Olympia — State health officials told the Senate Health and Long Term Care Committee on July 22 that the federal reconciliation bill known as HR1, together with several new Centers for Medicare & Medicaid Services rules, will likely reduce health coverage and federal funding in Washington and create new administrative burdens for Medicaid recipients and providers.

The Washington governor’s senior health policy advisor, Caitlin Stafford, told the panel the state expects “coverage losses pretty immediately” in the individual market and warned of cascading effects for Medicaid and providers. Stafford said, “we're probably gonna start seeing at a minimum about 80,000 people not being able to afford coverage starting in January.”

Stafford and officials from the Washington State Health Care Authority (HCA) described overlapping changes: HR1’s provisions on work requirements, more frequent eligibility checks, limits on state-directed payments to providers, and new cost-sharing plus several CMS rules finalized in 2023–2024 covering prior authorization, managed-care oversight, home-and-community-based services (HCBS), and eligibility/enrollment automation.

Why it matters: Committee members were told the combined effect could lower enrollment, reduce payment tools that support safety-net hospitals and other providers, and raise administrative burdens on beneficiaries — at a time when state leaders expect substantial budget pressure.

What officials told the committee
- Caitlin Stafford, Senior Health Policy Advisor to Governor Jay Inslee, said premium increases and the possible expiration of enhanced advance premium tax credits will produce immediate losses in the individual market and that the state must plan for follow-on Medicaid impacts.
- Trinity Wilson, Assistant Director for Medicaid Eligibility at HCA, reviewed CMS rules finalized in 2024 that the agency is implementing, including rules on prior authorization interoperability, a managed-care access package (appointment wait-time limits, beneficiary advisory councils, required public reporting and quality ratings), an HCBS payment and reporting rule, and streamlining eligibility and enrollment requirements. Wilson said HCA is working on mitigation plans and electronic data connections to reduce burdens on beneficiaries.
- Sherissa Fotinos, Medicaid and Behavioral Health Medical Director at HCA, outlined specific HR1 provisions she said will affect Medicaid: restrictions on payment to certain providers (noting the law’s aim at Planned Parenthood), changes to eligibility for some noncitizen adults effective October next year, a shift from annual to six-month eligibility checks starting December 2026, a reduction in retroactive coverage from three months to one month (January 2027), caps and phased reductions on state-directed payments toward Medicare levels starting 2028, and a removal of federal “good-faith” waivers for states that exceed a 3% error threshold beginning in 2029. Fotinos said, “we believe right now it means is that [Planned Parenthood] will not be able to bill Medicaid starting today.”

Officials gave timing and implementation notes
- Work requirements: HR1 makes coverage contingent on work, training or community engagement for some adults (19–65) and the administration plans to apply for a waiver. HCA said the state can seek a federal waiver of up to two years to align new requirements with technology and mitigation work already under way.
- Eligibility automation: HCA is under a CMS mitigation plan to bring non‑MAGI (classic Medicaid) ex‑parte renewals into the state’s Health Plan Finder portal; that work is scheduled to be completed by June 2027. HR1’s eligibility-check timing (every six months) begins December 2026, creating a timing mismatch that the state intends to address via waiver/extension requests.
- State-directed payments and provider taxes: Fotinos told the committee the bill imposes a new 3.5% cap on certain provider taxes and limits state‑directed payments to no more than Medicare rates, with phased reductions for existing payments beginning 2028. She estimated the change could reduce Washington’s leverage by roughly $1.5 billion annually from the existing safety‑net assessment and related mechanisms.
- Cost sharing and other technical changes: HR1 allows states to require modest cost sharing (up to $35 for some services) after an implementation period (October 2028), shortens retroactive coverage, and tightens address verification rules and post‑eligibility audit consequences.

Responses and near‑term actions
- Governor’s office: Stafford said the governor’s office is coordinating with HCA and other agencies; the governor has committed to fill a near‑term funding gap for providers affected by the Planned Parenthood restriction and officials told the committee that estimate for that gap is about $11 million for the coming year.
- HCA actions: HCA said it is preparing mitigation plans, strengthening data connections (for example, with the Employment Security Department for wage verification), working with carriers on marketplace premium assumptions, and planning outreach to beneficiaries about new timelines and documentation requirements. Trinity Wilson said HCA is launching beneficiary advisory councils and other measures required by the managed‑care access rule.

Committee questions and concerns
Senators asked about operational details: how work‑requirement proof will be verified for gig and seasonal workers, whether six‑month reviews will raise administrative churn, how reduced payment tools will affect rural hospitals and nursing facilities, and what the rural‑health funding included in HR1 — a competitive $10 billion pool — will mean for Washington. HCA and the governor’s office said they are preparing a public timeline and impact analysis to share with the legislature, and that additional short‑session work is likely.

Limitations and unknowns
Officials emphasized uncertainty. Fotinos said national models vary and the state cannot know exact coverage losses or financial impacts for a 10‑year horizon; she gave a rough projection that losses could exceed 100,000 people nationally in Washington over 10 years and cost the state billions, but she stressed estimates are model‑dependent.

What’s next
HCA and the governor’s office said they will continue technical analysis, pursue waivers where feasible, publish an implementation timeline, and brief the legislature as work progresses. Committee members requested HCA and related agencies to provide state‑specific fiscal estimates and clearer operational timelines ahead of the short session.

Ending
State officials told the Senate committee that HR1 plus the recent CMS rules will reshape eligibility, reporting and payment practices for Washington Medicaid and that the state is pursuing waivers and mitigation plans to limit coverage losses and administrative burdens while working to preserve provider capacity.