AN ACT Relating to health care; adding a new chapter to Title 70 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature declares that access to adequate health care is of paramount importance to the citizens of Washington state. As such, health care access is a major public policy concern and unless addressed through specific statutory direction, adequate health care through the expenditure of public funds will not be attainable for a vast majority of the state's population.

The legislature finds that the increase in health costs threatens to make health care unaffordable to many citizens. Furthermore, the legislature finds that unreimbursed health care services provided to persons who are unable to pay for such services causes the cost of services to paying patients to increase in a manner unrelated to the actual cost of services delivered. Consequently, the legislature finds that inequities between hospitals in the provision of unreimbursed services prevent hospitals that provide the bulk of such services from competing on an equitable economic basis with hospitals that provide relatively little care to indigent people. Therefore, it is the intent of the legislature to provide a mechanism for the funding of health care services to indigent persons, the cost of which shall be borne by the state and by hospitals that are granted the privilege of operating in this state.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Adjusted patient services income" means gross income of the business, less the deductions allowed under section 4 of this act.

(2) "Department" means the department of revenue.

(3) "Gross income of the business" means the value proceeding or accruing by reason of the transaction of the business engaged in and includes all income from whatever source derived without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.

(4) "Hospital" means any health care institution which is required to qualify for a license under RCW 70.41.020(2); or as a psychiatric hospital under chapter 71.12 RCW; but does not include beds utilized by a comprehensive cancer center for cancer research, nor any health care institution conducted for those who rely primarily upon treatment by prayer or spiritual means in accordance with the creed or tenets of any church or denomination.

(5) "Hospital business" includes hospitals and any other business providing services or making sales to patients in a hospital, if the service or sale is of a type generally provided by a hospital before the effective date of this section.

(6) "Rural hospital business" means a hospital business that is located within a class one through nine county, but is not located within five miles of the boundaries of a city or a city cluster with a population of more than twenty-five thousand persons. For the purposes of this subsection, the population of a city cluster is the total population of any two or more contiguous cities.

NEW SECTION. Sec. 3. (1) In addition to any other tax, an assessment is imposed on each hospital business for the privilege of operating in this state, as provided in this section.

(2)(a) The assessment for a rural hospital business is equal to one and seven one-hundredths percent of the adjusted patient services revenue of the hospital business.

(b) The assessment for a hospital business that is not a rural hospital business is equal to two and fourteen one-hundredths percent of the adjusted patient services revenue of the hospital business.

(3) Chapter 82.32 RCW applies with respect to assessments imposed under this chapter in the same manner as it applies to taxes imposed under chapter 82.04 RCW.

NEW SECTION. Sec. 4. In computing adjusted patient services revenue, the following may be deducted from the gross income of the business:

(1) Amounts not derived as compensation for services rendered or to be rendered to patients or from sales of prescription drugs as defined in RCW 82.08.0281 furnished as an integral part of services rendered to patients.

(2) The portion of medical dues received by a health maintenance organization that is properly allocated as compensation for activities not an integral, interrelated, or essential part of the hospital activities of the organization.

(3) The amount of credit losses actually sustained by the hospital business, if the hospital business's regular books of account are kept upon an accrual basis.

(4) Reimbursements received through the state medical assistance program.

(5) Reimbursements received through the federal medicare program.

NEW SECTION. Sec. 5. The health care access account is hereby created in the state treasury. All receipts from assessments collected under this chapter shall be deposited in the account. Except for unanticipated receipts under chapter 43.79 RCW, moneys in the account may be spent only after appropriation by statute. Expenditures from the account may be used only for disbursements for care provided under the medically indigent program created by RCW 74.09.700.

NEW SECTION. Sec. 6. Sections 1 through 5 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 7. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1989.