1577-S

AN ACT Relating to health care; amending RCW 70.47.010, 70.47.020, 70.47.030, 70.47.040, 70.47.060, 70.47.080, 41.05.011, 41.05.021, 41.05.050, 41.05.055, 41.05.065, 41.05.120, 41.05.140, 70.170.100, 70.170.110, 28B.125.010, 28B.115.080, 70.185.030, 43.70.460, 43.70.470, 48.30.300, 48.44.260, 48.46.380, 18.72.400, 43.70.320, 18.130.190, 70.41.200, 70.41.230, 5.60.070, 4.22.070, 48.44.095, 82.26.020, 82.24.020, 82.08.150, 66.08.180, 66.24.210, 66.24.290, 82.02.030, 42.17.2401, and 43.20.050; reenacting and amending RCW 28A.400.200, 48.21.200, and 48.46.080; adding a new section to chapter 70.47 RCW; adding a new section to Title 43 RCW; adding new sections to chapter 41.05 RCW; adding new sections to chapter 70.170 RCW; adding a new section to chapter 70.41 RCW; adding a new section to Title 48 RCW; adding new sections to chapter 43.70 RCW; adding a new section to chapter 48.18 RCW; adding new sections to chapter 48.20 RCW; adding new sections to chapter 48.21 RCW; adding new sections to chapter 48.44 RCW; adding new sections to chapter 48.46 RCW; adding a new section to chapter 18.130 RCW; adding a new section to chapter 48.22 RCW; adding a new section to chapter 48.05 RCW; adding new sections to chapter 7.70 RCW; adding new sections to chapter 48.14 RCW; adding a new section to chapter 82.04 RCW; adding a new chapter to Title 43 RCW; creating new sections; repealing RCW 48.46.160, 48.46.905, and 48.44.410; prescribing penalties; providing effective dates; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

TABLE OF CONTENTS

PART I. FINDINGS, GOALS, AND INTENT................................................................................................................................... 4

PART II. BASIC HEALTH PLAN....................................................................................................................................................... 6

PART III. STATE-PURCHASED HEALTH SERVICES............................................................................................................... 20

PART IV. DATA COLLECTION AND ADMINISTRATIVE REFORM....................................................................................... 34

PART V. HEALTH PROFESSIONAL SHORTAGES..................................................................................................................... 42

PART VI. HEALTH SERVICES COMMISSION‑-CERTIFIED HEALTH PLANS................................................................. 53

PART VII. HEALTH INSURANCE PROVISIONS.......................................................................................................................... 77

PART VIII. PRACTICE GUIDELINES.............................................................................................................................................. 88

PART IX. HEALTH CARE LIABILITY REFORM....................................................................................................................... 88

PART X. PUBLIC HEALTH SERVICES IMPROVEMENT PLAN........................................................................................... 103

PART XI. STUDIES AND ADMINISTRATIVE DIRECTIVES................................................................................................... 105

PART XII. HEALTH SERVICES ACCOUNT AND REVENUES............................................................................................... 108

PART XIII. MISCELLANEOUS.......................................................................................................................................................... 120

PART I. FINDINGS, GOALS, AND INTENT

NEW SECTION. Sec. 101. FINDINGS. The legislature finds that our health and financial security are jeopardized by our ever increasing demand for medical care and by current medical insurance and medical system practices. Current medical system practices encourage public demand for unneeded, ineffective, and sometimes dangerous medical treatments. These practices often result in unaffordable cost increases that far exceed ordinary inflation for essential care. Current total medical and health care expenditure rates should be sufficient to provide access to essential health and medical care interventions to all within a reformed, efficient system.

The legislature finds that too many of our state's residents are without medical insurance, that each year many individuals and families are forced into poverty because of serious illness, and that many must leave gainful employment to be eligible for publicly funded medical services. Additionally, thousands of citizens are at risk of losing adequate medical insurance, have had insurance canceled recently, or cannot afford to renew existing coverage.

The legislature finds that businesses find it difficult to pay for medical insurance and remain competitive in a global economy, and that individuals, the poor, and small businesses bear an inequitable medical insurance burden.

The legislature finds that persons of color have significantly high rates of mortality, poor health outcomes, and substantially lower numbers and percentages of persons covered by health insurance than general population. It is intended that chapter ..., Laws of 1993 (this act) shall make provisions to address the special health care needs of these ethnic populations in order to improve their health status.

The legislature finds that uncontrolled demand and expenditures for medical care are eroding the ability of families, businesses, communities, and governments to invest in other enterprises that promote health, maintain independence, and ensure continued economic welfare. Housing, nutrition, education, and the environment are all diminished as we invest ever increasing shares of wealth in medical treatments.

The legislature finds that while immediate steps must be taken, a long-term plan of reform is also needed.

NEW SECTION. Sec. 102. LEGISLATIVE INTENT AND GOALS. (1) The legislature intends that state government policy stabilize health services costs, assure access to essential services for all residents, actively address the health care needs of persons of color, improve the public's health, and reduce unwarranted health services costs to preserve the viability of nonmedical care businesses.

(2) The legislature intends that:

(a) Total health services costs be stabilized and kept within rates of increase similar to the rates of general economic inflation within a publicly regulated, private marketplace that preserves personal choice;

(b) State residents be enrolled in the certified health plan of their choice that meets state standards regarding affordability, accessibility, cost-effectiveness, and comprehensiveness;

(c) State residents be able to choose health services from the full range of health care providers, as defined in section 602(12) of this act, in a manner consistent with good health service management, quality assurance, and cost effectiveness;

(d) Individuals and businesses have the option to purchase any health or medical services they may choose in addition to those contained in the benefits package determined by the state to be essential;

(e) All state residents, businesses, employees, and government participate in payment for health services, with total costs to individuals on a sliding scale based on income to encourage efficient and appropriate utilization of services and to protect individuals from impoverishment because of health care costs;

(f) These goals be accomplished within a reformed system using private service providers and facilities in a way that allows consumers to choose among competing plans operating within budget limits and other regulations that promote the public good; and

(g) That a policy of facilitating communication and networking in the delivery, purchase, and provision of health services among the federal, state, local, and tribal governments be encouraged and accomplished by chapter . . ., Laws of 1993 (this act).

(3) Accordingly, the legislature intends that chapter . . ., Laws of 1993 (this act) provide both early implementation measures and a process for overall reform of the health services system.

PART II. BASIC HEALTH PLAN

NEW SECTION. Sec. 201. A new section is added to chapter 70.47 RCW to read as follows:

The powers, duties, and functions of the Washington basic health plan are hereby transferred to the Washington state health care authority. All references to the administrator of the Washington basic health plan in the Revised Code of Washington shall be construed to mean the administrator of the Washington state health care authority.

NEW SECTION. Sec. 202. All reports, documents, surveys, books, records, files, papers, or written material in the possession of the Washington basic health plan shall be delivered to the custody of the Washington state health care authority. All cabinets, furniture, office equipment, motor vehicles, and other tangible property used by the Washington basic health plan shall be made available to the Washington state health care authority. All funds, credits, or other assets held by the Washington basic health plan shall be assigned to the Washington state health care authority.

Any appropriations made to the Washington basic health plan shall, on the effective date of this section, be transferred and credited to the Washington state health care authority. At no time may those funds in the basic health plan trust account, any funds appropriated for the subsidy of any enrollees, or any premium payments or other sums made or received on behalf of any enrollees in the basic health plan be commingled with any appropriated funds designated or intended for the purposes of providing health care coverage to any state or other public employees.

Whenever any question arises as to the transfer of any personnel, funds, books, documents, records, papers, files, equipment, or other tangible property used or held in the exercise of the powers and the performance of the duties and functions transferred, the director of financial management shall make a determination as to the proper allocation and certify the same to the state agencies concerned.

NEW SECTION. Sec. 203. All employees of the Washington basic health plan are transferred to the jurisdiction of the Washington state health care authority. All employees classified under chapter 41.06 RCW, the state civil service law, are assigned to the Washington state health care authority to perform their usual duties upon the same terms as formerly, without any loss of rights, subject to any action that may be appropriate thereafter in accordance with the laws and rules governing state civil service.

NEW SECTION. Sec. 204. All rules and all pending business before the Washington basic health plan shall be continued and acted upon by the Washington state health care authority. All existing contracts and obligations shall remain in full force and shall be performed by the Washington state health care authority.

NEW SECTION. Sec. 205. The transfer of the powers, duties, functions, and personnel of the Washington basic health plan shall not affect the validity of any act performed prior to the effective date of this section.

NEW SECTION. Sec. 206. If apportionments of budgeted funds are required because of the transfers directed by sections 201 through 205 of this act, the director of financial management shall certify the apportionments to the agencies affected, the state auditor, and the state treasurer. Each of these shall make the appropriate transfer and adjustments in funds and appropriation accounts and equipment records in accordance with the certification.

NEW SECTION. Sec. 207. Nothing contained in sections 201 through 206 of this act may be construed to alter any existing collective bargaining unit or the provisions of any existing collective bargaining agreement until the agreement has expired or until the bargaining unit has been modified by action of the personnel board as provided by law.

Sec. 208. RCW 70.47.010 and 1987 1st ex.s. c 5 s 3 are each amended to read as follows:

(1) The legislature finds that:

(a) A significant percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of necessary basic health care services;

(b) This lack of basic health care coverage is detrimental to the health of the individuals lacking coverage and to the public welfare, and results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and all purchasers of health care, including the state; and

(c) The use of managed health care systems has significant potential to reduce the growth of health care costs incurred by the people of this state generally, and by low-income pregnant women ((~~who are an especially vulnerable population, along with their children~~)), and at-risk children and adolescents who need greater access to managed health care.

(2) The purpose of this chapter is to provide or make more readily available necessary basic health care services in an appropriate setting to working persons and others who lack coverage, at a cost to these persons that does not create barriers to the utilization of necessary health care services. To that end, this chapter establishes a program to be made available to those residents ((~~under sixty-five years of age~~)) not ((~~otherwise~~)) eligible for medicare ((~~with gross family income at or below two hundred percent of the federal poverty guidelines~~)) who share in a portion of the cost or who pay the full cost of receiving basic health care services from a managed health care system.

(3) It is not the intent of this chapter to provide health care services for those persons who are presently covered through private employer-based health plans, nor to replace employer-based health plans. However, the legislature recognizes that cost-effective and affordable health plans may not always be available to small business employers. Further, it is the intent of the legislature to expand, wherever possible, the availability of private health care coverage and to discourage the decline of employer-based coverage.

(4) ((The program authorized under this chapter is strictly limited in respect to the total number of individuals who may be allowed to participate and the specific areas within the state where it may be established. All such restrictions or limitations shall remain in full force and effect until quantifiable evidence based upon the actual operation of the program, including detailed cost benefit analysis, has been presented to the legislature and the legislature, by specific act at that time, may then modify such limitations.))

(a) It is the purpose of this chapter to acknowledge the initial success of this program that has (i) assisted thousands of families in their search for affordable health care; (ii) demonstrated that low-income, uninsured families are willing to pay for their own health care coverage to the extent of their ability to pay; and (iii) proved that local health care providers are willing to enter into a public-private partnership as a managed care system.

(b) As a consequence, the legislature intends to extend an option to enroll to certain citizens above two hundred percent of the federal poverty guidelines within the state who reside in communities where the plan is operational and who collectively or individually wish to exercise the opportunity to purchase health care coverage through the basic health plan if the purchase is done at no cost to the state. It is also the intent of the legislature to allow employers and other financial sponsors to financially assist such individuals to purchase health care through the program. It is also the intent of the legislature to condition access to this plan for nonsubsidized enrollees upon the prior placement of subsidized enrollees, to the extent funding is available.

Sec. 209. RCW 70.47.020 and 1987 1st ex.s. c 5 s 4 are each amended to read as follows:

As used in this chapter:

(1) "Washington basic health plan" or "plan" means the system of enrollment and payment on a prepaid capitated basis for basic health care services, administered by the plan administrator through participating managed health care systems, created by this chapter.

(2) "Administrator" means the Washington basic health plan administrator, who also holds the position of administrator of the Washington state health care authority.

(3) "Managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the administrator and rendered by duly licensed providers, on a prepaid capitated basis to a defined patient population enrolled in the plan and in the managed health care system. On and after July 1, 1997, "managed health care system" means a certified health plan, as defined in section 602 of this act.

(4) "Subsidized enrollee" means an individual, or an individual plus the individual's spouse ((~~and/or~~)) or dependent children, ((~~all under the age of sixty-five and~~)) not ((~~otherwise~~)) eligible for medicare, who resides in an area of the state served by a managed health care system participating in the plan, whose gross family income at the time of enrollment does not exceed twice the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services, who chooses to obtain basic health care coverage from a particular managed health care system in return for periodic payments to the plan.

(5) "Nonsubsidized enrollee" means an individual, or an individual plus the individual's spouse or dependent children, not eligible for medicare, who resides in an area of the state served by a managed health care system participating in the plan, who chooses to obtain basic health care coverage from a particular managed health care system and who pays or on whose behalf is paid the full costs for participation in the plan, without any subsidy from the plan.

(6) "Subsidy" means the difference between the amount of periodic payment the administrator makes((~~, from funds appropriated from the basic health plan trust account,~~)) to a managed health care system on behalf of ((an)) a subsidized enrollee plus the administrative cost to the plan of providing the plan to that subsidized enrollee, and the amount determined to be the subsidized enrollee's responsibility under RCW 70.47.060(2).

((~~(6)~~)) (7) "Premium" means a periodic payment, based upon gross family income ((~~and determined under RCW 70.47.060(2),~~)) which an ((~~enrollee~~)) individual, their employer or another financial sponsor makes to the plan as consideration for enrollment in the plan as a subsidized enrollee or a nonsubsidized enrollee.

((~~(7)~~)) (8) "Rate" means the per capita amount, negotiated by the administrator with and paid to a participating managed health care system, that is based upon the enrollment of subsidized and nonsubsidized enrollees in the plan and in that system.

Sec. 210. RCW 70.47.030 and 1992 c 232 s 907 are each amended to read as follows:

(1) The basic health plan trust account is hereby established in the state treasury. ((~~All~~)) Any nongeneral fund-state funds collected for this program shall be deposited in the basic health plan trust account and may be expended without further appropriation. Moneys in the account shall be used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of enrollees in the plan and payment of costs of administering the plan. ((After July 1, 1993, the administrator shall not expend or encumber for an ensuing fiscal period amounts exceeding ninety-five percent of the amount anticipated to be spent for purchased services during the fiscal year.))

(2) The basic health plan subscription account is created in the custody of the state treasurer. All receipts from amounts due from or on behalf of nonsubsidized enrollees shall be deposited into the account. Funds in the account shall be used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of nonsubsidized enrollees in the plan and payment of costs of administering the plan. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

(3) The administrator shall take every precaution to see that none of the funds in the separate accounts created in this section or that any premiums paid either by subsidized or nonsubsidized enrollees are commingled in any way, except that the administrator may combine funds designated for administration of the plan into a single administrative account.

Sec. 211. RCW 70.47.040 and 1987 1st ex.s. c 5 s 6 are each amended to read as follows:

(1) The Washington basic health plan is created as ((~~an independent agency of the state~~)) a program within the Washington state health care authority. The administrative head and appointing authority of the plan shall be the administrator ((who shall be appointed by the governor, with the consent of the senate, and shall serve at the pleasure of the governor. The salary for this office shall be set by the governor pursuant to RCW 43.03.040)) of the Washington state health care authority. The administrator shall appoint a medical director. The ((~~administrator,~~)) medical director((,)) and up to five other employees of the plan shall be exempt from the civil service law, chapter 41.06 RCW.

(2) The administrator shall employ such other staff as are necessary to fulfill the responsibilities and duties of the administrator, such staff to be subject to the civil service law, chapter 41.06 RCW. In addition, the administrator may contract with third parties for services necessary to carry out its activities where this will promote economy, avoid duplication of effort, and make best use of available expertise. Any such contractor or consultant shall be prohibited from releasing, publishing, or otherwise using any information made available to it under its contractual responsibility without specific permission of the plan. The administrator may call upon other agencies of the state to provide available information as necessary to assist the administrator in meeting its responsibilities under this chapter, which information shall be supplied as promptly as circumstances permit.

(3) The administrator may appoint such technical or advisory committees as he or she deems necessary. The administrator shall appoint a standing technical advisory committee that is representative of health care professionals, health care providers, and those directly involved in the purchase, provision, or delivery of health care services, as well as consumers and those knowledgeable of the ethical issues involved with health care public policy. Individuals appointed to any technical or other advisory committee shall serve without compensation for their services as members, but may be reimbursed for their travel expenses pursuant to RCW 43.03.050 and 43.03.060.

(4) The administrator may apply for, receive, and accept grants, gifts, and other payments, including property and service, from any governmental or other public or private entity or person, and may make arrangements as to the use of these receipts, including the undertaking of special studies and other projects relating to health care costs and access to health care.

(5) ((In the design, organization, and administration of the plan under this chapter, the administrator shall consider the report of the Washington health care project commission established under chapter 303, Laws of 1986. Nothing in this chapter requires the administrator to follow any specific recommendation contained in that report except as it may also be included in this chapter or other law)) Whenever feasible, the administrator shall reduce the administrative cost of operating the program by adopting joint policies or procedures applicable to both the basic health plan and employee health plans.

Sec. 212. RCW 70.47.060 and 1992 c 232 s 908 are each amended to read as follows:

The administrator has the following powers and duties:

(1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, and other services that may be necessary for basic health care, which subsidized and nonsubsidized enrollees in any participating managed health care system under the Washington basic health plan shall be entitled to receive in return for premium payments to the plan. The schedule of services shall emphasize proven preventive and primary health care and shall include all services necessary for prenatal, postnatal, and well-child care. However, ((~~for the period ending June 30, 1993,~~)) with respect to coverage for groups of subsidized enrollees who are eligible to receive prenatal and postnatal services through the medical assistance program under chapter 74.09 RCW, the administrator shall not contract for ((~~prenatal or postnatal~~)) such services ((~~that are provided under the medical assistance program under chapter 74.09 RCW~~)) except to the extent that such services are necessary over not more than a one-month period in order to maintain continuity of care after diagnosis of pregnancy by the managed care provider((~~, or except to provide any such services associated with pregnancies diagnosed by the managed care provider before July 1, 1992~~)). The schedule of services shall also include a separate schedule of basic health care services for children, eighteen years of age and younger, for those subsidized or nonsubsidized enrollees who choose to secure basic coverage through the plan only for their dependent children. In designing and revising the schedule of services, the administrator shall consider the guidelines for assessing health services under the mandated benefits act of 1984, RCW 48.42.080, and such other factors as the administrator deems appropriate. On or after July 1, 1995, the uniform benefits package adopted and from time to time revised by the Washington health services commission pursuant to section 615 of this act shall be implemented by the administrator as the schedule of covered basic health care services. However, with respect to coverage for subsidized enrollees who are eligible to receive prenatal and postnatal services through the medical assistance program under chapter 74.09 RCW, the administrator shall not contract for such services except to the extent that the services are necessary over not more than a one-month period in order to maintain continuity of care after diagnosis of pregnancy by the managed care provider.

(2)(a) To design and implement a structure of periodic premiums due the administrator from subsidized enrollees that is based upon gross family income, giving appropriate consideration to family size ((~~as well as~~)) and the ages of all family members. The enrollment of children shall not require the enrollment of their parent or parents who are eligible for the plan. The structure of periodic premiums shall be applied to subsidized enrollees entering the plan as individuals pursuant to subsection (9) of this section and to the share of the cost of the plan due from subsidized enrollees entering the plan as employees pursuant to subsection (10) of this section.

(b) To determine the periodic premiums due the administrator from nonsubsidized enrollees. Premiums due from nonsubsidized enrollees shall be in an amount equal to the cost charged by the managed health care system provider to the state for the plan plus the administrative cost of providing the plan to those enrollees and the appropriate premium tax as provided by law.

(c) An employer or other financial sponsor may, with the prior approval of the administrator, pay the premium, rate, or any other amount on behalf of a subsidized or nonsubsidized enrollee, by arrangement with the enrollee and through a mechanism acceptable to the administrator, but in no case shall the payment made on behalf of the enrollee exceed ninety-five percent of the total premiums due from the enrollee.

(d) On or after July 1, 1995, the administrator shall comply with any schedule of premiums that may be adopted by the Washington health services commission.

(3) To design and implement a structure of ((~~nominal~~)) copayments due a managed health care system from subsidized and nonsubsidized enrollees. The structure shall discourage inappropriate enrollee utilization of health care services, but shall not be so costly to enrollees as to constitute a barrier to appropriate utilization of necessary health care services. On or after July 1, 1995, the administrator shall comply with schedules of enrollee point of service cost-sharing adopted by the Washington health services commission.

(4) ((To design and implement, in concert with a sufficient number of potential providers in a discrete area, an enrollee financial participation structure, separate from that otherwise established under this chapter, that has the following characteristics:

~~(a) Nominal premiums that are based upon ability to pay, but not set at a level that would discourage enrollment;~~

~~(b) A modified fee-for-services payment schedule for providers;~~

(c) Coinsurance rates that are established based on specific service and procedure costs and the enrollee's ability to pay for the care. However, coinsurance rates for families with incomes below one hundred twenty percent of the federal poverty level shall be nominal. No coinsurance shall be required for specific proven prevention programs, such as prenatal care. The coinsurance rate levels shall not have a measurable negative effect upon the enrollee's health status; and

(d) A case management system that fosters a provider-enrollee relationship whereby, in an effort to control cost, maintain or improve the health status of the enrollee, and maximize patient involvement in her or his health care decision-making process, every effort is made by the provider to inform the enrollee of the cost of the specific services and procedures and related health benefits.

The potential financial liability of the plan to any such providers shall not exceed in the aggregate an amount greater than that which might otherwise have been incurred by the plan on the basis of the number of enrollees multiplied by the average of the prepaid capitated rates negotiated with participating managed health care systems under RCW 70.47.100 and reduced by any sums charged enrollees on the basis of the coinsurance rates that are established under this subsection.

~~(5)~~)) To limit enrollment of persons who qualify for subsidies so as to prevent an overexpenditure of appropriations for such purposes. Whenever the administrator finds that there is danger of such an overexpenditure, the administrator shall close enrollment until the administrator finds the danger no longer exists.

(5) To limit the payment of subsidies to subsidized enrollees, as defined in RCW 70.47.020.

(6) To adopt a schedule for the orderly development of the delivery of services and availability of the plan to residents of the state, subject to the limitations contained in RCW 70.47.080 or any act appropriating funds for the plan.

