“The Good, the Bad, and the Ugly” Washington State Legislature – 2011 Sessions

1. “The Good, the Bad, and the Ugly”Washington State Legislature – 2011 Sessions Len McComb, Lobbyist Randy Revelle, Senior Vice President Lisa Thatcher, Lobbyist 2011 WSHA Rural Hospital Summer Workshop June 28, 2011

2. Outline of the Presentation • 2011 Legislative Sessions • WSHA Policy Priorities: “The Good…” • Washington State Budget • WSHA Budget Priorities: “the Bad…” • Hospital Safety Net Assessment: “ …and the Ugly” • WSHA Information and Resources 2

3. 3 2011 Legislative Sessions

4. Democratic Leadership Lisa Brown Senate Majority Leader Ed Murray Senate Ways and Means Chair Karen Keiser Senate Health Care Chair Frank Chopp Speaker of the House Ross Hunter House Ways and Means Chair Eileen Cody House Health Care Chair 4

5. Republican Leadership Mike Hewitt Senate Minority Leader Joe Zarelli Senate Ranking Ways and Means Randi Becker Senate Ranking Health Care Richard DeBoldt House Minority Leader Gary Alexander House Ranking Ways and Means Joe Schmick House Ranking Health Care 5

6. Session Overview • Hard work by the Policy/Advocacy Team • Extensive grassroots campaign • Great success on numerous policy bills • Frustrating results on the state budget • State legislature raided the assessment 6

7. 7 WSHA Policy Priorities “The Good . . .”

8. Policy Priorities and Issues WSHA Policy Priorities: Nurse staffing agreement Health insurance exchange Adverse events reporting Public Hospital District fundraising Other Policy Issues

9. Nurse Staffing Agreement • Commitment that all five parties will work toward a mutually agreeable solution to missed meal and rest breaks. • Agreement among the parties not to introduce or seek new legislation on nurse staffing issues during the 2011 legislative sessions. • Agreement to continue a dialogue concerning the impact of fatigue on patient safety. 9

10. Health Insurance Exchange • Goal: Ensure the state’s adoption of an exchange is reasonable, with a proper role for hospital/provider expertise in developing the exchange. • Result: Senate Bill 5445 was enacted, creating an exchange governing board. Hospitals/providers may participate through a technical advisory committee. 10

11. Adverse Events Reporting • Goal: Improve patient safety by allowing hospitals to learn from their mistakes by sharing with each other in a safe environment. • Result: Senate Bill 5370, which would have required hospitals to pay a fee and share the results of root cause analyses with insurers and payers, died in committee. 11

12. Public Hospital District Fundraising • Goal: Ensure public hospital districts can solicit and raise funds through their foundations. • Result: House Bill 5116 was enacted, authorizing public hospital districts to receive and distribute gifts and bequests. 12

13. Other Policy Issues Workers Compensation: House Bill 2123, enacted during the special session with other reforms, is estimated to save the state $1.7 billion by 2015. The bill allows the state and self-funded employer groups to negotiate voluntary settlements for enrollees age 55 and older with enrollees 50 and older phased in over time. This process is viewed by employer groups as a step in the right direction. Requires the Joint Legislative Audit and Review Committee to conduct a performance audit of the Labor and Industries state fund claims system by 2015.

14. Other Policy Issues (continued) • Mental Health Information: The original bill would have fined hospitals and exposed staff to findings of unprofessional conduct. • Working with provider groups, WSHA fixed these problems. • Senate Bill 5187 requires emergency departments and mental health units to provide verbal/written treatment information to parents seeking mental health care for their children. 14

15. Other Policy Issues (continued) 15 • Payments to Providers: Senate Bill 5927 limits payments made by Medicaid and Basic Health managed care plans to non-contracted providers. The original bill specified the Medicaid rate, but was changed to the managed care plans’ lowest contracted rate for similar services. • Hospitals are concerned this limitation will undermine their future contracts with the plans. • WSHA was unable to exclude hospitals and opposed the bill. WSHA was successful in getting stronger network adequacy protections in the bill.

