HOUSE BILL REPORT
HB 1476
As Reported by House Committee On:
Appropriations
Title: An act relating to delaying the rebasing of the nursing home payment rates to 2028.
Brief Description: Delaying the rebasing of the nursing home payment rates to 2028.
Sponsors: Representative Ormsby; by request of Office of Financial Management.
Brief History:
Committee Activity:
Appropriations: 2/22/25, 4/3/25 [DPS].
Brief Summary of Substitute Bill
  • Postpones the rebase originally scheduled for fiscal year (FY) 2027, moving it to FY 2028; the FY 2028 rebase will use the 2024 cost reports.
  • Carries forward the FY 2025 direct care rates so that they remain in effect during FYs 2026 and 2027.
  • Intends to maintain the current rate structure, including the direct and indirect care components and the onetime rate add-on for the 2025-27 biennium, until the FY 2028 rebase is implemented.
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass.Signed by 19 members:Representatives Ormsby, Chair; Gregerson, Vice Chair; Macri, Vice Chair; Berg, Bergquist, Callan, Cortes, Doglio, Fitzgibbon, Leavitt, Lekanoff, Peterson, Pollet, Ryu, Springer, Stonier, Street, Thai and Tharinger.
Minority Report: Do not pass.Signed by 12 members:Representatives Couture, Ranking Minority Member; Connors, Assistant Ranking Minority Member; Penner, Assistant Ranking Minority Member; Schmick, Assistant Ranking Minority Member; Burnett, Caldier, Corry, Dye, Keaton, Manjarrez, Marshall and Rude.
Staff: Bryan Way (786-7311).
Background:

Medicaid recipients in Washington can receive long-term care services in a variety of settings, including care at home, adult day centers, adult family homes, assisted living facilities, or skilled nursing facilities (SNFs).  Skilled nursing facilities, regulated by the Department of Social and Health Services, provide comprehensive services such as 24-hour nursing care, personal care, therapy, and nutrition management for residents with significant medical and personal care attention.

 

Medicaid payment rates for SNFs are determined individually for each facility, reflecting the specific care needs of their residents.  The calculation methodology is built on four components:

  • Direct care covers expenses directly related to patient care, such as nursing, therapy, food, laundry, and dietary services.  This component is adjusted periodically using biannual performance measures to account for the care requirements of residents with higher acuity. 
  • Indirect care encompasses administrative expenses, maintenance, and housekeeping services.  A minimum occupancy assumption is applied to help stabilize funding despite fluctuations in resident census.
  • Capital uses a fair market rental system to determine a per bed rate.  This calculation considers factors, such as facility square footage, building age, and any adjustments for significant renovations, taking into account investments in the facility's physical infrastructure.
  • Quality Incentive provides an additional payment based on facility quality performance as measured by specific quality indicators.

 

A key feature of this payment system is the periodic "rebasing" of rates.  Rebasing updates the direct and indirect care components using current cost data and inflation adjustments, aligning reimbursement with actual costs.  Under the current framework, rates are recalculated in even-numbered years based on historical cost reports.  For example, the rates effective for July 1, 2026, are based on the 2024 cost reports, with subsequent adjustments scheduled in other fiscal years.  The overarching goals of this framework are to reduce administrative complexity, maintain cost neutrality, and sustain a system that supports both high-quality resident care and the financial stability of nursing home providers. 
Summary of Substitute Bill:

The substitute delays the rebasing of the direct and indirect care components in the nursing home rate methodology from July 1, 2026, to July 1, 2027.  It specifies that the cost reports originally intended for the July 1, 2026, rebase will instead be used for the new 2027 rebase.  To maintain continuity during the delay, the fiscal year 2025 weighted average nursing facility payment rate will remain in effect for fiscal years 2026 and 2027.
Substitute Bill Compared to Original Bill:

The substitute bill clarifies that the statewide average daily rate for fiscal year 2025, rather than fiscal year 2024 as proposed in the original bill, will be used for fiscal years 2026 and 2027.  It also clarifies that cost reports from 2024, instead of 2025, will be used for the delayed nursing home rebase that would be scheduled under the bill for fiscal year 2028. 
Appropriation: None.
Fiscal Note: Available.
Effective Date of Substitute Bill: The bill contains an emergency clause and takes effect immediately.
Staff Summary of Public Testimony:

(In support) Delaying the rate rebase for Medicaid nursing home payments is not ideal, but budget constraints made the delay necessary.   

 

(Opposed) The bill effectively reduces Medicare and Medicaid reimbursement rates for skilled nursing facilities.  Delaying the rebase until 2028 would result in continued payments based on 2022 cost data, which may not reflect current operating costs.  The bill's funding adjustments may not keep pace with rising wages, supply costs, and other operational expenses, potentially forcing some facilities to limit admissions or close.  This could lead to staffing shortages and place additional strain on hospitals.
Persons Testifying:

(In support) Sheri Sawyer, Office of Financial Management.

(Opposed) Carma Matti-Jackson, Washington Health Care Association; Alyssa Odegaard, LeadingAge Washington; Demas Nesterenko, SEIU 775; Terry Myers, Grays Harbor Health and Rehabilitation; Tiffany Birrell, Highland Health and Rehabilitation; Shelley Sandoval, Regency Omak; Lisa Moore, Post Acute Care Solutions; Bret Heiner, Ensign Services; Jordan Monson, Cascadia Care; Danielle St. Germain, Stafholdt Health and Rehabilitation; Carol Ann Andrews, Olympic View Care Center; Amy Seils, Cascadia Healthcare; Russell Sells, Olympia Transitional Care and Rehabilitation; Manuel Serfaty, South Creek Post Acute; Jon-Michael Bradley, Pine Ridge Post Acute; Joe Rudd, Alderwood Park and Rehabilitation; Rachel Erickson, Fir Lane Care; Loupel Antiquiera, Pacific Care Center; and Mindy Schaffner, Ensign Services and Pennant Healthcare WA.
Persons Signed In To Testify But Not Testifying: None.