((In the selection of any area of the state for the initial operation of the plan, the administrator shall take into account the levels and rates of unemployment in different areas of the state, the need to provide basic health care coverage to a population reasonably representative of the portion of the state's population that lacks such coverage, and the need for geographic, demographic, and economic diversity.

~~Before July 1, 1988, the administrator shall endeavor to secure participation contracts with managed health care systems in discrete geographic areas within at least five congressional districts.~~))

(7) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan. The administrator shall endeavor to assure that covered basic health care services are available to any enrollee of the plan from among a selection of two or more participating managed health care systems. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the administrator shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the several areas of the state.

(8) To receive periodic premiums from or on behalf of subsidized and nonsubsidized enrollees, deposit them in the basic health plan operating account, keep records of enrollee status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.

(9) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan as subsidized or nonsubsidized enrollees, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and at least ((~~annually~~)) semiannually thereafter, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. ((An enrollee who remains current in payment of the sliding-scale premium, as determined under subsection (2) of this section, and whose gross family income has risen above twice the federal poverty level, may continue enrollment unless and until the enrollee's gross family income has remained above twice the poverty level for six consecutive months, by making payment at the unsubsidized rate required for the managed health care system in which he or she may be enrolled.)) No subsidy may be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to RCW 70.47.110, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW. If, as a result of an eligibility review, the administrator determines that a subsidized enrollee's income exceeds twice the federal poverty level and that the enrollee knowingly failed to inform the plan of such increase in income, the administrator may bill the enrollee for the subsidy paid on the enrollee's behalf during the period of time that the enrollee's income exceeded twice the federal poverty level. If a number of enrollees drop their enrollment for no apparent good cause, the administrator may establish appropriate rules or requirements that are applicable to such individuals before they will be allowed to re-enroll in the plan.

(10) To accept applications from small business owners on behalf of themselves and their employees, spouses, and dependent children, as subsidized or nonsubsidized enrollees, who reside in an area served by the plan. The administrator may require all or the substantial majority of the eligible employees of such businesses to enroll in the plan and establish those procedures necessary to facilitate the orderly enrollment of groups in the plan and into a managed health care system. The administrator shall require that a small business owner pay at least fifty percent but not more than ninety-five percent of the nonsubsidized premium cost of the plan on behalf of each employee enrolled in the plan. Effective on or after July 1, 1997, the employer participation levels established by the health services commission pursuant to section 620 of this act shall govern employer participation levels under this section. For the purposes of this subsection, an employee means an individual who regularly works for the small business for at least twenty hours per week. The businesses may have no more than one hundred employees at the time of initial enrollment and enrollment is limited to those not eligible for medicare, who wish to enroll in the plan and choose to obtain the basic health care coverage and services from a managed care system participating in the plan. The administrator shall adjust the amount determined to be due on behalf of or from all such enrollees whenever the amount negotiated by the administrator with the participating managed health care system or systems is modified or the administrative cost of providing the plan to such enrollees changes.

(11) To determine the rate to be paid to each participating managed health care system in return for the provision of covered basic health care services to enrollees in the system. Although the schedule of covered basic health care services will be the same for similar enrollees, the rates negotiated with participating managed health care systems may vary among the systems. In negotiating rates with participating systems, the administrator shall consider the characteristics of the populations served by the respective systems, economic circumstances of the local area, the need to conserve the resources of the basic health plan trust account, and other factors the administrator finds relevant.

((~~(11)~~)) (12) To monitor the provision of covered services to enrollees by participating managed health care systems in order to assure enrollee access to good quality basic health care, to require periodic data reports concerning the utilization of health care services rendered to enrollees in order to provide adequate information for evaluation, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter. In requiring reports from participating managed health care systems, including data on services rendered enrollees, the administrator shall endeavor to minimize costs, both to the managed health care systems and to the ((~~administrator~~)) plan. The administrator shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the department of health, to minimize duplication of effort.

((~~(12)~~)) (13) To monitor the access that state residents have to adequate and necessary health care services, determine the extent of any unmet needs for such services or lack of access that may exist from time to time, and make such reports and recommendations to the legislature as the administrator deems appropriate.

((~~(13)~~)) (14) To evaluate the effects this chapter has on private employer-based health care coverage and to take appropriate measures consistent with state and federal statutes that will discourage the reduction of such coverage in the state.

((~~(14)~~)) (15) To develop a program of proven preventive health measures and to integrate it into the plan wherever possible and consistent with this chapter.

((~~(15)~~)) (16) To provide, consistent with available resources, technical assistance for rural health activities that endeavor to develop needed health care services in rural parts of the state.

(17) Basic health plan enrollment expansion shall correspond as much as possible to the proportion of racial and ethnic minorities in that community using the best available data to estimate representation by ethnic minorities. A report shall be submitted on or before December 1, 1996, and biannually thereafter, to the commission describing the areas of shortfall and recommendations to address them.

Sec. 213. RCW 70.47.080 and 1987 1st ex.s. c 5 s 10 are each amended to read as follows:

On and after July 1, 1988, the administrator shall accept for enrollment applicants eligible to receive covered basic health care services from the respective managed health care systems which are then participating in the plan. ((~~The administrator shall not allow the total enrollment of those eligible for subsidies to exceed thirty thousand.~~))

Thereafter, total ((~~enrollment shall not exceed the number established by the legislature in any act appropriating funds to the plan.~~

Before July 1, 1988, the administrator shall endeavor to secure participation contracts from managed health care systems in discrete geographic areas within at least five congressional districts of the state and in such manner as to allow residents of both urban and rural areas access to enrollment in the plan. The administrator shall make a special effort to secure agreements with health care providers in one such area that meets the requirements set forth in RCW 70.47.060(4))) subsidized enrollment shall not result in expenditures that exceed the total amount that has been made available by the legislature in any act appropriating funds to the plan.

The administrator shall at all times closely monitor growth patterns of enrollment so as not to exceed that consistent with the orderly development of the plan as a whole, in any area of the state or in any participating managed health care system. The annual or biennial enrollment limitations derived from operation of the plan under this section do not apply to nonsubsidized enrollees as defined in RCW 70.47.020(5).

PART III. STATE-PURCHASED HEALTH SERVICES

Sec. 301. RCW 41.05.011 and 1990 c 222 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.

(1) "Administrator" means the administrator of the authority.

(2) "State purchased health care" or "health care" means medical and health care, pharmaceuticals, and medical equipment purchased with state and federal funds by the department of social and health services, the department of health, the basic health plan, the state health care authority, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.

(3) "Authority" means the Washington state health care authority.

(4) "Insuring entity" means an ((~~insurance carrier as defined in chapter 48.21 or 48.22~~)) insurer as defined in chapter 48.01 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW. On and after July 1, 1997, "insuring entity" means a certified health plan, as defined in section 602 of this act.

(5) "Flexible benefit plan" means a benefit plan that allows employees to choose the level of health care coverage provided and the amount of employee contributions from among a range of choices offered by the authority.

(6) "Employee" includes all full-time and career seasonal employees of the state, whether or not covered by civil service; effective on and after October 1, 1993, all full-time employees of school districts; elected and appointed officials of the executive branch of government, including full-time members of boards, commissions, or committees; and includes any or all part-time and temporary employees under the terms and conditions established under this chapter by the authority; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature or of the legislative authority of any county, city, or town who are elected to office after February 20, 1970. "Employee" also includes employees of a county, municipality, or other political subdivision of the state if the legislative authority of the county, municipality, or other political subdivision of the state seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.04.205((, and employees of a school district if the board of directors of the school district seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority as provided in RCW 28A.400.350)).

(7) "Board" means the ((~~state~~)) public employees' benefits board established under RCW 41.05.055.

Sec. 302. RCW 41.05.021 and 1990 c 222 s 3 are each amended to read as follows:

(1) The Washington state health care authority is created within the executive branch. The authority shall have an administrator appointed by the governor, with the consent of the senate. The administrator shall serve at the pleasure of the governor. The administrator may employ up to seven staff members, who shall be exempt from chapter 41.06 RCW, and any additional staff members as are necessary to administer this chapter. The primary duties of the authority shall be to administer state employees' insurance benefits ((~~and to~~)), study state-purchased health care programs in order to maximize cost containment in these programs while ensuring access to quality health care, and implement state initiatives, joint purchasing strategies, and techniques for efficient administration that have potential application to all state-purchased health services. The authority's duties include, but are not limited to, the following:

((~~(1)~~)) (a) To administer a health care benefit program for employees as specifically authorized in RCW 41.05.065 and in accordance with the methods described in RCW 41.05.075, 41.05.140, and other provisions of this chapter;

((~~(2)~~)) (b) To analyze state-purchased health care programs and to explore options for cost containment and delivery alternatives for those programs that are consistent with the purposes of those programs, including, but not limited to:

((~~(a)~~)) (i) Creation of economic incentives for the persons for whom the state purchases health care to appropriately utilize and purchase health care services, including the development of flexible benefit plans to offset increases in individual financial responsibility;

((~~(b)~~)) (ii) Utilization of provider arrangements that encourage cost containment and ensure access to quality care, including but not limited to prepaid delivery systems, utilization review, and prospective payment methods;

((~~(c)~~)) (iii) Coordination of state agency efforts to purchase drugs effectively as provided in RCW 70.14.050;

((~~(d)~~)) (iv) Development of recommendations and methods for purchasing medical equipment and supporting services on a volume discount basis; and

((~~(e)~~)) (v) Development of data systems to obtain utilization data from state-purchased health care programs in order to identify cost centers, utilization patterns, provider and hospital practice patterns, and procedure costs, utilizing the information obtained pursuant to RCW 41.05.031;

((~~(3)~~)) (c) To analyze areas of public and private health care interaction;

((~~(4)~~)) (d) To provide information and technical and administrative assistance to the board;

((~~(5)~~)) (e) To review and approve or deny applications from counties, municipalities, and other political subdivisions of the state((~~, and school districts~~)) to provide state-sponsored insurance or self-insurance programs to their employees in accordance with the provisions of RCW 41.04.205 ((~~and 28A.400.350~~)), setting the premium contribution for approved groups as outlined in RCW 41.05.050;

((~~(6)~~)) (f) To appoint a health care policy technical advisory committee as required by RCW 41.05.150; and

((~~(7)~~)) (g) To promulgate and adopt rules consistent with this chapter as described in RCW 41.05.160.

(2) The public employees' benefits board shall implement strategies to promote managed competition among employee health benefit plans by July 1, 1994, including but not limited to:

(a) Standardizing the benefit package;

(b) Soliciting competitive bids for the benefit package;

(c) Limiting the state's contribution to a percent of the lowest priced sealed bid of a qualified plan within a geographical area. If the state's contribution is less than one hundred percent of the lowest priced sealed bid, employee financial contributions shall be structured on a sliding-scale basis under which lower wage employees pay a smaller percentage of their salary;

(d) Ensuring access to quality health services;

(e) Monitoring the impact of the approach under this subsection with regards to: Efficiencies in health service delivery, cost shifts to subscribers, access to and choice of managed care plans state-wide, and quality of health services. The health care authority shall also advise on the value of administering a benchmark employer-managed plan to promote competition among managed care plans. The health care authority shall report its findings and recommendations to the legislature by January 1, 1996.

Sec. 303. RCW 41.05.050 and 1988 c 107 s 18 are each amended to read as follows:

(1) Every department, division, or separate agency of state government, and such county, municipal, or other political subdivisions as are covered by this chapter, shall provide contributions to insurance and health care plans for its employees and their dependents, the content of such plans to be determined by the authority. Contributions, paid by the county, the municipality, or other political subdivision for their employees, shall include an amount determined by the authority to pay such administrative expenses of the authority as are necessary to administer the plans for employees of those groups. All such contributions will be paid into the ((~~state~~)) public employees' health insurance account.

(2) The contributions of any department, division, or separate agency of the state government, and such county, municipal, or other political subdivisions as are covered by this chapter, shall be set by the authority, subject to the approval of the governor for availability of funds as specifically appropriated by the legislature for that purpose. However, insurance and health care contributions for ferry employees shall be governed by RCW 47.64.270.

(3) The administrator with the assistance of the ((~~state~~)) public employees' benefits board shall survey private industry and public employers in the state of Washington to determine the average employer contribution for group insurance programs under the jurisdiction of the authority. Such survey shall be conducted during each even-numbered year but may be conducted more frequently. The survey shall be reported to the authority for its use in setting the amount of the recommended employer contribution to the employee insurance benefit program covered by this chapter. The authority shall transmit a recommendation for the amount of the employer contribution to the governor and the director of financial management for inclusion in the proposed budgets submitted to the legislature.

Sec. 304. RCW 41.05.055 and 1989 c 324 s 1 are each amended to read as follows:

(1) The ((~~state~~)) public employees' benefits board is created within the authority. The function of the board is to design and approve insurance benefit plans for state employees and effective on and after October 1, 1993, school district employees.

(2) The board shall be composed of ((~~seven~~)) nine members appointed by the governor as follows:

(a) ((~~Three~~)) Two representatives of state employees, ((~~one of whom shall represent an employee association certified as exclusive representative of at least one bargaining unit of classified employees,~~)) one of whom shall represent an employee union certified as exclusive representative of at least one bargaining unit of classified employees, and one of whom is retired, is covered by a program under the jurisdiction of the board, and represents an organized group of retired public employees;

(b) Two representatives of school district employees, one of whom shall represent the largest state association of school employees and one of whom is retired, and represents an organized group of retired school employees;

((~~Three~~)) (c) Four members with experience in health benefit management and cost containment; and

((~~(c)~~)) (d) The administrator.

(3) The governor shall appoint the initial members of the board to staggered terms not to exceed four years. Members appointed thereafter shall serve two-year terms. Members of the board shall be compensated in accordance with RCW 43.03.250 and shall be reimbursed for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060. The board shall prescribe rules for the conduct of its business. The administrator shall serve as chair of the board. Meetings of the board shall be at the call of the chair.

Sec. 305. RCW 41.05.065 and 1988 c 107 s 8 are each amended to read as follows:

(1) The board shall study all matters connected with the provision of health care coverage, life insurance, liability insurance, accidental death and dismemberment insurance, and disability income insurance or any of, or a combination of, the enumerated types of insurance for employees and their dependents on the best basis possible with relation both to the welfare of the employees and to the state((~~: PROVIDED, That~~)), however liability insurance shall not be made available to dependents.

(2) The ((~~state~~)) public employees' benefits board shall develop employee benefit plans that include comprehensive health care benefits for all employees. In developing these plans, the board shall consider the following elements:

(a) Methods of maximizing cost containment while ensuring access to quality health care;

(b) Development of provider arrangements that encourage cost containment and ensure access to quality care, including but not limited to prepaid delivery systems and prospective payment methods;

(c) Wellness incentives that focus on proven strategies, such as smoking cessation, exercise, and automobile and motorcycle safety;

(d) Utilization review procedures including, but not limited to prior authorization of services, hospital inpatient length of stay review, requirements for use of outpatient surgeries and second opinions for surgeries, review of invoices or claims submitted by service providers, and performance audit of providers; ((~~and~~))

(e) Effective coordination of benefits;

(f) Minimum standards for insuring entities; and

(g) Minimum scope and content of standard benefit plans to be offered to enrollees participating in the employee health benefit plans. On or after July 1, 1995, the uniform benefits package and schedule of premiums and other individual cost-sharing adopted and from time to time revised by the Washington health services commission pursuant to chapter . . ., Laws of 1993 (this act) shall be implemented by the administrator for purposes of employee health benefit plans.

(3) The board shall design benefits and determine the terms and conditions of employee participation and coverage, including establishment of eligibility criteria.

(4) The board shall attempt to achieve enrollment of all employees and retirees in managed health care systems by July 1994.

The board may authorize premium contributions for an employee and the employee's dependents in a manner that encourages the use of cost-efficient managed health care systems. ((~~Such authorization shall require a vote of five members of the board for approval.~~))

(5) Employees ((~~may~~)) shall choose participation in only one of the health care benefit plans developed by the board.

(6) The board shall review plans proposed by insurance carriers that desire to offer property insurance and/or accident and casualty insurance to state employees through payroll deduction. The board may approve any such plan for payroll deduction by carriers holding a valid certificate of authority in the state of Washington and which the board determines to be in the best interests of employees and the state. The board shall promulgate rules setting forth criteria by which it shall evaluate the plans.

Sec. 306. RCW 41.05.120 and 1991 sp.s. c 13 s 100 are each amended to read as follows:

(1) The ((~~state~~)) public employees' insurance account is hereby established in the custody of the state treasurer, to be used by the administrator for the deposit of contributions, reserves, dividends, and refunds, and for payment of premiums for employee insurance benefit contracts. Moneys from the account shall be disbursed by the state treasurer by warrants on vouchers duly authorized by the administrator.

(2) The state treasurer and the state investment board may invest moneys in the ((~~state~~)) public employees' insurance account. All such investments shall be in accordance with RCW 43.84.080 or 43.84.150, whichever is applicable. The administrator shall determine whether the state treasurer or the state investment board or both shall invest moneys in the ((~~state~~)) public employees' insurance account.

Sec. 307. RCW 41.05.140 and 1988 c 107 s 12 are each amended to read as follows:

(1) The authority may self-fund, self-insure, or enter into other methods of providing insurance coverage for insurance programs under its jurisdiction except property and casualty insurance. The authority shall contract for payment of claims or other administrative services for programs under its jurisdiction. If a program does not require the prepayment of reserves, the authority shall establish such reserves within a reasonable period of time for the payment of claims as are normally required for that type of insurance under an insured program. Reserves established by the authority shall be held in a separate trust fund by the state treasurer and shall be known as the ((~~state~~)) public employees' insurance reserve fund. The state investment board shall act as the investor for the funds and, except as provided in RCW 43.33A.160, one hundred percent of all earnings from these investments shall accrue directly to the ((~~state~~)) public employees' insurance reserve fund.

(2) Any savings realized as a result of a program created under this section shall not be used to increase benefits unless such use is authorized by statute.

(3) Any program created under this section shall be subject to the examination requirements of chapter 48.03 RCW as if the program were a domestic insurer. In conducting an examination, the commissioner shall determine the adequacy of the reserves established for the program.

(4) The authority shall keep full and adequate accounts and records of the assets, obligations, transactions, and affairs of any program created under this section.

(5) The authority shall file a quarterly statement of the financial condition, transactions, and affairs of any program created under this section in a form and manner prescribed by the insurance commissioner. The statement shall contain information as required by the commissioner for the type of insurance being offered under the program. A copy of the annual statement shall be filed with the speaker of the house of representatives and the president of the senate.

NEW SECTION. Sec. 308. A new section is added to Title 43 RCW to read as follows:

STATE HEALTH SERVICES AGENT. (1) The health care authority is hereby designated as the single state agent for purchasing health services.

(2) On and after July 1, 1995, at least the following state-purchased health services programs shall be merged into a single, community-rated risk pool: The basic health plan; health benefits for active employees of school districts; and health benefits for active state employees. Until that date, in purchasing health services, the health care authority shall maintain separate experience pools for each of the programs in this subsection. The administrator may develop mechanisms to ensure that the cost of comparable benefits packages does not vary widely across the experience pools. At the earliest opportunity the governor shall seek necessary federal waivers and state legislation to place the medical and acute care components of the medical assistance program, the limited casualty program, and the medical care services program of the department of social and health services in this single risk pool. Long-term care services provided under the medical assistance program shall not be placed in the single risk pool until such services have been added to the uniform benefits package pursuant to section 615 of this act.

(3) At a minimum, and regardless of other legislative enactments, the state health services purchasing agent shall:

(a) Ensure immediate coverage if a state resident eligible for state-subsidized health services chooses to receive state-sponsored care;

(b) Require that a public agency that provides subsidies for a substantial portion of services now covered under the basic health plan or a uniform benefits package as adopted by the Washington health services commission as provided in section 615 of this act, use uniform eligibility processes, insofar as may be possible, and ensure that multiple eligibility determinations are not required;

(c) Require that a health care provider or a health care facility that receives funds from a public program provide care to state residents receiving a state subsidy who may wish to receive care from them, and that a health maintenance organization, health care service contractor, insurer, or certified health plan that receives funds from a public program accept enrollment from state residents receiving a state subsidy who may wish to enroll with them. A provider, facility, or certified health plan shall not be required to provide care to or enroll a resident receiving a state subsidy if provision of care or enrollment results in the provider or plan caring for a significantly greater percentage of subsidized residents than the percentage of subsidized residents in the geographical region served by the provider, facility, or plan;

(d) Strive to integrate purchasing for all publicly sponsored health services in order to maximize the cost control potential and promote the most efficient methods of financing and coordinating services;

(e) Annually suggest changes in state and federal law and rules to bring all publicly funded health programs in compliance with the goals and intent of chapter . . ., Laws of 1993 (this act);

(f) Consult regularly with the governor, the legislature, and state agency directors whose operations are affected by the implementation of this section;

(g) Ensure that procedures and due process guarantees no less beneficial than those available under federal and state law to participants in the medical assistance, limited casualty, and medical care services programs are provided to all persons who, but for the federal waivers and state legislation procured under subsection (1) of this section, would be eligible for those programs.

NEW SECTION. Sec. 309. A new section is added to chapter 41.05 RCW to read as follows:

(1) The Washington state health insurance purchasing cooperative is established for the purpose of coordinating and enhancing the health care purchasing power of the groups identified in subsection (2) of this section. The purchasing cooperative shall be administered by the administrator.

(2) The following organizations or entities may seek the approval of the administrator for membership in the purchasing cooperative:

(a) Private nonprofit human services provider organizations under contract with state agencies, on behalf of their employees and their employees' spouses and dependent children;

(b) Individuals providing in-home long-term care services to persons whose care is financed in whole or in part through the medical assistance personal care or community options program entry system program as provided in chapter 74.09 RCW, or the chore services program, as provided in chapter 74.08 RCW, on behalf of themselves and their spouses and dependent children;

(c) Owners and operators of child day care centers and family child care homes licensed under chapter 74.15 RCW and of preschool or other child care programs exempted from licensing under chapter 74.15 RCW on behalf of themselves and their employees and employees' spouses and dependent children;

(d) Foster parents contracting with the department of social and health services under chapter 74.13 RCW and licensed under chapter 74.15 RCW on behalf of themselves and their spouses and dependent children; and

(e) Small business owners on behalf of themselves and their employees and employees' spouses and dependent children. For purposes of this subsection, a small business may have no more than one hundred employees at the time of initial enrollment. An employee means an individual who regularly works for the employer for at least twenty hours per week.

