Health Care Authority Recommends $42 Million Medicaid Payment Cut to Hospital Clinics, Other Changes

September 24, 2014


Health Care Authority Recommends $42 Million Medicaid Payment Cut to Hospital Clinics, Other Changes


Last week the Health Care Authority (HCA) submitted to Governor Inslee a set of recommendations to meet the governor’s request that agencies submit proposals to achieve a 15 percent budget reduction for the 2015-2017 biennium. The recommendations include a reduction to payments for Medicaid office visits in hospital clinics by $42.3 million over the two-year period, a cut of over 60 percent. Under the HCA proposal, payments to clinics licensed as hospital departments would be reduced to the level of freestanding clinics paid on regular Resource Based Relative Value Scale (RBRVS) fee schedule. These fee levels are significantly lower than those in hospital based clinics and also lower than the enhanced fees received by federally qualified health centers and rural health clinics. 

The Washington State Hospital Association (WSHA) reacted strongly telling HCA leaders we are concerned the change will reduce access to care for Medicaid enrollees if hospital based clinics reduce the care provided.  It could then drive patients to more expensive venues, such as hospital emergency rooms.   Hospital clinics often serve a much higher proportion of Medicaid enrollees than freestanding clinics and are the primary source for specialty services in many regions of the state. WSHA will work to protect adequate payment for Medicaid clinic services and preserve access to care. Other HCA budget recommendations include:

  • Elimination of the phase-down provisions of the safety net assessment program:  Under current assessment program law, payments and assessment levels are scheduled to be reduced by 20 percent for State Fiscal Year (SFY) 2016 and 40 percent for SFY 2017. HCA proposes to maintain the program at current levels, preserving more than $60 million in state general fund savings and maintaining the benefits for hospitals from the program.
  • Funding for Medicaid outreach to selected populations: HCA is requesting $200,000 in additional funding for outreach to targeted populations that have not been reached by traditional enrollment efforts. (Andrew Busz,


Health Care Authority to Fix Medicaid Hospital Payment Programming Issues

The HCA has identified and is fixing programming issues that are causing underpayments on Medicaid services to prospective payment hospitals. A programming error is causing payments for outpatient hospital services to be incorrectly limited to the billed charge rather than the allowed amount for specific line items.  Given bundling of services, this is causing significant underpayments for some hospitals.

HCA anticipates the programming corrections to be completed around mid-October. Once the programming correction is complete, claims will be reprocessed by HCA without the need for resubmission by the hospital. This issue is limited to claims paid by the HCA through the ProviderOne system and should not affect payments by health plans using combined third-party grouper-pricer software. If you are experiencing other issues regarding payment of hospital Medicaid claims incurred after July 1, 2014, please let us know. (Andrew Busz,

Slides and Recording of WSHA’s Hospital Finance 101 Webcast Available

The cost of health care delivery is an issue that causes confusion and frustration for patients, lawmakers, and the hospitals themselves. On September 19, Andrew Busz, WSHA Policy Director, Finance and Mary Kay Clunies-Ross, WSHA VP Communications & Public Affairs presented a webinar to build some basic understanding about the major factors that affect hospitals’ financial picture, and the relationship between those finances and access to health care across our state. While the webinar was developed with health care reporters in mind, we believe it will also help hospital staff explain the costs related to the provision of health care.

The webinar tackled a broad variety of topics related to health care costs, including payment rates, payment structures, charity care, community benefits, Medicaid expansion, the Affordable Care Act, emerging new payment models, health care in rural areas, cost and quality transparency, and more! Slides and a recording of the presentation are available on WSHA’s webcast page. (Claudia Sanders,


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