SB 5407
In CommitteeSenate
Nursing home rate rebase
Delaying the rebasing of the nursing home payment rates to 2028.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill delays the next scheduled update (called a 'rebase') of Washington State’s nursing home payment rates from 2026 to 2028, keeping current rates—including recent inflation adjustments—in place through 2027. It preserves the existing rate structure and quality incentives while ensuring future rate updates still meet inflation benchmarks.
- Delays the next scheduled 'rebase' (comprehensive update) of nursing home payment rates from July 1, 2026 to July 1, 2028.
- Extends current rates—including a 4.7% inflation adjustment for 2024 and a 5% adjustment for 2025—through the 2025–2027 fiscal biennium, with no changes until fiscal year 2028.
- Maintains the existing rate structure with three components: direct care, indirect care, and capital, plus a quality incentive payment based on facility performance.
- Continues the quality incentive program, where facilities earn bonuses (up to 5% of average daily rate) based on performance on quality measures like falls, infections, and staff turnover.
- Requires the state to ensure the statewide average daily rate increases at least as much as inflation (using CMS’s market basket index) after any future rebase.
- Prohibits rate cuts for any facility exceeding 1% in 2016, 2% in 2017, or 5% in 2018—though these protections no longer apply after 2018.
Who is affected
- Nursing home operators — Nursing homes (facilities) that provide long-term care to residents, especially those serving Medicaid patients; they may see changes in how their reimbursement rates are calculated and when those rates are updated.
- Nursing home residents — Residents of nursing homes, especially those with higher medical needs (high acuity), as rate changes can affect staffing levels, quality of care, and availability of services.
- State agencies (e.g., Department of Health, Office of Financial Management) — State government agencies responsible for managing Medicaid and long-term care programs, including the Department of Health and Office of Financial Management, which must implement and monitor the new rate system.
- State taxpayers — Taxpayers and state budget funders, as changes in nursing home reimbursement affect state Medicaid spending and overall budget allocations.
Pro/Con Analysis
Potential Benefits (5)
The bill preserves the 4.7% and 5% inflation adjustments for 2024–2025 through the 2025–2027 biennium, helping facilities maintain current staffing levels and avoid abrupt service reductions—directly supporting care continuity for vulnerable residents, especially those on Medicaid.
HealthcarePeopleRef: Sec. 1(8)(c) and Summary (inflation adjustments for 2024–2025)The continuation of the quality incentive program—up to 5% of average daily rate—for facilities meeting performance thresholds provides financial reinforcement for quality improvements (e.g., falls reduction, infection control), encouraging better outcomes for residents across the state.
HealthcarePeopleRef: Sec. 1(6)(a)–(f)By avoiding a 2026 rebase, the state prevents immediate budgetary shock and gives counties and providers time to prepare for future adjustments—reducing disruption to local health systems and long-term care infrastructure during a period of labor market volatility.
Local GovernmentPeopleRef: Sec. 1(8)(c)Nursing home operators—especially small- and mid-sized, Medicaid-dependent providers—avoid the administrative and financial burden of a sudden rebase, preserving operational stability and reducing risk of closures or consolidation in competitive markets.
Business & EmploymentLean peopleRef: Sec. 1(8)(c)The bill retains the statutory cap on rate reductions for facilities (1% in 2016, 2% in 2017, 5% in 2018), though these protections expired after 2018—so this provision has no current effect; it is preserved in text but functionally neutral.
Business & EmploymentRef: Sec. 1(10)
Potential Concerns (5)
Delaying the next rebase until 2028 freezes the rate methodology in place through 2027, preventing updates to cost components (e.g., wage indices, facility age depreciation, staffing thresholds) that reflect current economic and operational realities—potentially leading to underpayment for facilities serving high-acuity or high-wage-area residents, which may reduce access to care or quality in vulnerable communities.
Public SafetyRef: Sec. 1(8)(c)While the bill avoids immediate rate cuts, it defers structural adjustments that could better align payments with rising labor and capital costs; this increases long-term fiscal risk and may force future rate reductions or service cuts, disproportionately affecting Medicaid-dependent facilities and residents who rely on stable staffing and care access.
HealthcarePeopleRef: Sec. 1(8)(c) and Fiscal ImpactThe bill extends the 2025 cap on direct care rates (142% of base-year costs) and maintains reduced indirect care occupancy assumptions (80%) through 2027, which suppresses reimbursement for facilities with higher-than-average costs—particularly those serving complex Medicaid populations—potentially reducing service availability in underserved areas.
HealthcareLean peopleRef: Sec. 1(3)(b)(iii) and Sec. 1(4)(b)(iii)By delaying rebasing, the state avoids short-term budget adjustments but accumulates unaddressed cost pressures; this increases the likelihood of future budgetary trade-offs that could reduce state support for other critical services (e.g., home- and community-based services), shifting burden to counties and families.
Local GovernmentPeopleRef: Sec. 1(8)(c)Residents in nursing homes—especially those with high acuity, cognitive impairments, or limited family support—are at higher risk of reduced care quality if facilities face sustained underpayment; staffing, infection control, and falls prevention may deteriorate as margins compress without timely rate adjustments.
HealthcarePeopleRef: Sec. 1(8)(c)
Who Is Most Affected
Medicaid-dependent nursing home operators—especially small- and mid-sized, rural, or nonprofit providers—benefit from rate stability and preserved inflation adjustments, reducing risk of closure or service cuts. However, they may face longer-term margin pressure if costs outpace frozen rates.
Residents—particularly those with high acuity, dementia, or limited family support—benefit from preserved staffing and quality incentives, but are at higher risk if underpayment accumulates and leads to reduced care access or quality decline by 2028.
The Department of Health and Office of Financial Management gain short-term budget predictability and avoid complex rebase implementation in 2026, but face increased fiscal risk and future pressure to fund rate adjustments retroactively or cut other long-term care programs.
State taxpayers benefit from delayed fiscal shock and avoided immediate budget reallocations, but may bear long-term costs if future rebases require large catch-up adjustments or if reduced provider capacity shifts residents to more expensive hospital or emergency care.