(3) In administering the purchasing cooperative, the administrator shall:

(a) Negotiate and enter into contracts on behalf of the purchasing cooperative's members in conjunction with its contracting and purchasing activities for employee benefit plans under RCW 41.05.075. Until July 1, 1997, in negotiating and contracting with insuring entities on behalf of employees and purchasing cooperative members, distinct experience pools shall be maintained. On and after that date, the purchasing cooperative shall be placed into the single risk pool for state-purchased health services, as provided in section 308 of this act;

(b) Review and approve or deny applications from entities seeking membership in the purchasing cooperative:

(i) The administrator may require all or the substantial majority of the employees of the organizations or entities listed in subsection (2) of this section to enroll in the purchasing cooperative.

(ii) The administrator shall require, that as a condition of membership in the purchasing cooperative, an entity or organization listed in subsection (2) of this section that employs individuals pay at least fifty percent but not more than ninety-five percent of the cost of the insurance coverage for each employee enrolled in the purchasing cooperative.

(iii) In offering and administering the purchasing cooperative, the administrator may not discriminate against individuals or groups based on age, gender, geographic area, industry, or medical history.

(4) On or after July 1, 1995, the uniform benefits package and schedule of premiums and point of service cost-sharing adopted and from time to time revised by the health services commission pursuant to chapter . . ., Laws of 1993 (this act) shall be applicable to the cooperative.

(5) The administrator shall adopt preexisting condition coverage provisions for the cooperative as provided in sections 704 through 707 of this act.

(6)(a) The Washington state health insurance purchasing cooperative account is established in the custody of the state treasurer, to be used by the administrator for the deposit of premium payments from individuals and entities described in subsection (2) of this section, and for payment of premiums for benefit contracts entered into on behalf of the purchasing cooperative's participants and operating expenses incurred by the authority in the administration of benefit contracts under this section. Moneys from the account shall be disbursed by the state treasurer by warrants on vouchers duly authorized by the administrator.

(b) Disbursements from the account are not subject to appropriations, but shall be subject to the allotment procedure provided under chapter 43.88 RCW.

NEW SECTION. Sec. 310. A new section is added to chapter 41.05 RCW to read as follows:

The administrator shall develop a marketing plan for the basic health plan and the Washington state health insurance purchasing cooperative. The plan shall be targeted to individuals and entities eligible to enroll in the two programs and provide clear and understandable explanations of the programs and enrollment procedures. The plan also shall incorporate special efforts to reach communities and people of color.

Sec. 311. RCW 28A.400.200 and 1990 1st ex.s. c 11 s 2 and 1990 c 33 s 381 are each reenacted and amended to read as follows:

(1) Every school district board of directors shall fix, alter, allow, and order paid salaries and compensation for all district employees in conformance with this section.

(2)(a) Salaries for certificated instructional staff shall not be less than the salary provided in the appropriations act in the state-wide salary allocation schedule for an employee with a baccalaureate degree and zero years of service; and

(b) Salaries for certificated instructional staff with a masters degree shall not be less than the salary provided in the appropriations act in the state-wide salary allocation schedule for an employee with a masters degree and zero years of service;

(3)(a) The actual average salary paid to basic education certificated instructional staff shall not exceed the district's average basic education certificated instructional staff salary used for the state basic education allocations for that school year as determined pursuant to RCW 28A.150.410.

(b) Fringe benefit contributions for basic education certificated instructional staff shall be included as salary under (a) of this subsection only to the extent that the district's actual average benefit contribution exceeds the ((~~greater of: (i) The formula amount for insurance benefits~~)) amount of the uniform benefits package allocation provided per certificated instructional staff unit in the state operating appropriations act in effect at the time the compensation is payable((~~; or (ii) the actual average amount provided by the school district in the 1986‑87 school year~~)). For purposes of this section, fringe benefits shall not include payment for unused leave for illness or injury under RCW 28A.400.210((~~, or~~)); employer contributions for old age survivors insurance, workers' compensation, unemployment compensation, and retirement benefits under the Washington state retirement system; or employer contributions for services or levels of services not included in the uniform benefits package provided under section 615 of this act.

(c) Salary and benefits for certificated instructional staff in programs other than basic education shall be consistent with the salary and benefits paid to certificated instructional staff in the basic education program.

(4) Salaries and benefits for certificated instructional staff may exceed the limitations in subsection (3) of this section only by separate contract for additional time, additional responsibilities, or incentives. Supplemental contracts shall not cause the state to incur any present or future funding obligation. Supplemental contracts shall be subject to the collective bargaining provisions of chapter 41.59 RCW and the provisions of RCW 28A.405.240, shall not exceed one year, and if not renewed shall not constitute adverse change in accordance with RCW 28A.405.300 through 28A.405.380. No district may enter into a supplemental contract under this subsection for the provision of services which are a part of the basic education program required by Article IX, section 3 of the state Constitution.

(5) Employee benefit plans offered by any district shall comply with RCW 28A.400.350 and 28A.400.275 and 28A.400.280.

NEW SECTION. Sec. 312. TRANSFER OF AUTHORITY TO PURCHASE SERVICES FROM COMMUNITY HEALTH CENTERS. (1) State general funds appropriated to the department of health for the purposes of funding community health centers to provide primary medical and dental care services, migrant health services, and maternity health care services shall be transferred to the state health care authority. Any related administrative funds expended by the department of health for this purpose shall also be transferred to the health care authority. The health care authority shall exclusively expend these funds through contracts with community health centers to provide primary medical and dental care services, migrant health services, and maternity health care services. The administrator of the health care authority shall establish requirements necessary to assure community health centers provide quality health care services that are appropriate and effective and are delivered in a cost-efficient manner. The administrator shall further assure that community health centers have appropriate referral arrangements for acute care and medical specialty services not provided by the community health centers.

(2) To further the intent of chapter . . ., Laws of 1993 (this act), the health care authority, in consultation with the department of health, shall evaluate the organization and operation of the federal and state-funded community health centers and propose recommendations to the health services commission and the health policy committees of the legislature by November 30, 1994, that identify changes to permit community health centers to form certified health plans or other innovative health care delivery arrangements that help ensure access to primary health care services to low-income, migrant, refugee populations consistent with the purposes of chapter . . ., Laws of 1993 (this act).

NEW SECTION. Sec. 313. A new section is added to chapter 41.05 RCW to read as follows:

(1) If a waiver of the medicare statute, as provided in section 621 of this act, is not obtained prior to June 30, 1995, the administrator shall develop a self-funded medicare supplemental benefits package. The package shall be offered beginning July 1, 1996, and until a medicare waiver is obtained.

(2) The administrator shall:

(a) Define the services in the package to include all services available in the uniform benefits package to the extent they are not covered by medicare;

(b) Offer the package to any resident of the state eligible for medicare benefits;

(d) Establish the premium that will be charged for the package and individual point of service cost-sharing levels; and

(e) To the extent that funding is made available specifically for this purpose, establish subsidies for low-income residents' premium and cost-sharing payments.

PART IV. DATA COLLECTION AND ADMINISTRATIVE REFORM

Sec. 401. RCW 70.170.100 and 1990 c 269 s 12 are each amended to read as follows:

(1) To promote the public interest consistent with the purposes of chapter . . ., Laws of 1993 (this act), the department is responsible for the development, implementation, and custody of a state-wide ((~~hospital~~)) health care data system, with policy direction and oversight to be provided by the Washington health services commission. As part of the design stage for development of the system, the department shall undertake a needs assessment of the types of, and format for, ((~~hospital~~)) health care data needed by consumers, purchasers, health care payers, ((~~hospitals~~)) providers, and state government as consistent with the intent of chapter . . ., Laws of 1993 (this act) ((~~chapter~~)). The department shall identify a set of ((~~hospital~~)) health care data elements and report specifications which satisfy these needs. The ((~~council~~)) Washington health services commission, created by section 603 of this act, shall review the design of the data system ((~~and~~)) may ((~~direct the department to~~)) establish a technical advisory committee on health data and may recommend that the department contract with a private vendor for assistance in the design of the data system or for any part of the work to be performed under this section. The data elements, specifications, and other ((~~design~~)) distinguishing features of this data system shall be made available for public review and comment and shall be published, with comments, as the department's first data plan by ((~~January 1, 1990~~)) July 1, 1994.

(2) Subsequent to the initial development of the data system as published as the department's first data plan, revisions to the data system shall be considered ((~~through the department's development of a biennial data plan, as proposed to,~~)) with the oversight and policy guidance of the Washington health services commission or its technical advisory committee and funded by((,)) the legislature through the biennial appropriations process with funds appropriated to the state health services trust fund. ((~~Costs of data activities outside of these data plans except for special studies shall be funded through legislative appropriations.~~

~~(3)~~)) In designing the state-wide ((~~hospital~~)) health care data system and any data plans, the department shall identify ((~~hospital~~)) health care data elements relating to ((~~both hospital finances~~)) health care costs, the quality of health care services, the outcomes of health care services, and ((~~the~~)) use of ((~~services by patients~~)) health care by consumers. Data elements ((~~relating to hospital finances~~)) shall be reported ((~~by hospitals~~)) as the Washington health services commission directs by reporters in conformance with a uniform ((~~system of~~)) reporting ((~~as specified by the department and shall~~)) system established by the department, which shall be adopted by reporters. In the case of hospitals this includes data elements identifying each hospital's revenues, expenses, contractual allowances, charity care, bad debt, other income, total units of inpatient and outpatient services, and other financial information reasonably necessary to fulfill the purposes of chapter . . ., Laws of 1993 (this ((~~chapter~~)) act), for hospital activities as a whole and, as feasible and appropriate, for specified classes of hospital purchasers and payers. Data elements relating to use of hospital services by patients shall, at least initially, be the same as those currently compiled by hospitals through inpatient discharge abstracts ((~~and reported to the Washington state hospital commission~~)). In the case of practitioners this includes, at least, data elements indicating the practitioner's unique identification number, practice location, and credentials. All such information shall be collected through payers, such as certified health plans and the health care authority, or third-party administrators, except to the extent that the department determines it can only be collected through health service providers. The commission and the department shall require reporting by electronic transmission under a uniform system adopted by the department.

(3) All state agencies responsible for providing health care services and all health care provider organizations contracting with the state shall be required to collect and report annually detailed data on client utilization, quality assurance, and health insurance coverage. The data shall be disaggregated by race and ethnicity.

(4) The state-wide ((~~hospital~~)) health care data system shall be uniform in its identification of reporting requirements for ((~~hospitals~~)) reporters across the state ((~~to the extent that such uniformity is necessary to fulfill the purposes of this chapter~~)). Data reporting requirements may reflect differences ((~~in hospital size; urban or rural location; scope, type, and method of providing service; financial structure; or other pertinent distinguishing factors~~)) that involve pertinent distinguishing features as determined by the Washington health services commission by rule. ((~~So far as possible,~~)) The data system shall be coordinated with any requirements of the trauma care data registry as authorized in RCW 70.168.090, the federal department of health and human services in its administration of the medicare program, ((~~and~~)) the state in its role of gathering public health statistics, or any other payer program of consequence so as to minimize any unduly burdensome reporting requirements imposed on ((~~hospitals~~)) reporters.

(5) In identifying financial reporting requirements under the state-wide ((~~hospital~~)) health care data system, the department may require both annual reports and condensed quarterly reports from reporters, so as to achieve both accuracy and timeliness in reporting, but shall craft such requirements with due regard of the data reporting burdens of reporters.

(6) ((In designing the initial state-wide hospital data system as published in the department's first data plan, the department shall review all existing systems of hospital financial and utilization reporting used in this state to determine their usefulness for the purposes of this chapter, including their potential usefulness as revised or simplified.

(7) Until such time as the state-wide hospital data system and first data plan are developed and implemented and hospitals are able to comply with reporting requirements, the department shall require hospitals to continue to submit the hospital financial and patient discharge information previously required to be submitted to the Washington state hospital commission. Upon publication of the first data plan, hospitals shall have a reasonable period of time to comply with any new reporting requirements and, even in the event that new reporting requirements differ greatly from past requirements, shall comply within two years of July 1, 1989.

~~(8)~~)) The ((~~hospital~~)) health care data collected ((~~and~~)), maintained, and studied by the department or the Washington health services commission shall only be available for retrieval in original or processed form to public and private requestors within a reasonable period of time after the date of request. The fee charged for data retrieval shall be equal for all eligible interests. The cost of retrieving data for state officials and agencies shall be funded through the state general appropriation. The cost of retrieving data for individuals and organizations engaged in research or private use of data or studies shall be funded by a fee schedule developed by the department which reflects the direct cost of retrieving the data or study in the requested form.

(7) All persons subject to chapter . . ., Laws of 1993 (this act) shall comply with departmental or commission requirements established by rule in the acquisition of data.

Sec. 402. RCW 70.170.110 and 1989 1st ex.s. c 9 s 511 are each amended to read as follows:

The department shall provide, or may contract with a private entity to provide, ((~~hospital~~)) analyses and reports or any studies it chooses to conduct consistent with the purposes of chapter . . ., Laws of 1993 (this ((~~chapter~~)) act), subject to the availability of funds and any policy direction that may be given by the Washington health services commission. ((Prior to release, the department shall provide affected hospitals with an opportunity to review and comment on reports which identify individual hospital data with respect to accuracy and completeness, and otherwise shall focus on aggregate reports of hospital performance.)) These studies, analyses, or reports shall include:

(1) Consumer guides on purchasing ((~~hospital care services and~~)) or consuming health care and publications providing verifiable and useful aggregate comparative information to ((~~consumers on hospitals and hospital services~~)) the public on health care services, their cost, their efficacy, and the quality of health care providers who participate in certified health plans;

(2) Reports for use by classes of purchasers, who purchase from certified health plans, health care payers, and providers as specified for content and format in the state-wide data system and data plan; ((~~and~~))

(3) Reports on relevant ((~~hospital~~)) health care policy ((~~issues~~)) including the distribution of hospital charity care obligations among hospitals; absolute and relative rankings of Washington and other states, regions, and the nation with respect to expenses, net revenues, and other key indicators; ((~~hospital~~)) provider efficiencies; and the effect of medicare, medicaid, and other public health care programs on rates paid by other purchasers of ((~~hospital~~)) health care; and

(4) Any other reports the commission or department deems useful to assist the public purchasers of certified health plans in understanding the prudent and cost-effective use of certified health plan services.

NEW SECTION. Sec. 403. A new section is added to chapter 70.170 RCW to read as follows:

The Washington health services commission shall have access to all health data presently available to the secretary of health. Certified health plans, purchasers, and providers shall have access to all health data presently available to the secretary of health, but in such aggregate form as to protect proprietary interests. To the extent possible, the commission shall use existing data systems and coordinate among existing agencies. The department of health shall be the designated depository agency for all health data collected pursuant to chapter . . ., Laws of 1993 (this act). The following data sources shall be developed or made available:

(1) The commission shall coordinate with the secretary of health to utilize data collected by the state center for health statistics, including hospital charity care and related data, rural health data, epidemiological data, ethnicity data, social and economic status data, and other data relevant to the commission's responsibilities.

(2) The commission, in coordination with the department of health and the health science programs of the state universities shall develop procedures to analyze clinical and other health services outcome data, and conduct other research necessary for the specific purpose of assisting in the design of the uniform benefits package under chapter . . ., Laws of 1993 (this act).

(3) The commission shall establish cost data sources and shall require each certified health plan as defined in section 602 of this act to provide the commission and the department of health with enrollee care and cost information, to include: (a) Enrollee identifier, including date of birth, sex, and ethnicity; (b) provider identifier; (c) diagnosis; (d) health care services or procedures provided; (e) provider charges; and (f) amount paid. The department shall establish by rule confidentiality standards to safeguard the information from inappropriate use or release.

NEW SECTION. Sec. 404. A new section is added to chapter 70.170 RCW to read as follows:

(1) The department is responsible for the implementation and custody of a state-wide personal health services data and information system. The data elements, specifications, and other design features of this data system shall be consistent with criteria adopted by the Washington health services commission. The department shall provide the commission with reasonable assistance in the development of these criteria, and shall provide the commission with periodic progress reports related to the implementation of the system or systems related to those criteria.

(2) The department shall coordinate the development and implementation of the personal health services data and information system with related private activities and with the implementation activities of the data sources identified by the commission. Data shall include: (a) Enrollee identifier, including date of birth, sex, and ethnicity; (b) provider identifier; (c) diagnosis; (d) health services or procedures provided; (e) provider charges; and (f) amount paid. The commission shall establish by rule, confidentiality standards to safeguard the information from inappropriate use or release. The department shall assist the commission in establishing reasonable time frames for the completion of the system development and system implementation.

(3) The department shall coordinate with the Portland area Indian health service, reservation Indian health service units, tribal clinics, and any urban Indian health service organizations for the design, development, implementation, and maintenance of an American Indian-specific health data statistics information system. The commission rules regarding the confidentiality to safeguard the information from inappropriate use or release shall apply.

NEW SECTION. Sec. 405. A new section is added to chapter 70.170 RCW to read as follows:

The Washington health services commission may determine reporting requirements for the following types of entities: Health care providers, health care facilities, insuring entities, and certified health plans. The reporting requirement shall be for the purposes of determining whether the health care system is operating as efficiently as possible. In addition to determining which entities may report such data, the commission may also determine which elements are essential, consistent with the data reporting requirements of the department of health and in a form as the department may require. In determination of said reporting requirements, the commission may consider, but not be limited to, the following:

(1) Salaries, by classification for each position in the reporting entity;

(2) Total number of full-time equivalent employees employed under each classification;

(3) Salaries and fringe benefits for the twenty highest paid administrative positions;

(4) The name of each corporation related to the entity;

(5) The salaries paid to entity employees by each related corporation and by the entity to the employees of related corporations; and

(6) A breakdown of each entity and department budgets by administrative, supervisory, and direct service categories.

NEW SECTION. Sec. 406. A new section is added to chapter 70.41 RCW to read as follows:

(1) The legislature finds that the spiraling costs of health care continue to surmount efforts to contain them, increasing at approximately twice the inflationary rate. The causes of this phenomenon are complex. By making physicians and other health care providers with hospital admitting privileges more aware of the cost consequences of health care services for consumers, these providers may be inclined to exercise more restraint in providing only the most relevant and cost-beneficial hospital services, with a potential for reducing the utilization of those services. The requirement of the hospital to inform physicians and other health care providers of the charges of the health care services that they order may have a positive effect on containing health costs. Further, the option of the physician or other health care provider to inform the patient of these charges may strengthen the necessary dialogue in the provider-patient relationship that tends to be diminished by intervening third-party payers.

(2) The chief executive officer of a hospital licensed under this chapter and the superintendent of a state hospital shall establish and maintain a procedure for disclosing to physicians and other health care providers with admitting privileges the charges of all health care services ordered for their patients. Copies of hospital charges shall be made available to any physician and/or other health care provider ordering care in hospital inpatient/outpatient services. The physician and/or other health care provider may inform the patient of these charges and may specifically review them. Hospitals are also directed to study methods for making daily charges available to prescribing physicians through the use of interactive software and/or computerized information thereby allowing physicians and other health care providers to review not only the costs of present and past services but also future contemplated costs for additional diagnostic studies and therapeutic medications.

NEW SECTION. Sec. 407. A new section is added to Title 48 RCW to read as follows:

The insurance commissioner, with the advice of the Washington health services commission and the department of health, shall design and implement uniform administrative requirements for certified health plans. Requirements shall include: (1) A centralized and regularly updated electronic eligibility file; (2) a standardized process for coordinating benefits; (3) common criteria to be used in performing utilization review, including minimum qualifications for reviewers; and (4) a standard process for auditing provider bills, to be developed in accordance with national health care billing audit guidelines.

PART V. HEALTH PROFESSIONAL SHORTAGES

NEW SECTION. Sec. 501. LEGISLATIVE INTENT. The legislature finds that the successful implementation of health care reform will depend on a sufficient supply of primary health care providers throughout the state. Many rural and medically underserved urban areas lack primary health care providers and because of this, basic health care services are limited or unavailable to populations living in these areas. The legislature has in recent years initiated new programs to address these provider shortages but funding has been insufficient and additional specific provider shortages remain.

Sec. 502. RCW 28B.125.010 and 1991 c 332 s 5 are each amended to read as follows:

(1) The higher education coordinating board, the state board for community ((~~college education~~)) and technical colleges, the superintendent of public instruction, the state department of health, the Washington health services commission, and the state department of social and health services, to be known for the purposes of this section as the committee, shall establish a state-wide health personnel resource plan. The governor shall appoint a lead agency from one of the agencies on the committee.

In preparing the state-wide plan the committee shall consult with the training and education institutions affected by this chapter, health care providers, employers of health care providers, insurers, consumers of health care, and other appropriate entities.

Should a successor agency or agencies be authorized or created by the legislature with planning, coordination, or administrative authority over vocational-technical schools, community colleges, or four-year higher education institutions, the governor shall grant membership on the committee to such agency or agencies and remove the member or members it replaces.

The committee shall appoint subcommittees for the purpose of assisting in the development of the institutional plans required under this chapter. Such subcommittees shall at least include those committee members that have statutory responsibility for planning, coordination, or administration of the training and education institutions for which the institutional plans are being developed. In preparing the institutional plans for four-year institutes of higher education, the subcommittee shall be composed of at least the higher education coordinating board and the state's four-year higher education institutions. The appointment of subcommittees to develop portions of the state-wide plan shall not relinquish the committee's responsibility for assuring overall coordination, integration, and consistency of the state-wide plan.

In establishing and implementing the state-wide health personnel resource plan the committee shall, to the extent possible, utilize existing data and information, personnel, equipment, and facilities and shall minimize travel and take such other steps necessary to reduce the administrative costs associated with the preparation and implementation of the plan.

(2) The state-wide health resource plan shall include at least the following:

(a)(i) Identification of the type, number, and location of the health care professional work force necessary to meet health care needs of the state.

(ii) A description and analysis of the composition and numbers of the potential work force available for meeting health care service needs of the population to be used for recruitment purposes. This should include a description of the data, methodology, and process used to make such determinations.

(b) A centralized inventory of the numbers of student applications to higher education and vocational-technical training and education programs, yearly enrollments, yearly degrees awarded, and numbers on waiting lists for all the state's publicly funded health care training and education programs. The committee shall request similar information for incorporation into the inventory from private higher education and vocational-technical training and education programs.

(c) A description of state-wide and local specialized provider training needs to meet the health care needs of target populations and a plan to meet such needs in a cost-effective and accessible manner.

