Senate Bill 5083 would cap hospital commercial rates for state employee plans; committee hears mixed testimony

The Washington Senate Appropriations Committee held a public hearing on engrossed second substitute Senate Bill 5083, a request of the Health Care Authority that would require hospitals that participate in the Medical Care Services program (Medicaid) to contract with the Public Employees Benefits Board (PEBB) and School Employees Benefits Board (SEBB) plans upon receipt of a good‑faith offer and limit reimbursement for services under those contracts to 200 percent of Medicare beginning Jan. 1, 2027, stepping down to 90 percent on Jan. 1, 2029.

Why it matters: PEBB and SEBB together cover roughly 700,000 people, about 15 percent of the commercial market in Washington, and are projected to spend roughly $12.6 billion in the 2025–27 biennium. Proponents told the committee the bill could reduce premiums for public employees and create more transparent hospital pricing; hospital systems and insurers warned it would cut hospital revenue, risk services and shift costs to other commercial payers.

David Pringle, staff to the committee, briefed legislators on the bill, outlining the main provisions: the 200 percent then 90 percent reimbursement caps, higher caps for children’s hospitals (350 percent of Medicare), floors for rural critical access and sole community hospitals (a percentage of allowable costs), and a 50 percent Medicare floor for primary care and non‑facility behavioral health services. Pringle summarized fiscal estimates, saying the Health Care Authority’s fiscal note projects savings to PEBB/SEBB of about $56.2 million in fiscal year 2027, $280–290 million in the 2027–29 biennium and about $414 million in 2029–31; the University of Washington projected lower payments to hospitals but noted offsetting savings because of the large number of UW employees covered by PEBB.

Public testimony split largely by interest: labor and consumer advocates urged support. Nicole Gomez of the Washington Federation of State Employees said, “This bill offers potential drop in premiums and making hospital visits more affordable.” Jared Mason Gere of the Washington Education Association and Emily Bryce of Northwest Health Advocates likewise urged passage as relief for employees, school districts and families, citing Oregon’s earlier experience.

Hospital systems and trade groups opposed the bill. Alex Towne, chief administrative officer of Samaritan Healthcare in Moses Lake, said the bill’s exemptions exclude Samaritan and other public hospital districts in Central Washington and that the measure would create a $10.4 million revenue shortfall for his hospital. Dr. Andrew Jones, CEO of Confluence Health, said Confluence — “the last remaining independent, private, nonprofit sole community hospital in the state” — would face a $50 million annual cut under the bill as drafted and urged restoring rural exemptions. Shalene Whitaker and Lisa Thatcher of the Washington State Hospital Association warned the committee that reductions they estimate at hundreds of millions per biennium would worsen already negative operating margins and could lengthen wait times or eliminate services. Chris Bandley of America’s Health Insurance Plans and other insurers warned of cost‑shifting to commercial markets and cited a projection that commercial premiums could rise by about 5.7 percent by 2027.

Several speakers highlighted pediatrics and rural care as special cases. Suzanne Bridal, chief financial officer at Seattle Children’s, noted Medicare does not include many pediatric billing codes and estimated an up to $50 million annual impact on Seattle Children’s; she asked that children’s hospitals be exempted as in Oregon’s law. Hospital representatives and rural district leaders called for either broader rural exemptions or closer alignment with Oregon’s statutory approach, including a steadier 200 percent cap without an automatic stepdown to 90 percent.

Committee action: the hearing record shows staff briefing and extensive public testimony; no committee vote or amendment was recorded during the hearing. Pringle noted the bill requires the Health Care Authority to report by Dec. 1, 2030, on the bill’s impacts on network access and state expenditures.

Closing: members heard detailed fiscal notes and extensive public testimony on competing priorities: labor and consumer groups arguing the measure would lower costs and increase transparency for public plans; hospital systems warning of large revenue losses with risks to services, especially in rural areas and for children’s care. The committee moved on to other items after concluding the public hearing on SB 5083.