Public Hospital Districts.  Any public hospital district may contract or join with any other public hospital district, publicly owned hospital, nonprofit hospital, legal entity, or individual to acquire, own, operate, manage, or provide any hospital or other health care facilities or hospital services or other health care services to be used by individuals, districts, hospitals, or others, including providing health maintenance services.

If a public hospital district chooses to contract or join with another party or parties pursuant to the provisions of this chapter, it may do so through establishing a nonprofit corporation, partnership, limited liability company, or other legal entity of its choosing in which the public hospital district and the other party or parties participate.

Rural public hospital districts may enter into cooperative agreements and contracts with other rural public hospital districts in order to provide for the health care needs of the people served by the hospital districts.  These agreements and contracts are specifically authorized to include:

• allocation of health care services among the different facilities owned and operated by the districts;
• combined purchases and allocations of medical equipment and technologies;
• joint agreements and contracts for health care service delivery and payment with public and private entities; and
• other cooperative arrangements consistent with state law relating to the Interlocal Cooperation Act, which applies to the development and implementation of the cooperative contracts and agreements.

Washington Health Care Facilities Authority.  Washington Health Care Facilities Authority (WHCFA) was created by the Legislature in 1974 to provide a new source of capital funding for modern, well-equipped, and reasonably priced health care facilities. WHCFA offers access to the tax-exempt capital markers, information on the capital markets, and low-cost financing alternatives to participants such as nonprofit health care providers in order to minimize the capital cost of construction. Participants that can utilize the access provided by WHCFA include any city, county or other municipal corporation or agency or political subdivision of the state or any corporation, hospital, comprehensive cancer center, or health maintenance organization authorized by law to operate nonprofit health care facilities, or any affiliate defined by the Department of Financial Institutions, which is a nonprofit corporation acting for the benefit of any of the above-mentioned entities.

Insurance Premium Tax.  The Office of the Insurance Commissioner is required to collect an annual premium tax each year on or before March 1st from:

• insurers licensed in Washington State during the tax year;
• purchasing groups admitted in Washington State;
• risk retention groups admitted in Washington State;
• surplus line brokers, including business entities, unaffiliated individuals with active surplus line licenses during the tax year, and those that did not do business or that have someone else pay their premium taxes; and
• unregistered or unauthorized entities involved in insurance.

The bill as referred to committee not considered.

Public Hospital Districts.  Public hospital districts that are not affiliated with a nonpublic entity may enter into cooperative agreements and contracts with other public hospital districts and publicly owned or operated health care entities to provide for the health care needs of the people serviced by the hospital districts.

Any authorized public hospital district or publicly owned or operated health care entity are defined as participants for the purposes of WHCFA.

Annual Coverage Assessment.  An annual coverage assessment (assessment) will be assessed on insurers and other businesses subject to the insurance premium tax with initial assessments due and payable on or before March 1, 2027. The assessment equals $0.75 per coverage month in the prior calendar year.  Funds collected shall be deposited into the Public Hospital Infrastructure Account (account.)

Each insurer or taxpayer subject to the insurance commissioner on or before March 1st of each year, an annual coverage month assessment statement indicating the number of coverage months associated with premiums or prepayments for health care services subject to the insurance premium tax.

"Coverage month" means each month of coverage under an insurance policy or each month of prepayment for health care services where premiums or prepayments are subject to the insurance premium tax.

This assessment must be borne solely by the insurer or taxpayer and may not be passed through to enrollees in premiums, rates, plan design, or otherwise.

Any insurer or taxpayer failing to file its annual coverage month assessment statement and pay the assessment:

• by March 31st, the insurer or taxpayer must be assessed a penalty of 5 percent of the assessment amount;
• within 45 days after the due date, the insurer or taxpayer must be assessed a total penalty of 10 percent of the assessment amount; and
• within 60 days of the due date, the insurer or taxpayer must be assessed a total penalty of 20 percent of the assessment amount.

Interest accrues on the amount of the unpaid assessment at the maximum legal rate of interested permitted by state law commencing 61 days after the assessment is due until the assessment is paid. The assessment may be collected by distraint, and the penalty recovered by any action instituted by the insurance commissioner in any court of competent jurisdiction. The amount of any penalty collected must be paid to the state treasurer and credited to the Public Hospital Infrastructure Account.

The insurance commissioner may revoke the certificate of authority or registration of any delinquent insurer or taxpayer, and the certificate of authority or registration will not be reissued, until all assessments, interest, and penalties imposed have been fully paid and the insurer or taxpayer has otherwise qualified for the certificate of authority or registration.

