HCA Completes Budget Neutrality Adjustment Process, Hospitals Avoid Large Cuts

October 19, 2016

When the Washington State Health Care Authority rebased inpatient and outpatient rates in July 2014, they originally suggested a three percent cut to adjust for coding changes in the new system. WSHA and our hospitals pushed back and HCA agreed to measure changes for a two-year period, making budget neutrality adjustments as needed. HCA recently completed its budget neutrality analysis of inpatient and outpatient hospital payment and determined no additional rate adjustments to inpatient or outpatient would be necessary to ensure budget neutrality.

WSHA estimates that the adopted process, along with extensive work by WSHA, WSHA consultant Analysis Group, and member hospitals in WSHA’s Medicaid Payment Task Force to help identify data and calculation errors, saved hospitals about $60 million in payment reductions over the two-year measurement period, with estimated  savings of similar magnitude until the system is rebased at some future period in time.

On a related but separate issue, HCA plans to update the set of outpatient EAPG weights from version 3.7 to version 3.11. Since the weights are in aggregate higher in the new version, HCA is considering a downward rate adjustment to offset the higher weights. WSHA and member hospitals have significant concerns regarding a downward rate adjustment as the new weights may better reflect the cost of providing care. HCA agreed to meet with WSHA’s Medicaid Payment Task Force in late October. (Andrew Busz, andrewb@wsha.org)


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