Requirement for Hospitals to Contract with Public Option Plans

February 7, 2022

To: Chief Executive Officers, Chief Financial Officers, Legal, and Government Affairs staff
Please share with Payor Contracting staff.
Staff Contact: Andrew Busz, FAHM, Policy Director, Finance| (206) 216-2533
Subject: Requirement for Hospitals to Contract with Public Option Plans


This bulletin reminds hospitals about a law enacted during the 2021 Washington State legislative session, which requires hospitals to contract with at least one public option plan for the 2023 plan year. This was previously communicated in our previous Bulletin and Fiscal Watch article. Contracting for these plans is underway now. This bulletin also informs hospitals regarding the current status of Health Care Authority (HCA) rulemaking for enforcement of the requirements.

This applies to all acute care hospitals licensed under chapter 70.41 RCW.

Hospital legal, government affairs, financial, and contracting staff should review this bulletin and Senate Bill 5377 to understand the new requirements and ensure compliance. Penalties for non-compliance are quite steep.

WSHA encourages hospitals to participate in the HCA rulemaking on these requirements, currently in process.

Senate Bill 5377, enacted during the 2021 legislative session, included a provision mandating hospital participation in at least one public option plan upon receiving an offer to contract. This provision takes effect in 2022 or any subsequent year when there are any counties where a public option health plan is not available to consumers. Because there were 14 counties without public option health plans for 2022, the mandatory participation provision will be in effect for plan year 2023 with contracting arrangements occurring in 2022.

For 2023, a hospital must be contracted with at least one public option plan if they have received a valid offer to contract from any public option plan. A hospital may elect to contract with more than one plan but are not required to do so under the law. See our prior Bulletin and Fiscal Watch article for more information.

Health Care Authority Rulemaking
The Health Care Authority (HCA) is authorized under the law codified under RCW 41.05.405 to adopt rules and provided a stakeholder draft. WSHA’s comments to the stakeholder draft include:

  • A request that the rule clarify that hospitals are considered compliant with the law by contracting with at least one public option plan.
  • Clarification that HCA cannot investigate a hospital for declining an offer from a public option plan if the hospital has contracted with at least one other public option plan.
  • Additions to the definition of a “valid offer” regarding inclusion of services and payment collection.

WSHA did not address the issue of reasonability of payment rates in its comments to avoid setting a minimum payment threshold or standard. In addition, WSHA also commented that the proposed penalties for noncompliance in the stakeholder draft rule were excessive and should be significantly reduced.

The next stage of the rulemaking will be for HCA to release a CR-102 version of the rule, which will include a hearing and comment period.  WSHA will monitor and provide further comments when the CR-102 version of the rule is available. We encourage hospitals to engage in the remainder of the rulemaking process and staff can request to receive communications from HCA using the contact information here.

Next Steps
Hospitals should consider the information in this bulletin and the stakeholder draft rule as they receive and consider offers from public options plans for the 2023 plan year.

WSHA will continue to engage in the HCA rulemaking process and provide updates to member hospitals.

WSHA’s 2021 New Law Implementation Guide
Please visit WSHA’s new law implementation guide online. The Government Affairs team is hard at work preparing resources and information on the high-priority bills that passed in 2021 to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for the release of upcoming resources on other laws and additional resources for implementation.



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