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                                         SUBSTITUTE SENATE BILL NO. 5887

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State of Washington                              50th Legislature                              1987 Regular Session

By Senate Committee on Human Services & Corrections (originally sponsored by  Senators Wojahn, Kiskaddon, Moore, Patterson and Barr)

Read first time 3/5/87.

AN ACT Relating to hospital health care services; establishing a moratorium upon rate regulation by the state hospital commission; adding a new section to chapter 70.39 RCW; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     The legislature finds and declares that it is in the best interest of the consumer public that competition be encouraged and fostered within the hospital industry; that a more effective containment of hospital rates may result from free competition; that because of competition, and because of the regulation inherent in prospective payment under the federal medicare program and in the budgetary restraints upon public funding of health care, there no longer is need for commission regulation of hospital rates of those hospitals which restrict their budget increases to market standards; and that to these ends, such hospitals should be exempted from rate approval by the hospital commission.

NEW SECTION. Sec. 2.  A new section is added to chapter 70.39 RCW to read as follows:

          Effective for hospital fiscal years beginning after June 30, 1987, hospitals shall be exempt from rate approval by the hospital commission.  During this period, each hospital may establish and modify its rates at its discretion:  PROVIDED, That such exemption shall apply only where a hospital presents its rates for the ensuing fiscal year at a level that is at or below the increases projected in the regionally adjusted hospital market basket index as reported by the federal health care financing administration:  PROVIDED FURTHER, That nothing in this section limits  the ability of the department of social and health services to establish hospital payment rates pursuant to RCW 74.09.120 or in accordance with a federally approvable state plan under Title XIX of the federal social security act.

          Each hospital exempted from budget and rate control under this section shall be subject to a performance evaluation.  A hospital whose performance exceeds its budget shall be subject to a budget adjustment and shall be subject to budget approval and rate control by the hospital commission in the succeeding year.  Determination of budget changes and measures of budget performance shall allow for changes in deductions from revenues apart from comparison to the hospital market basket index.  The legislative budget committee shall, as part of its sunset review as provided in chapter 43.131 RCW, evaluate the impact of these exemptions on rate regulation by the hospital commission.

NEW SECTION. Sec. 3.     This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.