(d) A description of how innovative, cost-effective technologies such as telecommunications can and will be used to provide higher education, vocational-technical, continued competency, and skill maintenance and enhancement education and training to placebound students who need flexible programs and who are unable to attend institutions for training.

(e) A strategy for assuring higher education and vocational-technical educational and training programming is sensitive to the changing work force such as reentry workers, women, minorities, and the disabled.

(f) Strategies for promoting an increase in the use of persons of color in the health professions including adequate resources to train and utilize persons of color in the full spectrum of health professions, to include physicians, licensed physicians who are foreign medical graduates, nurses, administrators, planners, education, technicians, outreach workers, and dentists.

(g) A strategy that includes the incorporation of federal assistance programs for health career development with an emphasis on the national Indian health service programs targeting the American Indian population and other federal and state education and training assistance programs for the economically disadvantaged, physically challenged, and persons of color in all health professions.

((~~(f)~~)) (g) A strategy and coordinated state-wide policy developed by the subcommittees authorized in subsection (1) of this section for increasing the number of graduates intending to serve in shortage areas after graduation, including such strategies as the establishment of preferential admissions and designated enrollment slots.

((~~(g)~~)) (h) Guidelines and policies developed by the subcommittees authorized in subsection (1) of this section for allowing academic credit for on-the-job experience such as internships, volunteer experience, apprenticeships, and community service programs.

((~~(h)~~)) (i) A strategy developed by the subcommittees authorized in subsection (1) of this section for making required internships and residency programs available that are geographically accessible and sufficiently diverse to meet both general and specialized training needs as identified in the plan when such programs are required.

((~~(i)~~)) (j) A description of the need for multiskilled health care professionals and an implementation plan to restructure educational and training programming to meet these needs.

((~~(j)~~)) (k) An analysis of the types and estimated numbers of health care personnel that will need to be recruited from out-of-state to meet the health professional needs not met by in-state trained personnel.

((~~(k)~~)) (l) An analysis of the need for educational articulation within the various health care disciplines and a plan for addressing the need.

((~~(l)~~)) (m) An analysis of the training needs of those members of the long-term care profession that are not regulated and that have no formal training requirements. Programs to meet these needs should be developed in a cost-effective and a state-wide accessible manner that provide for the basic training needs of these individuals.

((~~(m)~~)) (n) A designation of the professions and geographic locations in which loan repayment and scholarships should be available based upon objective data-based forecasts of health professional shortages. A description of the criteria used to select professions and geographic locations shall be included. Designations of professions and geographic locations may be amended by the department of health when circumstances warrant as provided for in RCW 28B.115.070.

((~~(n)~~)) (o) A description of needed changes in regulatory laws governing the credentialing of health professionals.

((~~(o)~~)) (p) A description of linguistic and cultural training needs of foreign-trained health care professionals to assure safe and effective practice of their health care profession.

((~~(p)~~)) (q) A plan to implement the recommendations of the state-wide nursing plan authorized by RCW 74.39.040.

((~~(q)~~)) (r) A description of criteria and standards that institutional plans provided for in this section must address in order to meet the requirements of the state-wide health personnel resource plan, including funding requirements to implement the plans. The committee shall also when practical identify specific outcome measures to measure progress in meeting the requirements of this plan. The criteria and standards shall be established in a manner as to provide flexibility to the institutions in meeting state-wide plan requirements. The committee shall establish required submission dates for the institutional plans that permit inclusion of funding requests into the institutions budget requests to the state.

((~~(r)~~)) (s) A description of how the higher education coordinating board, state board for community ((~~college education~~)) and technical colleges, superintendent of public instruction, department of health, and department of social and health services coordinated in the creation and implementation of the state plan including the areas of responsibility each agency shall assume. The plan should also include a description of the steps taken to assure participation by the groups that are to be consulted with.

((~~(s)~~)) (t) A description of the estimated fiscal requirements for implementation of the state-wide health resource plan that include a description of cost saving activities that reduce potential costs by avoiding administrative duplication, coordinating programming activities, and other such actions to control costs.

(3) The committee may call upon other agencies of the state to provide available information to assist the committee in meeting the responsibilities under this chapter. This information shall be supplied as promptly as circumstances permit.

(4) State agencies involved in the development and implementation of the plan shall to the extent possible utilize existing personnel and financial resources in the development and implementation of the state-wide health personnel resource plan.

(5) The state-wide health personnel resource plan shall be submitted to the governor by July 1, 1992, and updated by July 1 of each even-numbered year. The governor, no later than December 1 of that year, shall approve, approve with modifications, or disapprove the state-wide health resource plan.

(6) The approved state-wide health resource plan shall be submitted to the senate and house of representatives committees on health care, higher education, and ways and means or appropriations by December 1 of each even-numbered year.

(7) Implementation of the state-wide plan shall begin by July 1, 1993.

(8) Notwithstanding subsections (5) and (7) of this section, the committee shall prepare and submit to the higher education coordinating board by June 1, 1992, the analysis necessary for the initial implementation of the health professional loan repayment and scholarship program created in chapter 28B.115 RCW.

(9) Each publicly funded two-year and four-year institute of higher education authorized under Title 28B RCW and vocational-technical institution authorized under Title 28A RCW that offers health training and education programs shall biennially prepare and submit an institutional plan to the committee. The institutional plan shall identify specific programming and activities of the institution that meet the requirements of the state-wide health professional resource plan.

The committee shall review and assess whether the institutional plans meet the requirements of the state-wide health personnel resource plan and shall prepare a report with its determination. The report shall become part of the institutional plan and shall be submitted to the governor and the legislature.

The institutional plan shall be included with the institution's biennial budget submission. The institution's budget shall identify proposed spending to meet the requirements of the institutional plan. Each vocational-technical institution, college, or university shall be responsible for implementing its institutional plan.

Sec. 503. RCW 28B.115.080 and 1991 c 332 s 21 are each amended to read as follows:

After June 1, 1992, the board, in consultation with the department and the department of social and health services, shall:

(1) Establish the annual award amount for each credentialed health care profession which shall be based upon an assessment of reasonable annual eligible expenses involved in training and education for each credentialed health care profession. The annual award amount may be established at a level less than annual eligible expenses. The annual award amount shall ((~~not be more than fifteen thousand dollars per year~~)) be established by the board for each eligible health profession. The awards shall not be paid for more than a maximum of five years per individual;

(2) Determine any scholarship awards for prospective physicians in such a manner to require the recipients declare an interest in serving in rural areas of the state of Washington. Preference for scholarships shall be given to students who reside in a rural physician shortage area or a nonshortage rural area of the state prior to admission to the eligible education and training program in medicine. Highest preference shall be given to students seeking admission who are recommended by sponsoring communities and who declare the intent of serving as a physician in a rural area. The board may require the sponsoring community located in a nonshortage rural area to financially contribute to the eligible expenses of a medical student if the student will serve in the nonshortage rural area;

(3) Establish the required service obligation for each credentialed health care profession, which shall be no less than three years or no more than five years. The required service obligation may be based upon the amount of the scholarship or loan repayment award such that higher awards involve longer service obligations on behalf of the participant;

(4) Determine eligible education and training programs for purposes of the scholarship portion of the program;

(5) Honor loan repayment and scholarship contract terms negotiated between the board and participants prior to May 21, 1991, concerning loan repayment and scholarship award amounts and service obligations authorized under chapter ((~~18.150~~)) 28B.115, 28B.104, or 70.180 RCW.

NEW SECTION. Sec. 504. A new section is added to chapter 43.70 RCW to read as follows:

(1) The department shall establish a multicultural health care technical assistance program. Its purpose shall be to promote technical assistance to community and migrant health centers and other appropriate health care providers who serve principally the underserved and persons of color.

The technical assistance provided shall include, but is not limited to: (a) Collaborative research and data analysis on health care outcomes that disproportionately affect persons of color; (b) design and development of model health education and promotion strategies aimed at modifying unhealthy health behaviors or enhancing the use of the health care delivery system by persons of color; (c) provision of technical information and assistance on program planning and financial management; (d) administration, public policy development, and analysis in health care issues affecting people of color; and (e) enhancement and promotion of health care career opportunities for persons of color.

(2) Consistent with appropriate funds, the programs shall be available on a state-wide basis.

Sec. 505. RCW 70.185.030 and 1991 c 332 s 9 are each amended to read as follows:

(1) The department ((~~shall~~)) may, subject to funding, establish ((~~up to three~~)) community-based recruitment and retention project sites to provide financial and technical assistance to participating communities. The goal of the project is to help assure the availability of health care providers in rural and underserved urban areas of Washington state.

(2) Administrative costs necessary to implement this project shall be kept at a minimum to insure the maximum availability of funds for participants.

(3) The secretary may contract with third parties for services necessary to carry out activities to implement this chapter where this will promote economy, avoid duplication of effort, and make the best use of available expertise.

(4) The secretary may apply for, receive, and accept gifts and other payments, including property and service, from any governmental or other public or private entity or person, and may make arrangements as to the use of these receipts, including the undertaking of special studies and other projects related to the delivery of health care in rural areas.

(5) In designing and implementing the project the secretary shall coordinate the project with the Washington rural health system project as authorized under chapter 70.175 RCW to consolidate administrative duties and reduce costs.

Sec. 506. RCW 43.70.460 and 1992 c 113 s 2 are each amended to read as follows:

(1) The department may establish a program to purchase and maintain liability malpractice insurance for retired ((~~physicians~~)) primary care providers who provide primary health care services at community clinics. The following conditions apply to the program:

(a) Primary health care services shall be provided at community clinics that are public or private tax-exempt corporations;

(b) Primary health care services provided at the clinics shall be offered to low-income patients based on their ability to pay;

(c) Retired ((~~physicians~~)) primary care providers providing health care services shall not receive compensation for their services; and

(d) The department shall contract only with a liability insurer authorized to offer liability malpractice insurance in the state.

(2) This section and RCW 43.70.470 shall not be interpreted to require a liability insurer to provide coverage to a ((~~physician~~)) primary care provider should the insurer determine that coverage should not be offered to a physician because of past claims experience or for other appropriate reasons.

(3) The state and its employees who operate the program shall be immune from any civil or criminal action involving claims against clinics or physicians that provided health care services under this section and RCW 43.70.470. This protection of immunity shall not extend to any clinic or ((~~physician~~)) primary care provider participating in the program.

(4) The department may monitor the claims experience of retired physicians covered by liability insurers contracting with the department.

(5) The department may provide liability insurance under chapter 113, Laws of 1992 only to the extent funds are provided for this purpose by the legislature.

Sec. 507. RCW 43.70.470 and 1992 c 113 s 3 are each amended to read as follows:

The department may establish by rule the conditions of participation in the liability insurance program by retired ((~~physicians~~)) primary care providers at clinics utilizing retired physicians for the purposes of this section and RCW 43.70.460. These conditions shall include, but not be limited to, the following:

(1) The participating ((~~physician~~)) primary care provider associated with the clinic shall hold a valid license to practice ((~~medicine and surgery~~)) as a physician under chapter 18.71 or 18.57 RCW, a physician assistant under chapter 18.36A, 18.71A, or 18.57A RCW, or an advanced registered nurse practitioner under chapter 18.88 RCW in this state and otherwise be in conformity with current requirements for licensure as a retired ((~~physician~~)) primary care health care provider, including continuing education requirements;

(2) The participating ((~~physician~~)) primary care health care provider shall limit the scope of practice in the clinic to primary care. Primary care shall be limited to noninvasive procedures and shall not include obstetrical care, or any specialized care and treatment. Noninvasive procedures include injections, suturing of minor lacerations, and incisions of boils or superficial abscesses;

(3) The provision of liability insurance coverage shall not extend to acts outside the scope of rendering medical services pursuant to this section and RCW 43.70.460;

(4) The participating ((~~physician~~)) primary care health care provider shall limit the provision of health care services to primarily low-income persons provided that clinics may, but are not required to, provide means tests for eligibility as a condition for obtaining health care services;

(5) The participating ((~~physician~~)) primary care health care provider shall not accept compensation for providing health care services from patients served pursuant to this section and RCW 43.70.460, nor from clinics serving these patients. "Compensation" shall mean any remuneration of value to the participating ((~~physician~~)) primary care health care provider for services provided by the ((~~physician~~)) primary care health care provider, but shall not be construed to include any nominal copayments charged by the clinic, nor reimbursement of related expenses of a participating ((~~physician~~)) primary care health care provider authorized by the clinic in advance of being incurred; and

(6) The use of mediation or arbitration for resolving questions of potential liability may be used, however any mediation or arbitration agreement format shall be expressed in terms clear enough for a person with a sixth grade level of education to understand, and on a form no longer than one page in length.

NEW SECTION. Sec. 508. MEDICAL SCHOOL GRADUATES SERVING IN RURAL AND MEDICALLY UNDERSERVED AREAS OF THE STATE--LEGISLATIVE INTENT. The legislature finds that the shortage of primary care physicians practicing in rural and medically underserved areas of the state has created a severe public health and safety problem. If unaddressed, this problem is expected to worsen with health care reform since an increased demand for primary care services will only contribute further to these shortages.

The legislature further finds that the medical training program at the University of Washington is an important and well respected resource to the people of this state in the training of primary care physicians. Currently, only a small proportion of medical school graduates are Washington residents who serve as primary care practitioners in certain parts of this state.

NEW SECTION. Sec. 509. MEDICAL SCHOOL SHORTAGE PLAN DEVELOPMENT. (1) The University of Washington shall prepare a primary care shortage plan that accomplishes the following:

(a) Identifies specific activities that the school of medicine shall pursue to increase the number of Washington residents serving as primary care physicians in rural and medically underserved areas of the state, including establishing a goal that assures that no less than forty-five percent of medical school graduates who are Washington state residents at the time of matriculation will enter into primary care residencies in Washington state by the year 2000;

(b) Assures that the school of medicine shall establish among its highest training priorities the distribution of its primary care physician graduates from the school and associated postgraduate residency programs into rural and medically underserved areas;

(c) Establishes the goal of assuring that the annual number of graduates from the family practice residency network entering rural or medically underserved practice shall be increased by forty percent over a baseline period from 1985 through 1990 by 1995;

(d) Establishes a further goal to make operational at least two additional family practice residency programs within Washington state in geographic areas identified by the plan as underserved in family practice by 1997. The geographic areas identified by the plan as being underserved by family practice physicians shall be consistent with any such similar designations as may be made in the health personnel research plan as authorized under chapter 28B.125 RCW;

(e) Establishes, in coordination with existing community and migrant health centers, three family practice residency satellite sites in rural and underserved areas of the state. One shall be a joint American osteopathic association and American medical association approved training site coordinated with an accredited college of osteopathic medicine with extensive experience in training primary care physicians for the western United States; at least fifty percent of the residency position shall be in osteopathic medicine; and

(f) Implements the plan, with the exception of the expansion of the family practice residency network, within current biennial appropriations for the University of Washington school of medicine.

(2) The plan shall be submitted to the appropriate committees of the legislature no later than December 1, 1993.

PART VI. HEALTH SERVICES COMMISSION‑-CERTIFIED HEALTH PLANS

NEW SECTION. Sec. 601. INTENT. The legislature intends that chapter . . ., Laws of 1993 (this act) establish structures, processes, and specific financial limits to stabilize the overall cost of medical care within the economy, reduce the demand for unneeded medical care, provide universal access to essential health and medical services, improve public health, and ensure that medical system costs do not undermine the financial viability of nonmedical care businesses.

NEW SECTION. Sec. 602. DEFINITIONS. In this chapter, unless the context otherwise requires:

(1)(a) "Certified health plan" or "plan" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, a health care service contractor as defined in RCW 48.44.010, or a health maintenance organization as defined in RCW 48.46.020, that contracts to administer or provide the uniform benefits package in a managed care setting consistent with the requirements of this chapter.

(b) "Certified health plan" or "plan" also means an employee health benefits plan maintained by an employer who self-insures such benefits and chooses to comply with health plan certification standards in section 610 of this act, and a health benefits plan maintained by a labor-management organization for the members of such labor organization that self-insures such benefits and chooses to comply with health plan certification standards in section 610 of this act.

(2) "Chair" means the presiding officer of the Washington health services commission.

(3) "Commission" means the Washington health services commission.

(4) "Continuous quality improvement and total quality management" means a continuous process to improve health services while reducing costs.

(5) "Employee" means a resident who is in the employment of an employer, as defined by chapter 50.04 RCW. A full-time employee is an employee who is employed at least fifty hours during a calendar month.

(6) "Employers' cooperative health purchasing group" or "purchasing group" means a group of employers in a distinct geographical region defined by the health services commission that: (a) Has as one of its purposes the purchase of the uniform benefits package on a group basis from certified health plans; (b) purchases the benefits package only for its members' employees and dependents; (c) is composed of members whose businesses or activities are principally located in the specified geographical region; (d) purchases the uniform benefits package for not less than one hundred thousand persons; and (e) does not deny participation to any business, partnership, or corporation within its geographical region.

(7) "Enrollee" means any person who is a Washington resident enrolled in a certified health plan.

(8) "Enrollee point of service cost-sharing" means copayments paid to certified health plans directly providing services, health care providers, or health care facilities by enrollees for receipt of specific uniform benefits package services, within limits established by the commission.

(9) "Enrollee premium sharing" means that portion of the premium, determined by the commission, that is paid by enrollees or their family members.

(10) "Federal poverty level" means the federal poverty guidelines determined annually by the United States department of health and human services or successor agency.

(11) "Health care facility" or "facility" means hospices licensed under chapter 70.127 RCW, hospitals licensed under chapter 70.41 RCW, rural health facilities as defined in RCW 70.175.020, psychiatric hospitals licensed under chapter 71.12 RCW, nursing homes licensed under chapter 18.51 RCW, community mental health centers licensed under chapter 71.05 or 71.24 RCW, kidney disease treatment centers licensed under chapter 70.41 RCW, ambulatory diagnostic, treatment or surgical facilities licensed under chapter 70.41 RCW, drug and alcohol treatment facilities licensed under chapter 70.96A RCW, and home health agencies licensed under chapter 70.127 RCW, and includes such facilities if owned and operated by a political subdivision or instrumentality of the state and such other facilities as required by federal law and implementing regulations, but does not include Christian Science sanatoriums operated, listed, or certified by the First Church of Christ Scientist, Boston, Massachusetts.

(12) "Health care provider" or "provider" means:

(a) A person regulated under Title 18 RCW to practice health or health-related services or otherwise practicing health care services in this state consistent with state law;

(b) An employee or agent of a person described in (a) of this subsection, acting in the course and scope of his or her employment; or

(c) An entity, whether or not incorporated, facility, or institution employing one or more persons described in (a) of this subsection, including, but not limited to, a hospital, clinic, health maintenance organization, or nursing home; or an officer, director, employee, or agent thereof acting in the course and scope of his or her employment.

(13) "Long-term care" means institutional, residential, outpatient, or community-based services that meet the individual needs of persons of all ages who are limited in their functional capacities or have disabilities and require assistance with performing two or more activities of daily living for an extended or indefinite period of time. These services include case management, protective supervision, in-home care, nursing services, convalescent, custodial, chronic, and terminally ill care.

(14) "Major capital expenditure" means any single expenditure for capital construction, renovations, or acquisition, including medical technological equipment, as defined by the commission, costing more than one million dollars.

(15) "Managed care" means an integrated system of insurance and health services delivery functions, using a defined network of providers, that assumes financial risk for delivery of health services.

(16) "Maximum enrollee financial participation" means the income-related total annual payments that may be required of an enrollee per family who chooses one of the three lowest priced plans in a geographic region including both premium-sharing and enrollee point of service cost-sharing.

(17) "Medical research facility" means either:

(a) An entity, institution, or facility recognized as a comprehensive cancer center by the national cancer institute prior to April 20, 1983, that is organized primarily for the research or treatment of cancer, including its research programs and all other health services utilized by such institution; or

(b) Other entities, institutions, or facilities meeting standards established by the commission.

(18) "Persons of color" means Asians/Pacific Islanders, African, Hispanic, and Native Americans.

(19) "Premium" means the level of payment a certified health plan receives from all sources for all expenses, including administration, operation, and capital, determined on an annual basis by the commission for providing the uniform benefits package to an individual, either adult or child, or a family.

(20) "Qualified medical research services" means medical and related health care services, drugs, and other technologies provided by a health care organization under or in accordance with the findings of a peer-reviewed and approved research protocol meeting standards established by the commission in accordance with section 606 of this act.

(21) "Technology" means the drugs, devices, equipment, and medical or surgical procedures used in the delivery of health services, and the organizational or supportive systems within which such services are provided. It also means sophisticated and complicated machinery developed as a result of ongoing research in the basic biological and physical sciences, clinical medicine, electronics, and computer sciences, as well as specialized professionals, medical equipment, procedures, and chemical formulations used for both diagnostic and therapeutic purposes.

(22) "Uniform benefits package" means those appropriate and effective health services, defined by the commission under section 615 of this act, that must be offered to all Washington residents through certified health plans.

(23) "Washington resident" or "resident" means a person who intends to reside in the state permanently or indefinitely and who did not move to Washington for the primary purpose of securing health services under sections 609 through 620 of this act. "Washington resident" also includes people and their accompanying family members who are in the state for the purpose of engaging in employment for at least one month, who did not enter the state for the primary purpose of obtaining health services. The confinement of a person in a nursing home, hospital, or other medical institution in the state shall not by itself be sufficient to qualify such person as a resident.

NEW SECTION. Sec. 603. CREATION OF COMMISSION‑-MEMBERSHIP‑-TERMS OF OFFICE‑-VACANCIES‑-SALARIES. (1) There is created an agency of state government to be known as the Washington health services commission. The commission shall consist of the insurance commissioner, the state health officer and three other members, reflecting ethnic diversity, appointed by the governor, with the consent of the senate. One member, who may not be either the insurance commissioner or the state health officer, shall be designated by the governor as chair and shall serve at the pleasure of the governor. Of the initial members, one shall be appointed to a term of three years, one shall be appointed to a term of four years, and one shall be appointed to a term of five years. Thereafter, members shall be appointed to five-year terms. Vacancies shall be filled by appointment for the remainder of the unexpired term of the position being vacated.

(2) Members of the commission shall have no pecuniary interest in any business subject to regulation by the commission and shall be subject to chapter 42.18 RCW, the executive branch conflict of interest act.

(3) Except for the insurance commissioner and the state health officer, members of the commission shall occupy their positions on a full-time basis and are exempt from the provisions of chapter 41.06 RCW. Commission members and the professional commission staff are subject to the public disclosure provisions of chapter 42.17 RCW. Members shall be paid a salary to be fixed by the governor in accordance with RCW 43.03.040. A majority of the members of the commission constitutes a quorum for the conduct of business.

