SENATE BILL REPORT

SB 5385

BYSenators Vognild, West, Wojahn and Barr

Providing for collection and analysis of hospital data.

Senate Committee on Health Care & Corrections

Senate Hearing Date(s):February 2, 1989; February 14, 1989

Majority Report:  Do pass.

      Signed by Senators West, Chairman; Smith, Vice Chairman; Amondson, Johnson, Wojahn.

Senate Staff:Don Sloma (786-7414)

                  February 16, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):March 2, 1989; March 3, 1989

Majority Report:  That Substitute Senate Bill No. 5385 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bluechel, Cantu, Gaspard, Hayner, Johnson, Lee, Matson, Moore, Newhouse, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:W. Featherstone Reid (786-7715)

                  March 6, 1989

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 3, 1989

BACKGROUND:

The Washington State Hospital Commission was established in 1973 and reauthorized in 1984 with a mandate to contain hospital costs.  The commission is scheduled to terminate on June 30, 1989 under the provisions of the Washington State Sunset Act.

The Legislative Budget Committee's (LBC) sunset review found that between 1981 and 1986, the rate of growth of hospital costs in Washington exceeded average increases nationally and in five other regulated states.

The LBC found that rate setting and controlling revenues has not been effective at containing hospital costs, and that alternative strategies exist.  The LBC found that efforts must be made to control over-utilization of medical procedures and physician practices and to reduce excess hospital beds, all of which contribute to increased hospital costs.

Finally, the LBC found that the state has a legitimate role to play in assuring that access to hospital care is maintained for low income persons.

The LBC recommended that the Hospital Commission be replaced by a health care commission or the department of health, if created.  The new entity would collect data on health care costs, conduct research and assessments and perform policy analysis.  Recommendations on this data would be made to the Governor or Legislature as appropriate.  Existing hospital financial data and patient discharge data would be maintained and expanded to include other health care facilities, insurers and managed care systems.  Legislation to establish such data collection and analysis functions would include a provision that will reestablish rate regulation in five years, or sooner, if the Legislature deemed it necessary.

SUMMARY:

The Office of Financial Management (OFM) or the state department of health, if created, must develop and implement a statewide hospital data system.  The system must be designed after a needs assessment has identified the types of information needed and the format most useful to consumers, purchasers, payors, hospitals and state government.  An initial data plan must be published by January 1, 1990.  The plan may be modified biennially.

The data plan must include provisions for the collection of hospital financial data and the use of services by patients. Certain specific data elements are required.  Quarterly and annual reports from hospitals are required.

Until the statewide hospital data system is implemented hospitals must continue to submit data as now required by the State Hospital Commission.  Hospitals must comply with new reporting requirements within two years of the effective date.

The health department or OFM must contract for the collection, validation, audit, storage and retrieval of hospital data as specified in the chapter.  Criteria for the selection of the contractor, and timeliness for the contracting process are specified.

The health department or OFM must provide or contract for the provision of consumer guides, data summary reports and reports on relevant hospital policy issues including the distribution of charity care obligations assumed by hospitals.

The health department or OFM may approve requests for special studies using the hospital data system.  Those requesting such studies may be required to pay the costs of their preparation.

Hospitals and their medical staff are prohibited from adopting admissions practices which result in:  (1) significant reductions in the proportion of patients who are unable to pay for hospital services, or may not be able to pay all of the costs of their care, and (2) the refusal to admit patients who might require unusually costly or prolonged treatment.

Hospitals are prohibited from turning away any person from an emergency room without screening the person and stabilizing them prior to any transfer.  Hospitals must adhere to reasonable procedures in making patient transfers, including confirmation of the acceptance by the receiving hospital.

The department of health or OFM must monitor hospitals' compliance with the charity care provisions, and report to the Legislature and the Governor on such compliance.  Individual instances of possible noncompliance must be reported to the state Attorney General or appropriate federal agencies.

The department of health or OFM must establish and maintain uniform procedures for identifying patients receiving charity care, and a definition of residual bad debt.  The distribution of charity care must be monitored and reported to the Governor and the Legislature along with analyses of the effectiveness of the charity care provisions on access to health care services.

Each hospital must adopt a charity care policy, including a sliding fee schedule for persons who cannot pay the full cost of their care.  Each hospital must make every effort to collect the cost of care from private or public sponsors before making efforts to collect from patients directly.

The department of health or OFM must establish a data advisory committee for various data system design and use issues.

The basic expenses for the data collection and reporting activities must be financed by an assessment against hospitals of not more than four one-hundredths of 1 percent of each hospital's gross operating costs.  Additional funds may be appropriated by the Legislature from the general fund.

Penalties are prescribed for violations of the requirements of the act.

EFFECT OF PROPOSED SUBSTITUTE:

New definitions for "charity care, charity care-indigent, and charity care-other" are deleted and the existing definition of charity care in RCW 70.39.020 is restated for any purposes of this bill.  The findings and declarations of legislative intent are modified in line with the deletion of those new definitions.

The following mandatory requirements on the department are all deleted:  (1) to contract with a private vendor for the collection, validation, audit, storage and retrieval of any hospital data; (2) that an RFP be issued no later than February 1, 1990 and a contract awarded to a private vendor no later than June 1, 1990, to be effective July 1, 1990; and (3) that the initial contract be for a period of no less than three years.

Restrictions upon any expenditure of funds generated by the assessment upon each hospital's gross operating costs are clarified.  The possibility that the existing assessment in Chapter 70.39 RCW might be terminated before continuation under this measure is guarded against.

On the issue of access to hospital services:  (1) existing state law now contained in 70.39.140(4) is restated in full; and (2) the "anti-dumping" provisions of existing federal law that were enacted April 7, 1986 in P.L. 99-272 are now codified in RCW.

Both the original bill and the proposed substitute require general fund appropriations for any activities approved by the Legislature other than hospital data collection and reporting.  The proposed substitute strengthens requirements that any request of third parties for special studies be fully paid for by such requesting parties.

A null and void provision is added requiring that both this measure be enacted and funding for this specific purpose be included in the operating budget that is adopted for the next biennium.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: HEALTH CARE & CORRECTIONS:  Mel Sorensen, Washington Physicians Service (pro); Bob Crittenden, Governor's office (con)

Senate Committee - Testified: WAYS & MEANS:  David W. Broderick, Washington State Hospital Association; Sharon Case, Washington State Primary Care Association; Melvin N. Sorensen, Washington Physicians Service; Senator James West