This bill amends RCW 74.09.5225 to change how the state pays rural hospitals and to establish the "Washington rural health access preservation pilot." It generally requires medical assistance payments for hospitals that are CMS-certified critical access hospitals to be made based on allowable costs except when a hospital participates in the new pilot. The bill creates the pilot as an alternative service and payment model to the CMS critical access hospital model, allows voluntary participation and exit procedures, and permits pilot hospitals that leave critical access hospital payments to later renew participation in those payment methodologies. The bill changes payment rules and procedures: beginning January 1, 2015, certain rural hospitals meeting specified criteria receive payments increased to 125% of their fee-for-service rates, and those enhanced rates count as the hospital's Medicaid rate for other programs; hospitals participating in the certified public expenditures program may not receive the increased inpatient rates. Payments to public health care service districts in the pilot must be based on an alternative, value-based payment methodology established by the Health Care Authority and are subject to appropriation. The pilot requires goals be identified by the Department of Health, the Health Care Authority, and the Washington State Hospital Association before hospitals join; it encourages other payers to adopt the methodology; it limits pilot transition funds to an anticipated three-year period; and it requires an interim legislative report by December 1, 2018 and a final report within six months after the pilot ends. Payments for services by CMS-designated rural emergency hospitals are expressly subject to appropriation. The bill also notes a moratorium on additional hospitals entering critical access hospital payments that began July 24, 2005, with an exception for hospitals that applied for CMS certification before January 1, 2005. Affected entities named in the text include the Health Care Authority, Department of Health, Washington State Hospital Association, State Office of Rural Health, public health care service districts, various rural hospital types, and medical assistance programs. The extracted text omits some details needed for full implementation: it does not define several referenced terms within this section (for example, exact statutory definitions of "rural emergency hospital," "sole community hospital," or "public health care service district"), it does not state the pilot’s actual start or end dates, and it does not include appropriation amounts or specific procedural steps for implementing the alternative payment methodology.

If enacted, Medicaid payments to rural hospitals certified as critical access hospitals will generally remain cost-based unless a hospital joins the Washington rural health access preservation pilot, which would instead pay participating public health care service districts using a new, value-focused payment method set by the Health Care Authority to sustain essential rural services and adjust payments by quality rather than volume. Certain qualifying rural hospitals already receive higher payments (set at 125% of fee‑for‑service rates effective January 1, 2015) and those enhanced rates are treated as the Medicaid benchmark for other payers; hospitals using the certified public expenditures program cannot get those inpatient increases, and payments for CMS‑designated rural emergency hospitals require separate appropriation. Rural hospitals and public health care districts are most affected: some hospitals will see increased revenue if they meet the historical eligibility for the 125% rate, while others may choose to leave cost‑based critical access payments and accept a time‑limited, value‑based payment model with limited transition funds, changing their revenue mix and incentives. The Department of Health, Health Care Authority, and Washington State Hospital Association must set pilot goals, payment rules, and report to the Legislature, but important details are missing—such as exact pilot start/end dates, appropriation amounts, and implementation steps—so how individual hospital budgets and payer adoption will ultimately change is uncertain.