This bill amends RCW 74.09.5225 to change how medical assistance payments are made for hospitals certified by the Centers for Medicare and Medicaid Services as critical access hospitals (CAHs). It requires payments for services provided by CAHs to be based on allowable costs incurred during the year unless the CAH participates in a specified Washington rural health access preservation pilot. The amendment also limits additional payments by the Health Care Authority for the healthy options program to amounts no greater than the additional amounts per service paid under this section for other medical assistance programs, and it retains a moratorium on additional hospital participation in CAH payments that began July 24, 2005, while listing specified exceptions and eligibility for a CAH on an island operating within a public hospital district in Skagit County. The bill creates and governs the Washington rural health access preservation pilot, described as an alternative service and payment system to the federal CAH model. Participation is voluntary, and the Department of Health (DOH), the Health Care Authority (HCA), and the Washington State Hospital Association (WSHA) must identify pilot goals before any hospital joins and report interim progress and final results to the Legislature (interim by December 1, 2018; final within six months after pilot conclusion). For participating public health care service districts, payments must be based on an alternative, value-based payment methodology established by HCA, subject to appropriation, intended to adjust payments based on quality and value. Appropriated pilot funds are to assist transitions and are not to extend beyond an anticipated three-year pilot period. The amendment also provides a substantive payment change: beginning January 1, 2015, certain rural hospitals that meet all listed criteria (CMS sole community hospital certification as of January 1, 2013; DOH level III adult trauma designation as of January 1, 2014; fewer than 150 acute care licensed beds in fiscal year 2011; and ownership/operation by the state or a political subdivision) receive increased payments equal to 125 percent of their fee-for-service rates. Those enhanced payment rates are treated as the hospital’s Medicaid payment rate for other programs that pay hospitals according to Medicaid rates. Hospitals participating in the certified public expenditures program are not eligible to receive the increased inpatient reimbursement rates under the subsection describing the 125 percent payment. Affected entities named in the amendment include HCA, DOH, WSHA, the state office of rural health, CMS, public health care service districts, public hospital districts, hospitals certified as CAHs or as sole community hospitals, medical assistance programs (including the healthy options program), the certified public expenditures program, and the Legislature. The excerpt does not state an explicit effective date for the amendment, and it includes pilot reporting deadlines that are dated in the past relative to the bill’s 2026 passage; several referenced program terms (for example, "healthy options program," "public health care service districts," and details of the certified public expenditures program) are not defined in this excerpt.

If enacted, most critical access hospitals (CAHs) would continue to be paid Medicaid based on their allowable costs unless they opt into the Washington rural health access preservation pilot, which instead would pay participating public hospital districts under an alternative, value‑based method designed to sustain emergency and primary care and to reward quality over volume. The pilot is voluntary, time‑limited with transition funds expected for about three years, lets hospitals leave and resume CAH payments, and requires HCA, DOH, and WSHA to set goals and report progress (the text cites reporting deadlines that are already past, so the timing and current status of those reports or the pilot start/end are unclear). Certain small rural hospitals that meet narrow prior-date conditions (sole community hospital certification as of 1/1/2013, level III adult trauma by 1/1/2014, under 150 beds in FY2011, and publicly owned) would receive higher Medicaid payments equal to 125% of their fee‑for‑service rates, which likely raises their Medicaid revenue and can increase what other state or private payers pay when they base payments on Medicaid rates; however hospitals using the certified public expenditures program cannot get that inpatient increase. The changes mainly affect hospital revenues and payer relationships, and increase HCA/DOH/WSHA responsibilities to design, promote, and report on the pilot; the excerpt does not state an explicit effective date for these amendments and includes past reporting deadlines, creating uncertainty about implementation timing.