wa-law.org > bill > 2025-26 > SB 5955 > Original Bill
The legislature finds that the administration of medicaid through managed care organizations has resulted in excessive administrative costs, reduced transparency in financial and clinical decision making, and barriers to timely access to medically necessary care. These outcomes have disproportionately impacted Native American communities, rural residents, individuals with complex health needs, and those navigating behavioral health and disability services.
The legislature further finds that a managed fee-for-service model, in which providers are paid directly by the state and care coordination is funded separately, will promote transparency, accountability, and equity. This model will reduce administrative overhead, restore public ownership of medicaid data, and ensure that care decisions are made in the best interest of patients rather than corporate shareholders.
The purpose of this act is to eliminate financial risk-bearing intermediaries from the state medicaid program and to establish a publicly accountable, managed fee-for-service system that centers care coordination, community oversight, and health equity.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Administrative services organization" means an entity contracted by the state to perform administrative functions related to medicaid including, but not limited to, claims processing, prior authorization review, customer service and grievance resolution, and data analytics and utilization monitoring. An administrative services organization shall not assume financial risk for the cost of medicaid services.
"Authority" means the Washington health care authority.
"Care coordination" means a set of services provided by physicians, nurses, community health workers, behavioral health professionals, and other licensed providers to ensure that patients receive appropriate, timely, and culturally responsive care across the continuum of health services.
"Department" means the Washington state department of health.
"Financial risk-bearing entity" means any organization that receives capitated payments or assumes financial liability for the cost of medicaid services, including managed care organizations, health maintenance organizations, and other entities operating under risk-based contracts.
"Local health jurisdiction" means a geographically designated body that is a local government agency and carries out a wide variety of programs to promote health, help prevent disease, and build healthy communities.
"Managed fee-for-service" means a medicaid delivery model in which providers are paid directly by the state through fee-for-service for clinical services, and care coordination is funded through a separate mechanism that does not involve capitation of a risk-bearing fiscal intermediary. Providers of direct care may not be paid with capitation except for a flat monthly care coordination fee paid to practices designated by a beneficiary as the coordinator of their care.
"Medicaid" means the joint federal-state program enacted under Title XIX of the social security act that provides health insurance coverage for adults and children with limited income and resources.
Beginning July 1, 2026, the authority may not initiate, renew, or extend any contract with a financial risk-bearing entity for the administration of medicaid services. This prohibition shall apply to all programs administered under the authority, including medical assistance programs under chapter 74.09 RCW.
All existing contracts with managed care organizations shall terminate no later than December 31, 2026.
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Beginning January 1, 2027, no fiscal intermediary shall be authorized to receive capitated payments or assume financial risk for medicaid enrollees under any program administered by the state.
Medicaid payments for health care services shall be made directly from the state to providers of care on a fee-for-service basis, with care coordination funded separately.
The authority may create a division to perform necessary administrative functions for the maintenance of the state medicaid plan or may contract with one or more administrative services organizations to perform nonrisk administrative functions necessary for the operation of the medicaid program. These functions shall include, but are not limited to:
Human review of prior authorization to ensure that medically necessary services are approved in a timely and equitable manner. AI generated denials of care are not allowed;
Reviewing prior authorizations to ensure that medically necessary services are approved in a timely and equitable manner. Prior authorization should be used as judiciously as possible and only for services prone to nonmedically necessary use. As a nonrisk contractor, the administrative services organization may not have a financial stake in medical necessity determinations;
Providing customer service and grievance resolution to assist enrollees in navigating benefits, resolving disputes, and accessing care;
Using data analytics to evaluate service patterns, identify gaps in care, and support continuous quality improvement;
Processing claims to ensure accurate and timely reimbursement for covered services; and
Providing administrative support for care coordination programs, including scheduling assistance, documentation infrastructure, and technical support for interdisciplinary teams engaged in patient-centered care.
Administrative services organizations may not establish or maintain separate provider networks. All medicaid enrollees shall access care through a unified statewide provider network that is publicly managed and inclusive of safety net providers, culturally competent practitioners, and geographically distributed services.
Administrative services organizations shall comply with all transparency and data-sharing requirements established by the authority, including public reporting of performance metrics, audit results, and stakeholder feedback.
The authority may give priority to an administrative services organization that is: (a) Owned and operated in the state of Washington; (b) located in an underserved community; and (c) is a not-for-profit entity.
The care coordination fund account is created in the state treasury. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only to compensate approved providers for documented care coordination services that improve health outcomes, reduce unnecessary utilization, and promote culturally responsive care. These services shall include, but are not limited to, patient navigation, transportation services for health care, interdisciplinary care planning, chronic disease management, specialist consultations to primary care, programs for patients with specialized care needs including for those with serious mental illness and substance use disorders, behavioral health integration, and culturally competent outreach.
The authority shall provide flat care coordination payments to any primary care practice designated by a medicaid enrollee as their source of coordinated care. Community-based care coordination services shall be funded through the care coordination fund account based on the cost of operations and community need, and not with capitation based on defined members that would shift insurance risk onto care providers, require risk adjustment, or impose undue administrative burden.
