Senate Budget: Hospital Safety Net Assessment Program Problematic; Concerns About Mental Health Fund

April 1, 2015

The Washington State Senate released its budget proposal today. One of the biggest pieces of news out of the Senate budget is the treatment of Hospital Safety Net Assessment funds.
The assessment is levied on hospitals and used to leverage federal dollars to help pay for services provided to Medicaid patients. The program was designed to allow both the state and hospitals to benefit from increased revenues. Given our past experience with this program where the legislature raided the assessment funds, we have been working to ensure that the program is recognized as a vehicle to help ensure access to hospital services, and not a quick way to solve state budget issues. 
The program is currently scheduled to phase out over time starting in the next biennium. The WSHA board has expressed that our support for continuing the assessment at its current level is contingent on the net benefits being split evenly between hospitals and the state. WSHA and our hospitals have supported eliminating the phase-out on the condition that the program provides support for hospital services under terms we can trust. 
The House budget provides about $140 million per year in net benefit to the state and about the same amount to hospitals. In our first review of the Senate budget bill, it appears that their budget increases the assessment rate above the House level, but uses the additional funds solely for the state. However, the net benefit for the hospitals may be the same in both budgets. 
WSHA is working to clarify the details of the Senate’s plan but believes it does not meet our Board request to have the benefits shared equally between the state and the hospitals. Even though some of the additional assessment funds are being directed to programs we support, without an equal split of benefits, WSHA may have to withdraw its support of the assessment. We will provide more details to members as soon as they become available.

Read the issue brief for more information about the Safety Net Assessment.

Other Big Budget Drivers

The Senate Republican Caucus states that the budget meets the legal requirements of both the McCleary school funding decision and the In Detention D.W. psychiatric boarding decision. With the exception of an increased portion of the hospital safety net assessment, the Senate, unlike the House, does not propose new revenue from the capital gains tax, a carbon tax or changes to the business and occupation (B&O) tax. This results in a budget that is much more limited than the House budget.

See our Budget Comparison Chart here.

Hospital-Based Clinics (No cuts): We are very pleased the Senate budget does not include cuts to hospital-based clinics and ensures access to primary and specialty care for Medicaid patients. The Governor’s proposed budget included a $42 million cut to hospital-based clinics that provide primary and specialty care to Medicaid patients. These cuts would have had a huge impact on low-income patients, who would likely find it difficult to find other clinics who accept Medicaid. In many communities, the hospital and its clinics are the main—or only—provider of primary and specialty care.
Read the issue brief about hospital based clinics here, or a national report about how hospital outpatient departments differ from physician offices.
Mental Health Funding ($90.5 Million state funds/Cuts $49.1 Million state funds): Mental health funding is our top budget priority this year. The Senate budget does show some progress on funding for acute mental health services by funding new inpatient psychiatric beds and increased funding for Western State Hospital.  However, it simultaneously undercuts the community-level mental health services provided by Regional Support Networks (RSNs) and community mental health clinics. While we are pleased to see these new investments, we are also concerned with the proposed deep cuts to community services. The proposed budget includes both state and federal funds for the following items:

  • Increased evaluation and treatment (E&T) capacity with $35.1 million in state funds and $18 million in federal funds.
  • Cuts of $49.1 million for community-based mental health services.
  • Outpatient treatment funding of $5.7 million state, plus $3.3 million federal funds in HB 1450 which move treatment and intervention upstream of crisis by allowing an individual to be ordered to participate in outpatient assisted treatment if the person is determined to be at-risk based on past behavior and other criteria.
  • Crisis substance abuse services in HB 1713 are not funded.
  • Family input into the detention process in SB 5269 with $5.1 million state, plus $2.7 million in federal funds. The bill allows immediate family members to petition the court when their family member is not detained by a designated mental health professional. Some of these dollars will be used for intensive teams or inpatient E&T facilities.
  • Western and Eastern State Hospitals expansion and other improvements with $14.8 million state funds. This funding includes a new 30-bed unit for long-term patients at Western State and emergency response teams and intensive care services at both hospitals, but no increase in pay to recruit psychiatrists, which raises a concern about the ability to staff these new beds.
  • Western and Eastern State also get $27 million for new competency-restoration forensic beds for individuals found incompetent to stand trial, as well as staffing and diversion resources.
  • Non-felony diversion to community programs funded at $2.8 million state and $2.0 million federal.   

Loan Repayment (funded at $9.4 Million): Washington State does not currently have enough primary care providers to meet our need, and what’s more, the providers we do have are not evenly distributed across the state. Loan repayment is a crucial tool in bringing providers to rural and underserved areas. (Funding assumes a $7.6 million fund balance.)
Read the issue brief about loan repayment here.
Family Practice Medical Residencies (funded at $16.3 Million): WSHA is a strong support of this program and requested $16M in funding for it. However, the Senate funds it by increasing the tax through the  Hospital Safety Net Assessment program. We have concerns about the proposed changes to that program (see above).
Primary Care Payment ($0): Funding to maintain payments for Medicaid patients at Medicare levels for primary care services was not included in the budget. 


Other Health Care Funding

Other health care projects and services were included in the budget, including:

  • No cuts to Critical Access Hospitals (CAH)
  • Medical school for Washington State University: funded
  • Department of Health Certificate of Need application fee increase: No fee increase assumed
  • Family planning services: not funded 

Other highlights of the Senate budget include:

  • The class-size initiative, passed by a slim margin of voters last fall, is assumed to be repealed;
  • $300 million revenue from marijuana; and
  • $115 million in additional tax cuts.

What’s next?

The Senate held budget hearings for their operating budget today and is expected to release their capital budget soon.  Both the House and Senate will be considering amendments to their proposed budgets over the next few days.  Once they have each passed a budget, negotiations between the Senate, House, and Governor will begin in earnest.



Contact Us

Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

Map / Directions

206.281.7211 phone
206.283.6122 fax

Staff List