A BILL FOR AN ACT

Relating to rural hospital access.

Be It Enacted by the People of the State of Oregon:

SECTION 1. As used in sections 1 to 4 of this 2027 Act:

(1) “Authority” means the Oregon Health Authority.

(2)(a) “Hospital” means a facility in this state that is licensed by the authority under ORS 441.025 to provide general hospital services, provides acute inpatient care and operates an emergency department that accepts patients 24 hours each day. For purposes of the systemically important rural hospital designation under section 2 of this 2027 Act, “hospital” includes a facility licensed as a low occupancy acute care hospital if the facility provides those services.

(b) The unit of designation is the licensed hospital at its principal inpatient campus. “Principal inpatient campus” means the site identified as the hospital's main inpatient site on the license or, if the license does not identify the site, the licensed site with the greatest number of beds of the types described in subsection (3)(a) of this section. The authority shall resolve a tie by using the site with the greatest number of acute inpatient discharges in the most recent 12 completed calendar months for which complete data are available. If a tie remains, the authority shall use the main inpatient practice location in the hospital's current Medicare provider agreement if that location is one of the tied sites. If the preceding tests do not identify a site, the authority shall identify which tied site principally provides emergency stabilization and receives inpatient transfers based on documented service volumes or, if comparable volumes are unavailable or equal, the hospital's emergency and referral service plans. The authority shall state its reasons in the order under section 3 of this 2027 Act. A hospital may receive only one designation as a systemically important rural hospital for the same principal inpatient campus.

(c) A hospital may not combine the beds, licensure, admissions, Medicare classifications or service capabilities of a separately licensed facility to meet a criterion in section 2 of this 2027 Act. A parent organization, health system, outpatient site or satellite without a separately licensed acute inpatient hospital is ineligible to hold a separate designation.

(3)(a) “Licensed acute inpatient beds” means the maximum number of beds that the authority authorizes in writing under the hospital's license for general acute inpatient care at the principal inpatient campus on the applicable measurement date. Count a bed used for swing-bed services once if it is also licensed for general acute inpatient care. Exclude beds licensed solely for psychiatric, rehabilitation, long term care or other special inpatient services, observation stations that are not licensed for inpatient care and beds authorized only during a declared emergency. Include beds licensed for general acute inpatient care even if they are temporarily unstaffed or unoccupied.

(b) The authority shall use the license and its approved schedules or a written determination by the authority's licensing program based on those records. A count of staffed, occupied or federally reported beds does not establish licensed capacity under this subsection.

(4) “Nonmetropolitan location” means a principal inpatient campus physically located in an Oregon county that is outside a metropolitan statistical area identified in Office of Management and Budget Bulletin No. 23-01, issued July 21, 2023. A county's inclusion in a micropolitan statistical area or combined statistical area does not establish its inclusion in a metropolitan statistical area. A Medicare geographic adjustment, wage-index reclassification or treatment as rural for payment purposes does not change the hospital's physical location under this subsection.

(5) “Dual federal classification” means that the Centers for Medicare and Medicaid Services or its authorized contractor classifies the same hospital, in relation to the same principal inpatient campus and under the hospital's active inpatient prospective payment system provider agreement, as both a sole community hospital under 42 C.F.R. 412.92 and a rural referral center under 42 C.F.R. 412.96. The classifications must be simultaneously in effect on the measurement date. The authority shall establish the effective dates and the facility to which the federal determinations apply. An administrative payment file is evidence of status and must be reconciled with a later, conflicting or superseding determination, including a conversion to a critical access hospital.

(6) “Functional criteria” means that the hospital:

(a) Has a nonmetropolitan location and provides general acute inpatient medical and surgical care, emergency stabilization and the ability to receive and care for patients transferred from another facility when medically appropriate. The hospital must maintain operative transfer arrangements for patients who require services that the hospital does not provide;

(b) Is at least 45 minutes by ordinary motor vehicle travel from the nearest other hospital in Oregon or an adjoining state that provides general acute inpatient medical and surgical care and operates an emergency department that accepts patients 24 hours each day. The authority shall measure time using the shortest normally available public-road route between the two emergency department entrances and shall publish its data and method. Routine seasonal road closures must be accounted for. A temporary closure arising from an isolated event may not be used to establish eligibility; and

(c) In each of the two most recent completed calendar years, had a share of acute inpatient discharges of at least 20 percent as calculated under paragraph (d) of this subsection and admitted at least 50 acute inpatients by documented direct transfer from at least two other separately licensed health care facilities. Do not count movement between campuses of the same hospital as a qualifying direct transfer. The authority may accept auditable hospital records where other data are incomplete. The authority may not waive either threshold or substitute an earlier calendar year.

