Health Care Cost Transparency

Washington's health care cost transparency board was created in 2020 to help reduce the growth in the health care costs statewide. Learn more about the board on this page. The WSMA will keep members apprised of the board's work, which stands to impact physician practices across Washington, through its regular communications.

Background

In response to concerns from constituents about the rising cost of health care, the Washington State Legislature passed House Bill 2457 in 2020 directing the state Health Care Authority to create a health care cost transparency board. The board is intended to help reduce the state's health care cost growth by:

• Determining the state's total health care expenditures.
• Setting a health care cost growth benchmark for providers and payers.
• Identifying cost trends and cost drivers in the health care system.
• Reporting annually to the Legislature, including providing recommendations for lowering health care costs.

The board will publicly identify health care providers, including health systems and physician practices, and payers that exceed the established benchmark with the aims of:

1. Making health care costs more transparency to the public and policymakers.
2. Encouraging providers and payers to keep costs at or below the benchmark.
3. Reducing the overall trend of health care cost growth in Washington state.

The Board is required to review and consult with entities that exceed the benchmark before publicly identifying them.

There is currently no enforcement mechanism or penalty for providers or payers that exceed the benchmark.

Five other states, including Connecticut, Delaware, Massachusetts, Oregon, and Rhode Island, have created similar entities that seek to limit health care cost growth. As with these other states, the WSMA expects the board's reports to have significant influence on state health care policy decisions.

Deliverables

By Aug. 1, 2021, the board must create a preliminary report that addresses progress made toward establishing the board and an advisory committee.

Beginning Aug. 1, 2022, the board must provide an annual report, which will include the total expenditures for the most recent year for which data is available, and establish a benchmark for the following year.

Structure

The board is comprised of 14 members with representing various government agencies and industries. In general, most members of the board represent purchasers of health care.

Physicians, providers, health systems, and insurance carriers do not have representation on the board. Rather, these perspectives are considered during meetings of an advisory committee of health care providers and carriers, a subcommittee of the board, and then reported out by staff and a member of the advisory committee who serves as a non-voting member of the board.

The board has also created an advisory committee on data issues that includes a WSMA representative.

Work to Date of the Board

The board has been meeting monthly since February 2021. Initial activity focused on creating the advisory committee, the data committee, and understanding the charge of the board as laid out in HB 2457. The board also received presentations focused on progress in other states.

At the September 2021 meeting, the Board voted to set the following total cost of healthcare benchmark:

• 2022-2023: 3.2%
• 2024-2025: 3.0%
• 2026: 2.8%

The board is currently considering mechanisms that would trigger a review of the benchmark.

The WSMA believes that for this endeavor to be successful, benchmarks should be meaningful, supported by evidence, and achievable to maintain credibility and garner confidence and support from stakeholders. While we understand and share the desire of the board to reduce health care costs, the WSMA is concerned by lack of evidence or sufficient rationale to support such an aggressive reduction.

We fear that setting unrealistically high expectations undermines future recommendations to the legislature and might lead healthcare providers to ignore the work of the board, or worse, force them to initiate changes that have the effect of degrading access to high quality health care.

Physician practices have limited tools at their disposal to achieve the approach recommended by the board. Many may be forced to take detrimental measures such as reducing the size of workforce and/or reducing or closing access to certain services entirely to achieve this cost growth target.

The approach also does not take into consideration that contracting cycles between physician practices and insurance carriers are typically on multi-year cycles and that filings for 2022 and 2023 are taking place now. The WSMA and many advisory committee members believe that a stable, five-year benchmark would provide the flexibility needed to work toward the admirable target of 3.2% (half of our recent growth rate) in a responsible way. However, despite this strong recommendation, the board has adopted the declining benchmark growth rate target.

The WSMA will continue to offer critical perspectives on these points and the upcoming work of the board which will include identifying cost trends and cost drivers in the health care system, and what entities will be subject to the benchmark.

To advocate well, we need to hear from physician practices about what this work means for you practice and your patients.

How will this work effect your practice? Tell us!

Under current law, the board does not have the authority to sanction entities that exceed the benchmark. The board however will be publicly naming physician practices, health systems, and payers that exceed the benchmark, and making recommendations to the legislature around lowering costs that are certain to carry weight with lawmakers. The WSMA fully expects the legislature to give the board more "teeth" in future years.

Due to the troubling trajectory of this work, we need to hear from you now to make sure the state understands the perspective of all practice types and specialties that are potentially subject to the benchmark. Real world examples are very helpful! For example, what actions would you need to take at your practice to come in under the 3.2% growth benchmark in 2022? What steps would you need to take to ensure your costs do not exceed 2.8% in 2026? Let us know at policy@wsma.org.