BILL REQ. #:  S-4000.1 

Read first time 01/27/12.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to hospital financing and tax preference eligibility; amending RCW 70.37.010, 70.37.030, 70.37.090, 84.36.840, 84.36.040, and 82.04.4311; reenacting and amending RCW 70.37.050; and adding a new section to chapter 70.37 RCW.

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

Sec. 1   RCW 70.37.010 and 1974 ex.s. c 147 s 1 are each amended to read as follows:
     The good health of the people of our state is a most important public concern. The state has a direct interest in seeing to it that health care facilities adequate for good public health are established and maintained in sufficient numbers and in proper locations. The rising costs of care ((of the infirm)) constitute a grave challenge not only to health care providers but to our state and the people of our state who will seek such care. It is hereby declared to be the public policy of the state of Washington to assist and encourage the building, providing and utilization of modern, well equipped and reasonably priced health care facilities, and the improvement, expansion and modernization of health care facilities in a manner that will minimize the capital costs of construction, financing and use thereof and thereby the costs to the public of the use of such facilities, ((and to contribute to improving)) while contributing to improve the quality of health care available to our citizens and ensuring accountability for the cost of care. In order to accomplish these and related purposes this chapter is adopted and shall be liberally construed to carry out its purposes and objects.

Sec. 2   RCW 70.37.030 and 2002 c 91 s 1 are each amended to read as follows:
     There is hereby established a public body corporate and politic, with perpetual corporate succession, to be known as the Washington health care facilities authority. The authority shall constitute a political subdivision of the state established as an instrumentality exercising essential governmental functions. The authority is a "public body" within the meaning of RCW 39.53.010. The authority shall consist of the governor who shall serve as chair((man)), the lieutenant governor, the insurance commissioner, the secretary of health, and four legislators, one from each caucus and ((one)) three members of the public with no fiduciary interest or responsibility toward any health care facility or organization within seven years prior to appointment who shall be appointed by the governor, subject to confirmation by the senate, on the basis of the member's interest or expertise in health care delivery, for a term expiring on the fourth anniversary of the date of appointment. The lieutenant governor and the four legislative members are nonvoting members. In the event that any of the offices referred to shall be abolished the resulting vacancy on the authority shall be filled by the officer who shall succeed substantially to the powers and duties thereof. The members of the authority shall be compensated in accordance with RCW 43.03.240 and shall be entitled to reimbursement, solely from the funds of the authority, for travel expenses incurred in the discharge of their duties under this chapter, subject to the provisions of RCW 43.03.050 and 43.03.060. A majority shall constitute a quorum.
     The governor and the insurance commissioner each may designate an employee of his or her office to act on his or her behalf during the absence of the governor or the insurance commissioner at one or more of the meetings of the authority. The vote of the designee shall have the same effect as if cast by the governor or the insurance commissioner if the designation is in writing and is presented to the person presiding at the meetings included within the designation.
     The governor may designate a member to preside during the governor's absence.

NEW SECTION.  Sec. 3   A new section is added to chapter 70.37 RCW to read as follows:
     To further the public policy set forth in RCW 70.37.010, the authority shall require participants in a hospital project to agree, as minimum conditions of financing, that the hospital must:
     (1) Provide charity care that exceeds the average expenditures for charity care, as reported to the department of health, provided by the peer group of hospitals in this state during the year immediately preceding the year in which a financing application is submitted under this chapter;
     (2) Implement one or more programs to substantially reduce the number and rate of emergency department visits for nonemergent health conditions. Such programs may include, but are not limited to:
     (a) Maintaining full-service primary care capacity outside the emergency department to serve as an accessible, available alternative to emergency department care for nonemergent care; or
     (b) Maintaining an urgent care center as an accessible, available alternative to emergency department care for nonemergency care;
     (3) Agree to participate in activities that enhance accountable care such as providing reports to physicians with seventy-two hours of admission or emergency room visits, and other measures suggested by the Puget Sound health alliance and leading quality organizations, and adopted in rule by the authority;
     (4)(a) Agree to provide data on community health needs, consistent with the meaning of community health needs as defined in 26 U.S.C. Sec. 501 and any implementing regulations and guidance adopted by the federal internal revenue service as it existed on the effective date of this section, or such subsequent date as may be provided by the department by rule.      Documentation of the community health needs requires submission of the following:
     (i) A description of the community served by the hospital, including both a geographic description and a description of the general population served by the hospital;
     (ii) A description of the prioritized health needs of the community, including:
     (A) The five most common causes of death in the community; and
     (B) The extent to which the community experiences ambulatory sensitive conditions. Ambulatory sensitive conditions are those preventable conditions, acute illnesses including mental health illnesses, and chronic diseases that decrease in response to primary care access, yet are associated with hospitalizations and increased societal health care costs;
     (b) The description must identify any existing facilities, providers, or resources that are owned, operated, or jointly managed by the hospital or any health system with which the hospital is affiliated;
     (c) The description must include copies of the policies for charging facility fees, the policies on sharing access to electronic medical records with all community providers, and the policies on determining charges for the uninsured relative to the best payer rates that have been negotiated.