(d) For the 20 percent test in paragraph (c) of this subsection, the denominator is all acute inpatient discharges of Oregon residents at the principal inpatient campus during the calendar year and the numerator is the subset whose residence at admission was in a nonmetropolitan Oregon county other than the hospital's county. Count a discharge once. Use the geography in subsection (4) of this section. The hospital does not meet the test if the denominator is zero or the required data are unavailable.

SECTION 2. (1) A hospital is designated a systemically important rural hospital if the hospital has a nonmetropolitan location and has dual federal classification.

(2) The criteria in subsection (1) of this section are applied as of the date of application or initiation of a determination by the authority, whichever first applies, and on recertification or a determination arising from a material change under section 3 of this 2027 Act.

(3) The number of licensed, staffed or occupied beds does not determine eligibility under this section. The authority shall collect available licensing information on size for reporting and review of overlap with other hospital programs. The status and benefits of a Type A, Type B, Type C or rural critical access hospital continue under the laws governing that status and those benefits.

SECTION 3. (1) The Oregon Health Authority shall establish a process to certify each hospital meeting the requirements of section 2 of this 2027 Act. The authority may initiate a determination using available records. A hospital may apply at any time and provide evidence for a determination, correction, recertification or reinstatement. The authority shall give the hospital a reasonable opportunity to supply relevant evidence and shall specify any unavailable record necessary for a determination.

(2) No later than 180 days after the effective date of this 2027 Act, the authority shall publish its first roster of hospitals certified under section 2 of this 2027 Act. The authority shall complete an application determination within 90 days after receipt of a complete application and shall review the roster at least annually. The authority shall promptly update the roster after a final order affecting a listing. The roster shall identify the hospital, principal inpatient campus, state license number, active Medicare certification number if any, class and qualification pathway, determination date, evidence measurement dates and any applicable provisional continuation period. The authority shall publish the rules and methods used in making determinations and an explanation of any limits in the evidence used for the roster. The authority shall disclose the roster and a summary of its findings consistent with state and federal laws governing disclosure of information. The public roster may not contain patient identifying information or other information whose disclosure is prohibited by law.

(3) The authority shall issue a written order certifying, recertifying, reinstating, changing or denying certification. Except as provided in subsection (7) of this section for a temporary interruption, the authority may certify a hospital only if it finds the hospital meets the applicable criteria on the effective date of certification. An applicant shall inform the authority of any material change during the pendency of an application. The order shall state the applicable criteria, findings for each criterion, the sources and measurement dates on which the findings depend and the effective date of the action. An incomplete or contradictory administrative record shall be identified in the findings. The absence of an entry in a public file may not be treated as conclusive evidence of ineligibility if reliable underlying records are available.

(4) Before denying an application or changing, suspending or terminating a certification adversely to a hospital, the authority shall give written notice of the proposed action, the basis and proposed effective date, and the opportunity to respond and request a contested case hearing within 30 days after service of the notice. A proceeding requested under this subsection is a contested case under ORS chapter 183. The authority shall state in the notice whether the hospital is eligible to apply under a different pathway. A final order is subject to judicial review under ORS 183.482. This subsection does not stay any licensure or safety action or authorize provision of services for which a license has ceased to be effective.

(5) A certified hospital shall notify the authority in writing of a material change that may affect a class criterion within 30 days after the hospital learns of the change. A material change includes a change to the operator, license, principal inpatient campus, active Medicare provider agreement or classification, inpatient bed schedule where a bed criterion applies, or the availability of services required for qualification. The authority shall review the certification after notice or on receipt of reliable evidence of a material change. A change in name or ownership does not itself disqualify a hospital. The authority shall reassess the eligible unit and criteria when a license, active federal provider agreement or location changes. The authority shall determine the effect of a consolidation or replacement campus under section 2 of this 2027 Act using the new operating and certification records. Certification may not be transferred by sale, assignment or use of a former Medicare certification number.

