Governor Ferguson lays out recommended spending cuts

The state continues to face a significant budget shortall of $12-$15 billion for the 2025-2027 biennium. The legislature is contemplating both budget cuts and tax increases to address the shortfall.

In the last couple of weeks, Gov. Bob Ferguson announced additional spending cut recommendations for the 2025-2027 biennium. The proposed spending cuts are on top of the cuts already proposed in Gov. Inslee’s 2025-2027 budget released in December. WSHA is disappointed in Gov. Ferguson’s decision to include additional cuts to hospitals. In aggregate, Washington hospitals continue to experience negative operating margins.

The proposed cuts by Gov. Ferguson amount to about $4 billion—or about half of the two-year deficit—in the 2025-2027 biennium.
Major cuts to hospitals included in the recommendations are:

  • Hospital Safety Net Assessment Program – The proposal to apply additional assessment funding to general fund will cost hospitals $75 million during the 2025-2027 biennium and $100 million per biennium when fully implemented. (Contained in Gov. Inslee’s budget)
  • Caps to hospital payments under state and school employee health plans (PEBB/SEBB) – an impact of $57.8 million to hospitals in the last six months of 2025-2027 biennium and about $341 per biennium million when fully implemented in fiscal year 2030. (Contained in Gov. Inslee’s budget)
  • Hospital clinic facility fee cut—$34 million-state/$116 million total funds reduction in outpatient facility charges at off-campus hospital-based clinics. The Governor’s Office has not yet released more details about the methodology that will be used for this proposed cut.
  • Carve out of retail pharmacy from Medicaid managed care – reduces payment to acquisition cost for all Medicaid retail pharmacy and enables the state to keep the benefit of the discount for retail pharmacy provided by 340B entities such disproportionate share hospitals, federally qualified health centers and Ryan White clinics. This would save the state $22.5 million-state/$61.5 million-total.
  • Elimination of reimbursement for hospital ancillary services for patients on administrative day stays. While this is a smaller impact ($1.2 million-state/$4.6 million-total), it has a direct impact on hospitals.
  • The budget proposal also includes significant reductions to Medicaid payments for professional services that will impact a broad range of providers that serve Medicaid patients.
 
The House and Senate will develop their proposed budgets following the next revenue forecast on March 18. Then, they will negotiate a final biennial budget, which is due before the legislature adjourns April 27. WSHA will continue to advocate against budget cuts that will be harmful to Washingtonians’ ability to access health care services.
More information, including a link to a summary table of cuts can be found in our recent Inside Olympia.  (Ashlen Strong, ashlens@wsha.org)

WSHA working with Health Care Authority on Medicaid payment for Medicare Advantage Special Needs Plan enrollees

WSHA is currently working with the state Health Care Authority regarding Medicaid payment for patients enrolled with Medicare Advantage (MA) special needs plans (SNP).  Some WSHA member hospitals report that some MA plans are aggressive enrolling patients, including for their SNP plans in areas where they do not have contracts with local hospitals or providers and then denying claims for services as “out of network.”

We understand this is a significant issue for hospitals in rural areas. If you are from a WSHA member hospital experiencing this issue, please contact Andrew Busz at andrewb@wsha.org for additional information.

Medicaid usually coordinates with the MA-SNP plans to pay the patient’s remaining out of pocket expenses, but the normal crossover process does not work when there is no payment from the MA-SNP plan. WSHA is working with HCA to ensure patients can receive their Medicaid benefits in these cases.  (Andrew Busz, andrewb@wsha.org)

WSHA and AWPHD report 2024 lobbying expenses for Medicare cost reports

The Medicare Provider Reimbursement Manual requires hospitals to adjust their Medicare cost reports to eliminate the portion of association dues related to lobbying expenses. Please forward this information to the people in your organization responsible for completing and submitting Medicare cost reports.

The Washington State Hospital Association (WSHA) has determined 28 percent of its membership dues were expended in activities that meet the Medicare definition of lobbying for calendar year 2024. For entities that must separately calculate federal lobbying expenditures, 3.3 percent of WSHA membership dues were related to federal lobbying expenditures.

For the Association of Washington Public Hospital Districts (AWPHD), 6.1 percent of its membership dues were expended in activities that meet the Medicare definition of lobbying for calendar year 2024.

If you have questions, please contact Andrew Busz at andrewb@wsha.org or (206) 216-2533.
 

OIC extends BBPA dispute resolution process through June 2026

The Office of the Insurance Commissioner (OIC) announced it will be extending the dispute resolution process under the state’s Balance Billing Protection Act (BBPA) through at least June of 2026.  Reasons cited for the extension included pending litigation and the high volume of pending cases with the federal Independent Dispute Resolution (IDR) process under the federal No Surprises Act. WSHA has been a vocal supporter of this extension. 

The state’s BBPA dispute resolution process applies to state-regulated carriers (individual and small group) as well as self-funded groups that have elected to participate in the BBPA. The BBPA also applies to ground ambulance and certain emergency behavioral health services that are not included under the federal No Surprises Act.

The BBPA uses a “commercially reasonable” payment standard and median payment amounts established through the state’s all payer claims database for its dispute resolution process. Hospitals and providers may want to consider if some disputed out of network claims, including those for ERISA self-funded groups that may have elected to participate under the BBPA can be resolved through the state’s process. More information is on the OIC Website. (Andrew Busz, andrewb@wsha.org)

Department of Health requests reporting contacts to be updated via survey

The Hospital Charity Care and Financial Reporting Program is requesting hospital staff complete a short survey for each hospital financial, community benefit, and charity care report that they submit. Staff who currently submit reports may have already received one or more requests. 
 
The purpose of the surveys is to update DOH’s program directories and identify questions hospitals may have regarding reporting requirements.  WSHA supports the survey to ensure DOH has current contact information for hospital staff submitting specific reports, particularly as the volume of reports has increased in recent years. WSHA recommends hospitals and health systems coordinate survey responses within their organizations to ensure DOH has current information for each report and to minimize duplication of responses.  The links to surveys are below:
 

 
Questions regarding the surveys or report requirements can be directed to hos@doh.wa.gov . (Andrew Busz, andrewb@wsha.org)

Health Care Authority updates mailing list subscriptions to align with billing guides

The Health Care Authority is updating its provider mailing lists to reflect changes to various categories and align with its billing guides. Some existing lists are being discontinued and renamed or combined with other categories. Providers and staff who currently receive email updates may have received a request to update their subscription selections, and also  can do so here. HCA has provided a helpful crosswalk between its provider manuals and the corresponding email lists to help providers and staff select the categories they need to subscribe to. (Andrew Busz, andrewb@wsha.org)