16. Other Policy Issues (continued) • Executive Compensation: Senate Bill 5666 would have linked nonprofit hospitals’ property tax exemption to a cap on executive compensation. The bill died in committee. • Emergency Rooms: SenateBill 5515 would have imposed a two-year moratorium on construction of new free-standing emergency rooms. WSHA was opposed to several provisions in the bill. Nevertheless, we were neutral on the bill, which was not enacted. 16

17. Other Policy Issues (continued) • Health Care Facilities Authority: Senate Bill 5514 would have added legislators to the Authority board and duplicated the certificate of need process. The bill died in committee. • False Claims Act: If enacted, Senate Bills 5310, 5458, and 5960 would have encouraged frivolous claims by whistleblowers. None of the bills passed during the session. 17

18. Other Policy Issues (continued) 18 • Physician Peer Review: Proposal would have exempted physicians from the costs of challenges to hospitals on privileging decisions. No bill was introduced. • Interpreter Services: Senate Bill 5807 would have required use of state-certified language access providers, possibly limiting hospitals’ ability to use their own interpreter staff. While the bill died in committee, the language we amended was included in a budget proviso.

19. Other Policy Issues (continued) 19 • Breast Reconstruction: House Bill 1101 would have required hospitals and surgery centers to provide information regarding insurance coverage for breast reconstruction. The bill died in committee. • Reporting to Law Enforcement: Versions ofSenate Bill 5671 would have expanded reporting requirements to include blunt force and certain other injuries to conscious patients, or if a patient potentially died from a drug overdose. The bill died in committee.

20. Other Policy Issues (continued) 20 • Medicaid Reform: Senate Bill 5596 requires DSHS to submit a federal waiver to obtain flexibility in how benefits are provided in return for fixed funding per enrollee. • Immunization Exceptions: Senate Bill 5005 requires parents to discuss the risks and benefits with their health care provider before their child is exempted from immunization requirements.

21. Other Policy Issues (continued) 21 • Long-term Care: Senate Bill 5708 provides greater flexibility in how health services are provided by expanding the scope for boarding homes and skilled nursing facilities and studying ways to reduce excess capacity. • Notifying Law Enforcement: House Bill 5452 requires hospitals to contact the law enforcement officer if a patient left for mental health evaluation is released.

22. Other Policy Issues (continued) 22 • Handling Hazardous Drugs: Senate Bill 5594 requires the state adopt a rule-making process to codify standards for handling of chemotherapy and other hazardous drugs. • Evidence-based Care: House Bill 1311 establishes a collaborative to identify best practices to reduce unnecessary use of costly services. WSHA worked to ensure hospital leaders are represented.

23. 23 Washington State Budget

24. Hospital Operating Margins(1997 to 2009) Data Source: Washington State Department of Health – Hospital Fiscal Year-End Reports Health Information Program 24

25. Wide Range of 2009 Operating Margins (84 Hospitals/Health Systems) Data Source: Washington State Department of Health – Hospital Fiscal Year-End Reports Health Information Program 25

26. Government Cost Shift(1995 to 2009) Other Medicare Medicaid Data Source: Washington State Department of Health – Hospital Fiscal Year-End Reports Health Information Program 26

27. Impact of Initiative 1053 • Requires a two-thirds majority of the Senate and House or a public referendum vote for all tax increases • Makes it very difficult to obtain revenue increases, resulting in an all-cuts budget • A two-thirds majority is also required to eliminate existing tax loopholes 27

28. Impact of the Recession 28 Increased case loads for education/health care Reduced revenue as sales tax receipts decline As more than two-thirds of the budget is protected, $5.1 billion had to be cut from a budget base of about $13 billion. Latest forecast predicts $570 million less revenue for 2011-2013, reducing the state’s ending fund balance to $160 million.

29. Three Budget “Whacks” December 2010 special session cuts for the remainder of the 2009-2011 biennium ($588 million) February 2011 supplemental budget cuts for the remainder of the 2009-2011 biennium ($367 million in additional cuts) State operating budget cuts for the 2011-2013 biennium ($5.1 billion) 29

30. 30 WSHA Budget Priorities “ . . . the Bad”

31. WSHA Budget Priorities • Preserve the Hospital Safety Net Assessment • Maintain access to health care • Protect mental health funding • Protect health clinic funding • Maintain maternity support services • Other budget issues 31

32. Maintain Access to Health Care 32 Basic Health: Limits eligibility to those covered by the 2014 Medicaid expansion (133 percent of federal poverty level); disenrolls immigrants; and freezes enrollment to cover only 33,000 people by 2013.(Cut: $202 million) Disability Lifeline: Continues the medical portion at the current enrollment level, but changes cash grants to a housing assistance program. (Cut to cash grants: $80 million)

33. Maintain Access: Apple Health for Kids 33 Continues current eligibility levels, but requires families with incomes greater than 200 percent of the federal poverty level to pay the full cost of premiums. (Cut: $1.6 million) The state will establish a new Disproportionate Share Hospital (DSH) program to provide $2.8 million for services for children not eligible for Medicaid or the Children’s Health Program.