(6) A certified hospital that ceases all general acute inpatient operations on a permanent basis, or lacks an effective Oregon license authorizing the operations required for qualification, ceases to hold the designation when the operations permanently cease or the license ceases to be effective. The authority shall issue notice and afford review under subsection (4) of this section and correct the roster if the underlying fact or effective date was incorrect.

(7)(a) If a certified hospital continues lawful operation of its general acute inpatient and emergency services and there is a temporary interruption of a criterion other than nonmetropolitan location, the authority may enter a written order continuing the state designation for no more than 12 months after the effective date of the interruption, unless section 2 of this 2027 Act provides otherwise. A continuation order requires findings that the same principal inpatient campus continues to serve the access and referral function for which it qualified and that the hospital has supplied a documented plan and a reasonable schedule to restore the criterion or establish eligibility under another pathway. The authority may continue designation during a temporary interruption of inpatient or emergency services caused by a declared emergency if the license remains effective and the hospital has an approved reopening plan. The total continuation period for the same interruption may not exceed 12 months.

(b) A temporary interruption may include a correctable federal administrative lapse, a temporary reduction in licensed capacity where the bed count is a class criterion, or an interruption of a qualifying service. An intentional permanent service discontinuance, permanent conversion to a different Medicare payment system, or relocation that fails the applicable geography or campus criterion does not qualify for continuation. The authority shall record the basis and expiration date of the continuation and require reasonable periodic evidence of progress. The hospital may apply for reinstatement upon supplying evidence that it meets all criteria for the relevant pathway. A determination may correct the effective date if contemporaneous records establish that the condition did not lapse.

(c) An order under this subsection continues only the state designation. Payment eligibility, continued payment, settlement, reconciliation and recovery depend on the separate law and approvals governing each benefit. Designation may be reinstated prospectively on a new determination. A correction of the historical eligibility record does not independently authorize retroactive payments.

(8) If a federal rule is amended, replaced or repealed, the authority shall apply the facility's federal determinations and any applicable transition under this section. If the change removes a classification used by section 1 of this 2027 Act, substitutes a classification with materially different criteria or materially changes the Oregon class, the authority shall notify the interim committees of the Legislative Assembly related to health care and reimbursement in the manner provided by ORS 192.245 within 90 days after the authority identifies the change. The authority may not substitute a different eligibility criterion by rule. The authority shall recommend any statutory change necessary to continue the public purpose of the designation.

SECTION 4. (1) The systemically important rural hospital designation recognizes hospitals providing access to hospital care for their communities and receiving referrals from the region. For purposes of sections 1 to 4 of this 2027 Act, a decision on designation is based on the eligible hospital and the statutory criteria. A hospital's public, nonprofit or proprietary ownership, system affiliation, decision to contribute funds, or financial condition does not determine its eligibility. A hospital's trauma level does not determine eligibility except to the extent section 2 of this 2027 Act expressly provides otherwise. The authority may consider trauma designation as evidence of actual service capability where a functional criterion applies.

(2) The designation does not change a hospital's state license, federal Medicare classification or any Type A, Type B, Type C or rural critical access hospital classification. Sections 1 to 4 of this 2027 Act do not change payment or access protections under existing law, impose a hospital assessment or contribution, authorize a transfer of public funds, appropriate money or entitle a hospital to payment. This subsection does not preclude the application of a separate provision of law expressly authorizing a benefit, reimbursement or obligation for a certified hospital. Qualification for a benefit and treatment of payments for the same service shall be determined under the law and required approvals governing the benefit.

(3) The authority may adopt rules to administer sections 1 to 4 of this 2027 Act. Rules may specify documentation, application forms, evidence verification, review periods, address reconciliation, computation and reporting. Rules may not expand or narrow an eligibility criterion or waive a geographic, service, federal-classification or numeric requirement established by law. The authority shall use existing reports when sufficient and require only evidence reasonably necessary to make and review the determination. Disclosure, retention and use of submitted information remain subject to applicable state and federal law.

