAs in 2024, including Salem-Keizer School District.

Representative Nelson asked whether schools that employ behavioral-health clinicians in summer 2025 will be able to bill Medicaid directly. Emma Sando replied that, as long as the clinician is an enrolled Medicaid provider and the school has the appropriate billing processes in place, the school can bill for medically appropriate services, including care coordination.

Timelines and children’s intensive behavioral-health services: A contested point in the hearing concerned a policy option (POP 418) to develop child Medicaid behavioral-health home- and community-based services and a separate prior legislative appropriation (SB 1557). Senator Gelser Bluen pressed OHA on why families might wait years for services; she said, “these families that are in crisis ... would rather have a bumpy start with something than sit for another 4 years with nothing.”

OHA staff said the work requires federal approvals, rulemaking and system-building and described a multi-year schedule: readiness and federal approval work in 2025, hiring and initial implementation in 2026, broader implementation in 2027 and continued engagement through 2028. The agency emphasized a deliberate approach to avoid disrupting existing care.

Policy option packages and financing items: OHA summarized several POPs included in the governor’s package or under consideration: - POP 408: medical benefits and transition supports for incarcerated individuals, including data systems, staff and case management tied to reentry; - POP 417: reinvesting Oregon Health Plan bridge savings to maximize federal funds for the Healthier Oregon program (description: program seeks to match some individuals to federal funding streams instead of state-only funding); - POP 418: child Medicaid behavioral-health home- and community-based services, including case-management and assessment-tool work (OHA said the POP funds the tools and capacity-building needed to align programs); - POP 556: certified community behavioral health clinic (CCBHC) expansion and a statewide state plan amendment to support integrated mental-health and substance-use disorder care; and - POPs 421 and 422: renewals/extensions of the hospital assessment and insurer assessment that fund a significant portion of the state share of Medicaid; OHA told the subcommittee the hospital assessment expires Oct. 1, 2025, and the insurer assessment expires Dec. 2026, and the agency is working to align the timelines.

Budget figures and funding sources: OHA presented the Medicaid program as roughly a $29.2 billion program for the 2025–27 biennium, with approximately $29.2 billion in service expenditures and about $377 million for administration, according to the presentation. Officials said roughly $20 billion of that biennium is expected to be financed by federal FMAP dollars; roughly $3.7 billion (about 12% of the total) was described as general-fund state dollars, and about $5.2 billion (about 18%) as “other” state sources. Hathi cautioned that some figures reflect one-time carryover and that tobacco-tax revenue used for Medicaid has declined as tobacco use has declined.

OHA described the “normal” FMAP rate in the presentation as approximately 56% for the majority of eligibility categories and noted higher federal matching for the ACA new-adult group. The agency also told the committee that the December forecast showed tobacco-tax revenue below prior expectations and that closing a loophole on synthetic tobacco products could increase receipts but would not fully offset reduced utilization.

Risks and next steps: OHA identified several risks: caseload uncertainty following the pandemic unwinding, federal regulatory change and the need to renew the 1115 waiver before it expires at the end of 2027. The agency characterized implementation risk for the discussed items as medium to high because many changes require federal approvals, rulemaking, IT system changes and provider enrollment or training.

No formal committee action or votes were taken; the meeting was informational and closed after Q&A. OHA told the subcommittee it will continue work on the planning grants, state plan amendments and assessment-renewal proposals and will return for additional hearings and public testimony scheduled later in the week.

Ending: Co-chairs closed the session and announced follow-up hearings and public testimony on Medicaid and behavioral-health division items for the remainder of the week.