State Medicaid Cuts to Hospital Based Clinics Could be $75 Million Per Year

January 26, 2017

The Health Care Authority recently provided us with details on the proposed Governor’s budget cuts to hospital based clinics. Under the proposal, the cuts would affect all services provided in off-campus hospital department locations, including hospital-based clinics. The payment amounts would be reduced to about half of what is currently paid for these services. According to the new analysis, the cuts to hospitals are estimated to be about $75 million per year.

The analysis, however, comes with a major caveat. Neither the Health Care Authority staff nor WSHA can determine a precise amount of the cut, because there are no reliable claims and encounter data to calculate the amount of Medicaid outpatient hospital services provided at off campus locations. The analysis assumes about 20 percent of all hospital outpatient services are provided at off campus facilities. It also recognizes, however, that the actual amount could be higher or lower. If the proportion of outpatient services provided off-campus is 30 percent, the estimated reduction in payment would be greater, around $110 million per year. The state savings under the proposal would be primarily obtained through reductions in premium rates for the Medicaid managed care plans to reflect the payment rate reductions.

Next Steps: WSHA adamantly opposes these cuts to hospital services. We appreciate HCA providing the budget details, since this proposal is under active consideration by legislators. We believe the cuts seriously threaten the financial viability of access for Medicaid and other patients served through off-campus hospital clinics. We will be working with member hospitals to estimate impacts and contact their legislators about the implications for the hospital and its patients. (Andrew Busz,


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