SECTION 5. Sections 1 to 4 of this 2027 Act are added to and made a part of ORS chapter 442.

SECTION 6. This 2027 Act takes effect on the 91st day after the date on which the 2027 regular session of the Legislative Assembly adjourns sine die.

SECTION 7. (1) The Oregon Health Authority shall study how medical assistance hospital payment and public financing affect the availability of emergency, inpatient, outpatient and regional referral hospital services furnished by hospitals certified under section 3 of this 2027 Act. The authority may include hospitals near the eligibility thresholds for comparison. Inclusion in the study does not confer certification or eligibility for payment.

(2) Using a common period and verified hospital, payer and service identifiers, the authority shall compare covered service costs with base, supplemental and directed payments, settlements, third-party receipts, assessments and provider contributions. The authority shall identify material missing data and distinguish fee-for-service from coordinated care and contracted from noncontracted services.

(3) The authority shall estimate direct fiscal effects by fund type and the effects on timely access if a certified hospital reduces capacity or closes. The authority shall compare independently funded allowable-cost reimbursement, targeted service protection, minimum fee schedules, approved public financing, a state-only purchase of essential service capacity and other lawful methods with a reasonable prospect of implementation. For each material option, the authority shall identify the required law or approval, permissible provider class and service scope, applicable payment limits, implementation period, gross and retained hospital payments, administration and any effect on existing benefits or distributions. The authority shall distinguish prospective estimates from observed losses and identify any financing source whose availability has not been established.

(4) The authority may use information lawfully available to it and consult hospitals, coordinated care organizations, local governments, tribes, rural communities, hospital workers, education stakeholders and other affected persons. The authority shall protect information exempt from disclosure and use existing data when sufficient.

SECTION 8. (1) The Oregon Health Authority shall deliver a work plan and preliminary data, authority and fiscal inventory to the interim committees of the Legislative Assembly related to health care and the Joint Committee on Ways and Means by December 1, 2027. The work plan shall identify resources available to complete the study and any material resource gap.

(2) By September 15, 2028, the authority shall submit a report to the committees in the manner provided by ORS 192.245, with draft statutory options, estimated costs, funding and approval requirements, and implementation schedules for any recommended options.

(3) The authority shall conduct the study within available appropriations and expenditure limitations. The study is independent of any payment authority enacted in this 2027 Act.

SECTION 9. Sections 7 and 8 of this 2027 Act are repealed on January 2, 2029. The repeal does not affect the designation or certification established in sections 1 to 4 of this 2027 Act or any independently operative payment provision.

SECTION 10. (1) The Oregon Health Authority, under the supervision of the Governor and consistent with ORS 414.065, may enter into a written agreement with a county, health district or other governmental entity with independent authority to participate. An agreement may provide for a lawful intergovernmental transfer or, when permitted for the applicable Medicaid claiming methodology, a certification of eligible public expenditures for a program under section 11 of this 2027 Act.

(2) Participation is voluntary. Before executing an agreement the authority shall verify the participant’s authority and approval, the eligible source, availability and control of public funds or qualifying expenditures, applicable restrictions, amounts and timing, and compliance with applicable federal and state law. The agreement shall state the source and public purpose, matching and accounting method, duration, withdrawal and reconciliation terms and responsibility for a denied or recouped claim. A transfer or expenditure certification may not rely on impermissible federal funds, a non-bona fide provider-related donation or an arrangement that impermissibly holds a provider or contributor harmless for a contribution. Reconciliation and return of an unused, lawfully transferred amount under section 11 of this 2027 Act is subject to the same requirements. A privately incurred expenditure is not a certified public expenditure solely because a public body participates. No agreement may confer an entitlement to payment based on a contribution or require the contribution of Tribal or school funds. This section does not confer local taxing or borrowing authority.

