This bill (House Bill 1555, 69th Legislature, 2025) amends the existing nursing facility payment law (RCW 74.46.561 and 2023 c 475 s 942), creates a new section, and includes an emergency clause making the act effective immediately. It modifies the payment system for nursing homes by requiring that direct care and indirect care payment components be rebased annually beginning July 1, 2025, with the July 1, 2025 rates to be based on 2023 calendar year cost reports. The bill also continues and specifies capital, direct care, and indirect care calculation rules that were originally adopted effective July 1, 2016, including a fair market rental method for capital (using RSMeans construction data), a 1.5% annual depreciation, a 7.5% rental rate, equipment and land allowances, square-footage limits, and annual rebasing of capital allocations. The measure changes procedural rules for rate setting and quality incentives: direct care allocations are adjusted for resident acuity every six months and regionally by a county wage index; direct care rates are capped relative to a provider’s base-year allowable costs with transitional caps for FY2023–FY2025 (165%, 153%, 142% respectively, unless the provider is below the minimum staffing standard); indirect care uses minimum occupancy assumptions that vary by fiscal year (FY2023 75%, FY2024 80%, FY2025 80%); quality incentive enhancements (1%–5% of the statewide average daily rate) are allocated by a tiered facility quality score and must be adjusted semiannually on July 1 and January 1. Facilities lacking sufficient three-quarter average CMS quality data are assigned tiers based on CMS five-star ratings. Starting July 1, 2017, two additional quality measures are added: percentage of short-stay residents newly receiving an antipsychotic medication and direct care staff turnover (using PBJ or cost report data). The bill also includes procedural and fiscal provisions: the department must allocate the full biennial appropriation for the quality incentive program, continue reimbursement related to the safety net assessment under chapter 74.48 RCW, use reconciliation and settlement funds for technical assistance, training, or quality enhancement per RCW 74.46.022(6), and report to legislative committees by December 1, 2020 on rates versus costs for 2017–2019. After rebasing the department must confirm the statewide average daily rate increased at least as much as the skilled nursing facility market basket index (or comparable index) and may increase rates by any shortfall. The text provided does not name the specific department responsible, omits the full new section created by the act, and cuts off mid-sentence in one subsection, so some referenced subsections, definitions, and the identity of the department are not present in the extracted facts.

If enacted, nursing homes would see their Medicaid payment rates for direct and indirect care recalculated every year based on the most recent cost reports (with the July 1, 2025 rates tied to 2023 costs) and the agency administering the program must confirm rates keep pace with inflation using a CMS nursing facility inflation index and add money if they do not. That change makes payments more responsive to recent costs and inflation, and it keeps a fully funded, tiered quality incentive in place that is adjusted twice a year and now includes measures for antipsychotic use and direct care staff turnover; funds from prior reconciliation processes must be used for training or quality enhancements. The groups most affected are nursing facility operators, who will likely see more frequent changes to revenue (up or down depending on their recent reported costs), stronger incentives to meet quality and staffing measures, and added reliance on timely cost reports and CMS/PBJ data to avoid lower tiers or missed payments; the state department named in the bill takes on ongoing technical work to rebase rates, set thresholds, and report to the legislature. Important implementation details—such as the exact department responsible, precise calculation mechanics, the size of the quality enhancement, and how some referenced caps and add‑ons interact—are not included in the extracted text, so some practical effects cannot be fully determined from these facts alone.