In the event that any insurer or taxpayer has paid to the insurance commission any annual coverage assessment in error or in excess of that which it is lawfully obligated to pay, the insurance commissioner must, upon written request, make a refund thereof. An insurer or taxpayer may only request a refund of assessments within six years of the end of the calendar year for which the assessments are owed. Refunds may be made either by crediting the amount toward payment of taxes, assessments, or other charges due or to become due from such insurer or taxpayer, or by making a cash refund.

Public Hospital Infrastructure Account.  The account is created and funds in the account may only be spent after appropriation. These funds may only be used for providing funding assistance to public district hospitals, or any publicly owned or operated health care entity undertaking a major new construction or modernization project.

The account is added to the list of funds that receive an interest allocation from the treasury income account.

Financing for Public Hospital Districts.  Allocations to public hospital districts of state funds up to a maximum of 20 percent of the project's approved cost may be made by the Department of Commerce. Each public hospital district's board of directors must determine the proposed project's total cost, which may include:

• the cost of acquiring and preparing the infrastructure;
• the cost of constructing the infrastructure or of acquiring the infrastructure and preparing it for district hospital use;
• the cost of necessary equipment;
• taxes chargeable to the project;
• necessary technical consultant fees; and
• a reasonable amount for contingencies and for other necessary incidental expenses.

The state funding assistance percentage for a public hospital district shall be computed as the public hospital district's total hospital Medicaid revenue divided by the public hospital district's total hospital revenue.  If the state funding assistance percentage is more than 20 percent and the public hospital district is otherwise eligible for state funding assistance, the Department of Commerce may establish for such district a state funding assistance percentage not in excess of 20 percent of the approved project cost.

The allocations of state funds and state funding assistance to a public hospital district in financing a public hospital infrastructure project through this mechanism shall not be obligations of the state of Washington and shall be obligations only of the public hospital. Such funds shall not be or constitute public moneys or funds of the state of Washington but at all times shall be kept segregated and set apart from other funds.

Bonds issued shall contain a recital on their face to the effect that payment of the principal of, interest on, and prepayment premium, if any, on the bonds, shall be a valid claim only as against the special fund or funds relating thereto, that neither the faith and credit nor the taxing power of the state or nay municipal corporation, subdivision, or agency of the state, other than the commission is pledged to the payment of the principal of, interest on, and prepayment premium, if any, on the bonds.

Contracts entered into by the public hospital district shall be entered into in the name of the public hospital district and not in the name of the state of Washington. The obligations of the public hospital district under the contracts shall be obligations only of the public hospital district and are not in any way obligations of the state of Washington.

PRO: Public hospital districts play a critical role in our communities and with the recent federal actions, it has put a lot of strain on the public hospitals. Public hospitals just like public district hospitals are also constantly struggling with maintaining capital infrastructure. This bill is about making sure that the state can support the public hospitals that are struggling by allowing them to coordinate with one another and have a process in which they can modernize their facilities. This is about giving the public hospitals the tools they need in order to make sure they can stay competitive and be successful.

CON: Carriers are concerned this bill could unintentionally drive consolidation among hospitals and consolidation increases health care costs as more hospitals use more cooperative agreements and contracts and are able to access the funds available under this bill. The cumulative effect of these taxes will have a devastating impact on health care. This idea should be funded from the taxes already being paid.  This bill prohibits passing the cost of the assessment on to the customers. There is legal opinion that provisions like this one are unconstitutional. If this tax is not passed along to consumers, the insurance companies are potentially charging inadequate rates to maintain solvency, which is a concern.  If the current version of the bill passes, this would be a retaliatory tax treatment and puts insurers at a disadvantage in other states since they are paying a higher premium taxes in another state. This bill also sweeps in property and casualty mutual insurance companies. These entities do not participate in the healthcare marketplace in any form and should be removed from the bill.

OTHER: There is value in expanded collaboration between public hospitals but it should have guardrails to ensure that affordability and access is front of mind because public hospitals do not always treat patients equally and some have taken steps to limit its outpatient Medicaid appointments. Also, for rural hospitals and rural hospital districts that are currently affiliated with non-public entities, they cannot participate in other types of agreements and they cannot access the benefits under this bill. Most rural hospitals have some contracts or affiliations with nonpublic entities to provide different services. These provisions in the bill need to be amended.