SECTION 11. (1) The Oregon Health Authority may establish a public-financing pilot for covered medical assistance hospital facility services furnished by a hospital certified under section 3 of this 2027 Act. The authority shall identify the defined service scope, approved provider class, unit of payment and method of accounting for other payment for the same covered service. The authority may use a fee-for-service state plan method or an authorized managed-care method. A payment shall be attributable to an eligible claim or encounter for a covered service actually furnished. A hospital’s decision to provide funds does not determine payment eligibility or amount.

(2) Before activating a pilot, the authority shall document the eligible nonfederal share, matching funds and lawful expenditure authority available for the proposed period. It shall provide required public notice, obtain required federal approvals or document the applicable exception, complete necessary contract and actuarially sound rate actions for managed care, and establish the applicable payment limit and reconciliation method. The authority shall publish an implementation notice identifying the methodology, covered services, operative date and funding limit. A pilot payment may be made only for services furnished on or after the operative date and no later than June 30, 2029. The authority shall suspend new pilot obligations prospectively if authority or funding ceases and reconcile lawful prior obligations.

(3) The authority shall separately account for intergovernmental transfers in the Oregon Health Authority Fund established under ORS 413.101. Moneys credited to the pilot account are continuously appropriated to the authority solely for approved pilot payments and administration permitted by the agreement, subject to lawful expenditure limitations. A certification of public expenditures shall be recorded under the approved claiming and accounting procedure and does not constitute a cash deposit. The authority may use applicable federal funds subject to federal terms and expenditure limitation. Unused transfers and recoveries shall be reconciled and returned or otherwise disposed of under the governing agreement and federal requirements. This section does not appropriate General Fund moneys.

SECTION 12. (1) For a given hospital, covered service, delivery system and service period, the Oregon Health Authority may pay an increment under only one authority enacted in this 2027 Act. If another payment provision of this 2027 Act expressly has priority over section 11 of this 2027 Act and is operative for the hospital, service, delivery system and period, the authority shall apply the provision with priority. When the higher-priority provision is not operative, the authority may apply the next available approved and funded method. The authority shall state the sequencing and treatment of overlapping payments in each implementation notice and reconcile any transition without duplicate payment, claim or federal participation.

(2) The authority shall account for independently authorized base payments, supplements, cost settlements and third-party payments to the extent required by applicable law and the approved methodology. It may not reduce or reallocate an independently authorized distribution to another provider solely to finance an increment under this 2027 Act. A hospital entitled to an overlapping cost-based benefit for the same service shall receive the greater lawful applicable benefit and may not receive duplicative cost reimbursement. Existing member protections and the applicable Oregon and federal rules on noncontracted and emergency services remain in force except as expressly provided by the operative payment provision and permitted by federal law.

(3) The authority shall keep separate accounts and report annually while the pilot is active to the interim committees related to health care and the Joint Committee on Ways and Means on funding sources, participation, payments, administration, reconciliation and effect on access. The authority may adopt rules to administer sections 10 to 12 of this 2027 Act. A pilot or payment decision does not affect designation or certification under sections 1 to 4 of this 2027 Act.

SECTION 13. (1) Subject to section 14 of this 2027 Act, the Oregon Health Authority shall establish a program of targeted payment protection for hospitals certified under section 3 of this 2027 Act. A hospital may apply for an identified group of covered inpatient or outpatient medical assistance hospital facility services during a single applicable service, rate or rating period. The authority shall require a financial and access plan supported by independently verifiable cost, payment and service information. The authority shall obtain an independent actuarial analysis of the proposed protection when needed to establish its amount or satisfy applicable federal requirements.

(2) The authority may issue an approval if it finds in writing that:

(a) Independently supportable payments for the covered services, after accounting for other payments for the same services under section 12 of this 2027 Act, are below reasonable and allowable costs allocable to those services;

(b) The shortfall materially threatens timely access to those services for medical assistance recipients in the hospital's service area within the proposed period, and feasible alternative providers or arrangements do not preserve that access; and

(c) The proposed increment is no greater than the documented allowable-cost gap, the amount reasonably necessary to preserve access, the applicable lawful payment ceiling and the amount supportable within funds and expenditure authority specifically available for this program.

