July 1, 2015

The Washington State Legislature has narrowly avoided a complete shutdown of state services by agreeing on operating and capital budgets for Fiscal Years 2015-2017. The Governor has announced his intention to sign the operating budget, likely this evening. The compromise budget is very good for hospitals and health care overall.

This was a particularly challenging session. Political control of the state legislature is split, with the House in Democratic control and the Senate in Republican control. The Legislature had to address the state Supreme Court’s mandate for increased education funding and concerns about inadequate mental health treatment services. The final budget includes an additional $1.3 billion for K-12 education, but some education leaders are already saying it is not enough and calling on the Supreme Court to intervene.

The state had some good fiscal news that helped reach an agreement. A very positive economic forecast reduced pressures on the budget, as did the federal extension of the Children’s Health Insurance Program. In addition, state legislators reached agreement on closing some existing tax loopholes and expanded taxes on marijuana; doing so provided additional funding for the state.

We are very appreciative of all our members who were actively involved this session, as your voices and your commitment to health care helped the Legislature make good budget decisions. We are also very appreciative of all the legislators who shared their time and insights. Working together, we were able to preserve hospitals’ ability to care for patients in all corners of our state.


Mental Health Operating Funds: The operating budget includes significant new investments for mental health, which will result in major steps forward for mental health treatment. The budget includes a total of $100.4 million in new state and federal funding for the mental health system. The dollars can be separated into two buckets: (1) The civil side, dealing with the Involuntary Treatment Act; and (2) The criminal side, dealing with competency restoration for individuals who may be determined incompetent to stand trial. Here’s the breakdown:

  • Civil Services: $64.1 million in total new state and federal funds for a variety of improvements to the mental health system. These funds will be used to pay for new psychiatric beds that have opened since the Supreme Court case In Re Detention of D.W.; staffing improvements for more acute patients at Western and Eastern State Hospitals; a new, badly needed long-term civil commitment ward at Western State; a process for family members to petition the court for review of designated mental health professional involuntary detention decisions; and involuntary assisted outpatient treatment. This total figure takes into account a rate cut to the Regional Support Networks (RSNs) of $33 million, reflecting Medicaid expansion dollars distributed to the RSNs that were not spent over the last 18 months.
  • Criminal Services: $36.3 million in total state and federal funds for a new competency restoration ward, and increases in staff who can evaluate individuals to determine if they are competent to stand trial.

Mental Health Capital Funds: WSHA also advocated for capital budget funding for grants for hospitals and other community health providers who are increasing inpatient mental health treatment facilities serving people in crisis. We are very pleased that the capital budget includes $32 million in this pool, $26.5 of which is earmarked. Click here for more details located on page 25. In the final hours, the legislature also passed HB 2212, an accompanying policy bill that will exempt hospitals receiving capital grants for expanding services from Certificate of Need.

Hospital Safety Net Assessment, and Medical Residencies: After an extraordinary amount of negotiation and fine-line review and consideration, both the House and the Senate passed HB 2125, a new Hospital Safety Net Assessment bill that meets the parameters established by the WSHA Board of Trustees.

The compromise proposal WSHA offered, and that was ultimately accepted, has three changes from the original proposal:

  • It funds the new integrated psychiatry residency program at $4 million. This program will train psychiatrists to provide team-based care. Having providers trained in this proven model will be helpful to all hospitals as we work to better integrate physical and behavioral health.
  • It funds new hospital-based family medicine residency slots at $8.2 million. Non-hospital-based family medicine residencies are not funded through the assessment.
  • It takes advantage of higher than expected Medicaid enrollment, which enabled us to return slightly more money to the state and to hospitals.

It does these things while still keeping the assessment level at a reasonable rate, similar to what has been charged in prior years.

Family Medicine Residencies: In addition to the hospital-based residencies funded through the hospital assessment, the final budget includes an additional $8 million general fund appropriation for non-hospital-based family residencies.

Medicaid Outpatient Services: WSHA strongly opposed the Governor’s proposal to cut funding for hospital-based outpatient clinic services. We are very pleased this cut was not adopted.

Loan Repayment: WSHA supported additional funding for loan repayment to increase the number of licensed primary care and mental health professionals. We are pleased the program is funded at $9.3 million.

Other health care budget items include:

  • Long-Term Care: The state will maintain the current payment methodology for long-term care this year, but will implement a new payment methodology in July 2016. The new methodology consists of rate components for direct care, indirect care, capital, and quality. It will take patient acuity more into account than the current system, but may exacerbate losses at some small rural facilities.
  • Health Insurance Exchange: Funding for the Health Insurance Exchange is reduced from current funding levels to $110 million. The Senate had proposed a much lower level of funding; the House had proposed more. Funding for the call center and in-person assisters is protected. In addition, the Health Insurance Exchange is required to provide detailed reports about its financial and strategic plans to the legislature.
  • Rural Health Clinics: The budget provides about $1.2 million to reimburse audit costs of non-hospital based rural health clinics in order to comply with a payment reconciliation process for calendar years 2011-2013. We are disappointed that hospital-based clinics were not included.


Web Conference: Please save the date for a web conference on Wednesday, July 15 from 12:00-1:00 p.m. to review the results of the Washington State Legislature’s 2015 session. We will send the login information to you when we are closer to the date. Thank you!

Safety Net Assessment: Hospital CFOs, attorneys, and policy staff will be invited to a members-only webcast specifically about the implementation details of the Hospital Safety Net Assessment on Thursday, July 16 from 8:00-9:00 a.m. The invitation will go directly to you and RSVPs will be required, or contact Cindy Skinner at cindys@wsha.org for connection information.

Legislative Summary: A detailed report of the legislative session is in the works. The Legislative Summary will provide a review of WSHA’s efforts on the policy and budget fronts, and look forward to future issues.


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Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

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206.281.7211 phone
206.283.6122 fax


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