Inside Olympia: Legislature reaches 2019-21 budget agreement

April 28, 2019

On April 27, the Legislature reached a budget agreement for the 2019-21 biennium, which will allow the 2019 legislative session to conclude on time on April 28. The budget is somewhat positive for hospitals and health care. While the legislature did not cut Medicaid or hospital payments, some new taxes will be imposed on parts of the health care industry. Overall, the legislature will raise about $830 million in new revenue for the biennium from a Business and Occupation (B&O) tax increase on services, a graduated real estate excise tax and through the closure of tax loopholes. This budget also makes some aggressive assumptions about savings in programs that, if not realized, could lead to pressure to cut health care in future years.

The legislature does make significant investments toward its vision to reduce services at the state’s psychiatric hospitals, Western and Eastern State, and move 90- and 180-day mental health commitments into the community. Additionally, the legislature provides some new capital and operating funding for patients living with dementia or development disabilities, and for mental health and substance use disorder services.
Other major highlights include:

  • No B&O tax increase on hospitals licensed under 70.41 RCW. WSHA worked hard to obtain this exemption;
  • A significant investment of $119 million in capital funding for community behavioral health;
  • A 20 percent increase on the B&O service tax rate for (1) independent physician groups, not directly employed by a hospital; and (2) freestanding psychiatric hospitals licensed under 71.12 RCW, which was a surprise last-minute inclusion;
  • Significant funding for 90- and 180-day mental health commitments in community hospitals and evaluation and treatment facilities. WSHA is disappointed the final bill language does not commit to adequately reimbursing hospitals the cost of providing care for these patients. WSHA will work to correct this shortfall in 2020;
  • Additional funding for patient living with development disabilities that includes a rate increase and respite beds. WSHA is pleased to see these investments;
  • Increase in funding for WHRAP hospitals;
  • No funding for partial hospitalization and intensive outpatient mental health treatment, to WSHA’s disappointment; and
  • A very aggressive savings assumption in Medicaid of $101 million state and $351 million total funds for fraud and abuse savings from audits on providers. WSHA worked to oppose this and is disappointed with its inclusion in the budget.

Read WSHA’s budget comparison document for more details.

ESSB 5526: Public option final agreement

Yesterday, on a party-line vote, the legislature passed the final version of ESSB 5526, which will allow Washingtonians the option to purchase lower-costing health insurance coverage on the Health Benefit Exchange (the individual market). The bill now goes to the Governor for signature.

The final bill establishes a framework for interested carriers to offer a public option health plan with a rate cap for all covered benefits, excluding pharmacy. The rate cap would be set at 160% of the aggregate amount Medicare would pay. As with other versions of this bill, provider, hospital and carrier participation is not mandatory. Throughout the legislative process, WSHA expressed concerns about any plan that would establish rate caps on providers and hospitals. It sets a disturbing precedent that health care costs may only be reduced through reducing provider and hospital reimbursement rates, rather than addressing the array of cost drivers.

The 160% of Medicare aggregate rate cap may be waived if a carrier is unable to establish a network of providers and facilities to meet network adequacy standards or if the carrier is able to establish actuarily sound premiums that are 10% lower than premiums from the previous plan year.

Other items in the final bill include establishing reimbursement rates for Critical Access Hospitals at no less than 101% of allowable costs; and for primary care services no less than 135% of the amount Medicare would pay. By 2022, the Health Care Authority (HCA) must recommend to the legislature whether to link carrier or provider participation in a public option plan to participation in Public Employer Benefit Board, School Employee Benefit Board or Medicaid. Further, by 2020, the HCA is to establish a plan for premium subsidies to assist individuals who make up to 500% of the federal poverty level and are seeking coverage on the exchange.

The final bill added that carriers may not require providers or facilities participating in a public option plan network to accept the lower public option reimbursement rates for other health plan products offered by that carrier. Also, the amount carriers reimburse independent providers through the public option plan is not subject to B&O tax. This also includes any amounts these providers collect from patients through cost sharing. (Shirley Prasad)

SSB 5734: Safety Net Assessment passes

SSB 5734, extending the Hospital Safety Net Assessment program, has passed both chambers and now awaits the governor’s signature to become law. WSHA is pleased the bill passed without harmful amendments.

