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Bill Summary · HB 56

HB 56 — Medicaid Reimbursements for Birth Centers (Final / Enacted version)

Status: Enacted (signed into law)
Subject: Health care / Medicaid reimbursement for birth centers

Main purpose

Require the Health Care Authority (HCA) to establish Medicaid facility‑fee reimbursement for freestanding birth centers that is comparable to reimbursement for similar services provided at hospitals, and to adopt rules to implement that change (including annual increases equivalent to hospital reimbursement increases).

Key provisions

  • Defines a “birth center” as a freestanding, state‑licensed facility whose primary purpose is low‑risk deliveries and that is not a hospital or hospital‑attached facility.
  • Directs the HCA secretary to adopt rules that:
    1. Create a methodology to determine Medicaid facility‑fee reimbursement rates for birth centers that are comparable to rates for similar hospital services; and
    2. Require annual increases to birth‑center facility‑fee reimbursement rates equivalent to annual hospital reimbursement rate increases.
  • “Medicaid” and “medicaid recipient” are defined consistent with federal Medicaid program terminology.

Who is affected

  • Birth centers in the state (facility operators and their staff). The fiscal analysis notes there was only one accredited birth center in the state at the time of analysis, so near‑term programmatic volume may be small.
  • Medicaid recipients who receive maternity and delivery services at birth centers.
  • The Health Care Authority (HCA) — responsible for rulemaking, Medicaid state plan amendment, claims system changes and managed‑care contract amendments.
  • Hospitals and other Medicaid maternity providers (for rate‑comparison purposes).
  • Potential longer‑term effect on providers deciding whether to open birth centers and on site‑of‑care utilization for low‑risk births.

Fiscal and administrative impact

  • Legislative Finance Committee / Health Care Authority estimate: implementation requires at least 1 new FTE in the Medical Assistance Program. Estimated recurring cost ≈ $97.4 thousand per year (50% general fund / 50% federal match). Three‑year total shown as ≈ $194.8 thousand (recurring).
  • No appropriation included in the bill; costs would need to be budgeted.
  • Administrative work includes: developing/rulemaking the methodology, preparing and submitting a Medicaid state‑plan amendment to CMS, IT and claims‑processing changes, regulatory revisions, provider notices/supplements, and managed‑care contract amendments.

Policy and operational considerations

  • HCA notes current Medicaid payment methodologies differ: hospitals are reimbursed using diagnosis‑related groups (DRGs) and hospital‑specific rates (including capital and tax adjustments), while birth centers are paid via a facility fee plus professional services (e.g., midwifery). Because of these model differences, HCA indicated operationalizing DRG‑style hospital payments for birth centers may not be feasible and CMS approval of such a change is uncertain.
  • HCA suggested an alternative: increasing birth‑center facility‑fee reimbursement by a specified percentage (rather than adopting hospital DRG payments) as a more practicable approach.
  • The law requires rulemaking and (likely) a Medicaid state‑plan amendment subject to federal approval; therefore actual payment changes will be delayed until HCA completes those steps and obtains any necessary CMS approvals.

Timeline / procedural notes

  • The enacted language directs the secretary to adopt rules (no immediate effective rate change is automatic). Implementation timing depends on HCA rulemaking, state‑plan amendment preparation/submission, and CMS review/approval, plus necessary IT and contract work.
  • Fiscal and committee analyses (during 2025 session) flagged the need for administrative resources and federal coordination.

If you want, I can:
- Draft a short timeline of expected implementation steps (rulemaking → state plan amendment → IT changes → provider notices), or
- Summarize how this change could affect a hypothetical birth center budget under alternative rate approaches (percentage facility‑fee increase vs. DRG parity).

Compiled from official sources — confirm details with the bill’s official record.

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