Sec. 4   RCW 70.37.050 and 1983 c 210 s 2 and 1983 c 167 s 171 are each reenacted and amended to read as follows:
     (1) The authority shall:
     (a) Establish rules concerning its exercise of the powers authorized by this chapter((. The authority shall)); and
     (b) Receive from applicants requests for the providing of bonds for financing of health care facilities, and ((shall)) investigate and determine the need and the feasibility of providing such bonds. As part of its review of requests for financing awarded on or after the effective date of this section, the authority must consider whether the applicant submits all the information requested in section 3 of this act.
     (2)(a) Whenever the authority deems it necessary or advisable for the benefit of the public health to provide financing for a health care facility, it shall adopt a financing plan therefor and shall declare the estimated cost thereof, as near as may be, including as part of such cost funds necessary for the expenses incurred in the financing as well as in the construction or purchase or other acquisition or in connection with the rental or other payment for the use thereof, interest during construction, reserve funds and any funds necessary for initial start-up costs, and shall issue and sell its bonds for the purposes of carrying out the proposed financing plan((: PROVIDED, That)). However, if a certificate of need is required for the proposed project, no such financing plan shall be adopted until such certificate has been issued pursuant to chapter 70.38 RCW ((by the secretary of the department of social and health services)).
     (b) The authority shall have power as a part of ((such)) a plan adopted under this subsection to create a special fund or funds for the purpose of defraying the cost of such project and for other projects of the same participant subsequently or at the same time approved by it and for their maintenance, improvement, reconstruction, remodeling and rehabilitation, into which special fund or funds it shall obligate and bind the participant to set aside and pay from the gross revenues of the project or from other sources an amount sufficient to pay the principal and interest of the bonds being issued, reserves and other requirements of the special fund and to issue and sell bonds payable as to both principal and interest out of such fund or funds relating to the project or projects of such participant.
     ((Such)) (c) Bonds ((shall)) issued under this subsection must bear such date or dates, mature at such time or times, be in such denominations, be in such form, either coupon or registered, or both, as provided in RCW 39.46.030, carry such registration privileges, be made transferable, exchangeable, and interchangeable, be payable in such medium of payment, at such place or places, be subject to such terms of redemption, bear such fixed or variable rate or rates of interest, and be sold in such manner, at such price, as the authority ((shall)) determines. Such bonds ((shall)) must be executed by the chair((man)), by either its duly elected secretary or its executive director, and by the trustee if the authority determines to utilize a trustee for the bonds. Execution of the bonds may be by manual or facsimile signature((: PROVIDED, That)); however, at least one signature placed thereon ((shall)) must be manually subscribed. Any interest coupons appurtenant to the bonds ((shall)) must be executed by facsimile or manual signature or signatures, as the authority ((shall)) determines.

Sec. 5   RCW 70.37.090 and 1974 ex.s. c 147 s 9 are each amended to read as follows:
     The authority shall have power to:
     (1) Require persons applying for its assistance in connection with ((the investigation and financing of)) projects to pay fees and charges to provide the authority with funds for: (a) Investigation((,)) and financial feasibility studies((,)); (b) expenses of issuance and sale of bonds; (c) review and verification of information provided to verify compliance with section 3 of this act; and (d) other charges for services provided by the authority in connection with such projects. All other expenses of the authority including compensation of its employees and consultants, expenses of administration and conduct of its work and business and other expenses shall be paid out of such fees and charges, out of contributions and grants to it, out of the proceeds of bonds issued for projects of participants, or out of revenues of such projects; none of its expenses may be paid by the state of Washington((. The authority shall have power to)); and
     (2) Establish special funds into which ((such)) money received by the authority shall be ((received)) deposited and out of which it may be disbursed by the persons and with the procedure and in the manner established by the authority.

