Inside Olympia: Final budget released, legislative session concludes

The Legislature adjourned on time Sunday, April 23. Legislators introduced 2,312 bills in the 2023 session and 491 bills passed, for a roughly 20% rate of passage. This represents a significant increase in passage of bills over previous sessions.

The House and Senate unveiled their final budget on Saturday, April 22. The legislature spends $69.8 billion in the 2023-2025 operating budget, including $4.7 billion in new spending. Overall, this is a very good budget for hospitals and health care. It makes significant investments in nearly all WSHA’s priority budget areas and funds substantial rate increases for long-term care and community behavioral health providers and health care coverage expansions.

In developing the 2023-2025 biennial operating budgets, the Legislature faced a shifting budget environment. Temporary enhancements of federal funding streams are phasing out, and while inflation has slowed, it remains higher than prior to the pandemic. Although revenue collections in the current biennium remain strong, revenue over the next two biennia is expected to grow at a slower-than-average rate.

For more details, see WSHA’s 2023 Budget Comparison Table.

Safety Net Assessment Program (SNAP)

We are very pleased the budget fully funds the Safety Net Assessment Program as passed by House Bill 1850 and negotiated between the Legislature and WSHA. The Medicaid increases in SNAP begin on January 1, 2024, and funding will follow the patient. This increase will mark the first time in more than 20 years that Medicaid has increased payments to hospitals, in particular urban hospitals. With these increases, most hospitals will now be paid closer to Medicare, which pays about 80 percent of the cost of caring for patients.

Difficult to Discharge

We are pleased the budget makes substantial investments to address systemic barriers that keep non-acute patients stuck in hospitals, leading to high hospital census and delays for patients who need acute care. The final budget funds multiple programs designed specifically to address the populations facing the most barriers to post-acute care placement and long-overdue investments in increased payment rates to Medicaid long-term care providers. The proposed budget includes funding for the following WSHA priorities, amounting to $293.3 million state ($557.7 million total):

• $25 million state ($26.4 million total) to establish a taskforce and five hospital pilot programs specifically to address challenges faced with discharging patients from acute care and post-acute care capacity.
• $250,000 state for a hospital discharge assessment study to evaluate the impact of requiring functional assessments prior to discharge from acute care hospitals.
• $17.4 million state ($34.8 million total) to continue the long-term care rapid response nursing team program in fiscal year 2024. This program provides staffing teams for long-term care facilities facing workforce shortages and helps address hospital capacity issues.
• $10.9 million state ($13 million total) for institutional transitions to help Medicaid patients transition from acute care hospitals, state hospitals and community psychiatric hospitals into settings in the community with more appropriate levels of care:
  • $3.3 million state ($6.7 million total) for community placement incentives: includes specialty dementia care slots, community stability slots and discharge coordination.
  • $1.8 million state for non-citizen LTC slots: adds 10 long-term care slots for individuals transitioning out of acute care hospitals who are ineligible for Medicaid as non-citizens.
• $5.8 million state to fund slots for non-citizen developmental disabilities slots.
• $5.2 million state ($10.4 million total) for DSHS to provide an enhanced rate to providers who take specialized training to better serve clients and reduce unnecessary hospitalization of children and adults with intellectual and developmental disabilities.
• $3.3 million state ($6.9 million total) for a new enhanced pilot for adult family homes that specialize in serving individuals with intellectual or developmental disabilities who may also have a co-occurring health or behavioral diagnosis.
• $6.8 million state ($11 million total) for a developmental disability administration behavior stabilization program to expand capacity and increase the rate for service providers for clients with difficult-to-serve behaviors.
• $41 million state ($82 million total) for the ongoing operation and projected cost increases of nursing facility services in Transitional Care Center of Seattle (TCCS).
• Medicaid payment rate increases for long-term care providers:
  • $104.7 million state ($215.3 million total) to increase rates for skilled nursing facilities.
  • $55.7 million state ($116.9 million total) to increase rates for assisted living facilities.
  • $16.5 million state ($33.3 million total) to increase rates for community residential services that serve clients with intellectual/developmental disabilities.
  • $726,000 state ($1.6 million total) to increase rates for assisted living facilities that serve Medicaid clients with intellectual/developmental disabilities.

