Pierce County to restructure Medicaid without the state, ensuring sales tax hike

PIERCE COUNTY, Wash. — Pierce County is looking to pivot plans that overhaul the Medicaid program and ensure that the one-tenth of 1 percent sales tax increase will start this summer.

The council’s Human Services Committee moved the bill to full council on Tuesday, and the county council is expected to hold the bill’s final vote on March 23.

The first attempt to restructure Medicaid in Pierce County passed in December. The county council tied a sales tax increase for behavioral health services to the creation of a board of local service providers to redistribute Medicaid dollars.

That initial plan would have renegotiated contracts with Medicaid insurance providers and local partners would get to decide how dollars would be spent, but it required state approval before adoption.

Vice Chair Dave Morell (R-South Hill) said after the state showed reservation in approving the model, service providers and the county worked to create a similar plan that did not require state approval.

The Washington State Health Care Authority told The News Tribune in January there were many questions regarding the overhaul.

“I wouldn’t want to say we will say no, we don’t have enough information on what they are attempting to do,” State Medicaid director MaryAnne Lindeblad said.

This legislation removes the contingency on state approval before the one-tenth of 1 percent on sales tax is implemented. The behavioral health tax will begin this summer, Morell said.

Of Washington’s 39 counties, Pierce County has become the 25th to pass a one-tenth of 1 percent tax increase. Pierce County staff estimate a projected $12 million a year for behavioral health education, early intervention and prevention.

A 2018 Pierce County Behavioral Health System Study report concluded there were significant behavioral health-related needs across the county and gaps between the need and available resources.

Morell, Chairman Derek Young (D-Gig Harbor) and service providers have said that the Medicaid restructure would help keep more dollars locally and thus add more funding for health services.

“This makes a lot of sense to me,” Young said in the committee meeting about the bill proposal.

The council set a deadline of having a new Medicaid network in place by next January.


Currently, Medicaid dollars flow through the managed care organizations, which pay the providers for Medicaid participants. The MCOs, which are Medicaid insurance companies, dictate the cost of services.

Elevate Health’s CEO Alisha Fehrenbacher told The News Tribune in December the same service can vary in cost based on the provider.

There are more than 230,000 Medicaid recipients in Pierce County and five MCOs. When a recipient visits a provider, each managed care plan has a fixed reimbursement rate for different services.

“These providers, not only do they not always have contracts with a managed care organization, they also have to do billing five different ways and utilization reviews five different ways,” Fehrenbacher told The News Tribune on Dec. 18.

Any profits made by the MCOs return to their headquarters. Morell, Elevate Health and other service providers want those profits to remain in Pierce County for local services and care.

Last year’s restructuring proposal for an “Accountable Care Organization,” was been replaced with a bill on Tuesday to create an “Accountable Care Network” instead.

Both plans look to keep a percentage of Medicaid dollars in Pierce County rather than return to the MCOs. But in an ACN, rather than implement a single countywide structure like an ACO, providers have to opt in to the network.

Morell, who championed the Medicaid restructuring, sees the “network” as a phased approach to the ultimate “organization.”

“We don’t get what the ACO would have gotten us, which is 100 percent of Medicaid participants and would eliminate the (managed care organizations),” he said. “But this gets us part way. We don’t get all 100 and we have to negotiate with the MCOs, but it gives us a bigger hammer.”

The ACN board would re-negotiate contracts with MCOs to discuss the profits and cost of care. The “Letter of Intent” was supported by providers who serve “more than 85 percent of Pierce County Medicaid population,” according to the bill.

Other providers involved in the formation include Community Health Care, Sea Mar Community Health Centers, CHI Franciscans/Virginia Mason, Multicare, Hope Sparks, and Comprehensive Life Resources.


The State Medicaid director told The News Tribune in January that they were invited to one meeting with the county regarding the Medicaid change and the year deadline was tight, especially during a pandemic.

“Realistically it’s not something that can happen quickly, even in the best of circumstances,” Lindeblad said.

She wanted more details about the changes, like what would happen if someone lives in King County, but wants to go to a provider in Pierce County, and the risk has to be renegotiated between the MCOs, the health plan and the service provider.

Asked about the newly proposed shift to the ACN model, Lindeblad said “We just learned about this change in direction last week, and we look forward to hearing more about the model and their plans to improve the delivery system.”

This story was written by The News Tribune.