The bill adds a new section to chapter 41.05 RCW that imposes reimbursement and contracting requirements on health carriers and third-party administrators (called "contractors") that provide medical coverage to public employees and their dependents. It requires most hospitals that receive payment through programs administered under chapter 74.09 RCW to contract with a contractor upon a good faith offer, with an exception for hospitals owned and operated by HMOs licensed under chapter 48.46 RCW. The section sets maximum reimbursement caps for in-network inpatient and outpatient hospital services for plans covering public employees: effective January 1, 2027 general hospitals are capped at the lesser of billed charges, contracted rate, or 200% of the Medicare amount (specialty children’s hospitals at 350%), and effective January 1, 2029 those caps change to the lesser of billed charges, contracted rate, or 190% of Medicare (specialty children’s hospitals at 300%). The section explicitly excludes professional service charges from those inpatient and outpatient reimbursement limits. The section also establishes minimum reimbursement floors: beginning January 1, 2027, CMS-certified critical access hospitals or sole community hospitals must be reimbursed at no less than 101% of CMS allowable costs for Medicare cost reporting; in-network primary care services and in-network nonfacility-based behavioral health services must be reimbursed at no less than the greater of 150% of Medicare or the contractor’s contracted rate. Contractors may use non–fee-for-service payment methods that incentivize quality or outcomes so long as they comply with the reimbursement requirements. Premiums must account for anticipated reimbursement changes, contractors must provide cost and quality information to the Health Care Authority on request, and contract terms cannot bar providing that information. The Health Care Authority may adopt rules to implement the section and may include fines and contract actions for enforcement, and it must report to the governor and relevant legislative committees by December 31, 2030, in consultation with the Office of the Insurance Commissioner. This is a substantive statutory change to payment and contracting law and a procedural change that authorizes administrative rulemaking and reporting; it does not create a new criminal offense. The text supplied leaves some details unspecified: the definitions of "primary care services" and "nonfacility-based behavioral health services" are delegated to the Health Care Authority but are not provided here; the method for calculating "the total amount Medicare would have reimbursed," the precise mechanism for how premiums must "take into account" reimbursement changes, the scope and format of cost and quality data required from contractors, and the specific enforcement rules, fines, or contract actions are not included in the extracted text.

If enacted, public-employee health plans would limit what insurers and third-party administrators pay for in-network hospital services by tying maximum payments to set multiples of Medicare rates (200% for general hospitals in 2027 falling to 190% in 2029, higher limits for specialty children’s hospitals), while guaranteeing minimum payments for CMS-certified rural hospitals and for in-network primary care and nonfacility behavioral health services (at least 150% of Medicare or the contractor’s contracted rate). That is likely to reduce revenue pressure on plans but shift payment levels for different providers: many general hospitals could see lower payments from these public plans, specialty children’s hospitals would have higher caps but still a ceiling, and rural, primary care, and nonfacility behavioral health providers would get stronger minimum payment protection. Insurers and third-party administrators must accept good-faith hospital contract offers in most cases, adjust premiums to reflect the new payment rules, respond to data requests from the Health Care Authority, and face potential enforcement actions and reporting requirements, so their administrative duties and pricing choices will change and public employers and employees may see premium adjustments. Key uncertainties remain that affect real-world outcomes: the law leaves important definitions and calculation methods (what counts as primary care or nonfacility behavioral health, how the comparable Medicare amount is computed, how premiums must "take into account" the changes, and the exact enforcement penalties) to the Health Care Authority or later rules, so the scale of payment shifts, premium impacts, and compliance costs will depend on those future specifications.