34. Protect Mental Health and Maternity Support Funding 34 Mental Health Funding: Cuts funding for non-Medicaid patients receiving community mental health services by $8.7 million and funding for Medicaid services by $17 million. Maternity Support Services: Cuts funding for at-risk pregnant women by 30 percent (Cut: $24 million)

35. Protect Health Clinic Funding 35 Establishes a new alternative methodology to cut payments to rural and community health clinics by $86 million for 2011-2013 by reducing the medical cost inflation factor used to calculate payments. The budget does not address the deeper cuts for April-June 2011 enacted in the supplemental budget. Payments to rural health clinics for prenatal and well child visits by rural health clinics will be increased by$6 million.

36. Other Budget Issues 36 Covered Services: Reduces or eliminates adult dental, hearing, physical therapy, and other health services. Emergency Room Visits: Denies “preventable” visits after three “preventable” visits (Cut: $72 million) DSH Payments: Reduces indigent assistance and low income DSH payments by 40 percent(Cut: $29 million) Interpreter Services: Reduces state costs by greater use of phones and the internet (Cut: $6 million)

37. 37 Hospital Safety Net Assessment “ . . . and the Ugly”

38. Preserve the Hospital Safety Net Assessment 38 Hospitals pay an assessment to augment state funds. The assessment is matched by the federal government. Hospitals receive enhanced Medicaid payment rates and DSH payments. The assessment stabilizes quality care for Medicaid and Apple Health enrollees.

39. Assessment: Benefits to the State 39 • 2009-2011 biennium • About $60 million in new state general funds • About $230 million avoided in state expenditures for hospital payments • Biennium total: About $290 million • 2011-2013 biennium • About $50 million in new state general funds • About $230 million avoided in state expenditures for hospital payments • Biennium total: About $280 million

40. Assessment: Benefits to Hospitals 40 About $130 million net for 2009-2011 biennium About $220 million net for 2011-2013 biennium Restores about two thirds of the hospital payment cuts enacted by the 2009 legislature Requires no additional state funds

41. Hospital Rate Cuts: House Bill 2069(2011 to 2013) Total impact is $260 million • Takes $110 million from the assessment for state general funds • Forgoes $110 million in Medicaid match funds for hospital payments • Keeps $40 million in surplus assessment funds • No direct cuts to Critical Access Hospitals

42. WSHA Board of Trustees’ Goals Pursue a lawsuit against Washington State to: • Preserve the Hospital Safety Net Assessment OR • Negotiate a mutually agreeable settlement with the state

43. 43 WSHA Information and Resources

44. WSHA Information • Weekly Inside Olympia • WSHA’s legislative summary • Health care reform resources on WSHA’s web site • Hospital-specific reports through WSHA’s Health Information Program • WSHA staff are available for presentations to management staff, boards, and organizations. 44

45. WSHA Resources • Policy: Research, analysis, and writing • Media: Editorials and news articles • Lobbyists: WSHA lobbyists, as well as mobilizing other hospital lobbyists • Grassroots: Unleashing the persuasive power of our membership • Political Action Committee (PAC): Using campaign donations to promote access to elected officials 45

46. Washington Hospital PAC • In 2001, WSHA membership urged PAC expansion. • In 2010, 531 donors from 92 hospitals/health systems and several organizations donated $154,713. • Success in the 2010 elections: 88 of the 94 (93.6 percent) candidates we supported won their elections. • PAC donations, WSHA investments, and WHS profits make WSHA a major player, with excellent access to elected officials. • From 2001 to 2010, the PAC Committee raised a total of $945,897. 46

47. $154,713 $137,076 $135,446 $126,501 $109,345 $82,751 $16,550 PAC Donations: 2005 to 2011 47

48. 2010 PAC Contributions(State Legislative Candidates) 48 • Individual Candidates • Senate: 10 Democrats, 7 Republicans • House:43 Democrats, 25 Republicans • Democratic Funds • Senate: Roosevelt Fund – Tied forfirst • House: Truman Fund – Fourth • Republican Funds • Senate: Leadership Council – Second • House: Reagan Fund – Tied forthird

49. We Need Your Help! • Stay in contact with your legislators and arrange a hospital visit this year • Answer calls to action in Inside Olympia and Inside D.C. • Talk to community leaders about hospitals and health care • Educate reporters and editorial boards • Contribute generously to the Washington Hospital PAC! 49

50. Thank you! Questions and Comments Contact Information: Lori Martinez Policy/Advocacy Coordinator lorim@wsha.org 206-577-1838 50