Governor’s Budget: Good for hospitals and health care

December 13, 2018

Today Gov. Jay Inslee released his full proposed budget for the 2019-2021 biennium. The budget is positive for health care, and especially behavioral health, as it contains significant investments in the state’s behavioral health system. WSHA is very pleased to see significant new funding proposed in other areas of health care as well.

To fund these new investments, the governor proposes increasing revenue by $3.6 billion in the following three ways: 1) raise the Business and Occupation (B&O) tax on services from 1.5 percent to 2.5 percent; 2) a capital gains tax on the sale of stocks, bonds and other assets; and 3) making the real estate tax progressive, meaning the rate would change based on the value of the property transfer.

Thanks to WSHA’s advocacy, the proposed B&O tax increase does not apply to hospitals. However, we remain unclear on whether the B&O tax increase applies to physician services, and the answer to that question may slightly color our overall positive reaction to the governor’s budget.

Budget highlights

Behavioral health plan: $404 million in operating increases; $271 million in capital funds
On Tuesday, the governor announced a comprehensive proposal to fund behavioral health. WSHA strongly supports increasing funding for the behavioral health system. We were particularly pleased to see that the budget funds partial hospitalization and intensive outpatient programs, supportive housing and a path to sustainable rates for community hospitals wanting to officially treat patients on 90/180-day involuntary commitments.

Also included in the governor’s plan is funding for specialized dementia care for patients discharged from state psychiatric hospitals. WSHA will build on this funding to seek similar investments for patients in community hospitals. Placement for patients stuck in community hospitals is a top WSHA priority. To read more about the governor’s behavioral health plan, see WSHA’s Inside Olympia from December 11.

Primary care rate increase: $56.6 million state, $199.6 million total
Funding is provided to increase the Medicaid payment rate for designated adult and pediatric primary care codes to 83 percent of the Medicare payment rate. WSHA is pleased to see improved access to primary care addressed in the governor’s budget. WSHA’s 2019 budget priorities include support to increase payment for primary care involving behavioral health conditions.

Community and rural hospitals: $2.8 million state, $9.8 million total
One-time funding is provided to the Washington State Health Care Authority (HCA) to sustain community and rural hospitals. WSHA is working to understand more about the funding assumptions.

Investments for addressing the opioid crisis: $8.4 million state, $12.2 million total
Funding is provided for several issues related to preventing opioid-related overdose deaths, including services for low-level offenders, those transitioning out of jail, and pregnant and parenting mothers with opioid use disorder. In addition to these important services, WSHA has advocated for coverage of alternative therapies shown to effectively address pain.

While we are pleased to see that the governor has proposed a new chiropractic care benefit for those with spinal pain, we look forward to continuing the conversations on how other treatments — such as physical therapy, occupational therapy and cognitive behavioral therapy — can be covered. Specific investments in the governor’s proposal include:

  • Diversion grants to establish two new Law Enforcement Assisted Diversion (LEAD) programs to divert low-level offenders to community service rather than jail or prosecution. ($686,000 state, $4.5 million total)
  • Same-day visits to ease transitions for those released from jail so that upon release there is no disruption in access to medication-assisted treatment for individuals with opioid use disorder. ($1.17 million state funds)
  • Funds for pregnant and parenting residential treatment sites, covering start-up costs for four new 16-bed sites that will allow parents and children to reside together through treatment. ($1.27 million state funds)
  • One-time funding to distribute fentanyl test strip kits to syringe service programs to reduce deaths related to opioid-related overdoses. ($101,000 state funds)
  • A new chiropractic care benefit for adults with spinal pain diagnosis. ($5 million state funds)

Transitioning the state’s Prescription Drug Monitoring Program, with the aim of increasing the system’s functionality and sustainability. ($200,000 state funds)

Other health care budget items

  • Crime victim provider rate increase: $6.7 million state funds. Increases provider payment rates for services provided under the Crime Victim Compensation program from 70 percent to 100 percent of the Labor and Industries fee schedule.
  • Public option: $500,000 state funds. Funding is provided for consulting and contract management for at least one plan to be offered in each county of the state.
  • Foundational public health services: The governor proposed $22 million in state funds for local public health departments to improve their capacity to focus on general communicable disease and STDs, address environmental health, improve data consolidation and innovation, and assess activities and effectiveness.
  • Mandated newborn screenings: The Department of Health would add two new conditions to the newborn screening panel. Costs of the new screenings would be paid for by a fee increase, totaling $1.6 million. The HCA budget includes funding to offset this fee for Medicaid patients. The governor’s budget also includes funding to maintain the state laboratory’s ability to complete current screenings.
  • Reducing suicide rates: The governor includes $1.2 million in state funds to support the crisis hotline and text line, which is a partnership with the National Suicide Prevention Hotline. Funding would also be used to support two new call centers for the hotline to increase our state’s answer rate and better represent Eastern Washington.
  • Hepatitis C virus elimination: $3.7 million state, $7.4 million total. Funding is provided for strategy and interventions to eliminate the virus by 2030.
  • Maternal mortality reviews: To continue the biennial maternal mortality review report, the governor proposed using $807,000 in state funds to collect better information on incidents to inform policy responses aimed at reducing maternal deaths. Maternal mortality has recently garnered national attention, especially due to an increased rate of maternal deaths within minority communities.
  • Health Workforce Council:  $480,000 in state funds. WSHA is pleased to see funding included for the governor’s Health Workforce Council, which will continue to assess workforce shortages across behavioral health disciplines.
  • Licensing systems: A total of $8.95 million in other funds (increase on license fees) is proposed to upgrade licensing and enforcement processes, and to accelerate the licensing process for 85 health professions throughout the state.
  • Healthier Washington behavioral health savings restoration: $55 million state, $120 million total. Funding is provided to restore a portion of assumed savings that were not achieved due to later-than-expected integration of behavioral health and physical health services.
  • Pharmacy savings restoration: $14.2 million state, $49.7 million total. Funding is provided to restore a portion of assumed savings — through adoption of a single Medicaid preferred drug list — that were not able to be achieved within the timeline or at the level originally anticipated.
  • Dental savings restoration: $12.2 million state, $29.9 million total. Expected savings due to reductions in emergency services due to implementation of dental managed care will not occur within the originally expected timeline and is being restored.


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