SB 5955
In CommitteeSenate
Medicaid fee-for-service
Concerning the medicaid deprivatization act.
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 replaces Washington’s current Medicaid managed care system with a publicly administered fee-for-service model. It eliminates private risk-bearing intermediaries, pays providers directly, funds care coordination separately, and strengthens transparency, data access, and community oversight—especially for underserved populations.
- Ends contracts with financial risk-bearing entities (like managed care organizations) by December 31, 2026, and prohibits new or renewed contracts starting July 1, 2026.
- Establishes a managed fee-for-service model where providers are paid directly by the state for clinical services (at Medicare rates), and care coordination is funded separately—not through capitation.
- Creates a Care Coordination Fund to pay providers and community-based organizations for services like patient navigation, transportation, chronic disease management, and behavioral health integration.
- Requires the state to retain full ownership of all Medicaid data and mandates a publicly accessible data dashboard updated quarterly with metrics on access, quality, equity, and cost.
- Empowers local health jurisdictions to serve as community oversight bodies, meeting quarterly and advising the state on equity gaps and best practices.
- Prohibits AI-generated prior authorization denials and requires human review to ensure timely, equitable access to medically necessary care.
Who is affected
- Health care providers — Providers (doctors, hospitals, clinics, community health workers, etc.) will be paid directly by the state for clinical services and care coordination, rather than through managed care organizations. They will receive fee-for-service payments equal to Medicare rates and may earn a flat care coordination fee for designated patients.
- Medicaid beneficiaries — Medicaid enrollees will continue to receive health services, but care coordination will be more directly supported and tied to their choice of primary care provider. Access to services—especially for rural, Native American, behavioral health, and disability communities—is intended to improve through reduced administrative barriers and equity-focused oversight.
- Local health jurisdictions — Local governments that operate public health programs (e.g., county health departments) will gain formal roles in monitoring community health needs, identifying disparities, and advising the state on care improvements.
- Managed care organizations — Private managed care organizations and other risk-bearing intermediaries will no longer be allowed to manage Medicaid services or receive capitated payments. Their current contracts will end by December 31, 2026.
- State agencies (Health Care Authority and Department of Health) — State agencies—especially the Washington Health Care Authority and Department of Health—will take on expanded roles in direct administration, data management, and oversight of care coordination, with new responsibilities for transparency and equity.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The Care Coordination Fund will directly fund patient navigation, transportation, chronic disease management, and behavioral health integration—services that disproportionately benefit low-income, rural, Native American, and disability communities by removing structural access barriers.
HealthcarePeopleRef: Sec. 5(1)Paying providers directly at Medicare rates (not capitated) eliminates financial incentives to deny or delay care, improving equity for beneficiaries with complex or stigmatized conditions (e.g., mental health, substance use) who often face gatekeeping under managed care.
HealthcarePeopleRef: Sec. 6(1)Mandating local health jurisdictions as oversight bodies with required community representation (including patient advocates, community health workers, and behavioral specialists) strengthens accountability and ensures equity gaps are identified and addressed at the community level.
Public SafetyPeopleRef: Sec. 7(1)-(2)A publicly accessible, quarterly updated data dashboard on access, quality, equity, and cost increases transparency and enables community-driven accountability—especially valuable for historically marginalized groups excluded from prior decision-making processes.
HealthcarePeopleRef: Sec. 8(3)Banning AI-generated prior authorization denials and requiring human review reduces algorithmic bias and ensures medically necessary care is not denied due to automated errors or profit-driven incentives—directly benefiting vulnerable populations disproportionately affected by prior authorization denials.
HealthcarePeopleRef: Sec. 4(1)(a)
Potential Concerns (5)
Transitioning to a publicly administered fee-for-service model will require significant upfront state investment in infrastructure, administrative systems, and provider recruitment, potentially diverting funds from other critical health services during the transition period. This could strain the state budget and delay improvements in other public health programs.
HealthcarePeopleRef: Sec. 3(2)Prohibiting AI-generated prior authorization denials and requiring human review may improve equity and reduce inappropriate denials, but it will likely increase administrative delays and processing times, potentially slowing access to time-sensitive care for patients in acute need.
Public SafetyPeopleRef: Sec. 4(1)(a)The requirement to expand provider recruitment and retention programs—with emphasis on culturally competent care and underserved populations—will be extremely challenging under Medicare-rate reimbursement, which is below commercial rates and may not attract sufficient provider participation, especially in rural and specialty areas.
HealthcarePeopleRef: Sec. 10(1)(d)Community-based organizations and care coordination providers will receive flat-rate compensation based on operational cost and community need—not capitation—limiting their revenue predictability and scalability, potentially reducing investment in innovation or workforce expansion.
Business & EmploymentPeopleRef: Sec. 5(2)While local health jurisdictions gain formal oversight roles, the bill does not guarantee dedicated, sustained funding beyond initial operational support—risking under-resourced jurisdictions that cannot meet expanded reporting, convening, and technical assistance responsibilities without additional state or federal grants.
Local GovernmentLean peopleRef: Sec. 7(3)
Who Is Most Affected
Medicaid providers (especially safety-net clinics, community health centers, and rural practices) will benefit from direct reimbursement and care coordination fees, but may struggle with Medicare-rate reimbursement levels and increased administrative burden without risk-sharing buffers. Mixed impact.
Medicaid beneficiaries—particularly low-income, rural, Native American, and disabled individuals—are likely to benefit from reduced administrative barriers, improved care coordination, and more equitable access to behavioral health and chronic disease services. Positive impact.
Local health jurisdictions gain formal oversight authority and expanded roles in equity monitoring, but success depends on sustained funding and staffing—currently uncertain. Mixed impact.
Managed care organizations (MCOs) will lose their role as financial intermediaries and capitated payment recipients, representing a major structural shift that negatively affects their business model and revenue streams. Negative impact.
State agencies (HCA and DOH) will assume expanded administrative and oversight responsibilities, increasing their workload and budget needs—but also enhancing their ability to enforce equity and transparency standards. Mixed impact.