ESSB 6194
SignedSenate
Allowable costs/hospital
Allowing payments to be made based on allowable costs for services provided by any rural hospital that is located on a federally recognized Indian reservation. (REVISED FOR ENGROSSED: Allowing payments to be made for services provided by any rural hospital that is located on a federally recognized Indian reservation.)
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 expands eligibility for Medicaid payments based on allowable costs to rural hospitals located on federally recognized Indian reservations, allowing them to receive more stable funding regardless of whether they are certified as critical access hospitals. It also clarifies rules for the state’s rural health pilot program and reiterates existing payment rules for other rural hospitals.
- Allows rural hospitals located on federally recognized Indian reservations to receive Medicaid payments based on allowable costs (rather than standard fee-for-service rates) if they meet specific bed-size and certification criteria.
- Creates two eligibility paths for Indian reservation hospitals: (1) hospitals certified as critical access hospitals on or after January 1, 2026 qualify under existing critical access hospital payment rules; (2) hospitals *not* certified by that date qualify if they have no more than 25 inpatient beds (excluding psychiatric beds).
- Clarifies that hospitals in the Washington Rural Health Access Preservation Pilot may rejoin critical access hospital payment methodologies at any time if they leave the pilot, and outlines requirements for the pilot—including value-based payments and reporting to the legislature.
- Maintains the existing moratorium on new hospitals joining critical access hospital payments, except for those that applied for certification before January 1, 2005, or qualify under the new Indian reservation provisions.
- Requires the Health Care Authority to use value-based payment methods for hospitals in the rural health access preservation pilot, adjusting payments based on quality and outcomes rather than volume of services.
Who is affected
- Rural hospitals on Indian reservations certified as critical access hospitals on or after 1/1/26 — Rural hospitals located on federally recognized Indian reservations that are newly certified as critical access hospitals on or after January 1, 2026, will be eligible for the same payment rules as other critical access hospitals (i.e., payments based on allowable costs).
- Rural hospitals on Indian reservations not certified as critical access hospitals on or after 1/1/26 — Rural hospitals on Indian reservations that are *not* certified as critical access hospitals on or after January 1, 2026, but have 25 or fewer inpatient beds (excluding psychiatric beds), will be eligible for payments based on allowable costs instead of the standard fee-for-service rates.
- State agencies and hospital associations involved in the rural health pilot — The Washington State Department of Health, Health Care Authority, and Washington State Hospital Association will work together to develop and manage the Washington Rural Health Access Preservation Pilot, including setting goals and reporting progress.
- Medicaid beneficiaries in rural communities — Medicaid recipients in rural areas served by qualifying hospitals may gain more consistent access to care due to improved payment stability for providers.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (4)
Allows rural hospitals on federally recognized Indian reservations certified as critical access hospitals on or after Jan 1, 2026 to receive payments based on allowable costs—providing more stable and potentially higher reimbursement than standard fee-for-service, directly supporting hospital viability and continuity of care for Medicaid beneficiaries in underserved tribal communities.
HealthcarePeopleRef: Sec. 1, RCW 74.09.5225(4)(a)Extends allowable-cost-based Medicaid payments to rural hospitals on reservations with ≤25 beds (even if not certified as critical access hospitals), significantly improving financial predictability for small, high-need facilities that serve tribal populations and are often excluded from other rural hospital support programs.
HealthcarePeopleRef: Sec. 1, RCW 74.09.5225(4)(b)Requires value-based payments for pilot hospitals, adjusting reimbursement based on quality and outcomes rather than volume—aligning incentives toward preventive care, chronic disease management, and better population health, which benefits Medicaid beneficiaries in rural communities.
HealthcarePeopleRef: Sec. 1, RCW 74.09.5225(2)(b)(v)Permits hospitals that leave the rural health pilot to rejoin critical access hospital payment methodologies at any time, providing flexibility and reducing risk for hospitals considering participation—encouraging adoption of value-based models without permanent commitment.
HealthcarePeopleRef: Sec. 1, RCW 74.09.5225(2)(b)(ii)
Potential Concerns (3)
Expands Medicaid payments based on allowable costs to rural hospitals on Indian reservations with ≤25 beds, but this benefit is only available to a very small subset of rural hospitals—those that are both geographically isolated (on reservations) and physically small—limiting broader rural hospital access improvements.
HealthcarePeopleRef: Sec. 1, RCW 74.09.5225(4)(b)The Washington Rural Health Access Preservation Pilot is capped at three years and must use only specifically appropriated funds, meaning long-term sustainability is uncertain and dependent on future legislative funding—creating instability for participating hospitals and communities.
HealthcareLean peopleRef: Sec. 1, RCW 74.09.5225(2)(b)(vi) (pilot sunset and funding cap)The bill places administrative burden on state agencies (DOH, HCA) and the Washington State Hospital Association to design, manage, and report on the pilot program, which may divert resources from other rural health priorities—especially for small state agencies with limited staffing.
Local GovernmentLean peopleRef: Sec. 1, RCW 74.09.5225(2)(b)(i)
Who Is Most Affected
Rural hospitals on Indian reservations with ≤25 beds gain direct financial relief through allowable-cost-based Medicaid reimbursement, improving operational stability and ability to retain staff and services. This is especially critical for small tribal hospitals that often operate at a loss under standard fee-for-service.
Medicaid beneficiaries in rural tribal communities benefit from improved provider stability and continuity of care, as hospitals can better plan staffing and services when payments are based on actual costs rather than fluctuating fee schedules. This may reduce emergency department overcrowding and improve access to primary care.
State agencies (HCA, DOH) and the Washington State Hospital Association gain new responsibilities to design and evaluate the pilot, which could strengthen data infrastructure and inform future rural health policy—but may strain limited staff resources and require additional oversight capacity.
Rural hospitals *not* on reservations or with >25 beds see no direct benefit, and the moratorium on new CAH participation remains in place—meaning this bill does not address broader rural hospital closures outside tribal lands, potentially widening disparities.
Tribal governments may benefit indirectly through stronger health infrastructure on reservations, supporting sovereignty over health services—but the bill does not explicitly involve tribal governments in program design or governance, limiting self-determination.