The House and Senate released their proposed budgets Monday, March 24. The state is facing a projected $15 billion budget deficit over the next four years and is required to enact a balanced budget every two years.
WSHA is pleased that many of Gov. Inslee’s and Gov. Ferguson’s major cuts impacting hospitals are not included in the legislative budgets. However, both chambers’ funding packages include the bill to cut and cap PEBB/SEBB payments for hospital services (SB 5083). Between SB 5083 and the tax proposals, hospitals cannot afford these cuts.
Despite single-party control of the executive branch and both chambers of the Legislature, the budget and revenue packages proposed have significant differences. Both the House and Senate proposed a different combination of cuts and taxes.
The Inside Olympia from Friday, March 21 summarizes the tax proposals. WSHA’s initial estimate on the B&O tax was too low.
Cuts proposed in governors’ budgets but not included in legislative budgets
After significant advocacy from WSHA and hospital members, these cuts proposed in the governors’ budgets were not included in either the House or Senate budget proposal.
- Hospital Safety Net Assessment cut— $75 million biennial cut/$100 million fully phased in
- Hospital facility fee cuts— $116 million biennial cut/$156 million fully phased in
- Professional fee cuts— >$30-41 million biennial cut
Next Steps. Each chamber will hold a hearing on their proposed budgets Tuesday, March 25. The budgets will be passed out of committee on Thursday, March 27, and they will be voted on the floor of each chamber on Saturday, March 29. Then, a conference committee will be appointed to negotiate a compromise budget that must be enacted by both chambers before April 27, the last day of the legislative session.
House Budget and Revenue Proposals
The main highlights of the House funding package as it relates to hospitals and health care are that it includes a substantial cut to hospital payments from SB 5083, a 1% additional B&O tax on top of the 1.5% tax for taxable revenue over $250 million, and much more aggressive cost cutting than the Senate. Click here for a detailed comparison table of the proposed budgets.
Hospital-specific budget proposals
- ($56.2 million total) cut to hospital reimbursement in public and school employee benefit plans from enactment of PEBB/SEBB bill (SB 5083). The impact to hospitals will grow to more than $341 million per biennium once fully implemented.
- ($1.5 million GFS/ $5.0 million total) elimination of reimbursement for hospital ancillary services (such as labs, therapy) for Medicaid patients on administrative day stays.
Other major health care budget proposals
- ($10.7 million GFS/ $38 million total) reduction to Medicaid adult dental rates.
- ($22.7 million GFS/ $46 million total) reduction to Medicaid children’s dental rates.
- ($10.4 million GFS/ $33.5 million total) reduction in Medicaid laboratory fee schedule rates for fee-for service-and managed care.
- ($37.5 million GFS/ $124 million total) 1% reduction in Medicaid managed care organization capitation rates for physical health services.
Behavioral health budget proposals
- ($33.5 million) reduction in funding for long-term civil commitment for individuals on 90- or 180-day orders that are in community settings.
- ($4.7 million GFS/ $9.3 million total) reduction in funding for children’s long-term inpatient beds (CLIP beds).
- $2.6 million GFS/total to fund the children in crisis multidisciplinary team for children abandoned in hospitals.
Complex discharge budget proposals
- Substantial increases to licensing fees for nursing homes ($16.7 million GFS), adult family homes ($23.1 million GFS) and assisted living facilities ($21.8 million GFS).
- ($9.9 million GFS/ $17.6 million total) to remove case management services and increase caseload ratio DSHS Developmental Disabilities Administration No Paid Services Caseload.
- $6.6 million GFS/ $13.9 million total and ($12.3 million GFS / $25 million total) to transition individuals from nursing facilities and reduce nursing home caseloads.
- ($5.3 million GFS/ $10.6 million total) increase in DSHS caseloads for hospital discharge, residential and residential wavier services.
Senate Budget and Revenue Proposals
The health care highlights of the Senate funding package are that it includes a substantial cut to hospital payments from SB 5083 (PEBB/SEBB) and a 5% payroll tax on wages above the Social Security maximum. A new 5% payroll tax on the amount of wages above the Social Security threshold of $176,100 in 2025 is the proposal most impactful to hospitals. Click here for a detailed comparison table of the proposed budgets.
Hospital-specific budget proposals
- ($56.2 million total) cut to hospital reimbursement in public and school employee benefit plans from enactment of PEBB/SEBB bill (SB 5083). The impact to hospitals will grow to more than $341 million per biennium once fully implemented.
Other major health care budget proposals
- ($118.25 million GFS/ $225.64 million total) moving Aged, Blind, Disabled Services from the managed care to the fee-for-service delivery model.
- ($10.4 million GFS/ $33.5 million total) reduction in Medicaid laboratory fee schedule rates for fee-for service-and managed care.
- ($29.7 million GFS/ $115.4 million total) reduction in Medicaid managed care organization capitation rates for physical health services.
Behavioral health budget proposals
- ($42.6 million GFS/$47.4 million total) reduction in funding for long-term civil commitment for individuals on 90- or 180-day orders that are in community settings.
- ($3.9 million GFS/ $7.9 million total) reduction in funding for children’s long-term inpatient beds (CLIP beds).
- $5.3 million GFS/total to fund the children in crisis multidisciplinary team for children abandoned in hospitals.
Complex discharge budget proposals
- ($41.4 million GFS/total) doubling annual licensing fees for nursing homes, adult family homes and assisted living facilities.
- ($9.9 million GFS/ $17.6 million total) removing case management services and increase caseload ratio for DSHS Developmental Disabilities Administration No Paid Services Caseload.
- $6.5 million GFS/ $13.6 million total and ($12.3 million GFS/ $25.8 million total) to transition individuals from nursing facilities and reduce nursing home caseloads.
WSHA weighing in: March 24-28
Monday, March 24
- Senate Local Government
- ESHB 1946: Clarifying tribal membership on local boards of health. (Zosia Stanley)
Tuesday, March 25
- House Appropriations
- HB 1198: Making 2025-2027 fiscal biennium operating appropriations. (Andrew Busz)
- House Civil Rights & Judiciary
- E2SB 5745: Concerning legal representation under the involuntary treatment act. (Cara Helmer)
- House Health Care & Wellness
- SSB 5239: Concerning the retention of hospital medical records. (Cara Helmer)
- SSB 5493: Concerning hospital price transparency. (Andrew Busz)
- Senate Health & Long Term Care
- E2SHB 1432: Improving access to appropriate mental health and substance use disorder services. (Cara Helmer)
- Senate Ways & Means
- SB 5167: Making 2025-2027 fiscal biennium operating appropriations. Making 2025-2027 fiscal biennium operating appropriations.
Wednesday, March 26
- House Health Care & Wellness
- SSB 5579: Prohibiting health carriers, facilities, and providers from making any public statements of any potential or planned contract terminations unless it satisfies a legal obligation. (Andrew Busz)
Thank you for testifying!
Thank you to everyone who testified in support of WSHA’s legislative efforts last week:
- Chris Bredeson, EvergreenHealth
- Suzanne Daly, MultiCare Health System
- Dr. Andrew Jones, Confluence Health
- Janet Schade, Forks Community Hospital
- Catrina Schwartz, Coulee Medical Center
- Alex Town, Samaritan Healthcare
- Ashley Thurow, Providence
