Senate budget overview on top WSHA priorities

March 22, 2017

The Big Picture: The Senate Majority Coalition Caucus released its budget today, and it is overall positive for WSHA’s budget priorities. The budget does not include any cuts to hospital-based clinics and also funds several other important health care priorities.

The biggest shifts in funding approaches are in the areas of mental health. See “Focus on Mental Health and Post-Acute Placements” section below.

This budget does not count on the same amount of new revenue as the Governor’s budget, or as the House budget is expected to have. See below for other budget drivers and the next steps in biennial budget writing.

 2017-2019 Biennium Budget Highlights:

  • No cuts to Medicaid payments for hospital-based clinics. Hospital-based clinics provide access in their communities to primary and specialty care for Medicaid patients, and WSHA, hospital leaders and many others worked hard to educate legislators about the risks of making these cuts. The Governor’s budget proposed to cut $75 million per year from off-campus hospital-based clinics; the Senate budget had no cuts. (Read more about hospital advocacy efforts here.)
  • Hospital Safety Net Assessment ( About $300 million in net total funds for hospitals). The safety net assessment program was included as requested in the Senate budget. This is targeted to return about $300 million per biennium in additional Medicaid payments to hospitals and $300 million per biennium to the state. (Read more here)
  • Post-discharge placement for complex patients ($21.8 million total). The Senate budget provides additional funds for increased payment rates for patients with behavioral health needs, making it easier for nursing facilities or adult family homes to accept complex Medicaid payments. This allows these patients to move out of the hospital setting.
  • Nursing home care in small rural hospitals ($112,000). Increased Medicaid payment rates will help support four rural nursing homes in public hospital districts, enabling those residents to stay in their home communities.
  • Essential services in small rural hospitals. WSHA is advocating for additional funds for the hospitals involved in the Washington Rural Healthcare Preservation Program (WRHAP). The Senate first heard the WRHAP bill on Monday, too late to include it in the budget. The bill was passed in the House and is expected to be funded in that budget, and we will continue to support it through the reconciliation process.
  • Improve the Prescription Monitoring program ($1.4 million total). The funding will enable the Department of Health to provide opioid prescribing reports to hospitals, clinics and providers. This data will help identify opportunities to reduce over-prescribing of opioids. The funds also support a program to reduce overdose deaths by notifying a patient’s primary care provider and any prescriber of an opioid when a patient experiences an overdose event. Some funding would also support updates to pain rules.

Focus on Mental Health and Post-Acute Placements

The Senate budget puts forward significant changes to how care is delivered for patients living with a mental illness. WSHA is supportive of this new direction that attempts to address some of the underlying problems with the system. The budget decreases state hospital beds, moves patients to community hospitals and invests in post-acute discharge facilities.

We will be working to ensure these changes make effective investments in the system to ensure care can be delivered in the most appropriate settings. In summary, the budget makes investments in the following areas:

  • Medicaid billing for integrated mental health in primary care
  • 90/180 day commitments in community hospitals
  • Psychiatric rate increase
  • Other mental health investments
  • Post-acute setting rate increase

Other changes include funding changes made to Western and Eastern State Hospitals.

For more detail on the mental health budget and the changes to Western and Eastern State, read the entire analysis here.

Making improvements for patients in the mental health system, both in hospitals and the community health setting, has been a high priority for WSHA and our members, and we are very pleased to see funding and needed reforms.

Other Key Health Care Spending

Health care is a big part of the state’s budget, and there are several other health care items we are tracking.

  • Opioids – the proposed budget acknowledges about $24 million dollars the state is likely to receive as part of two federal grants to expand access to treatment and prevent opioid overdose deaths. This will go a long way in addressing the opioid crisis in Washington. Unfortunately, the UW pain management call center is not funded.
  • Increased hepatitis C funding
  • High risk pool funded
  • Health homes for patients who are dual-eligible for Medicare and Medicaid
  • Increased newborn screening fee in order to add a new screen to the panel. Approximately $500,000 which would be paid by hospitals.

Other Budget Factors

As compared to December’s budget outlook, the budget that the Senate developed is different in some key ways….

  • The Senate budget does not include funding for the collective bargaining agreements. All employees are budgeted to get small raises, and some will get larger raises, but for the most part, the agreements, which included cost-of-living raises, were unfunded.
  • Marijuana revenue is estimated to be $135M.
  • A new statewide property tax will help pay for education. According to the Olympian, “Overall, the Senate plan would add about $1.8 billion to the state’s K-12 school system over the next two years.”
  • The Senate budget assumes $32 million in state savings through use of single drug formulary and pharmacy benefits manager for state Medicaid and Medicaid managed care. Currently the managed care plans provide their own formularies and management of drug services.
  • The Senate budget also assumes $5.8 million savings by contracting Medicaid dental services through managed care.

Next Steps

We expect that the Senate will hold budget hearings today, handle amendments tomorrow and likely pass the bill this week. The expectation in Olympia is that the House will release its budget next week and follow a similar pace. Development of a common budget is likely to take some time. The next revenue forecast is scheduled for June 15, but that may be moved sooner so that new revenue numbers can be used to determine and pass the budget before the fiscal year begins on July 1.


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