State House and Senate come to budget agreement, call for investments in mental health care

March 29, 2016

The Washington State Legislature has reached agreement on a supplemental budget, meaning the legislature can soon conclude its special session. Overall, WSHA is very pleased with the results of the 2016 state legislative session. The budget is very good for hospitals and health systems, provides significant new funding for mental health and makes no significant cuts to hospitals or health care. Additionally, important funding was provided to implement many of the WSHA-supported policy bills.

To adjourn, the legislature needs to pass the final budget by a majority vote and also pass a number of bills necessary to implement the budget. The budget deal is supported by both Democrats and Republicans, and the legislature is expected to take these actions quickly. Also, because the legislature has reached an agreement, the governor has begun signing bills again — he will sign a number of bills important to WSHA this afternoon.

The compromise budget includes increased funding for K‐12 education (including charter schools), higher education and last summer’s wildfires. Funding for the wildfires will come out of the budget stabilization account. It also includes modest new revenues, including collection of overdue royalty payments.

Mental health

Mental health was WSHA’s top budget priority, and the legislature makes significant new investments in mental health services, focusing in particular on stabilizing the state’s psychiatric hospitals. Regarding mental health, the budget calls for about $40 million in state mental health spending:

  • Community mental health treatment (short term): Funds expansion and new mobile crisis teams to provide immediate community-level interventions ($2 million); funds four new housing and recovery services teams to support individuals transitioning out of inpatient settings ($2 million); and provides new dollars to pilot a telephone-based consultation service for rural areas to support primary care providers addressing children’s mental health needs ($600,000).
  • Loan repayment for mental health professionals: WSHA is disappointed the final budget does not provide any new funding.
  • Appropriate rate-setting at new hospital psychiatric units: After significant urging by WSHA, the budget directs the state Health Care Authority (HCA), in consultation with WSHA, to set psychiatric rates for new facilities in a similar way to existing facilities, ending a long-time practice that paid new facilities significantly lower rates. This was a disincentive to opening new units.
  • Long-term mental health investments at state psychiatric hospitals:
    • Salary raises to recruit and retain psychiatrists and other psychiatric hospital staff ($9.3 million);
    • Hiring 51 new nurses at Western State Hospital ($6.8 million);
    • A one-time appropriation to address overspending and new expenditures to meet Centers for Medicare & Medicaid (CMS) requirements ($11 million);
    • Hiring of an oversight and reporting consultant ($260,000);
    • Expanding peer support services — called “bridging” — for individuals being discharged from the state hospitals (federal funds);  and
    • Directing the University of Washington to conduct an analysis of and develop a plan to create a forensic teaching unit in collaboration with Western State Hospital ($600,000).
  • Community Diversion Innovation Fund: Creates a new fund to implement a variety of strategies to prevent patients from needing long-term care and allows contracting from a Behavioral Health Organization (BHO, previously Regional Support Network) for inpatient long-term beds in community settings ($6.8 million).
  • Western State Hospital patient discharge: Pursuant to HB 2453 or SB 6656, directs Western State Hospital to discharge 30 patients with long-term care needs and provides funds to contract with a nursing home facility in the community ($1 million).

Behavioral Health Organization reserves: WSHA was concerned about proposals to sweep significant reserves from BHOs and what that might mean for access to mental health care. The budget does not cut $43 million in the BHO operating reserves. Moving forward, the budget directs the Department of Social and Health Services (DSHS) to establish minimum and maximum reserve levels for contracts for BHOs. If a BHO is found out of compliance, DSHS will require a corrective action that, if not followed, could result in reduction in payment.

Other key changes in health care funding

The legislature also makes several other key changes in health care funding:

  • Holds 2017 Medicaid managed care rates to 2016 levels for a projected savings of $13 million state, $47 million total. We are concerned about the impact this could have on patient access to care and payments to providers. The budget also authorizes a workgroup of state agencies to look at Medicaid managed care rate strategies and the impact on clients by October 2016.
  • Reduces spending by $4.2 million state and $8.5 million total in “inpatient cost avoidance.” Savings would come as a result of avoiding admissions and enabling earlier hospital discharges by increasing access to skilled home RNs and LPNs working with children who need medically intensive care. The state will add $3.25 million to $4.4 million from the federal government to increase the pay rate for home health and private nurses. The HCA is directed to work with WSHA and the Home Health Association to develop a plan to show how improved access to home health nursing reduces preventable readmissions, increases access to care, reduces length of stay and prevents hospital readmissions. We have concerns about this item, on which a report is due in December 2016.
  • Funds important new policy bills in the Department of Health (DOH) that were passed, including hospital pharmacy licensing ($160,000), prescription monitoring program ($26,000), maternal mortality ($230,000), vapor/e-cigarette regulation ($1.6 million), a taskforce on out-of-pocket costs for drugs ($49,000) and vaccine reporting for schools ($511,000).
  • Appropriates $100,000 to the DOH to ensure hospitals are complying with charity care laws and rules.
  • Funds a study of Sexual Assault Nurse Examiners ($76,000) through the Office of Crime Victims Advocacy.
  • Funds rulemaking backlog in the DOH, which we are hopeful could allow for movement on some pharmacy regulations.
  • Includes $3.9 million state and $4 million federal funds to maintain and expand Health Homes services for high-risk, high-cost enrollees who are dually eligible for Medicare and Medicaid.
  • Directs the state to do a study on how it could utilize birth centers in place of hospitals, specifically focusing on outcomes and C-section rates.
  • Reiterates a request for the HCA to request CMS to consider Uniform Medical Plan payment rates as an acceptable cost proxy for Federally Qualified Health Center and Rural Health Clinic services. CMS has already denied this request once.
  • Directs the state to suspend, rather than terminate, Medicaid enrollment for incarcerated people. This will aid in continuity of coverage and services for patients being discharged from incarceration and reduce re-entry into the criminal justice system.
  • Includes restorations of budgeted savings that did not materialize, including $11.4 million in savings that did not occur due to later-than-expected implementation of integration of physical and behavioral health, and $16.7 million in expected savings under an 1115 waiver that CMS did not approve.

Requires the HCA to track and report preventive services and vaccinations provided in Medicaid managed care by carrier, age, gender and other eligibility criteria.

Health Care Authority oversight

The legislature had concerns about increases in expenditures in the Health Care Authority. As a result, the budget moves a number of key functions from the HCA to the Office of Financial Management (OFM) or the legislature. These changes include transfer of the Medicaid caseload forecast function and managed care actuarial rate setting functions from HCA to OFM by July 1, 2016.

The budget also prohibits the state from spending federal dollars in the Healthier Washington program beyond specific legislative appropriations for key areas under the Healthier Washington Initiative: accountable communities of health, long-term supportive services for older adults, supportive housing and supportive employment assistance. Additional expenditures beyond $147 million that are expected in future years will require legislative approval.

Mental health in the capital budget

In addition to the operating budget, the House and Senate also released a capital budget. WSHA’s interest in the capital budget is in the area of funding for new mental health facilities. WSHA is very pleased the capital budget contains significant new dollars for construction costs of mental health facilities for both short-term and long-term mental health treatment.

  • Competitive grants: The budget creates a pool of $5 million for construction costs for new mental health facilities. The types of facilities eligible to apply for the dollars in the competitive grant pool are those treating involuntarily detained patients, including hospital psychiatric units, evaluation and treatment facilities, crisis stabilization programs and crisis triage centers.
  • Diversion facilities: The budget earmarks $7.5 million for design and construction of mental health facilities to divert or transition patients from state hospitals to community settings. Some WSHA members are interested in providing this service.

Housing for people living with chronic mental health disorders. The budget also provides $6 million for building or renovating four health homes that will serve individuals diagnosed with a chronic behavioral health disorder. The homes must be located in Everett, Bellingham, southwest Washington or eastern Washington in counties that have adopted the 1/10th of one percent mental health tax.

A successful session

Overall, we are pleased with the results for health care in the 2016 state legislative session. In addition to the positive budget news, the legislature passed many bills that are important for health care in our state. WSHA members are ready to implement these new laws. As some examples, we are excited to participate in charting the future of telemedicine as reflected in SB 6519; we are committed to reducing opioid addiction and HB 2730 gives us important new tools to do so; we want to be sure patient information captured on police body cameras stays private as governed by HB 2362; we want to improve services to survivors of sexual assault through the tracking system in HB 2530; and we want to ensure the efficient operation of hospital-based pharmacies in SB 6558. This is only a partial list; there are a number of other bills we strongly support. In addition, no bills that we oppose or that will damage hospitals’ and health systems’ ability to provide high-quality care to their communities were ultimately enacted. We will provide more detail about all the new laws once the governor has signed them.

Thank you

Thank you to all our members who were so engaged this session. Your testimony, advocacy and relationships with your legislators are invaluable. It is an honor to represent you and create the policy framework to allow you to deliver high-quality care to your communities.


Cassie Sauer 

WSHA Executive Vice President


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