NEW SECTION. Sec. 604. STAKEHOLDERS' COMMITTEE. (1) In an effort to ensure effective participation in the commission's deliberations, the chair shall appoint a stakeholders' committee with a balanced representation of members representing consumers, business, government, labor, insurers, health care providers, health care service contractors, health maintenance organizations, and persons of color. The chair may also appoint ad hoc and special committees for a specified time period.

(2) The chair shall also appoint health services effectiveness panels for specified periods of time to provide technical guidance related to appropriate and effective health services, use of technology and practice guidelines, and development of the uniform benefits package. Panels should include technical experts, such as general practitioners, specialty physicians or providers, health service researchers, health ethicists, epidemiologists, and public health experts who reflect the state's ethnic and cultural diversity.

(3) Members of committees and panels shall serve without compensation for their services but shall be reimbursed for their expenses while attending meetings on behalf of the commission in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 605. POWERS AND DUTIES OF THE CHAIR. The chair shall be the chief administrative officer and the appointing authority of the commission and has the following powers and duties:

(1) Direct and supervise the commission's administrative and technical activities in accordance with the provisions of this chapter and rules and policies adopted by the commission;

(2) Employ personnel of the commission, representative of ethnic diversity, not to exceed twenty-five full-time employees, in accordance with chapter 41.06 RCW, and prescribe their duties. With the approval of a majority of the commission, the chair may appoint persons to administer any entity established pursuant to subsection (8) of this section, and up to seven additional employees all of whom shall be exempt from the provisions of chapter 41.06 RCW;

(3) Enter into contracts on behalf of the commission;

(4) Accept and expend gifts, donations, grants, and other funds received by the commission;

(5) Delegate administrative functions of the commission to employees of the commission as the chair deems necessary to ensure efficient administration;

(6) Subject to approval of the commission, appoint advisory committees and undertake studies, research, and analysis necessary to support activities of the commission;

(7) Preside at meetings of the commission;

(8) Consistent with policies and rules established by the commission, establish such administrative divisions, offices, or programs as are necessary to carry out the purposes of chapter . . ., Laws of 1993 (this act); and

(9) Perform such other administrative and technical duties as are consistent with chapter . . ., Laws of 1993 (this act) and the rules and policies of the commission.

NEW SECTION. Sec. 606. POWERS AND DUTIES OF THE COMMISSION. The commission has the following powers and duties:

(1) Ensure that all residents of Washington state are enrolled in a certified health plan to receive the uniform benefits package, regardless of age, sex, family structure, ethnicity, race, health condition, geographic location, employment, or economic status.

(2) Ensure that all residents of Washington state have access to appropriate, timely, confidential, and effective health services. If certified health plans are insufficient or unable to meet a population's needs for access to certified health plan services, authorize appropriate state agencies, local health departments, community or migrant health centers or other nonprofit health service entities to take actions necessary to assure such access. This may include authority to contract for or to directly deliver services described within the uniform benefits package to special populations.

(3) Adopt necessary rules in accordance with chapter 34.05 RCW to carry out the purposes of chapter . . ., Laws of 1993 (this act), provided that an initial set of draft rules establishing at least the commission's organization structure, the uniform benefits package, enrollee and employer financial participation, levels of and standards for certified health plan certification, must be submitted in draft form to appropriate committees of the legislature by December 1, 1994.

(4) Establish and modify as necessary, in consultation with the state board of health and the department of health, and coordination with the planning process set forth in section 1001 of this act a uniform set of health services based on the recommendations of the health care cost control and access commission.

(5) Establish and modify as necessary, the uniform benefits package, as provided in section 615 of this act, which shall be offered to enrollees of a certified health plan. The benefit package shall be provided at no more than the maximum premium specified in subsection (6) of this section.

(6) Establish for each year a strictly community-rated maximum premium for the uniform benefits package that a certified health plan may receive. The premium cost of the uniform benefits package in 1995 shall be allowed to increase by a rate no greater than the average growth rate in the cost of the package between 1989 and 1992 as actuarially determined. Beginning in 1996, the growth rate of the package shall be reduced by two percentage points per year until the growth rate is no greater than growth in Washington per capita personal income, as determined by the office of financial management. In addition, and in order to promote price competition, the commission shall establish annual premium shares and amounts that shall be paid by employers, government sponsors, and enrollees defined in relation to the price of the lowest priced certified health plan in a region of the state, so long as the total premiums received by a certified health plan do not exceed the maximum premium levels established under this subsection. Enrollee premium share levels shall be related to enrollee household income, shall not reduce household income below the federal poverty level, and shall not apply to those with household income less than the federal poverty level. The commission shall establish regions within the state by rule.

(7) Design a mechanism to assure minors have access to confidential health care services as currently provided in RCW 70.24.110 and 71.34.030.

(8) Monitor the actual growth in total annual health services costs.

(9) Establish reporting requirements for health care providers to periodically report to the commission regarding major capital expenditures of the plans. The commission shall review and monitor such reports from providers and shall report to the legislature regarding major capital expenditures by providers on at least an annual basis.

(10) Establish maximum enrollee financial participation levels. The levels shall be related to enrollee household income and shall not result in household income being reduced below the federal poverty level.

(11) Establish a process for purchase of uniform benefits package services by enrollees when they are out-of-state.

(12) For health services provided under the uniform benefits package, adopt standards for enrollment, and standardized billing and claims processing forms. The standards shall ensure that these procedures minimize administrative burdens on health care providers, certified health plans, and consumers. Subject to federal approval or phase-in schedules whenever necessary or appropriate, the standards also shall apply to state-purchased health services, as defined in RCW 41.05.011.

(13) Suggest that certified health plans adopt certain practice guidelines or risk management protocols including those that have been demonstrated to be effective amongst persons of color for quality assurance, utilization review, or provider payment. The commission may consider guidelines or protocols recommended according to section 801 of this act for these purposes.

(14) Suggest other guidelines to certified health plans for utilization management, use of technology and methods of payment, such as diagnosis‑related groups and a resource-based relative value scale. Such guidelines shall be voluntary and shall be designed to promote improved management of care, and provide incentives for improved efficiency and effectiveness within the delivery system.

(15) Adopt standards and oversee and develop policy for personal health data and information systems as provided in chapter 70.170 RCW.

(16) Adopt standards that prevent conflict of interest by health care providers as provided in section 607 of this act.

(17) Evaluate and monitor barriers to access for special populations and persons of color and develop strategies to address these barriers.

(18) Develop appropriate standards for reimbursement of qualified medical research facilities considering as a model those used by medicare for providers and hospitals exempt from the medicare prospective payment system.

(19) Study for future development: (a) Mechanisms to assess and distribute equitably the financial effects and medical risks among certified health plans; and (b) voluntary reinsurance provisions to be funded by the certified health plans to minimize any financial risk to plans posed by including qualified research services in the uniform benefits package.

(20) Adopt standards and procedures under which a health care provider, health care facility, enrollee, or certified health plan may seek a prior determination as to whether medical services and related health care services, drugs, and other technologies provided in connection with a particular treatment are included in the uniform benefits package.

(21) Evaluate and monitor the extent to which racial and ethnic minorities have access and to receive health services within the state. This information shall be verified when certifying health plans to ensure that plans are fulfilling their obligation to provide equitable access to the uniform benefits package.

(22) Develop standards for the certification process to certify health plans to provide the uniform benefits package, according to the provisions for certified health plans under chapter . . ., Laws of 1993 (this act).

(23) Adopt standards applicable to all certified health plans that will assure health care providers within the service area of a plan an opportunity to negotiate on an equal basis the terms and conditions of their professional relationship with the plan; work cooperatively in the development of any utilization review procedures, risk management protocols for quality assurance, and practice indicators that might be unique to a plan or local community; and address such other professional issues as the parties may need to pursue in the furtherance of the goals of chapter . . ., Laws of 1993 (this act). The standards shall include a dispute resolution process for the plan and providers. The providers are authorized to organize and communicate for the purposes of the negotiations under this section.

(24) Undertake or facilitate evaluations of health care reform, including analysis of fiscal and economic impacts, the effectiveness of managed care and managed competition, and effects of reform on access and quality of service. Fiscal and economic impact analysis shall be conducted by the office of financial management.

(25) In developing the uniform benefits package and other standards pursuant to this section, consider the likelihood of the establishment of a national health services plan adopted by the federal government and its implications.

To the extent that the exercise of any of the powers and duties specified in this section may be inconsistent with the powers and duties of other state agencies, offices, or commissions, the authority of the commission shall supersede that of such other state agency, office, or commission, except in matters of personal health data, where the commission shall have primary data system policymaking authority and the department of health shall have primary responsibility for the maintenance and routine operation of personal health data systems.

NEW SECTION. Sec. 607. CONFLICT OF INTEREST STANDARDS. The commission shall establish standards prohibiting conflicts of interest by health service providers. These standards shall be designed to control inappropriate behavior by health service providers that results in financial gain at the expense of and to the detriment of consumers or certified health plans. These standards are not intended to inhibit the efficient delivery of uniform benefits package services.

NEW SECTION. Sec. 608. CONTINUOUS QUALITY IMPROVEMENT AND TOTAL QUALITY MANAGEMENT. To ensure the highest quality health services at the lowest total cost, the commission shall establish a total quality management system of continuous quality improvement. Such endeavor shall be based upon the recognized quality science for continuous quality improvement. The commission shall impanel a committee composed of persons from the private sector and related sciences who have broad knowledge and successful experiences in continuous quality improvement and total quality management applications. It shall be the responsibility of the committee to develop standards for a Washington state health services supplier certification process and recommend such standards to the commission for review and adoption. Once adopted, the commission shall establish a schedule, with full compliance no later than July 1, 1996, whereby all health service providers and health service facilities shall be certified prior to providing uniform benefits package services.

NEW SECTION. Sec. 609. CERTIFIED HEALTH PLANS--REGISTRATION REQUIRED--PENALTY. (1) On or after July 1, 1997, no person or entity in this state shall, by mail or otherwise, offer for sale, sell, promote, or provide the uniform benefits package as defined in section 602 of this act without being certified as a certified health plan by the insurance commissioner.

(2) On or after July 1, 1997, the uniform benefits package shall be purchased only from entities certified as certified health plans.

(3) On or after July 1, 1997, the uniform benefits package shall become the minimum benefits package of any certified health plan.

NEW SECTION. Sec. 610. HEALTH PLAN CERTIFICATION STANDARDS. A certified health plan shall:

(1) Provide the benefits included in the uniform benefits package to enrolled Washington residents on a prepaid per capita community-rated basis for a total cost, which may not exceed the maximum premium established by the commission and provide such health services either directly or through arrangements with institutions, entities, and persons that its enrolled population might reasonably require in accordance with the rules established by the commission;

(2) Accept for enrollment any state resident and provides or assures the provision of all services within the uniform benefits package regardless of factors referenced in RCW 49.60.020, including age, sex, family structure, ethnicity, race, health condition, geographic location, employment status, socioeconomic status, or other condition or situation. A certified health plan maintained by a self-insured employer or by a labor-management organization may limit enrollment to their employees and employees' dependents or to members and members' dependents, respectively. However, enrollment must be offered to such persons regardless of age, sex, family structure, ethnicity, race, health condition, geographic location, socioeconomic status, or other condition or situation;

(3) Permit health care providers, on an individual or class basis, to provide health services or care for conditions included in the uniform benefits package to the extent that:

(a) The provision of such health services or care is within the health care providers' permitted scope of practice; and

(b) The providers agree to abide by standards related to:

(i) Provision, utilization review, and cost containment of health services;

(ii) Management and administrative procedures; and

(iii) Provision of cost-effective and clinically efficacious health services;

(4) Develop and implement procedures for:

(a) Disclosure of provider contracting standards developed under subsection (3) of this section;

(b) Termination for cause of health care providers who have failed to comply with standards developed under subsection (3) of this section; and

(c) Appeal of a certified health plan's determination not to contract with an individual provider or provider group or to terminate a contract for cause;

(5) Demonstrate to the satisfaction of the insurance commissioner in consultation with the department of health and the commission that its facilities and personnel are adequate to provide the benefits prescribed in the uniform benefits package to enrolled Washington residents, and that it is financially capable of providing such residents with, or has made adequate contractual arrangements with health care providers and facilities to provide the residents with such services;

(6) Comply with portability of benefits requirements prescribed by the commission;

(7) Comply with administrative rules prescribed by the commission, the insurance commissioner, and other appropriate state agencies governing the conduct of the certified health plans;

(8) Provide all enrollees with instruction and informational materials to increase individual and family awareness of injury and illness prevention; encourage assumption of personal responsibility for protecting personal health; and stimulate discussion about the use and limits of medical care in improving the health of individuals and communities;

(9) Include in all of its contracts issued for uniform benefits package coverage a subrogation provision that allows the certified health plan to recover the costs of uniform benefits package services incurred to care for an enrollee injured by a negligent third party. The costs recovered shall be limited to:

(a) If the certified health plan has not intervened in the action by an injured enrollee against a negligent third party, then the amount of costs the certified health plan can recover shall be limited to the excess remaining after the enrollee has been fully compensated for his or her loss minus a proportionate share of the enrollee's costs and fees in bringing the action. The proportionate share shall be determined by:

(i) The fees and costs approved by the court in which the action was initiated; or

(ii) The written agreement between the attorney and client that established fees and costs when fees and costs are not addressed by the court.

When fees and costs have been approved by a court, after notice to the certified health plan, the certified health plan shall have the right to be heard on the matter of attorneys' fees and costs or its proportionate share;

(b) If the certified health plan has intervened in the action by an injured enrollee against a negligent third party, then the amount of costs the certified health plan can recover shall be the excess remaining after the enrollee has been fully compensated for his or her loss or the amount of the plan's incurred costs, whichever is less;

(10) Establish and maintain a grievance procedure approved by the commissioner, to provide a reasonable and effective resolution of complaints initiated by enrollees concerning any matter relating to the provision of benefits under the uniform benefits package, access to health care services, and quality of services. Each certified health plan shall respond to complaints filed with the insurance commissioner within fifteen working days. The insurance commissioner in consultation with the commission shall establish standards for grievance procedures and resolution;

(11) Be prohibited from offering or supplying incentives for individuals to enroll in, or employers to contract with, certified health plans. Prohibited incentives include, but are not limited to, payment of enrollee premium shares or point of service cost-sharing, cash incentives, and gifts or other tangible items; and

(12) Have culturally sensitive marketing and health promotion programs that include messages and approaches that are specifically effective for persons of color and accommodating to different cultural value systems, gender, and age.

NEW SECTION. Sec. 611. DENTAL HEALTH CARE SERVICE. If a corporation or cooperative group meets all requirements as a certified health plan under this chapter the commissioner may waive the requirement that such certified health plan provide all services within the uniform benefits package except dental services. The commissioner shall adopt rules necessary to implement this section.

NEW SECTION. Sec. 612. EMPLOYERS' COOPERATIVE HEALTH CARE PURCHASING GROUP‑-DEFINITION, OPEN ACCESS, REGISTRATION, SEPARATION OF PREMIUM FUNDS. (1) A purchasing group that intends to purchase health care coverage from a certified health plan shall furnish notice to the insurance commissioner that shall: (a) Identify the principal name and address of the purchasing group, (b) furnish the names and addresses of the officers of the purchasing group, (c) include copies of letters of agreement for participation in the purchasing group including minimum term of participation, and (d) provide other information as prescribed by the insurance commissioner in consultation with the health services commission to verify that the purchasing group is qualified and managed by competent and trustworthy individuals.

(2) All funds representing premiums or return premiums received by a purchasing group in its fiduciary capacity shall be accounted for and maintained in a separate account from all other funds. Each willful violation of this section shall constitute a misdemeanor.

(3) Every purchasing group shall keep at its principal address, a record of all transactions it has consummated on behalf of its members with certified health plans. All such records shall be kept available and open to the inspection of the insurance commissioner at any business time during a five-year period immediately after the date of completion of the transaction.

(4) Each purchasing group shall contract with all available certified health plans serving the geographical region where its members' employees and dependents are located.

NEW SECTION. Sec. 613. ENFORCEMENT AUTHORITY OF COMMISSIONER. For the purposes of chapter . . ., Laws of 1993 (this act), the insurance commissioner shall have the same powers and duties of enforcement as are provided in Title 48 RCW.

NEW SECTION. Sec. 614. STATE AND FEDERAL ANTI-TRUST IMMUNITY. (1) The legislature finds that competition in the health services and insurance markets is not in the public interest unless it operates within publicly established constraints that seek to (a) contain the aggregate cost of most health services, (b) promote the comparability of health insurance products, (c) improve the cost-effectiveness of those products relative to health promotion, disease prevention, and the amelioration or cure of illness, (d) assure universal access to a publicly determined, uniform package of health benefits, and (e) create reasonable equity in the distribution of funds, treatment, and medical risk among purchasing groups, insurance groups, health care providers, and Washington residents.

(2) The legislature recognizes that chapter . . ., Laws of 1993 (this act) may result in a reduction of competition in the provision of health services or insurance.

(3) The legislature intends that reductions in health services or insurance competition occur as a result of chapter . . ., Laws of 1993 (this act) for the purposes stated in this section and elsewhere in chapter . . ., Laws of 1993 (this act). To these ends, any actions taken pursuant to subsection (4) of this section by any entity created or regulated by chapter . . ., Laws of 1993 (this act) are declared to be taken pursuant to state statute and in furtherance of the public purposes of the state of Washington.

(4) The commission may, upon request of a certified health plan or entities seeking to establish a certified health plan, authorize specific anticompetitive conduct by such certified health plan or entity upon a showing by the certified health plan or entity that the conduct is necessary to achieve the policy goals of chapter . . ., Laws of 1993 (this act).

(5) The commission shall periodically review the conduct of certified health plans and entities authorized under subsection (4) of this section.

NEW SECTION. Sec. 615. UNIFORM BENEFITS PACKAGE DESIGN--LEGISLATIVE VETO. (1) The commission shall define the uniform benefits package, which shall include those health services based on the best available scientific health information, deemed to be effective and necessary on a societal basis for the maintenance of the health of citizens of the state, and weighed against need to control state health services expenditures.

(a) The legislature intends that the uniform benefits package be comparable in scope to health benefits plans offered to employees of state agencies, and that it be comprehensive and meet the health needs of residents of the state.

The uniform benefits package shall include at least:

(i) Diagnosis/assessment and selection of treatment/care;

(ii) Clinical preventive services;

(iii) Emergency health services, including ground and air ambulance services;

(iv) Reproductive and maternity services;

(v) Clinical management and provision of treatment;

(vi) Therapeutic drugs, biologicals, supplies, and equipment;

(vii) Vision, hearing, and dental care;

(viii) Inpatient and outpatient mental health and chemical dependency treatments;

(ix) Inpatient and outpatient hospital and surgical services;

(x) Effective organ transplants; and

(xi) Rehabilitative services, including physical, occupational, and speech therapies.

(b) The uniform benefits package may include other services determined by the commission to be effective, necessary, and consistent with the goals and intent of chapter . . ., Laws of 1993 (this act).

(2) The commission shall determine the specific schedule of health services within the uniform benefits package, including limitations on scope and duration of services. The uniform benefits package shall not limit coverage for preexisting or prior conditions, except that the package may exclude coverage of preexisting conditions for six months following the month that a resident enters Washington state. Such exclusion shall not apply to persons with income below the federal poverty level. The commission shall consider the recommendations of health services effectiveness panels established pursuant to section 604 of this act in carrying out this task.

(3) The commission shall establish a schedule of enrollee point of service cost-sharing for nonpreventive health services, related to enrollee household income, such that financial considerations are not a barrier to access for low-income persons, but that, for those of means, the uniform benefits package provides for moderate point of service cost-sharing. All point of service cost-sharing and cost control requirements shall apply uniformly to all health care providers providing uniform benefits package services. The schedule shall provide for an alternate and lower schedule of cost-sharing applicable to enrollees with household income below the federal poverty level.

(4) The commission shall adopt rules related to coordination of benefits where a resident has duplicate coverage. The rules shall not have the effect of eliminating enrollee premium sharing or point of service cost-sharing.

(5) In determining the uniform benefits package, the commission shall endeavor to seek the opinions of and information from the public. The commission shall consider the results of official public health assessment and policy development activities including recommendations of the department of health in discharging its responsibilities under this section.

(6) The commission shall submit its uniform benefits package and any changes it may wish to make to the legislature by December 1, 1994, and annually thereafter. The legislature may disapprove of the package by a concurrent resolution of the legislature at any time prior to the thirtieth day of the following regular legislative session. If such disapproval action is taken, the commission shall resubmit a regular modified package to the legislature within fifteen days of the disapproval. If the legislature does not disapprove the package or modify it by law by the end of that regular session it is deemed approved.

NEW SECTION. Sec. 616. CONSCIENCE OR RELIGION. No certified health plan or health care provider may be required by law or contract in any circumstances to participate in the provision of any uniform benefit if they object to so doing for reason of conscience or religion. No person may be discriminated against in employment or professional privileges because of such objection.

Should a certified health plan or health care provider object to participation in the provision of any uniform benefit on the basis of conscience or religion, the plan or provider must ensure than enrollees have direct, timely access or self-referral to a health care provider who does provide those services.

NEW SECTION. Sec. 617. SUPPLEMENTAL BENEFITS. Nothing in this chapter shall preclude insurers, health care service contractors, or health maintenance organizations from insuring, providing, or contracting for health services not included in the uniform benefits package, and nothing in this chapter shall restrict the right of an employer to offer, and employee representative to negotiate for, or an individual to purchase services not included in the uniform benefits package.

NEW SECTION. Sec. 618. LONG-TERM CARE INTEGRATION PLAN. (1) To meet the health needs of the residents of Washington state, it is critical to finance and provide long-term care and support services through an integrated, comprehensive system that promotes human dignity and recognizes the individuality of all functionally disabled persons. This system shall be available, accessible, and responsive to all residents based upon an assessment of their functional disabilities. The governor and the legislature recognize that families, volunteers, and community organizations are essential for the delivery of effective and efficient long-term care and support services, and that this private and public service infrastructure should be supported and strengthened. Further, it is important to provide benefits in perpetuity without requiring family or program beneficiary impoverishment for service eligibility.

(2) To realize the need for a strong long-term care system and to carry out the November 30, 1992, final recommendations of the Washington health care commission related to long-term care, the commission shall:

(a) Engage in a planning process, in conjunction with an advisory committee appointed for this purpose, for the inclusion of long-term care services in the uniform benefits package established under section 615 of this act as soon as practicable, but not later than July 1998;

(b) Include in its planning process consideration of the scope of services to be covered, the cost of and financing of such coverage, and the means through which existing long-term care programs and delivery systems can be coordinated and integrated.