Behavioral Health

WSHA’s 2023 priorities for behavioral health included funding to create 23-hour behavioral health crisis facilities and several programs to support individuals living with behavioral health conditions who have long-term care needs. The final budget includes funding for operating these facilities. The budget also focuses heavily on behavioral health services for children and youth, including funding for the children’s partial hospitalization/intensive outpatient treatment program (PHP/IOP) Medicaid benefit that WSHA successfully advocated for last year. It also expands youth inpatient navigator teams and other transition services for children and youth with behavioral health and developmental disability diagnoses. Relevant behavioral health investments include the following, which amount to $236.2 million state ($481.8 million total):

• $14.8 million state ($52.1 million total) to rebase psychiatric per diem rates paid to hospitals to ensure the rates reflect the appropriate percentage of cost for each hospital. Psychiatric per diem rates were not included in the hospital rebasing performed by HCA in 2021.
• $1.1 million state ($7.5 million total) to maintain PHP/IOP pilot sites and expand to a statewide children’s benefit in CY 2024.
• $6.3 million state ($6.5 million total) to support pediatric patients stuck in hospitals through a care coordinator within the Office of the Governor and a rapid care team composed of representatives from multiple agencies, including DCYF as designated by HB 1580 (Children in Crisis).
• $3.8 million state ($4.9 million total) for youth inpatient navigators to help families and caregivers identify alternate, temporary solutions when a long-term inpatient bed is not available due to bed capacity or geography issues.
• $3.5 million state ($6.9 million total) to increase children’s long-term inpatient program (CLIP) bed rates.
• $23.8 million state for UW 90/180 inpatient beds. The agency will pay the University of Washington Behavioral Health Teaching Facility for long-term inpatient beds.
• $10.3 million total for UW short-term behavioral health beds. The agency will pay the University of Washington Behavioral Health Teaching Facility for short-term beds.
• $16.4 million state ($35.7 million total) operating costs for 15 behavioral health facilities that were funded in prior capital budgets.
• $95.3 million state ($267.7 million total) for a behavioral health Medicaid community-based provider rate increase beginning Jan. 1, 2024. The amount reflects a 15% increase for services by behavioral health organizations paid through the Medicaid managed care organizations. The House budget specifies that these rate increases are for non-hospital providers.
• $55.7 million state for a 15% rate increase for non-Medicaid/state only services. This is intended to address regional behavioral health service needs that cannot be paid for with Medicaid funds including designated crisis responders, involuntary treatment hearing court costs and services to low-income individuals who are not eligible for Medicaid.
• $3.5 million state ($9 million total) for rate enhancement for all hospital and non-hospital facilities serving civil conversion patients except those whose rates are set at 100% of their most recent Medicare cost report. These civil conversion patients are patients who have not been restored to competency to stand trial for criminal charges.
• $1.7 million total for expenses associated with credentialing, inspections, assistance and program administration for licensed psychiatric beds.

Health Care Workforce

The budget provides funding for several programs designed to grow the state’s health care workforce, including the following that amount to about $24.3 million state and $24.4 total funds:

• $1.2 million total to implement the multistate nurse licensure compact. (SSB 5499)
• $55,000 state ($107,000 total) to implement the traveler agency transparency bill. (SSB 5547)
• $6 million state for the nurse preceptorship grant program to pay nurses who are preceptors.
• $560,000 state to help increase the number of clinical placement opportunities.
• $2 million state provided to award incumbent healthcare worker training matching grants to labor-management partnerships, such as the SEIU Multi-Employer Training Fund.
• $3.6 million state to increase the number of nursing slots in the community college system.
• $4.6 million state provided to hire additional faculty and staff to serve additional students in the EWU BSN degree programs.
• $3.9 million state provided to increase nurse educator salaries to support the WSU College of Nursing’s reaccreditation effort.
• $2.4 million state to implement components of the nursing supply bill. (ESSB 5582)

Other Health Care Investments

The budget also makes other health care investments that are relevant to hospitals and health systems:

• $8 million state for one-time bridge grants to hospitals in financial distress.
• $9.4 million state ($32 million total) increases to Medicaid rates for specific categories of professional services.
• $45.7 million state to expand Apple Health to include Washington residents with incomes below 138% of federal poverty level, regardless of immigration status.
• $3.3 million state ($6 million total) to increase composite Medicaid payment rates for kidney dialysis services by 30%.
• $4.8 million state ($15 million total) to enhance Medicaid payment rates for air ambulance transport.
• $4.2 million state ($13.2 million total) to enhance Medicaid payment rates for ground ambulance transport.
• $100,000 state ($200,000 total) for HCA to study and report to the Legislature the cost and benefits of prescription drug funding models, including carveout of 340b drugs from MCO contracts.

Join us for our members-only Legislative Summary webcast from 12-1 p.m. May 8

Register now to join us for our 2023 Legislative Summary Webcast from 12-1 p.m. Monday, May 8! The Government Affairs Team will provide you with important information from this legislative session, including action you will need to take to comply with newly adopted state law. Please contact Tim Pfarr at timp@wsha.org with questions about the webcast.