This bill amends existing law at RCW 74.09.5225. It changes how Medicaid (medical assistance program) payments are made to rural hospitals certified by CMS as critical access hospitals by requiring payments to be based on allowable costs incurred during the year, unless the hospital participates in a newly described Washington rural health access preservation pilot. It also places a moratorium (effective July 24, 2005) on additional hospital participation in the critical access hospital payment method, with an exception for rural hospitals that applied for CMS certification prior to January 1, 2005 but had not completed certification. The bill establishes the Washington rural health access preservation pilot, setting eligibility and operational rules and assigning duties to the Department of Health, the Health Care Authority, and the Washington State Hospital Association for pilot formation, participation, information provision, payment methodology, reporting, and use of appropriated funds. The statutory text includes historical reporting deadlines (interim progress to the Legislature by December 1, 2018, and a final report no later than six months after the pilot concludes) and states pilot funding is intended to assist transition and not extend beyond the anticipated three-year pilot period; the pilot’s actual start and end dates and current status are not provided here. Separately, the law provides that beginning January 1, 2015, certain rural hospitals that meet four specified criteria receive payments increased to 125 percent of the hospital’s fee-for-service rates, and those enhanced payment rates are to be treated as the hospital’s Medicaid payment rate for other programs that pay according to Medicaid rates. The provision bars hospitals participating in the certified public expenditures program from receiving the subsection (3) increased inpatient reimbursement rates, and it states payments for services provided by CMS-designated rural emergency hospitals are subject to appropriation. The text does not define key terms used (for example, “allowable costs,” “medical assistance programs under this chapter,” “healthy options program,” or “rural emergency hospital”) and does not specify appropriation amounts or the current status of the pilot.

If enacted, Medicaid payments to hospitals in rural Washington would shift in a few concrete ways: certified critical access hospitals would generally be paid based on their allowable annual costs unless they join a specified rural health pilot, and a subset of rural hospitals that meet historical certification, trauma, and bed‑count cutoffs would have received higher Medicaid payments starting January 1, 2015 (125% of their fee‑for‑service rates), with that elevated rate used as the Medicaid rate for other programs that follow Medicaid. Hospitals that participate in the certified public expenditures program cannot get the enhanced inpatient rates, and payments for newly designated rural emergency hospitals would depend on separate legislative appropriations, making their funding more uncertain. The groups most affected are rural and critical access hospitals (including sole community hospitals and rural emergency hospitals), the Health Care Authority, Department of Health, the State Office of Rural Health, and the Washington State Hospital Association, which must create and run the pilot, provide information, and report to the Legislature. A moratorium dating to 2005 limits new hospital conversions to critical access status except for pre‑2005 applicants, which reduces options for hospitals seeking that designation. The bill sets aside limited pilot funds intended only for a roughly three‑year transition and imposes reporting deadlines, but key details are missing here — the full definitions of terms, exact appropriation amounts for rural emergency hospitals, and the pilot’s actual start/end status are not provided, so the practical funding availability and operational timeline remain uncertain.