(3) The authority shall publish uniform application, allocation and review standards. The authority shall give a hospital notice of a denial, limitation or prospective suspension, the reasons and an opportunity for review under ORS chapter 183 or other applicable law. Approval is limited to the stated service, delivery system and period. A hospital may reapply on the same terms as any other certified hospital. Overall hospital financial condition may be relevant to the access finding but does not determine eligibility for designation.

(4) For the targeted program, reasonable and allowable costs are the covered facility costs allocable to the service group and period, documented through the most recent finalized audited Medicare cost report and other independently verifiable cost and utilization data necessary to reflect the Medicaid service mix. The authority shall prescribe uniform allocation, audit and settlement rules consistent with the applicable approved methodology. The authority shall exclude noncovered costs and credit payments for the same services as required under section 12 of this 2027 Act.

SECTION 14. (1) To carry out section 13 of this 2027 Act, and notwithstanding ORS 414.755 for the approved fee-for-service increment only, the Oregon Health Authority may implement a fee-for-service payment under the approved state plan and a separate managed-care payment under the applicable approved methodology, contract and rate. A managed-care increment may apply to noncontracted services only where expressly authorized under the applicable approved methodology, contracts and law. ORS 414.743 otherwise applies according to its terms. The authority shall not require a coordinated care organization to pay an increment without a lawful contract and rate mechanism. No provision authorizes a payment beyond the applicable federal limit, including limits on payment in full for noncontracted emergency services.

(2) Before activating a service or delivery system, the authority shall complete required public notice, state plan, prior-approval or exemption documentation, aggregate fee-for-service payment limit analysis, provider-class and managed-care total-payment limit analysis, contracts, actuarially sound rates and any quality, evaluation and reporting actions applicable to the method. The authority shall publish an implementation notice stating the service, period, lawful methodology, funding source and maximum obligation. The operative date shall comply with the federal effective date and rating period.

(3) The authority shall limit the total obligation to moneys specifically appropriated or otherwise expressly made available for the targeted program, any matching federal funds and authorized expenditure limitations. If funds will not support all approved applications, the authority shall uniformly narrow the prospective service scope or increments under the approved methodology before obligation and document the access effects. No amount is due for an inoperative period. The authority shall prospectively limit or suspend an increment if applicable authority or available funds cease and reconcile lawfully incurred prior obligations. This section does not appropriate moneys.

(4) A payment authorized under this section has priority over section 11 of this 2027 Act for an approved hospital, service, delivery system and period under section 12 of this 2027 Act. The authority shall verify the cost and payment amounts, terms of participation and prospective or settlement procedures according to the applicable methodology and permit no duplicate payment. The authority may adopt rules to administer sections 13 and 14 of this 2027 Act.

SECTION 15. ORS 414.728 is amended to read:

414.728. (1) For services provided on a fee-for-service basis to persons who are entitled to receive medical assistance, the Oregon Health Authority shall reimburse Type A and Type B hospitals and rural critical access hospitals, as described in ORS 442.470 and identified by the Office of Rural Health as rural hospitals, fully for the cost of covered services based on the most recent audited Medicare cost report for Oregon hospitals adjusted to reflect the Medicaid mix of services.

(2) Subject to section 16 of this 2027 Act and notwithstanding ORS 414.755, the authority shall reimburse a hospital certified under section 3 of this 2027 Act for covered inpatient and outpatient hospital facility services provided on a fee-for-service basis to a medical assistance recipient at 100 percent of reasonable and allowable costs determined under section 16 of this 2027 Act, to the extent permitted by the approved state plan and applicable federal limits. If a greater otherwise applicable payment is lawfully payable for the same covered services, the authority shall use the greater payment. An increment may not be paid under this subsection for a service for which payment is made under subsection (1) of this section.

SECTION 16. (1) Subject to this section, the Oregon Health Authority shall require each coordinated care organization, under its contract with the authority, to reimburse a hospital certified under section 3 of this 2027 Act for covered inpatient and outpatient hospital facility services for which the organization is responsible at 100 percent of reasonable and allowable costs, to the extent authorized under applicable federal requirements and an approved methodology. If applicable federal law permits only a lower amount, the authority shall implement the highest lawful amount under the approved methodology and available funding. The authority shall use an approved fee schedule, settlement or other service-based method and incorporate the obligation in the applicable contract and actuarially sound rates and rate certification.

