The Washington State Health Care Authority (HCA), through the Public Employees Benefits Board (PEBB), provides medical benefits for employees and dependents of the state and participating local governments.  The PEBB coverage is also available to retired employees of the state and those local governments who purchase active employee benefits through PEBB.  The School Employees Benefits Board (SEBB), also administered by the HCA, provides medical benefits for employees of the state's public schools and educational service districts.  School employees covered by the provisions of SEBB are covered by the PEBB program as retirees.  The PEBB and SEBB health benefit systems cover almost 700,000 lives between employees, retirees, and dependents.

The Uniform Medical Plan (UMP) is a self-insured health plan for Washington state public employees and school employees.  The HCA administers the UMP through its Public Employees Benefits Board and School Employees Benefits Board, and provides a choice of several different benefit designs from the UMP, including a high deductible plan with health savings accounts and accountable care networks.  The PEBB and SEBB also provide health plans through health carriers, including fully insured plans, among which members may choose.

Both the UMP and the fully insured plans contract with a wide variety of health benefit providers to ensure access for members of the PEBB and SEBB systems.  In recent years, the cost of providing benefits through the UMP or from insurers have been typically increasing by 5 to 7 percent per year for active employees and pre-Medicare retirees, and between 7 and 18 percent for plans covering Medicare-eligible retirees.

A licensed hospital that receives payments from Medicaid programs administered by the HCA must contract with a health carrier or similar entity providing benefits through the PEBB and SEBB systems upon receiving a good faith offer.

Beginning January 1, 2027:

• the reimbursement under these contracts to any in-network provider or facility located in Washington for inpatient and outpatient hospital services may not exceed the lesser of:
  • billed charges;
  • the contracted rate for the provider; or
  • 200 percent of the total amount Medicare would have reimbursed for the same or similar service;
• the reimbursement under these contracts to any in-network provider or facility located in Washington for inpatient and outpatient services provided at a children's hospital may not exceed the lesser of:
  • billed charges;
  • the contracted rate for the provider; or
  • 350 percent of the total amount Medicare would have reimbursed for the same or similar service;
• the reimbursement for in-network primary care services or nonfacility-based behavioral health services may not be less than 150 percent of the total amount Medicare would have reimbursed for the same or similar service; and
• the reimbursement for services provided by rural hospitals certified as Critical Access Hospitals or Sole Community Hospitals may not be less than 101 percent of allowable costs as defined by the United States Centers for Medicare and Medicaid Services.

Beginning January 1, 2029, the reimbursement limit for inpatient and outpatient hospital services is lowered to 190 percent of the total amount Medicare would have reimbursed for the same or similar service, and the reimbursement limit for inpatient and outpatient services provided at a children's hospital is lowered to 300 percent of the total amount Medicare would have reimbursed for the same or similar service.

This bill does not apply to Critical Access Hospitals or Sole Community Hospitals that receive enhanced Medicaid payments, except those owned or operated by a health system that owns or operates more than two acute care hospitals.  The act also does not apply to hospitals located on an island operating within a public hospital district in Skagit County or hospitals that are not currently designated as a Critical Access Hospital, do not meet current federal eligibility requirements for designation as a Critical Access Hospital, have combined Medicaid and Medicare inpatient days greater than 60 percent of all hospital inpatient days, and are located on the land of a federally recognized Indian tribe.

For the purposes of this bill, reimbursement for inpatient and outpatient services does not include charges for professional services.

A health carrier or similar entity must provide the HCA with cost and quality of care information, and may not enter into an agreement with a provider or third party that would

restrict the provision of data to the HCA.

By December 31, 2030, the HCA must, in consultation with the Office of the Insurance Commissioner (OIC), report to the Office of the Governor (GOV) and the appropriate committees of the Legislature on the impacts of the bill on network access, enrollee premiums and cost sharing, and state expenditures for state and school district employee and retiree coverage.

By December 31, 2034, the HCA must, in consultation with the OIC, submit a second report to GOV and the appropriate committees of the Legislature updating the impacts of the bill on network access, enrollee premiums and cost sharing, and state expenditures for state and school district employee and retiree coverage.  The HCA may adopt rules to implement the bill, including rules for levying fines and taking other contract actions to enforce compliance.