(3) The commission shall submit recommendations concerning any necessary statutory changes or modifications of public policy to the governor and the legislature by January 1, 1995.

(4) The departments of health, retirement systems, revenue, social and health services, and veterans' affairs, the offices of financial management, insurance commissioner, and state actuary, along with the health care authority, shall participate in the review of the long-term care needs enumerated in this section and provide necessary supporting documentation and staff expertise as requested by the commission.

(5) The insurance commissioner, in consultation with the commission, shall develop, implement, and coordinate a pilot program entitled the "Washington long-term care partnership pilot program," whereby private insurance and medicaid funds shall be used to finance long-term care. In developing the program, the commission shall model the program after the Connecticut partnership for long-term care to the greatest extent practicable. The department of social and health services shall seek the federal approval necessary to carry out the purposes of this subsection. Each year, on January 1st, the office of insurance commissioner shall report to the appropriate committees of the legislature on the progress of the program. The report shall include: (a) The success in implementing the public and private partnership; (b) the number, age, and financial circumstances of individuals purchasing long-term care policies; (c) the extent and type of benefits paid under long-term care policies that could count toward medicaid resource protection; (d) estimates of impact on present and future medicaid expenditures; (e) the cost-effectiveness of the program; and (f) a determination regarding the appropriateness of continuing the program. The program shall be conducted from July 1, 1993, to July 1, 2000.

(6) The commission shall include in its planning process, the development of two social health maintenance organization long-term care pilot projects. The two pilot projects shall be referred to as the Washington life care pilot projects. Each life care pilot program shall be a single-entry system administered by an individual organization that is responsible for bringing together a full range of medical and long-term care services. The commission, in coordination with the appropriate agencies and departments, shall establish a Washington life care benefits package that shall include the uniform benefits package established in chapter . . ., Laws of 1993 (this act) and long-term care services. The Washington life care benefits package shall include, but not be limited to, the following long-term care services: Case management, intake and assessment, nursing home care, adult family home care, home health and home health aide care, hospice, chore services/homemaker/personal care, adult day care, respite care, and appropriate social services. The pilot project shall develop assessment and case management protocol that emphasize home and community-based care long-term care options.

(a) In designing the pilot projects, the commission shall address the following issues: Costs for the long-term care benefits, a projected case-mix based upon disability, the required federal waiver package, reimbursement, capitation methodology, marketing and enrollment, management information systems, identification of the most appropriate case management models, provider contracts, and the preferred organizational design that will serve as a functioning model for efficiently and effectively transitioning long-term care services into the uniform benefits package established in chapter . . ., Laws of 1993 (this act). The commission shall also be responsible for establishing the size of the two membership pools.

(b) Each program shall enroll applicants based on their level of functional disability and personal care needs. The distribution of these functional level categories and ethnicity within the enrolled program population shall be representative of their distribution within the community, using the best available data to estimate the community distributions.

(c) The two sites selected for the Washington life care pilot program shall be drawn from the largest urban areas and include one site in the eastern part of the state and one site in the western part of the state. The two organizations selected to manage and coordinate the life care services shall have the proven ability to provide ambulatory care, personal care/chore services, dental care, case management and referral services, must be accredited and licensed to provide long-term care for home health services, and may be licensed to provide nursing home care.

(d) The report on the development and establishment date of the two social health maintenance organizations shall be submitted to the governor and appropriate committees of the legislature by September 16, 1994. If the necessary federal waivers cannot be secured by January 1, 1995, the commission may elect to not establish the two pilot programs.

NEW SECTION. Sec. 619. INDIVIDUAL PARTICIPATION. (1) All residents of the state of Washington are required to participate in a certified health plan no later than July 1, 1998. If a federal waiver of the Employee Retirement Income Security Act is not obtained by July 1998, residents who have health coverage through self-insured employer plans shall be deemed to meet this requirement. This requirement shall not apply to residents with income at or below two hundred percent of the federal poverty level unless adequate funding is available for the premium subsidy levels adopted by the commission pursuant to section 606 of this act.

(2) The commission shall monitor the enrollment of individuals into certified health plans and shall make public periodic reports concerning the number of persons enrolled and not enrolled, the reasons why individuals are not enrolled, recommendations to reduce the number of persons not enrolled, and recommendations regarding enforcement of this provision.

NEW SECTION. Sec. 620. EMPLOYER PARTICIPATION. (1) The legislature recognizes that small businesses play an essential and increasingly important role in the state's economy. The legislature further recognizes that many of the state's small business owners provide health insurance to their employees through small group policies at a cost that directly affects their profitability. Other small business owners are prevented from providing health benefits to their employees by the lack of access to affordable health insurance coverage. The legislature intends that the provisions of chapter . . ., Laws of 1993 (this act) make health insurance more available and affordable to small businesses in Washington state through strong cost control mechanisms and the option to purchase health benefits through the basic health plan, the Washington state health insurance purchasing cooperative, and employers' cooperative health care purchasing groups.

(2) In defining the level of mandated employer participation under this section, the commission shall consider the impact of such participation on the financial well-being of the state's employers. In its deliberations, the commission shall evaluate the following:

(a) Whether employers' premium payments should be related to the number of full-time employees the business employs;

(b) Whether different levels of employer premium payments should be applied to employees and dependents;

(d) Any other factors deemed necessary by the commission.

(3) On July 1, 1995, every employer employing more than five hundred full-time employees shall offer a choice of at least three available certified health plans, one of which shall be the lowest cost available plan within their geographic region, to all full-time employees. The employer shall be required to pay no less than fifty percent and no more than ninety-five percent of the premium cost of the lowest cost available certified health plan within their geographic region as determined by the commission. On July 1, 1996, all dependents of full-time employees of these firms shall be offered a choice of certified health plans as provided in this section with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost certified health plan within their geographic region as determined by the commission.

(4) By July 1, 1996, every employer employing more than one hundred full-time employees shall offer a choice of at least three available certified health plans, one of which shall be the lowest cost available plan within their geographic region, to all full-time employees. The employer shall be required to pay no less than fifty percent and no more than ninety-five percent of the premium cost of the lowest cost available certified health plan as determined by the commission. On July 1, 1997, all dependents of full-time employees in these firms shall be offered a choice of certified health plans as provided in this section with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost plan within their geographic area as determined by the commission.

(5) By July 1, 1997, every employer shall offer a choice of at least three available certified health plans, one of which shall be the lowest cost available plan within their geographic region, to all full-time employees. The employer shall be required to pay no less than fifty percent and no more than ninety-five percent of the premium cost of the lowest cost available certified health plan as determined by the commission. On July 1, 1998, all dependents of full-time employees in all firms shall be offered a choice of certified health plans as provided in this section with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost plan within their geographic area as determined by the commission.

(6) The commission shall adopt rules that address employer participation requirements related to dependents when dependents are eligible for coverage under more than one plan.

(7) In lieu of sponsoring coverage for employees and their dependents through direct contracts with certified health plans, an employer may combine the employer contribution with that of the employee's contribution and enroll in the basic health plan as provided in section 201 of this act and chapter 70.47 RCW, the Washington state health insurance purchasing cooperative as provided in section 309 of this act, or an employer cooperative health purchasing group established under section 612 of this act.

(8) The commission shall submit its employer contribution levels and any changes it may wish to make to the legislature by December 1, 1994, and annually thereafter. The legislature may disapprove of the levels by a concurrent resolution of the legislature at any time prior to the thirtieth day of the following regular legislative session. If such disapproval action is taken, the commission shall resubmit regular modified employer contribution levels to the legislature within fifteen days of the disapproval. If the legislature does not disapprove the levels or modify them by law by the end of that regular session they shall be deemed approved.

NEW SECTION. Sec. 621. CODE REVISIONS AND WAIVERS. (1) The commission shall consider the analysis of state and federal laws that would need to be repealed, amended, or waived to implement chapter . . ., Laws of 1993 (this act), and report its recommendations, with proposed revisions to the Revised Code of Washington, to the governor, and appropriate committees of the legislature by January 1, 1994.

(2) The governor, in consultation with the commission, shall take the following steps in an effort to receive waivers or exemptions from federal statutes necessary to fully implement chapter . . ., Laws of 1993 (this act) to include, but not be limited to:

(a) Negotiate with the United States congress and the federal department of health and human services, health care financing administration to obtain a statutory or regulatory waiver of provisions of the medicaid statute, Title XIX of the federal social security act that currently constitute barriers to full implementation of provisions of chapter . . ., Laws of 1993 (this act) related to access to health services for low-income residents of Washington state. Such waivers shall include any waiver needed to implement managed care programs. Waived provisions may include and are not limited to: Categorical eligibility restrictions related to age, disability, blindness, or family structure; income and resource limitations tied to financial eligibility requirements of the federal aid to families with dependent children and supplemental security income programs; administrative requirements regarding single state agencies, choice of providers, and fee for service reimbursement programs; and other limitations on health services provider payment methods.

(b) Negotiate with the United States congress and the federal department of health and human services, health care financing administration to obtain a statutory or regulatory waiver of provisions of the medicare statute, Title XVIII of the federal social security act that currently constitute barriers to full implementation of provisions of chapter . . ., Laws of 1993 (this act) related to access to health services for elderly and disabled residents of Washington state. Such waivers shall include any waivers needed to implement managed care programs. Waived provisions include and are not limited to: Beneficiary cost-sharing requirements; restrictions on scope of services; and limitations on health services provider payment methods.

(c) Negotiate with the United States congress and the federal department of health and human services to obtain any statutory or regulatory waivers of provisions of the United States public health services act necessary to ensure integration of federally funded community and migrant health clinics and other health services funded through the public health services act into the health services system established pursuant to chapter . . ., Laws of 1993 (this act). The commission shall request in the waiver that funds from these sources continue to be allocated to federally funded community and migrant health clinics to the extent that such clinics' patients are not yet enrolled in certified health plans.

(d) Negotiate with the United States Congress to obtain a statutory exemption from provisions of the Employee Retirement Income Security Act that limit the state's ability to enact legislation relating to employee health benefits plans administered by employers, including health benefits plans offered by self-insured employers.

(3) On or before December 1, 1995, the commission shall report the following to the governor and appropriate committees of the legislature:

(a) The status of its efforts to obtain the waivers provided in subsection (2) of this section;

(b) The extent to which chapter . . ., Laws of 1993 (this act) can be implemented, given the status of waivers requested or granted; and

(c) If a waiver of the Employee Retirement Income Security Act has not been granted and likely will not be granted in the foreseeable future, changes in chapter . . ., Laws of 1993 (this act) necessary to implement a single-sponsor system, or to implement an alternative system that will assure universal access to care and control health services costs.

NEW SECTION. Sec. 622. Sections 601 through 620 of this act shall constitute a new chapter in Title 43 RCW.

PART VII. HEALTH INSURANCE PROVISIONS

NEW SECTION. Sec. 701. The legislature intends that, during the transition to a fully reformed health services system, certain health insurance practices be modified to increase access to health insurance coverage for some individuals and groups. The legislature recognizes that health insurance reform will not remedy the significant lack of access to coverage in Washington state without the implementation of strong cost control measures. The authority granted to the commissioner in chapter . . ., Laws of 1993 (this act) is in addition to any authority the commissioner currently has under Title 48 RCW to regulate insurers, health care service contractors, and health maintenance organizations.

NEW SECTION. Sec. 702. A new section is added to chapter 48.18 RCW to read as follows:

Every insurer upon canceling, denying, or refusing to renew any disability policy, shall, upon written request, directly notify in writing the applicant or insured, as the case may be, of the reasons for the action by the insurer and to any person covered under a group contract. Any benefits, terms, rates, or conditions of such a contract that are restricted, excluded, modified, increased, or reduced shall, upon written request, be set forth in writing and supplied to the insured and to any person covered under a group contract. The written communications required by this section shall be phrased in simple language that is readily understandable to a person of average intelligence, education, and reading ability.

Sec. 703. RCW 48.21.200 and 1983 c 202 s 16 and 1983 c 106 s 24 are each reenacted and amended to read as follows:

(1) No individual or group disability insurance policy, health care service contract, or health maintenance agreement which provides benefits for hospital, medical, or surgical expenses shall be delivered or issued for delivery in this state ((~~after September 8, 1975~~)) which contains any provision whereby the insurer, contractor, or health maintenance organization may reduce or refuse to pay such benefits otherwise payable thereunder solely on account of the existence of similar benefits provided under any ((~~individual~~)) disability insurance policy, ((~~or under any individual~~)) health care service contract, or health maintenance agreement.

(2) No individual or group disability insurance policy, health care service contract, or health maintenance agreement providing hospital, medical or surgical expense benefits and which contains a provision for the reduction of benefits otherwise payable or available thereunder on the basis of other existing coverages, shall provide that such reduction will operate to reduce total benefits payable below an amount equal to one hundred percent of total allowable expenses exclusive of copayments, deductibles, and other similar cost-sharing arrangements.

(3) The commissioner shall by rule establish guidelines for the application of this section, including:

(a) The procedures by which persons ((~~insured~~)) covered under such policies, contracts, and agreements are to be made aware of the existence of such a provision;

(b) The benefits which may be subject to such a provision;

(d) Establishment of the order of benefit determination; ((~~and~~))

(e) Exceptions necessary to maintain the integrity of policies, contracts, and agreements that may require the use of particular health care facilities or providers; and

(f) Reasonable claim administration procedures to expedite claim payments and prevent duplication of payments or benefits under such a provision((: PROVIDED, HOWEVER, That any group disability insurance policy which is issued as part of an employee insurance benefit program authorized by RCW 41.05.025(3) may exclude all or part of any deductible amounts from the definition of total allowable expenses for purposes of coordination of benefits within the plan and between such plan and other applicable group coverages: AND PROVIDED FURTHER, That any group disability insurance policy providing coverage for persons in this state may exclude all or part of any deductible amounts required by a group disability insurance policy from the definition of total allowable expenses for purposes of coordination of benefits between such policy and a group disability insurance policy issued as part of an employee insurance benefit program authorized by RCW 41.05.025(3).

~~(3) The provisions of this section shall apply to health care service contractor contracts and health maintenance organization agreements~~)).

NEW SECTION. Sec. 704. A new section is added to chapter 48.20 RCW to read as follows:

(1) After July 1, 1994, every disability insurer issuing coverage against loss arising from medical, surgical, hospital, or emergency care coverage shall waive any preexisting condition exclusion or limitation for persons who had similar coverage under a different policy, health care service contract, or health maintenance agreement in the three-month period immediately preceding the effective date of coverage under the new policy and who satisfied a waiting period of similar duration under such preceding policy, contract, or agreement; however, if the person satisfied a twelve-month waiting period under such preceding policy, contract, or agreement, the insurer shall waive any preexisting condition exclusion or limitation. The insurer need not waive a preexisting condition exclusion or limitation under the new policy for coverage not provided under such preceding policy, contract, or agreement.

(2) The commissioner may adopt rules establishing guidelines for determining when coverage is similar under new and preceding policies, contracts, and agreements and for determining when a preexisting condition waiting period has been satisfied.

(3) The commissioner in consultation with insurers, health care service contractors, and health maintenance organizations shall study the effect of preexisting condition exclusions and limitations on the cost and availability of health care coverage and shall adopt rules restricting the use of such conditions and limitations by January 1, 1994. No insurer, health care service contractor, or health maintenance organization may deny, exclude, or limit coverage for preexisting conditions for a period longer than that provided for in such rules after July 1, 1994.

NEW SECTION. Sec. 705. A new section is added to chapter 48.21 RCW to read as follows:

NEW SECTION. Sec. 706. A new section is added to chapter 48.44 RCW to read as follows:

(1) After July 1, 1994, every health care service contractor, except limited health care service contractors as defined under RCW 48.44.035, shall waive any preexisting condition exclusion or limitation for persons who had similar coverage under a different policy, health care service contract, or health maintenance agreement in the three-month period immediately preceding the effective date of coverage under the new contract and who satisfied a waiting period of similar duration under such preceding policy, contract, or agreement; however, if the person satisfied a twelve-month waiting period under such preceding policy, contract, or agreement, the insurer shall waive any preexisting condition exclusion or limitation. The insurer need not waive a preexisting condition exclusion or limitation under the new policy for coverage not provided under such preceding policy, contract, or agreement.

NEW SECTION. Sec. 707. A new section is added to chapter 48.46 RCW to read as follows:

(1) After July 1, 1994, every health maintenance organization shall waive any preexisting condition exclusion or limitation for persons who had similar coverage under a different policy, health care service contract, or health maintenance agreement in the three-month period immediately preceding the effective date of coverage under the new contract and who satisfied a waiting period of similar duration under such preceding policy, contract, or agreement; however, if the person satisfied a twelve-month waiting period under such preceding policy, contract, or agreement, the insurer shall waive any preexisting condition exclusion or limitation. The insurer need not waive a preexisting condition exclusion or limitation under the new policy for coverage not provided under such preceding policy, contract, or agreement.

Sec. 708. RCW 48.30.300 and 1975-'76 2nd ex.s. c 119 s 7 are each amended to read as follows:

Notwithstanding any provision contained in Title 48 RCW to the contrary:

(1) No person or entity engaged in the business of insurance in this state shall refuse to issue any contract of insurance or cancel or decline to renew such contract because of the sex or marital status, or the presence of any sensory, mental, or physical handicap of the insured or prospective insured. The amount of benefits payable, or any term, rate, condition, or type of coverage shall not be restricted, modified, excluded, increased or reduced on the basis of the sex or marital status, or be restricted, modified, excluded or reduced on the basis of the presence of any sensory, mental, or physical handicap of the insured or prospective insured. Subject to the provisions of subsection (2) of this section these provisions shall not prohibit fair discrimination on the basis of sex, or marital status, or the presence of any sensory, mental, or physical handicap when bona fide statistical differences in risk or exposure have been substantiated.

(2) With respect to disability policies issued or renewed on or after July 1, 1994, that provide coverage against loss arising from medical, surgical, hospital, or emergency care services:

(a) Policies shall guarantee continuity of coverage. Such provision, which shall be included in every policy, shall provide that:

(i) The policy may be canceled or nonrenewed without the prior written approval of the commissioner only for nonpayment of premium or as permitted under RCW 48.18.090; and

(ii) The policy may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the insurer has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(b) It is an unfair practice for a disability insurer to modify the coverage provided or rates applying to an in-force disability insurance policy and to fail to make such modification in all such issued and outstanding policies.

(i) Cease the sale of a policy form unless it has received prior written authorization from the commissioner and has offered all policyholders covered under such discontinued policy the opportunity to purchase equivalent coverage without health screening; or

(ii) Engage in a practice that subjects policyholders to rate increases on discontinued policy forms unless such policyholders are offered the opportunity to purchase equivalent coverage without health screening.

The insurer may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.

NEW SECTION. Sec. 709. A new section is added to chapter 48.44 RCW to read as follows:

(1) With respect to all health care service contracts issued or renewed on or after July 1, 1994, except limited health care service contracts as defined in RCW 48.44.035:

(a) Contracts shall guarantee continuity of coverage. Such provision, which shall be included in every contract, shall provide that:

(i) The contract may be canceled or nonrenewed without the prior written approval of the commissioner only for nonpayment of premiums, for violation of published policies of the contractor which have been approved by the commissioner, for persons who are entitled to become eligible for medicare benefits and fail to subscribe to a medicare supplement plan offered by the contractor, for failure of such subscriber to pay any deductible or copayment amount owed to the contractor and not the provider of health care services, or for a material breach of the contract; and

(ii) The contract may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the contractor has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(b) It is an unfair practice for a contractor to modify the coverage provided or rates applying to an in-force contract and to fail to make such modification in all such issued and outstanding contracts.

(i) Cease the sale of a contract form unless it has received prior written authorization from the commissioner and has offered all subscribers covered under such discontinued contract the opportunity to purchase equivalent coverage without health screening; or

(ii) Engage in a practice that subjects subscribers to rate increases on discontinued contract forms unless such subscribers are offered the opportunity to purchase equivalent coverage without health screening.

(2) The health care service contractor may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.

NEW SECTION. Sec. 710. A new section is added to chapter 48.46 RCW to read as follows:

(1) With respect to all health maintenance agreements issued or renewed on or after July 1, 1994, and in addition to the restrictions and limitations contained in RCW 48.46.060(4):

(a) Agreements shall guarantee continuity of coverage. Such provision, which shall be included in every agreement, shall provide that the agreement may be canceled or nonrenewed because of a change in the physical or mental condition or health of a covered person only with the prior written approval of the commissioner. Such approval shall be granted only when the organization has discharged its obligation to continue coverage for such person by obtaining coverage with another insurer, health care service contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits as defined by rule of the commissioner.

(b) It is an unfair practice for an organization to modify the coverage provided or rates applying to an in-force agreement and to fail to make such modification in all such issued and outstanding agreements.

(i) Cease the sale of an agreement form unless it has received prior written authorization from the commissioner and has offered all enrollees covered under such discontinued agreement the opportunity to purchase equivalent coverage without health screening; or

(ii) Engage in a practice that subjects enrollees to rate increases on discontinued agreement forms unless such enrollees are offered the opportunity to purchase equivalent coverage without health screening.

(2) The health maintenance organization may limit an offer of equivalent coverage without health screening to a period not less than thirty days from the date the offer is first made.

Sec. 711. RCW 48.44.260 and 1979 c 133 s 3 are each amended to read as follows:

Every authorized health care service contractor, upon canceling, denying, or refusing to renew any individual health care service contract, shall, upon written request, directly notify in writing the applicant or ((~~insured~~)) subscriber, as the case may be, of the reasons for the action by the health care service contractor. Any benefits, terms, rates, or conditions of such a contract which are restricted, excluded, modified, increased, or reduced ((~~because of the presence of a sensory, mental, or physical handicap~~)) shall, upon written request, be set forth in writing and supplied to the ((~~insured~~)) subscriber. The written communications required by this section shall be phrased in simple language which is readily understandable to a person of average intelligence, education, and reading ability.

Sec. 712. RCW 48.46.380 and 1983 c 106 s 16 are each amended to read as follows:

Every authorized health maintenance organization, upon canceling, denying, or refusing to renew any individual health maintenance agreement, shall, upon written request, directly notify in writing the applicant or enrolled participant as appropriate, of the reasons for the action by the health maintenance organization. Any benefits, terms, rates, or conditions of such agreement which are restricted, excluded, modified, increased, or reduced ((~~because of the presence of a sensory, mental, or physical handicap~~)) shall, upon written request, be set forth in writing and supplied to the individual. The written communications required by this section shall be phrased in simple language which is readily understandable to a person of average intelligence, education, and reading ability.