Sec. 6   RCW 84.36.840 and 2007 c 111 s 305 are each amended to read as follows:
     (1) In order to determine whether organizations, associations, corporations, or institutions, except those exempted under RCW 84.36.020 and 84.36.030, are exempt from property taxes, and before the exemption ((shall be)) is allowed for any year, the superintendent or manager or other proper officer of the organization, association, corporation, or institution claiming exemption from taxation ((shall)) must file with the department of revenue a statement certifying that the income and the receipts thereof, including donations to it, have been applied to the actual expenses of operating and maintaining it, or for its capital expenditures, and to no other purpose. This report ((shall)) must also include a statement of the receipts and disbursements of the exempt organization, association, corporation, or institution.
     (2) Educational institutions claiming exemption under RCW 84.36.050 ((shall)) must also file a list of all property claimed to be exempt, the purpose for which it is used, the revenue derived from it for the preceding year, the use to which the revenue was applied, the number of students who attended the school or college, the total revenues of the institution with the source from which they were derived, and the purposes to which the revenues were applied, listing the items of such revenues and expenditures in detail.
     (3) A nonprofit hospital that claims an exemption under RCW 84.36.040 must file the documents requested in RCW 84.36.040.
     (4) The reports required under ((subsections (1) and (2) of)) this section may be submitted electronically, in a format provided or approved by the department, or mailed to the department. Except as otherwise provided in subsection (3) of this section, the reports ((shall)) must be submitted on or before March 31st of each year. The department ((shall)) must remove the tax exemption from the property of any organization, association, corporation, or institution that does not file the required report with the department on or before the due date. However, the department ((shall)) must allow a reasonable extension of time for filing upon receipt of a written request on or before the required filing date and for good cause shown therein.

Sec. 7   RCW 84.36.040 and 2010 c 106 s 305 are each amended to read as follows:
     (1)(a) The real and personal property used by, and for the purposes of, the following nonprofit organizations is exempt from property taxation:
     (((a))) (i) Child day care centers ((as defined in subsection (4) of this section));
     (((b))) (ii) Free public libraries;
     (((c))) (iii) Orphanages and orphan asylums;
     (((d))) (iv) Homes for the sick or infirm;
     (((e))) (v) Hospitals for the sick that meet the requirements in subsection (4) of this section; and
     (((f))) (vi) Outpatient dialysis facilities.
     (b) For the purposes of this subsection, "hospitals for the sick" does not include freestanding emergency rooms that advertise as an emergency room nor other facilities acquired by the hospital that are not physically connected or adjacent to a licensed hospital under chapter 70.41 RCW.
     (2) The real and personal property leased to and used by a hospital for hospital purposes is exempt from property taxation if the hospital is established under chapter 36.62 RCW or is owned and operated by a public hospital district established under chapter 70.44 RCW.
     (3) To be exempt under this section, the property must be used exclusively for the purposes for which exemption is granted, except as provided in RCW 84.36.805, and the benefit of the exemption must inure to the user.
     (4) To be exempt under this section, a nonprofit hospital or public hospital district must:
     (a) Provide documentation of the charity care provided including costs of care as well as charges of care;
     (b) Provide documentation of the salaries of the top five highest paid officials; and
     (c) Document the availability of inpatient mental health beds, voluntary and involuntary, in their hospital is relative to the community needs for such services. The beds must be reported as a percentage of available hospital beds in the hospital and in the region. Hospitals within a region may make arrangements to trade the availability of mental health beds with another facility in the region in exchange for a funding offset or other agreement that must be provided with the above documentation.
     (5) For purposes of ((subsection (1) of)) this section, "child day care center" means a nonprofit organization that regularly provides child day care and early learning services for a group of children for periods of less than twenty-four hours.

Sec. 8   RCW 82.04.4311 and 2005 c 86 s 1 are each amended to read as follows:
     (1) A public hospital that is owned by a municipal corporation or political subdivision, or a nonprofit hospital, or a nonprofit community health center, or a network of nonprofit community health centers, that qualifies as a health and social welfare organization as defined in RCW 82.04.431, may deduct from the measure of tax amounts received as compensation for health care services covered under the federal medicare program authorized under Title XVIII of the federal social security act; medical assistance, children's health, or other program under chapter 74.09 RCW; or for the state of Washington basic health plan under chapter 70.47 RCW, so long as the hospital submits the documentation required in RCW 84.36.040. The deduction authorized by this section does not apply to amounts received from patient copayments or patient deductibles.
     (2) As used in this section, "community health center" means a federally qualified health center as defined in 42 U.S.C. 1396d as existing on August 1, 2005.