The authority shall develop and publish performance metrics to evaluate the effectiveness of care coordination services. These metrics shall include, but are not limited to:
Data analytics and utilization monitoring to evaluate service delivery;
Identification of gaps in care; and
Support for continuous quality improvement, patient satisfaction, reduction in avoidable hospitalizations, improved chronic disease management, and culturally appropriate service delivery.
The authority shall report annually to the legislature on expenditures from the care coordination fund account, provider participation, patient outcomes, and recommendations for improvement.
Physicians and other independent practitioners shall be paid directly by the authority for clinical services provided to medicaid enrollees. Payments shall be made on a fee-for-service basis and shall be equal to the applicable medicare rates for the same services.
In addition to standard fee-for-service payments, the authority shall provide a flat care coordination fee to eligible providers for each medicaid enrollee who formally designates that provider or practice as their primary source of coordinated care. This flat care coordination fee shall be paid from the care coordination fund account established under section 5 of this act.
Hospitals and other providers shall be reimbursed directly by the state through fee-for-service payments. Payment methodologies shall be designed to promote financial stability, access to essential services, and alignment with this chapter.
All care coordination services, whether provided by independent practitioners or community-based entities, shall be funded through the care coordination fund account.
The department shall require local health jurisdictions to serve as localized oversight bodies that monitor community health needs, assess disparities in access and outcomes, and facilitate continuous feedback between providers, patients, and the authority. A local health jurisdiction shall:
Identify gaps in service delivery;
Recommend culturally responsive best practices;
Support the implementation of care coordination strategies aligned with the goals of this chapter; and
Report these to the authority and to their respective county councils at least annually.
A local health jurisdiction shall convene no less than once per calendar quarter and shall include representation from primary care providers, community health workers, behavioral health specialists, patient advocates, and local public health officials. The department shall ensure that jurisdiction membership reflects the geographic, cultural, and linguistic diversity of the region served.
The department shall provide operational funding, technical assistance, and administrative support to each local health jurisdiction. Each jurisdiction shall submit an annual report to the department summarizing its findings, recommendations, and stakeholder engagement activities.
All contracts entered by the authority with administrative services organizations shall be in compliance with chapters 70.02, 19.373, and 42.56 RCW.
The state shall retain full and exclusive ownership of all medicaid-related data including, but not limited to, utilization records, cost reports, provider directories, and enrollee demographics. No private entity shall assert proprietary rights over data generated through publicly funded programs.
The authority shall develop and maintain a publicly accessible data dashboard that includes deidentified medicaid data for research, oversight, and community engagement. The dashboard shall be updated quarterly and shall include metrics related to access, quality, equity, and cost. The authority shall also publish an annual data report summarizing trends, disparities, and recommendations for improvement.
Public health functions, including vaccination programs, disease surveillance, emergency response coordination, and health education initiatives, shall remain under the direct administration of their current oversight departments. These functions shall not be delegated to any administrative services organization, contractor, or third-party entity.
The authority, in collaboration with the department, shall ensure that public health operations are integrated with medicaid services where appropriate, and that coordination between agencies supports continuity of care, emergency preparedness, and population health management. The authority and department shall maintain staffing, infrastructure, and funding necessary to fulfill their public health responsibilities without reliance on privatized intermediaries.
The legislature shall appropriate funds necessary to implement the provisions of this chapter including, but not limited to:
Transitioning infrastructure and administrative systems from risk-bearing managed care organizations to nonrisk-bearing administrative services organizations;
Establishing and maintaining the care coordination fund, including provider outreach, enrollment, and performance monitoring;
Supporting local health jurisdictions including staffing, meeting facilitation, and reporting functions; and
Expanding provider recruitment, training, and retention programs, with emphasis on culturally competent care and service to underserved populations.
The authority shall submit a detailed budget and implementation timeline to the legislature no later than December 1, 2026. The budget shall include projected costs, staffing requirements, technology upgrades, stakeholder engagement plans, and contingency strategies to ensure uninterrupted service delivery.
The authority shall submit an annual report to the legislature no later than December 1st of every year. The report shall include detailed information regarding:
Income and expenditures related to medicaid administration and service delivery;
The quality of care provided to medicaid beneficiaries, including performance metrics and patient outcomes;
Challenges encountered by providers, including physicians, hospitals, and community-based organizations; and
Recommendations for program improvement, policy adjustments, and legislative support.
The authority shall consult with local health jurisdictions, providers, and patient advocacy groups in preparing the report. The report shall be made publicly available and serve as a primary tool for legislative oversight and continuous improvement of the medicaid program.
Full implementation of all provisions shall be completed by January 1, 2027. The authority shall submit quarterly progress reports to the legislature beginning March 1, 2027, detailing milestones achieved, challenges encountered, and adjustments to ensure progress toward the goals outlined in this chapter. The authority shall continue to work with the universal health care commission to monitor implementation, provide feedback, and support continuous improvement throughout the transition period.