NEW SECTION. Sec. 713. The following acts or parts of acts are each repealed:

(1) RCW 48.46.160 and 1975 1st ex.s. c 290 s 17; and

(2) RCW 48.46.905 and 1975 1st ex.s. c 290 s 25.

NEW SECTION. Sec. 714. RCW 48.44.410 and 1986 c 223 s 12 are each repealed, effective July 1, 1994.

NEW SECTION. Sec. 715. A new section is added to chapter 48.20 RCW to read as follows:

Whenever the provisions of this chapter governing the sale and content of disability insurance conflict with the provision of sections 601 through 620 of this act, sections 601 through 620 of this act shall control.

NEW SECTION. Sec. 716. A new section is added to chapter 48.21 RCW to read as follows:

NEW SECTION. Sec. 717. A new section is added to chapter 48.44 RCW to read as follows:

Whenever the provisions of this chapter governing the sale and content of health care service contracts conflict with the provision of sections 601 through 620 of this act, sections 601 through 620 of this act shall control.

NEW SECTION. Sec. 718. A new section is added to chapter 48.46 RCW to read as follows:

Whenever the provisions of this chapter governing the sale and content of health maintenance agreements conflict with the provision of sections 601 through 620 of this act, sections 601 through 620 of this act shall control.

NEW SECTION. Sec. 719. The insurance commissioner shall undertake a study of the feasibility and benefits of developing a single licensing category for certified health plans that would replace the current disability insurer, health care service contractor, and health maintenance organization licensing categories. The results of the study shall be reported to the governor and appropriate committees of the senate and the house of representatives by January 1, 1995.

PART VIII. PRACTICE GUIDELINES

NEW SECTION. Sec. 801. A new section is added to chapter 43.70 RCW to read as follows:

PRACTICE GUIDELINES. The department of health shall consult with health care providers, purchasers, health professional regulatory authorities under RCW 18.130.040, appropriate research and clinical experts, and consumers of health care services to identify specific practice areas where practice guidelines and risk management protocols have been developed. The department shall establish a process to identify and evaluate practice guidelines and risk management protocols as they are developed by the appropriate professional, scientific, and clinical communities. The department shall recommend the use of practice guidelines and risk management protocols in quality assurance, utilization review, or provider payment to the health services commission.

PART IX. HEALTH CARE LIABILITY REFORM

Sec. 901. RCW 18.72.400 and 1991 c 3 s 171 are each amended to read as follows:

(1) The secretary of health shall allocate all appropriated funds to accomplish the purposes of this chapter.

(2) Upon a showing by the secretary of health, on behalf of the medical disciplinary board, that expenditures in excess of levels authorized by legislative appropriation are necessary to meet unanticipated public demand for investigation of, and disciplinary action against, unsafe or impaired physicians or surgeons, the office of financial management may authorize necessary expenditures from the medical disciplinary account in excess of appropriated levels.

Sec. 902. RCW 43.70.320 and 1991 sp.s. c 13 s 18 are each amended to read as follows:

(1) There is created in the state treasury an account to be known as the health professions account. All fees received by the department for health professions licenses, registration, certifications, renewals, or examinations and the civil penalties assessed and collected by the department under RCW 18.130.190(4) shall be forwarded to the state treasurer who shall credit such moneys to the health professions account.

(2) All expenses incurred in carrying out the health professions licensing activities of the department shall be paid from the account as authorized by legislative appropriation. Upon a showing by the department, on behalf of an individual health profession regulatory board, that expenditures in excess of levels authorized by legislative appropriation are necessary to meet unanticipated public demand for investigation of, and disciplinary action against, unsafe or impaired health care practitioners, the office of financial management may authorize necessary expenditures from the health professions account in excess of appropriated levels. Any residue in the account shall be accumulated and shall not revert to the general fund at the end of the biennium.

(3) The secretary shall biennially prepare a budget request based on the anticipated costs of administering the health professions licensing activities of the department which shall include the estimated income from health professions fees.

Sec. 903. RCW 18.130.190 and 1991 c 3 s 271 are each amended to read as follows:

(1) The secretary shall investigate complaints concerning practice by unlicensed persons of a profession or business for which a license is required by the chapters specified in RCW 18.130.040. In the investigation of the complaints, the secretary shall have the same authority as provided the secretary under RCW 18.130.050. The secretary shall issue a cease and desist order to a person after notice and hearing and upon a determination that the person has violated this subsection. If the secretary makes a written finding of fact that the public interest will be irreparably harmed by delay in issuing an order, the secretary may issue a temporary cease and desist order. The cease and desist order shall not relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy of a cease and desist order shall be in addition to any criminal liability. The cease and desist order is conclusive proof of unlicensed practice and may be enforced under RCW 7.21.060. This method of enforcement of the cease and desist order may be used in addition to, or as an alternative to, any provisions for enforcement of agency orders set out in chapter 34.05 RCW.

(2) The attorney general, a county prosecuting attorney, the secretary, a board, or any person may in accordance with the laws of this state governing injunctions, maintain an action in the name of this state to enjoin any person practicing a profession or business for which a license is required by the chapters specified in RCW 18.130.040 without a license from engaging in such practice or operating such business until the required license is secured. However, the injunction shall not relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy by injunction shall be in addition to any criminal liability.

(3) Unlicensed practice of a profession or operating a business for which a license is required by the chapters specified in RCW 18.130.040, unless otherwise exempted by law, constitutes a gross misdemeanor. All fees, fines, forfeitures, and penalties collected or assessed by a court because of a violation of this section shall be remitted to the health professions account.

(4) In addition to the remedies provided in this section, the secretary is authorized to impose a civil penalty of up to five thousand dollars on a person engaged, without a license, in a profession or business for which a license is required by the chapters specified in RCW 18.130.040. The imposition of the civil penalty shall occur only upon a finding by the secretary, after affording an opportunity for a hearing, that there has been a failure or refusal to obtain a license as required in any of the chapters specified in RCW 18.130.040.

NEW SECTION. Sec. 904. A new section is added to chapter 18.130 RCW to read as follows:

MALPRACTICE INSURANCE COVERAGE MANDATE. Except to the extent that liability insurance is not available, every licensed health care practitioner whose services are included in the uniform benefits package, as determined by section 615 of this act, and whose scope of practice includes independent practice, shall, as a condition of licensure and relicensure, be required to provide evidence of a minimum level of malpractice insurance coverage. On or before January 1, 1994, the department shall designate by rule:

(1) Those health professions whose scope of practice includes independent practice;

(2) For each health profession whose scope of practice includes independent practice, whether malpractice insurance is available; and

(3) If such insurance is available, the appropriate minimum level of mandated coverage.

NEW SECTION. Sec. 905. A new section is added to chapter 48.22 RCW to read as follows:

RISK MANAGEMENT TRAINING OF INDEPENDENT HEALTH CARE PRACTITIONERS. Effective July 1, 1994, a casualty insurer's issuance of a new medical malpractice policy or renewal of an existing medical malpractice policy to a physician or other independent health care practitioner shall be conditioned upon that practitioner's participation in, and completion of, health care liability risk management training. The risk management training shall provide information related to avoiding adverse health outcomes resulting from substandard practice and minimizing damages associated with the adverse health outcomes that do occur. For purposes of this section, "independent health care practitioners" means those health care practitioner licensing classifications designated by the department of health in rule pursuant to section 904 of this act.

NEW SECTION. Sec. 906. A new section is added to chapter 48.05 RCW to read as follows:

RISK MANAGEMENT TRAINING OF INDEPENDENT HEALTH CARE PRACTITIONERS. Effective July 1, 1994, each health care provider, facility, or health maintenance organization that self-insures for liability risks related to medical malpractice and employs physicians or other independent health care practitioners in Washington state shall condition each physician's and practitioner's liability coverage by that entity upon that physician's or practitioner's participation in risk management training offered by the provider, facility, or health maintenance organization to its employees. The risk management training shall provide information related to avoiding adverse health outcomes resulting from substandard practice and minimizing damages associated with those adverse health outcomes that do occur. For purposes of this section, "independent health care practitioner" means those health care practitioner licensing classifications designated by the department of health in rule pursuant to section 904 of this act.

Sec. 907. RCW 70.41.200 and 1991 c 3 s 336 are each amended to read as follows:

(1) Every hospital shall maintain a coordinated quality improvement program for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice. The program shall include at least the following:

(a) The establishment of a quality ((~~assurance~~)) improvement committee with the responsibility to review the services rendered in the hospital, both retrospectively and prospectively, in order to improve the quality of medical care of patients and to prevent medical malpractice. The committee shall oversee and coordinate the quality improvement and medical malpractice prevention program and shall insure that information gathered pursuant to the program is used to review and to revise hospital policies and procedures((~~. At least one member of the committee shall be a member of the governing board of the hospital who is not otherwise affiliated with the hospital in an employment or contractual capacity~~));

(b) A medical staff privileges sanction procedure through which credentials, physical and mental capacity, and competence in delivering health care services are periodically reviewed as part of an evaluation of staff privileges;

(c) The periodic review of the credentials, physical and mental capacity, and competence in delivering health care services of all persons who are employed or associated with the hospital;

(d) A procedure for the prompt resolution of grievances by patients or their representatives related to accidents, injuries, treatment, and other events that may result in claims of medical malpractice;

(e) The maintenance and continuous collection of information concerning the hospital's experience with negative health care outcomes and incidents injurious to patients, patient grievances, professional liability premiums, settlements, awards, costs incurred by the hospital for patient injury prevention, and safety improvement activities;

(f) The maintenance of relevant and appropriate information gathered pursuant to (a) through (e) of this subsection concerning individual physicians within the physician's personnel or credential file maintained by the hospital;

(g) Education programs dealing with quality improvement, patient safety, injury prevention, staff responsibility to report professional misconduct, the legal aspects of patient care, improved communication with patients, and causes of malpractice claims for staff personnel engaged in patient care activities; and

(h) Policies to ensure compliance with the reporting requirements of this section.

(2) Any person who, in substantial good faith, provides information to further the purposes of the quality improvement and medical malpractice prevention program or who, in substantial good faith, participates on the quality ((~~assurance~~)) improvement committee shall not be subject to an action for civil damages or other relief as a result of such activity.

(3) Information and documents, including complaints and incident reports, created specifically for, and collected, and maintained ((~~about health care providers arising out of the matters that are under review or have been evaluated~~)) by a ((~~review~~)) quality improvement committee ((~~conducting quality assurance reviews~~)) are not subject to discovery or introduction into evidence in any civil action, and no person who was in attendance at a meeting of such committee or ((~~board~~)) who participated in the creation, collection, or maintenance of information or documents specifically for the committee shall be permitted or required to testify in any civil action as to the content of such proceedings or the documents and information prepared specifically for the committee. This subsection does not preclude: (a) In any civil action, the discovery of the identity of persons involved in the medical care that is the basis of the civil action whose involvement was independent of any quality improvement activity; (b) in any civil action, the testimony of any person concerning the facts which form the basis for the institution of such proceedings of which the person had personal knowledge acquired independently of such proceedings; ((~~(b)~~)) (c) in any civil action by a health care provider regarding the restriction or revocation of that individual's clinical or staff privileges, introduction into evidence information collected and maintained by quality ((~~assurance~~)) improvement committees regarding such health care provider; ((~~(c)~~)) (d) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any and the reasons for the restrictions; or ((~~(d)~~)) (e) in any civil action, discovery and introduction into evidence of the patient's medical records required by regulation of the department of health to be made regarding the care and treatment received.

(4) The department of health shall adopt such rules as are deemed appropriate to effectuate the purposes of this section.

(5) The medical disciplinary board or the board of osteopathic medicine and surgery, as appropriate, may review and audit the records of committee decisions in which a physician's privileges are terminated or restricted. Each hospital shall produce and make accessible to the board the appropriate records and otherwise facilitate the review and audit. Information so gained shall not be subject to the discovery process and confidentiality shall be respected as required by subsection (3) of this section. Failure of a hospital to comply with this subsection is punishable by a civil penalty not to exceed two hundred fifty dollars.

(6) Violation of this section shall not be considered negligence per se.

Sec. 908. RCW 70.41.230 and 1991 c 3 s 337 are each amended to read as follows:

(1) Prior to granting or renewing clinical privileges or association of any physician or hiring a physician, a hospital or facility approved pursuant to this chapter shall request from the physician and the physician shall provide the following information:

(a) The name of any hospital or facility with or at which the physician had or has any association, employment, privileges, or practice;

(b) If such association, employment, privilege, or practice was discontinued, the reasons for its discontinuation;

(c) Any pending professional medical misconduct proceedings or any pending medical malpractice actions in this state or another state, the substance of the allegations in the proceedings or actions, and any additional information concerning the proceedings or actions as the physician deems appropriate;

(d) The substance of the findings in the actions or proceedings and any additional information concerning the actions or proceedings as the physician deems appropriate;

(e) A waiver by the physician of any confidentiality provisions concerning the information required to be provided to hospitals pursuant to this subsection; and

(f) A verification by the physician that the information provided by the physician is accurate and complete.

(2) Prior to granting privileges or association to any physician or hiring a physician, a hospital or facility approved pursuant to this chapter shall request from any hospital with or at which the physician had or has privileges, was associated, or was employed, the following information concerning the physician:

(a) Any pending professional medical misconduct proceedings or any pending medical malpractice actions, in this state or another state;

(b) Any judgment or settlement of a medical malpractice action and any finding of professional misconduct in this state or another state by a licensing or disciplinary board; and

(3) The medical disciplinary board shall be advised within thirty days of the name of any physician denied staff privileges, association, or employment on the basis of adverse findings under subsection (1) of this section.

(4) A hospital or facility that receives a request for information from another hospital or facility pursuant to subsections (1) and (2) of this section shall provide such information concerning the physician in question to the extent such information is known to the hospital or facility receiving such a request, including the reasons for suspension, termination, or curtailment of employment or privileges at the hospital or facility. A hospital, facility, or other person providing such information in good faith is not liable in any civil action for the release of such information.

(5) Information and documents, including complaints and incident reports, created specifically for, and collected, and maintained ((~~about health care providers arising out of the matters that are under review or have been evaluated~~)) by a ((~~review~~)) quality improvement committee ((~~conducting quality assurance reviews~~)) are not subject to discovery or introduction into evidence in any civil action, and no person who was in attendance at a meeting of such committee or ((~~board~~)) who participated in the creation, collection, or maintenance of information or documents specifically for the committee shall be permitted or required to testify in any civil action as to the content of such proceedings or the documents and information prepared specifically for the committee. This subsection does not preclude: (a) In any civil action, the discovery of the identity of persons involved in the medical care that is the basis of the civil action whose involvement was independent of any quality improvement activity; (b) in any civil action, the testimony of any person concerning the facts which form the basis for the institution of such proceedings of which the person had personal knowledge acquired independently of such proceedings; ((~~(b)~~)) (c) in any civil action by a health care provider regarding the restriction or revocation of that individual's clinical or staff privileges, introduction into evidence information collected and maintained by quality ((~~assurance~~)) improvement committees regarding such health care provider; ((~~(c)~~)) (d) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any and the reasons for the restrictions; or ((~~(d)~~)) (e) in any civil action, discovery and introduction into evidence of the patient's medical records required by regulation of the department of health to be made regarding the care and treatment received.

(6) Hospitals shall be granted access to information held by the medical disciplinary board and the board of osteopathic medicine and surgery pertinent to decisions of the hospital regarding credentialing and recredentialing of practitioners.

(7) Violation of this section shall not be considered negligence per se.

NEW SECTION. Sec. 909. A new section is added to chapter 43.70 RCW to read as follows:

(1)(a) Health care institutions and medical facilities, other than hospitals, that are licensed by the department, and certified health plans approved pursuant to section 610 of this act may maintain a coordinated quality improvement program for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice as set forth in RCW 70.41.200.

(b) All such programs shall comply with the requirements of RCW 70.41.200(1)(a), (c), (d), (e), (f), (g), and (h) as modified to reflect the structural organization of the institution, facility, or certified health plan, unless an alternative quality improvement program substantially equivalent to RCW 70.41.200(1)(a) is developed. All such programs, whether complying with the requirement set forth in RCW 70.41.200(1)(a) or in the form of an alternative program, must be approved by the department before the discovery limitations provided in subsections (3) and (4) of this section shall apply. In reviewing plans submitted by licensed entities that are associated with physicians' offices, the department shall ensure that the discovery limitations of this section are applied only to information and documents related specifically to quality improvement activities undertaken by the licensed entity.

(2) Physician groups of ten or more physicians may maintain a coordinated quality improvement program for the improvement of the quality of health care services rendered to patients and the identification and prevention of medical malpractice as set forth in RCW 70.41.200. All such programs shall comply with the requirements of RCW 70.41.200(1)(a), (c), (d), (e), (f), (g), and (h) as modified to reflect the structural organization of the physician group. All such programs must be approved by the department before the discovery limitations provided in subsections (3) and (4) of this section shall apply.

(3) Any person who, in substantial good faith, provides information to further the purposes of the quality improvement and medical malpractice prevention program or who, in substantial good faith, participates on the quality improvement committee shall not be subject to an action for civil damages or other relief as a result of such activity.

(4) Information and documents, including complaints and incident reports, created specifically for, and collected, and maintained by a quality improvement committee are not subject to discovery or introduction into evidence in any civil action, and no person who was in attendance at a meeting of such committee or who participated in the creation, collection, or maintenance of information or documents specifically for the committee shall be permitted or required to testify in any civil action as to the content of such proceedings or the documents and information prepared specifically for the committee. This subsection does not preclude: (a) In any civil action, the discovery of the identity of persons involved in the medical care that is the basis of the civil action whose involvement was independent of any quality improvement activity; (b) in any civil action, the testimony of any person concerning the facts that form the basis for the institution of such proceedings of which the person had personal knowledge acquired independently of such proceedings; (c) in any civil action by a health care provider regarding the restriction or revocation of that individual's clinical or staff privileges, introduction into evidence information collected and maintained by quality improvement committees regarding such health care provider; (d) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any and the reasons for the restrictions; or (e) in any civil action, discovery and introduction into evidence of the patient's medical records required by rule of the department of health to be made regarding the care and treatment received.

(5) The department of health shall adopt rules as are necessary to implement this section.

NEW SECTION. Sec. 910. (1) The administrator for the courts shall coordinate a collaborative effort to develop a voluntary system for review of medical malpractice claims by health services experts prior to the filing of a cause of action under chapter 7.70 RCW.

(2) The system shall have at least the following components:

(a) Review would be initiated, by agreement of the injured claimant and the health care provider, at the point at which a medical malpractice claim is submitted to a malpractice insurer or a self-insured health care provider.

(b) By agreement of the parties, an expert would be chosen from a pool of health services experts who have agreed to review claims on a voluntary basis.

(c) The mutually agreed upon expert would conduct an impartial review of the claim and provide his or her opinion to the parties.

(d) A pool of available experts would be established and maintained for each category of health care practitioner by the corresponding practitioner association, such as the Washington state medical association and the Washington state nurses association.

(3) The administrator for the courts shall seek to involve at least the following organizations in a collaborative effort to develop the informal review system described in subsection (2) of this section:

(a) The Washington defense trial lawyers association;

(b) The Washington state trial lawyers association;

(d) The Washington state nurses association;

(e) The Washington state hospital association;

(f) The Washington state physicians insurance exchange and association;

(g) The Washington casualty company;

(h) The doctor's agency;

(i) Group health cooperative of Puget Sound;

(j) The University of Washington;

(k) Washington osteopathic medical association;

(l) Washington state chiropractic association;

(m) Washington association of naturopathic physicians; and

(n) The department of health.

(4) On or before January 1, 1994, the administrator for the courts shall provide a report on the status of the development of the system described in this section to the governor and the appropriate committees of the senate and the house of representatives.

NEW SECTION. Sec. 911. A new section is added to chapter 7.70 RCW to read as follows:

MANDATORY MEDIATION OF HEALTH CARE MALPRACTICE CLAIMS. (1) All causes of action, whether based in tort, contract, or otherwise, for damages arising from injury occurring as a result of health care provided after the effective date of this section shall be subject to mandatory mediation prior to trial.

(2) The supreme court shall by rule adopt procedures to implement mandatory mediation of actions under this chapter. The rules shall address, at a minimum:

(a) Procedures for the appointment of, and qualifications of, mediators. A mediator shall have experience or expertise related to actions arising from injury occurring as a result of health care, and be a member of the state bar association who has been admitted to the bar for a minimum of five years or who is a retired judge. The parties may stipulate to a nonlawyer mediator. The court may prescribe additional qualifications of mediators. Mediators shall be compensated in the same amount and manner as judges pro tempore of the superior court unless the parties agree to a different amount or manner of compensation;

(b) The number of days following the filing of a claim under this chapter within which a mediator must be selected;

(c) The method by which a mediator is selected. The rule shall provide for designation of a mediator by the superior court if the parties are unable to agree upon a mediator;

(d) The number of days following the selection of a mediator within which a mediation conference must be held;

(e) A means by which mediation of an action under this chapter may be waived by a mediator who has determined that the claim is not appropriate for mediation. If mediation is waived, the rules shall require that the parties participate in at least one settlement conference prior to trial; and

(f) Any other matters deemed necessary by the court.

(3) Mediators shall not impose discovery schedules upon the parties.

NEW SECTION. Sec. 912. A new section is added to chapter 7.70 RCW to read as follows:

MANDATORY MEDIATION OF HEALTH CARE MALPRACTICE. The making of a written, good faith request for mediation of a dispute related to damages for injury occurring as a result of health care provided prior to filing a cause of action under this chapter shall toll the statute of limitations provided in RCW 4.16.350.

NEW SECTION. Sec. 913. A new section is added to chapter 7.70 RCW to read as follows:

MANDATORY MEDIATION OF HEALTH CARE MALPRACTICE CLAIMS. Section 911 of this act may not be construed to abridge the right to trial by jury following an unsuccessful attempt at mediation.

