SENATE BILL REPORT

HB 1951

BYRepresentatives Nutley, Peery, Butterfield, Cooper, Ferguson, Lux, Sutherland, Vekich and D. Sommers 

Providing rate review exemption for certain hospitals.

House Committe on Health Care

Senate Committee on Health Care & Corrections

Senate Hearing Date(s):February 18, 1988; February 22, 1988

Majority Report:  Do pass.

      Signed by Senators Deccio, Chairman; Johnson, Vice Chairman; Kreidler, Smith, Wojahn.

Senate Staff:Scott Plack (786-7409)

                  February 22, 1988

AS REPORTED BY COMMITTEE ON HEALTH CARE & CORRECTIONS, FEBRUARY 22, 1988

BACKGROUND:

The Washington State Hospital Commission reviews and prospectively approves requests for hospital budget and rate charges as well as amendments to budget requests.  The commission allows hospitals to negotiate contracts containing discounts with third-party payers.  Revenue shortfalls created by the discounts cannot be passed along or cost shifted to other rate payers.

The state of Oregon does not restrain its hospitals from cost shifting between payers.  For example, Portland hospitals can offer lower per diem rates for inpatient hospitalization and recover any losses by cost shifting to its remaining retail or charged-based business.

Washington hospitals located in Vancouver are at a competitive disadvantage.  Because cost shifting is permitted, hospitals in Portland are making deep discounts in the price of inpatient care to attract business from the Vancouver area.  In addition, a number of health care clinics associated with Portland hospitals are being established in Vancouver to further attract Washington patients.

SUMMARY:

Washington hospitals located within a metropolitan statistical area and within fifteen miles of hospitals not regulated by the commission are exempted from rate review and approval.  This exemption applies only if the competing non-regulated hospitals have the capacity to absorb 25 percent or more of an exempted hospital's patients.

The commission has identified St. Joseph's and Vancouver Memorial as two hospitals in Vancouver that meet the criteria.

Exempted hospitals are still required to submit required hospital data to the commission.  Additional data from exempted hospitals may be required by the commission.

The exemption shall expire on June 30, 1991.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Representative Nutley, prime sponsor (for); Jeff Selberg, SW Washington Hospitals (for)