The Hospital Safety Net Assessment program is key to protecting our state’s most vulnerable hospitals by augmenting Medicaid payments. Besides providing funding to hospitals for Medicaid services, the program provides significant revenue to the state’s operating budget. The program requires no state funding to operate, as it is funded by the assessments paid by hospitals and federal matching funds. Furthermore, it supports family practice residencies and training for integrated behavioral health care. (Andrew Busz)

SHB 1155: Nurse staffing bill passes

SHB 1155 passed both chambers after a conference committee was created to finalize the bill’s provisions. The bill now awaits the governor’s signature to become law, and WSHA will work with members to help them implement changes to comply with the new law. Most elements of the new law take effect Jan. 1, 2020, and the law will take effect for Critical Access Hospitals beginning July 1, 2021.

The bill’s final iteration removes the mandatory eight-hour cap on nurse shifts, a Senate amendment that WSHA strongly opposed. However, the bill does not exempt Critical Access Hospitals from the new staffing requirements, which could be detrimental to rural health care.

In its final form, SHB 1155 includes instances in which a break can be interrupted to address patient care needs. It prohibits mandatory on-call from being used to cover regularly scheduled shifts (as identified by hospital staffing plans), and it prohibits prescheduled on-call from being used to address regular changes in patient census or acuity, or expected increases in the number of employees not reporting for a predetermined scheduled shift. It also adds an option for rest between consecutive shifts when nurses or technicians accept overtime.

Read our detailed analysis of the final bill. (Lauren McDonald)

SHB 1931: Workplace violence bill passes

SHB 1931, addressing workplace violence, has passed both chambers and awaits the governor’s signature to become law. WSHA supported this legislation, which modifies current law requiring workplace violence prevention plans. It adds a requirement for an annual review of incidents and development and implementation of a plan every three years.

The bill also requires hospitals to provide violence prevention training to all employees, including contracted security personnel, and specifically allows the training to be adjusted to meet the needs of the specific employee. WSHA and the Washington State Nurses Association worked collaboratively on this legislation. (Lauren McDonald)

High-priority bills that passed both chambers

Bills WSHA Supports

HB 1016 Concerning timely access to sexual assault nurse examiners.
2SHB 1166 Supporting sexual assault survivors.
EHB 1175 Concerning health care decision making for patients who lack capacity.
2SHB 1394 Concerning community facilities needed to ensure a continuum of care for behavioral health patients (includes extending the CN exemption for psychiatric beds).
SHB 1406 Encouraging investments in affordable and supportive housing.
E2SHB 1593 Establishing a behavioral health innovation and integration campus within the University of Washington School of Medicine.
SHB 1686 (included as part of 2SSB 5602) Posting of hospital certain policies.
E2SHB 1874 Regarding parent and family-initiated treatment.
2SHB 1907 Concerning the substance use disorder treatment system.
SHB 1931 Concerning prevention of workplace violence in health care settings.
SSB 5380 Concerning opioid use disorder treatment, prevention and related services. This bill is in dispute between the two chambers and a conference committee has been requested.
SSB 5425 Maternal mortality reviews.
2SSB 5672 Contracting for adult family home specialty services.

Bills WSHA opposes

SSB 5163 Concerning wrongful death (see article above).
ESSB 5526 Public Option – Increasing the availability of quality, affordable coverage in the insurance market by capping provider rates to Medicare levels. This bill is in dispute between the two chambers and a conference committee has been requested.

Bills on which WSHA is neutral

HB 1049 Concerning health care provider and health care facility whistleblower protections.
HB 1065 Balance billing – creating an arbitration process for out-of-network claims disputes.
SHB 1071 Data breach notification.
ESHB 1450 Noncompete agreements.
SHB 1531 Placing limits on medical debt.
SHB 1602 Placing limits on consumer debt.
SHB 1607 Requiring notice for certain health care transactions.
ESSB 5258 Protecting isolated workers.
2SSB 5602 Regarding reproductive health care.

Notable bills that have died

HB 1608 & SB 5542 Restricting hospital ability to appropriately manage quality and safety of patient care.
HB 1810 Concerning rural hospital payment changes.
HB 1854 Consumer data privacy.
HB 1965 Qui Tam for workplace protection violations.
SB 5295 Concerning labor neutrality and contractor compliance for certain contracted service providers.
2SSB 5376 Consumer data privacy.
SB 5385 Establishing telemedicine payment parity.
E2SSB 5483 Improved services for individuals with developmental disabilities. (Part of this bill was hung onto SB 1394)
E2SSB 5720 Concerning the involuntary treatment act.
2SSB 5822 Providing a pathway to establish a universal health care system for the residents of Washington state.


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