Legislature passes bill mandating greater transparency in healthcare

Last week, the Washington state Legislature sent a bill to Gov. Jay Inslee’s desk that would increase the transparency of the state’s healthcare providers.

The bill, HB 1272, is part of Washington state’s broader response to the global COVID-19 pandemic and seeks to address an issue that has plagued pandemic responses on the state and national level. COVID-19 hit the hospital industry extremely hard, and front-line workers, such as nurses and janitors. have borne the brunt, suffering pay cuts, furloughs and job losses as hospitals have struggled to stay financially afloat.

A number of investigations have revealed, however, that many hospitals across the country have enacted these cost-cutting measures unnecessarily. Last year, The New York Times reported that more than half of the nation’s 60 largest healthcare companies laid off or furloughed staff during the pandemic, despite the fact that they were sitting on billions of dollars of cash reserves and collectively received over $15 billion from the federal government, courtesy of the Coronavirus Aid, Relief and Economic Security Act.

Washington state has also been affected by unnecessary hospital cutbacks during the pandemic. During a hearing of the Senate Health and Long-Term Care Committee, Yakima City Councilmember Dr. Kay Funk told senators that the measures in HB 1274 might have prevented a hospital closure in her city. Dr. Funk recounted how the hospital’s executives “disingenuously claimed that it was impossible for a hospital to survive in a rural area with a high percentage of Medicare and Medicaid patients.”

In reality, she said, they could have remained open.

“Actually, they were doomed by their own negligent failure to collect around $157 million in accounts receivable, earned by the labor of their employees,” she said.

Hospitals and other healthcare providers are already required by state law to divulge an array of financial data to the Washington Department of Health. HB 1272 obliges hospitals to provide more data to the DOH, including expense reports for a wide variety of categories — from blood supplies to laundry fees. The bill also closes some previously existing loopholes that allowed hospitals to obscure their figures; for example, hospitals must now report fees from patients treated by off-campus clinics or providers.

HB 1272 also seeks to address another issue that the COVID-19 pandemic has exacerbated — racial inequalities in the healthcare system.

While it is widely understood in the medical community that people of color have less access to quality treatment and poorer-than-average health outcomes, the lack of data on the issue puts up hurdles for lawmakers in search of solutions.

Rep. Nicole Macri (D-Seattle), the bill’s main sponsor, aims to bridge the information gap by requiring hospitals to provide patient demographics in discharge reports. Lawmakers hope this information will help guide future laws to address health inequalities between Washingtonians.

“We know some Washingtonians are underserved by the system, particularly those who are low income or in rural areas,” Macri said during testimony before the Senate Health and Long-Term Care Committee. “We have seen through COVID that there are intense racial disparities in terms of who has access to healthcare and healthcare outcomes for individuals. This bill allows us to have greater transparency and insight into the finances of our growing, complex healthcare delivery system, and it also seeks to address how we can deal with racial inequalities in healthcare settings.”

Macri’s bill garnered support among many hospital workers.

“Financial incentives drive so many decisions in healthcare, and transparency is really necessary to help show where financial decisions really supersede patient safety decisions,” said Justin Gill of the Washington State Nurses Association.

Opposition to the bill has focused on the impact it would have on struggling smaller hospitals. The Washington State Hospital Association expressed concerns to lawmakers that companies without efficient data-processing systems might be penalized if they report their data too slowly, as timelines are built into the bill.

Republican state lawmakers have also critiqued the bill for adding a burden to already-struggling small businesses. When the bill went to the House floor in late February, Rep. Joe Schmick (R-Colfax) argued that the bill should “segregate out smaller hospitals a bit more — one size does not always fit all.”

Sen. Ron Muzzall (R-Oak Harbor) expressed worries about overburdening hospitals.

“I guess this could fall into the category of ‘don’t let a good pandemic go to waste,’ ” he said. “I understand the collection of some of this information. It just seems like an awfully long list to be piled on institutions that are just recovering from their response.”

On April 10, the Senate voted 27-21 to pass the bill along mainly partisan lines. Sen. Tim Sheldon (D-Mason County) broke ranks with his party to vote against the bill.

Speaker of the House Laurie Jinkins signed the bill April 14, after the House of Representatives approved amendments made by the Senate. Inslee could sign the bill into law as early as this week.

In other news in Olympia, lawmakers are rushing to complete a slate of police reform bills in the final few days of the legislative session. On April 14, two laws were passed. One was for creating an office to independently investigate serious use-of-force incidents, and the other was a mandate for a statewide database to document such incidents. Other police reform bills are still moving through the Legislature.Washington’s legislative session ends April 25.