Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Healthcare Pricing Reference Pricing topic
No spam. Unsubscribe anytime.
Health Care Authority-backed bill would cap hospital payments for public employee plans to lower premiums, critics warn rural hospitals could lose revenue
Summary
Senate Health and Long Term Care heard Jan. 31 on SB 5083, a Health Care Authority-backed substitute meant to lower public-employee health premiums by capping hospital facility reimbursements tied to Medicare rates while raising minimum payments for primary care and behavioral health.
Senate Bill 5083, a Health Care Authority-sponsored substitute bill, was heard Jan. 31 in Senate Health and Long Term Care. The bill would require hospitals that receive Medicaid payments and receive a good-faith offer from a carrier for medical coverage through the Public Employees Benefits Board (PEBB) or School Employees Benefits Board (SEBB) to contract with that carrier or its third-party administrator. It also sets reimbursement ceilings tied to Medicare rates and floors for primary care and non-facility behavioral health providers.
Key provisions in the proposed substitute: beginning in 2027 reimbursements for in-network inpatient and outpatient facility charges in Washington could not exceed the lesser of billed charges, the contracted rate, or 200 percent of Medicare; children—s hospitals would be capped at 350 percent. Beginning in 2029 those caps would fall to 190 percent for hospitals and 300 percent for children—s hospitals. The bill also includes minimum reimbursement floors for in-network primary care and nonfacility behavioral health services (not less than 150 percent of Medicare), and higher floors for critical access and sole community hospitals based on allowable costs.
Supporters said the bill would lower premiums and redirect spending toward primary care and behavioral health. Evan Klein of the Health Care Authority said modeling shows state expenditures could fall by hundreds of millions over a four-year outlook and that the changes could increase payments to behavioral health providers by roughly $20 million by creating incentives to join networks.
Supporters included labor groups and purchaser organizations. Nicole Gomez of the Washington Federation of State Employees said the bill would help working families afford essentials by lowering premium growth; Pam McKeown of Purchasers Business Group on Health and other employer representatives urged state action to curb rising health costs.
Opponents included hospital systems and rural hospital leaders who warned the bill would cut significant revenue, put hospitals with already negative operating margins at risk and could force service reductions. Providence Swedish—s contracting vice president, Ashley Thoreau, testified that Providence Saint Peter could face a $40 million impact by 2029 and noted the hospital operates on a small cash reserve. Island Health in Anacortes reported multi-year operating losses and said certain outpatient surgical payments could be cut by 27 to 56 percent under the bill. The Washington State Hospital Association urged rejection, citing system-wide negative operating margins and concerns about cost-shifting to the commercial market.
Supporters pointed to Oregon—s experience with reference pricing and said that state—s program reduced costs without apparent cost-shifting. Opponents countered that Oregon—s experience differs: Oregon had a stronger hospital margin position prior to implementation and insurer-hospital dynamics differ in Washington. Witnesses disagreed about whether the cap would cause commercial insurers to pay higher rates for nonpublic patients.
No committee action was recorded on SB 5083 during the hearing. Committee staff provided a fiscal estimate of state savings and emphasized the proposal excludes certain rural hospitals from the caps.