(2) Subsection (1) of this section applies to noncontracted services notwithstanding ORS 414.743 only to the extent expressly permitted in the approved methodology and specified in the applicable contract and rules. The authority shall preserve the otherwise applicable ORS 414.743 minimum if lawfully payable. The hospital shall accept the lawful final payment as payment in full for the services. For noncontracted emergency services the authority shall comply with the applicable federal payment-in-full limit. ORS 414.743 applies according to its terms to services for which subsection (1) of this section is inoperative or does not lawfully apply. This section does not diminish member protection or expand authorization requirements.

(3) For purposes of section 15 of this 2027 Act and this section, reasonable and allowable costs are covered hospital facility costs documented in the most recent finalized audited Medicare cost report and other audited information necessary to reflect the Medicaid service mix, covered services and service period. The authority shall prescribe uniform cost allocations, third-party liability and credit rules, including accounting for all other payments federal law requires to be counted and preserving an independently authorized payment except where a change is independently required. Interim payments and later reconciliations must be attributable to valid claims or encounters and conform to the applicable unit and level of aggregation. The authority shall give a hospital the basis of a final determination, settlement or recovery and notice of available review under ORS chapter 183 or other applicable law.

(4) The authority shall prepare the methodology, provide required public notice and submit required federal materials. Before activation the authority shall obtain applicable approval or document the exception to prior approval with supporting analysis. The authority shall separately verify fee-for-service payment limits and managed-care total-payment limits, lawful provider class and participation terms, actuarially sound rates, contracts, quality objectives and required federal evaluation and reporting. The authority shall verify the necessary funds and expenditure authority for each implementation period. The authority shall publish separate implementation notices for fee-for-service and managed care and may identify distinct covered services and dates if the approved terms require them. Each notice shall state the funding and federal authority, methodology, scope and effective date. An increment under section 15 of this 2027 Act or this section shall apply prospectively on or after the date in the applicable notice, no earlier than January 1, 2028 and consistent with federal effective dates and managed-care rating periods.

(5) Sections 15 and 16 of this 2027 Act have priority over sections 11 and 14 of this 2027 Act for a hospital, service, delivery system and period for which the full allowable-cost provision is operative, as provided in section 12 of this 2027 Act. No increment is payable for a service for which base and other countable payments already reach the lawful target. The authority shall give reasonable advance notice and written grounds when an applicable approval or source of funds requires prospective limitation or suspension, reconcile lawful prior obligations and apply any lower-priority authority only as permitted under section 12 of this 2027 Act. Section 3 certification and the permanent designation continue independently.

(6) By December 1, 2027, and annually thereafter while either delivery system is materially restricted or unimplemented, the authority shall report to the interim committees related to health care and the Joint Committee on Ways and Means in the manner provided by ORS 192.245. The report shall identify gross and net hospital effects, required federal action, timing, interactions with current payments, expenditure by fund type, and the reasons and next action for material delay or limitation. Information exempt from disclosure shall be protected.

SECTION 17. (1) In addition to and not in lieu of any other appropriation, there is appropriated to the Oregon Health Authority, out of the General Fund, for the biennium beginning July 1, 2027, the amount necessary to pay the nonfederal share of the incremental expenditures authorized by sections 15 and 16 of this 2027 Act that qualify for federal financial participation and the reasonable implementation and administration costs not otherwise paid with federal or other funds. Preparatory work may begin on the effective date of this 2027 Act. This appropriation does not authorize a medical payment before the applicable implementation date under section 16 of this 2027 Act or in excess of the applicable approved payment limit.

(2) Federal funds received for expenditures under this section may be used for the same purposes subject to applicable federal requirements and expenditure limitations. For later biennia the authority shall include the amounts needed for sections 15 and 16 of this 2027 Act in its budget requests. Later increments remain subject to appropriations and lawful expenditure authority for the applicable biennium. An unavailable or reduced appropriation under this section does not affect sections 1 to 12 of this 2027 Act or sections 13 and 14 of this 2027 Act to the extent that the targeted payment program has separately authorized funding.