SENATE BILL REPORT

SB 6449

BYSenators Zimmerman, Bauer, Smith, Wojahn and Deccio

Providing a temporary rate-review exemption for certain hospitals.

Senate Committee on Health Care & Corrections

Senate Hearing Date(s):January 28, 1988

Majority Report:  Do pass.

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

Senate Staff:Scott Plack (786-7409)

                  February 13, 1988

AS PASSED SENATE, FEBRUARY 12, 1988

BACKGROUND:

The Washington State Hospital Commission was established in 1973 to regulate hospital costs by assuring a reasonable relationship between hospital charges and costs.  It 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 adjoining states of Oregon and Idaho do not restrain their 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 areas bordering Oregon and Idaho 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 fifteen miles of hospitals not regulated by the commission are exempted from rate review and approval if the competing non-regulated hospital has the capacity to absorb 25 percent or more of the exempted hospital's patients.

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:      requested January 27, 1988

Senate Committee - Testified: Senator Zimmerman, prime sponsor; Jeff Selberg, Southwest Washington Hospitals; Dennis Noonan, Southwest Washington Hospitals