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, from 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:
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.
(In support) Health care costs keep climbing, and this bill reins in some of the cost growth without sacrificing quality care. Oregon has implemented a similar program and saw out-of-pocket costs drop by 10 percent. Out-of-control health care spending has a disproportionate impact on lower income classified school employees. This bill will have a big impact on rural school employees, and helps school district employers as well. Some public servants were recently hit by 100 percent premium increases. Over half of covered employees still can't access care because of costs. This bill will provide some balance in the health care system.
(Opposed) This bill should be amended to exempt Samaritan Healthcare. The capped revenue in the bill is not enough to allow a Central Washington hospital to remain solvent. Confluence Health is a Sole Community Hospital that is not exempt from the reimbursement limits in the bill, and will be forced into contracts that will amount to a $51 million cut that cannot be sustained. Oregon is the only state that has implemented a system like this. However, there are three big differences with the Oregon plan: the contract mandate, the in-network and out-of-network difference, and the step-down in this bill from a 200 percent cap to a 190 percent cap. EvergreenHealth has had operating margins and cash on hand declining in recent years. A policy like this bill could make responding to future public health emergencies much harder. This bill will reduce payments to hospitals and reduce access. Seattle Children's Hospital (SCH) serves a large portion of Medicaid clients. Many clients at the SCH do not have Medicare payment rates, so the SCH should be entirely exempt from the bill. Providence Swedish has suffered financial losses in recent years. A large percentage of Thurston County residents are in PEBB and SEBB, and Providence St. Peter Hospital would suffer a $14 million annual loss from this bill. This bill does nothing to contain costs, it will just shift costs to other purchasers. Hospitals don't have big profit margins, so a loss in one set of contracts will have to be made up. This bill would result in a $341 million reduction in payments to hospitals. The data that this proposal is based upon is significantly flawed.
(Other) Health care costs far too much, but this bill is the wrong approach. This could increase other commercial market premiums by 5.7 percent by 2027. When faced with increases on this scale, families and businesses will have to make difficult choices.
(In support) Nicole Gomez, Washington Federation of State Employees; Jared Mason-Gere, Washington Education Association; and Emily Brice, Northwest Health Law Advocates.