Sec. 914. RCW 5.60.070 and 1991 c 321 s 1 are each amended to read as follows:

(1) If there is a court order to mediate ((or)), a written agreement between the parties to mediate, or if mediation is mandated under section 911 of this act, then any communication made or materials submitted in, or in connection with, the mediation proceeding, whether made or submitted to or by the mediator, a mediation organization, a party, or any person present, are privileged and confidential and are not subject to disclosure in any judicial or administrative proceeding except:

(a) When all parties to the mediation agree, in writing, to disclosure;

(b) When the written materials or tangible evidence are otherwise subject to discovery, and were not prepared specifically for use in and actually used in the mediation proceeding;

(d) When disclosure is mandated by statute;

(e) When the written materials consist of a written settlement agreement or other agreement signed by the parties resulting from a mediation proceeding;

(f) When those communications or written materials pertain solely to administrative matters incidental to the mediation proceeding, including the agreement to mediate; or

(g) In a subsequent action between the mediator and a party to the mediation arising out of the mediation.

(2) When there is a court order ((or)), a written agreement to mediate, or when mediation is mandated under section 911 of this act, as described in subsection (1) of this section, the mediator or a representative of a mediation organization shall not testify in any judicial or administrative proceeding unless:

(a) All parties to the mediation and the mediator agree in writing; or

(b) In an action described in subsection (1)(g) of this section.

Sec. 915. RCW 4.22.070 and 1986 c 305 s 401 are each amended to read as follows:

(1) Except as provided in subsection (4) of this section, in all actions involving fault of more than one entity, the trier of fact shall determine the percentage of the total fault which is attributable to every entity which caused the claimant's damages, including the claimant or person suffering personal injury or incurring property damage, defendants, third-party defendants, entities released by the claimant, entities immune from liability to the claimant and entities with any other individual defense against the claimant. Judgment shall be entered against each defendant except those who have been released by the claimant or are immune from liability to the claimant or have prevailed on any other individual defense against the claimant in an amount which represents that party's proportionate share of the claimant's total damages. The liability of each defendant shall be several only and shall not be joint except:

(a) A party shall be responsible for the fault of another person or for payment of the proportionate share of another party where both were acting in concert or when a person was acting as an agent or servant of the party.

(b) If the trier of fact determines that the claimant or party suffering bodily injury or incurring property damages was not at fault, the defendants against whom judgment is entered shall be jointly and severally liable for the sum of their proportionate shares of the claimants total damages.

(2) If a defendant is jointly and severally liable under one of the exceptions listed in subsection((s)) (1)(a) or (1)(b) or (4) (a) or (b) of this section, such defendant's rights to contribution against another jointly and severally liable defendant, and the effect of settlement by either such defendant, shall be determined under RCW 4.22.040, 4.22.050, and 4.22.060.

(3)(a) Nothing in this section affects any cause of action relating to hazardous wastes or substances or solid waste disposal sites.

(b) Nothing in this section shall affect a cause of action arising from the tortious interference with contracts or business relations.

(c) Nothing in this section shall affect any cause of action arising from the manufacture or marketing of a fungible product in a generic form which contains no clearly identifiable shape, color, or marking.

(4) In all actions governed by chapter 7.70 RCW involving fault of more than one entity, the trier of fact shall determine the percentage of the total fault that is attributable to every entity that caused the claimant's damages, including the claimant or person suffering personal injury or incurring property damage, defendants, third-party defendants, entities released by the claimant, entities immune from liability to the claimant, and entities with any other individual defense against the claimant. Judgment shall be entered against each defendant except those who have been released by the claimant or are immune from liability to the claimant or have prevailed on any other individual defense against the claimant in an amount that represents that party's proportionate share of the claimant's total damages. The total damages shall first be reduced by any amount paid to the claimant by a released entity. The liability of each defendant shall be several only and shall not be joint except:

(c) A defendant shall be responsible to the claimant for any fault of an entity released by the claimant, provided that the total damages shall first be reduced by any amount paid to the claimant by a released entity, and, where some fault has been attributed to the claimant, by the claimant's proportionate share of his or her total damages.

PART X. PUBLIC HEALTH SERVICES IMPROVEMENT PLAN

NEW SECTION. Sec. 1001. A new section is added to chapter 43.70 RCW to read as follows:

PUBLIC HEALTH SERVICES IMPROVEMENT PLAN. (1) The department of health shall develop, in consultation with local health departments and districts, the state board of health, the health services commission, area Indian health service, and other state agencies, health services providers, and citizens concerned about public health, a public health services improvement plan. The plan should provide a detailed accounting of deficits in the core functions of assessment, policy development, assurance of the current public health system, how additional public health funding would be used, and describe the benefits expected from expanded expenditures.

(2) The plan shall include:

(a) Definition of minimum standards for public health protection through assessment, policy development, and assurances;

(i) Enumeration of communities not meeting those standards;

(ii) A budget and staffing plan for bringing all communities up to minimum standards;

(iii) An analysis of the costs and benefits expected from adopting minimum public health standards for assessment, policy development, and assurances; and

(b) Recommended strategies and a schedule for improving public health programs throughout the state, including:

(i) Strategies for transferring personal care services from the public health system, into the uniform benefits package where feasible; and

(ii) Timing of increased funding for public health services linked to specific objectives for improving public health.

(3) Establish in conjunction with the area Indian health services system and providers an advisory group comprised of Indian and non-Indian health care facilities and providers to formulate an American Indian health care delivery element for the health services improvement plan. The element shall include:

(a) Recommendations to providers and facilities methods for coordinating and joint venturing with the Indian health services for service delivery;

(b) Methods to improve American Indian-specific health programming; and

(4) By March 1, 1994, the department shall provide initial recommendations of the public health services improvement plan to the legislature regarding minimum public health standards, and public health programs needed to address urgent needs, such as those cited in subsection (6) of this section.

(5) By December 1, 1994, the department shall present the public health services improvement plan to the legislature, with specific recommendations for each element of the plan to be implemented over the period from 1995 through 1997.

(6) Thereafter, the department shall update the public health services improvement plan for presentation to the legislature prior to the beginning of a new biennium.

(7) Among the specific population-based public health activities to be considered in the public health services improvement plan are: Health data assessment and chronic and infectious disease surveillance; rapid response to outbreaks of communicable disease; efforts to prevent and control specific communicable diseases, such as tuberculosis and acquired immune deficiency syndrome; health education to promote healthy behaviors and to reduce the prevalence of chronic disease, such as those linked to the use of tobacco; access to primary care in coordination with existing community and migrant health clinics; programs to ensure children are born as healthy as possible and they receive immunizations and adequate nutrition; efforts to prevent intentional and unintentional injury; programs to ensure the safety of drinking water and food supplies; and other activities that have the potential to improve the health of the population or special populations and reduce the need for or cost of health services.

PART XI. STUDIES AND ADMINISTRATIVE DIRECTIVES

NEW SECTION. Sec. 1101. REPORTS OF HEALTH CARE COST CONTROL AND ACCESS COMMISSION. In carrying out its powers and duties under chapter . . ., Laws of 1993 (this act), the design of the uniform benefits package, and the development of guidelines and standards, the commission shall consider the reports of the health care cost control and access commission established under House Concurrent Resolution No. 4443 adopted by the legislature in 1990. Nothing in chapter . . ., Laws of 1993 (this act) requires the commission to follow any specific recommendation contained in those reports except as it may also be included in chapter . . ., Laws of 1993 (this act) or other law.

NEW SECTION. Sec. 1102. WORKERS' COMPENSATION MEDICAL BENEFITS. On or before December 1, 1994, the health services commission, in coordination with the department of labor and industries and the workers' compensation advisory committee, shall complete a study related to the medical services component of the workers' compensation program of the department of labor and industries. The goal of the study is to determine whether and how the medical services component of the workers' compensation program can be modified to provide appropriate medical services to injured workers in a more cost-effective manner. In conducting the study, consideration shall be given to at least the following factors: Workers' choice of health care providers, twenty-four hour coverage, the relationship between rehabilitation and medical services, and the quasi-judicial system that overlays treatment. The study shall evaluate at least the following options:

(1) Whether the medical services component of the workers' compensation program should be maintained within the department of labor and industries, and its purchasing and other practices modified to control costs and increase efficacy of health services provided to injured workers;

(2) Whether the medical services component of the workers' compensation program should be administered by the health care authority as the state health services purchasing agent, pursuant to section 308 of this act. Any recommendation proposing that the state health services agent purchase injured workers' medical services shall assure that the uniform benefits package will provide benefits that are medically necessary under the workers' compensation program in 1993, including payment for medical determinations of disability under Title 51 RCW, and consider issues presented by twenty-four hour coverage and the use of managed care to provide medical services to injured workers;

(3) Whether the medical services component of the workers' compensation program should be included in the services offered by certified health plans through employer sponsorship as provided in chapter . . ., Laws of 1993 (this act). Any recommendation proposing the inclusion of workers' compensation medical services in the services offered by certified health plans shall assure that (a) no less than ninety-seven percent of state residents have access to the uniform benefits package as required in chapter . . ., Laws of 1993 (this act), (b) the uniform benefits package provides benefits that are medically necessary under the workers' compensation program in 1993, including payment for medical determinations of disability under Title 51 RCW, (c) time-loss benefits and rehabilitative services will not be reduced as a result of the transfer, and (d) the employees' share of the workers' compensation medical aid fund contribution will be returned to employees as increased wages.

NEW SECTION. Sec. 1103. EVALUATIONS, PLANS, AND STUDIES. (1) By July 1, 1997, the legislative budget committee either directly or by contract shall conduct the following studies:

(a) A study to determine whether the administrative structure of the Washington health services commission as set forth in section 603 of this act should be continued. The study shall analyze the structure as set forth in chapter . . ., Laws of 1993 (this act), a single administering-agency model, and at least one other salient organizational model, and recommend a structure that would be most efficient and effective;

(b) A study to determine the desirability and feasibility of consolidating the following programs, services, and funding sources into the delivery and financing of uniform benefits package services through certified health plans:

(i) State and federal veterans' health services;

(ii) Civilian health and medical program of the uniformed services (CHAMPUS) of the federal department of defense and other federal agencies; and

(iii) Federal employee health benefits.

(2) The legislative budget committee shall evaluate the implementation of the provisions of chapter . . ., Laws of 1993 (this act). The study shall determine to what extent chapter . . ., Laws of 1993 (this act) has been implemented consistent with the principles and elements set forth in chapter . . ., Laws of 1993 (this act) and shall report its findings to the governor and appropriate committees of the legislature by July 1, 2003.

NEW SECTION. Sec. 1104. The commission, the office of financial management, and the legislative evaluation and accountability program committee shall jointly review the financial and accounting structure of all current state-purchased health care programs and any new programs established in chapter . . ., Laws of 1993 (this act). They shall report to the legislature on or before December 1, 1994, with recommendations on how to structure a state-purchased health services budget that: (1) Meets federal and state audit requirements; (2) exercises adequate fiscal and programmatic control; (3) provides management and organizational accountability and control; and (4) provides continuity with historical health services expenditure data.

NEW SECTION. Sec. 1105. (1) On or before December 1, 1994, the legislative budget committee, whether directly or by contract, shall conduct a study related to coordination of certified health plans and other property and casualty insurance products. The goal of the study shall be to determine methods for containing costs of health services paid for through coverage underwritten by property and casualty insurers.

(2) The study shall address methods to integrate coverage sold by property and casualty insurance companies that covers medical and hospital expenses with coverage provided through certified health plans. In conducting the study, the legislative budget committee shall evaluate at least the following options:

(a) Requiring all property and casualty insurance coverage of health services to be provided through managed care systems rather than through fee for service or indemnification plans;

(b) Prohibiting certified health plans from recovering from property and casualty insurance companies amounts that the plan has expended for health services even if coverage for such services is available under property and casualty insurance policies;

(c) Requiring persons injured as a result of an accident, however caused, to obtain health services through a certified health plan, even if coverage for health services is available under a property and casualty insurance policy;

(d) Requiring property and casualty insurance companies to reduce premium rates for all coverage duplicated by a certified health plan to the extent that a certified health plan is denied subrogation rights against the property and casualty insurer;

(e) Prohibiting litigation by any person to recover damages or amounts paid for health services available under a certified health plan, except in limited circumstances such as product liability or other areas of negligence where the negligent party would benefit from such a no-fault system without contributing to the costs of providing coverage under certified health plans; and

(f) Limiting property and casualty insurance companies' sale of coverage that would duplicate coverage provided by certified health plans.

PART XII. HEALTH SERVICES ACCOUNT AND REVENUES

NEW SECTION. Sec. 1201. The health services account is created in the state treasury. All designated receipts from RCW 82.26.020(4), 82.24.020(3), 82.08.150(6), 66.24.210(5), 66.24.290(4), and sections 1202 and 1203 of this act shall be deposited into the account and are subject to appropriation. Expenditures from the account may be used only for the following purposes:

(1) Operation of the basic health plan, as provided in chapter 70.47 RCW. For the biennium ending June 30, 1995, up to a monthly total of sixty-five thousand individuals may be enrolled as follows: Twenty thousand additional subsidized individual enrollees; fifteen thousand additional business-sponsored subsidized enrollees; and five thousand additional business-sponsored nonsubsidized enrollees. Expenditures for the biennium ending June 30, 1995, shall not exceed eighty million dollars general fund‑-state;

(2) Public health services to maintain and improve the health of Washington residents through assessment of the population's health status, development of public policy that promotes and maintains health, and assuring the availability and delivery of appropriate and effective health interventions. For the biennium ending June 30, 1995, public health expenditures from the account shall include but are not limited to:

(a) Measures to increase rates of childhood immunization;

(b) Development and implementation of a counter-message media campaign that has a goal of reducing teen risk behaviors related to tobacco, alcohol and drug use, and sexuality;

(c) Development and implementation of a comprehensive teen pregnancy prevention strategy that includes a media campaign, grants to local communities, and increased access to family planning services; and

(d) Operations of community and migrant health clinics;

(3) Operations of the health services commission established pursuant to section 603 of this act;

(4) Measures to increase the supply and geographic distribution of primary care health services providers, including but not limited to physicians, advanced registered nurse practitioners, and physician assistants, as provided in sections 501, 504, 508, and 509 of this act, and RCW 28B.125.010, 28B.115.080, 70.185.030, 43.70.460, and 43.70.470; and

(5) Development and maintenance of a health services data system, as provided in chapter 70.170 RCW.

NEW SECTION. Sec. 1202. A new section is added to chapter 48.14 RCW to read as follows:

(1) Each health care service contractor, as defined in RCW 48.44.010, shall on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax on prepayments for health care services. The tax shall be in the amount of two percent of all prepayments for health care services collected or received by the health care service contractor during the preceding calendar year.

(2) Health care service contractors shall prepay the tax due under this section. The minimum amount of the prepayments shall be percentages of the health care service contractor's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year. For calendar year 1994 the minimum amount of prepayments due shall be calculated as if the tax had been in effect during calendar year 1993.

The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

(a) On or before June 15, forty-five percent;

(b) On or before September 15, twenty-five percent;

For good cause demonstrated in writing, the commissioner may approve an amount smaller than the preceding calendar year's tax obligation as recomputed for calculating the health care service contractor's prepayment obligations for the current tax year.

(3) The state treasurer upon receipt of taxes collected and remitted under this section shall credit the sums collected and remitted to the health services trust account created under section 1201 of this act.

NEW SECTION. Sec. 1203. A new section is added to chapter 48.14 RCW to read as follows:

(1) Each health maintenance organization, as defined in RCW 48.46.020, shall on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax on prepayments for health care services. The tax shall be in the amount of two percent of all prepayments for health care services collected or received by the health maintenance organization during the preceding calendar year.

(2) Health maintenance organizations shall prepay the tax due under this section. The minimum amount of the prepayments shall be percentages of the health maintenance organization's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year. For calendar year 1994 the minimum amount of prepayments due shall be calculated as if the tax had been in effect during calendar year 1993.

The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

(a) On or before June 15, forty-five percent;

(b) On or before September 15, twenty-five percent;

For good cause demonstrated in writing, the commissioner may approve an amount smaller than the preceding calendar year's tax obligation as recomputed for calculating the health maintenance organization's prepayment obligations for the current tax year.

NEW SECTION. Sec. 1204. A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to any person in respect to health maintenance organization or health care service contractor business upon which a tax based on amounts collected or received as prepayments for health care services is paid to the state under chapter 48.14 RCW.

Sec. 1205. RCW 48.44.095 and 1983 c 202 s 3 are each amended to read as follows:

(1) Every health care service contractor shall annually, ((~~within one hundred twenty days of the closing date of its fiscal year~~)) before the first day of March, file with the commissioner a statement verified by at least two of the principal officers of the health care service contractor showing its financial condition as of the ((~~closing date of its fiscal year~~)) last day of the preceding calendar year. The statement shall be in such form as is furnished or prescribed by the commissioner. The commissioner may for good reason allow a reasonable extension of the time within which such annual statement shall be filed.

(2) The commissioner may suspend or revoke the certificate of registration of any health care service contractor failing to file its annual statement when due or during any extension of time therefor which the commissioner, for good cause, may grant.

Sec. 1206. RCW 48.46.080 and 1983 c 202 s 10 and 1983 c 106 s 6 are each reenacted and amended to read as follows:

(1) Every health maintenance organization shall annually, ((~~within one hundred twenty days of the closing date of its fiscal year~~)) before the first day of March, file with the commissioner a statement verified by at least two of the principal officers of the health maintenance organization showing its financial condition as of the ((~~closing date of its fiscal year~~)) last day of the preceding calendar year.

(2) Such annual report shall be in such form as the commissioner shall prescribe and shall include:

(a) A financial statement of such organization, including its balance sheet and receipts and disbursements for the preceding year, which reflects at a minimum;

(i) all prepayments and other payments received for health care services rendered pursuant to health maintenance agreements;

(ii) expenditures to all categories of health care facilities, providers, insurance companies, or hospital or medical service plan corporations with which such organization has contracted to fulfill obligations to enrolled participants arising out of its health maintenance agreements, together with all other direct expenses including depreciation, enrollment, and commission; and

(iii) expenditures for capital improvements, or additions thereto, including but not limited to construction, renovation, or purchase of facilities and capital equipment;

(b) The number of participants enrolled and terminated during the report period. Every employer offering health care benefits to their employees through a group contract with a health maintenance organization shall furnish said health maintenance organization with a list of their employees enrolled under such plan;

(c) The number of doctors by type of practice who, under contract with or as an employee of the health maintenance organization, furnished health care services to consumers during the past year;

(d) A report of the names and addresses of all officers, directors, or trustees of the health maintenance organization during the preceding year, and the amount of wages, expense reimbursements, or other payments to such individuals for services to such organization. For partnership and professional service corporations, a report shall be made for partners or shareholders as to any compensation or expense reimbursement received by them for services, other than for services and expenses relating directly for patient care;

(e) Such other information relating to the performance of the health maintenance organization or the health care facilities or providers with which it has contracted as reasonably necessary to the proper and effective administration of this chapter, in accordance with rules and regulations; and

(f) Disclosure of any financial interests held by officers and directors in any providers associated with the health maintenance organization or any provider of the health maintenance organization.

(3) The commissioner may for good reason allow a reasonable extension of the time within which such annual statement shall be filed.

(4) The commissioner may suspend or revoke the certificate of registration of any health maintenance organization failing to file its annual statement when due or during any extension of time therefor which the commissioner, for good cause, may grant.

(5) No person shall knowingly file with any public official or knowingly make, publish, or disseminate any financial statement of a health maintenance organization which does not accurately state the health maintenance organization's financial condition.

Sec. 1207. RCW 82.26.020 and 1983 2nd ex.s. c 3 s 16 are each amended to read as follows:

(1) ((~~From and after June 1, 1971,~~)) There is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all tobacco products in this state at the rate of forty-five percent of the wholesale sales price of such tobacco products. ((~~Such tax~~))

(2) Taxes under this section shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state tobacco products for sale, (b) makes, manufactures, or fabricates tobacco products in this state for sale in this state, or (c) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

((~~(2)~~)) (3) An additional tax is imposed equal to ((~~the rate specified in RCW 82.02.030~~)) seven percent multiplied by the tax payable under subsection (1) of this section.

(4) An additional tax is imposed equal to five and seven-tenths percent of the wholesale sales price of tobacco products. The moneys collected under this subsection shall be deposited in the health services trust account created under section 1201 of this act.

Sec. 1208. RCW 82.24.020 and 1989 c 271 s 504 are each amended to read as follows:

(1) There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling, possession or distribution of all cigarettes, in an amount equal to the rate of eleven and one-half mills per cigarette.

(2) Until July 1, 1995, an additional tax is imposed upon the sale, use, consumption, handling, possession, or distribution of all cigarettes, in an amount equal to the rate of one and one-half mills per cigarette. All revenues collected during any month from this additional tax shall be deposited in the drug enforcement and education account under RCW 69.50.520 by the twenty-fifth day of the following month.

(3) An additional tax is imposed upon the sale, use, consumption, handling, possession, or distribution of all cigarettes, in an amount equal to the rate of one and one-half mills per cigarette. All revenues collected during any month from this additional tax shall be deposited in the health services trust account created under section 1201 of this act by the twenty-fifth day of the following month.

(4) Wholesalers and retailers subject to the payment of this tax may, if they wish, absorb one-half mill per cigarette of the tax and not pass it on to purchasers without being in violation of this section or any other act relating to the sale or taxation of cigarettes.

((~~(4)~~)) (5) For purposes of this chapter, "possession" shall mean both (a) physical possession by the purchaser and, (b) when cigarettes are being transported to or held for the purchaser or his designee by a person other than the purchaser, constructive possession by the purchaser or his designee, which constructive possession shall be deemed to occur at the location of the cigarettes being so transported or held.

Sec. 1209. RCW 82.08.150 and 1989 c 271 s 503 are each amended to read as follows:

(1) There is levied and shall be collected a tax upon each retail sale of spirits, or strong beer in the original package at the rate of fifteen percent of the selling price. The tax imposed in this subsection shall apply to all such sales including sales by the Washington state liquor stores and agencies, but excluding sales to class H licensees.

(2) There is levied and shall be collected a tax upon each sale of spirits, or strong beer in the original package at the rate of ten percent of the selling price on sales by Washington state liquor stores and agencies to class H licensees.

(3) There is levied and shall be collected an additional tax upon each retail sale of spirits in the original package at the rate of one dollar and seventy-two cents per liter. The additional tax imposed in this subsection shall apply to all such sales including sales by Washington state liquor stores and agencies, and including sales to class H licensees.

(4) An additional tax is imposed equal to ((~~the rate specified in RCW 82.02.030~~)) fourteen percent multiplied by the taxes payable under subsections (1), (2), and (3) of this section.

(5) Until July 1, 1995, an additional tax is imposed upon each retail sale of spirits in the original package at the rate of seven cents per liter. The additional tax imposed in this subsection shall apply to all such sales including sales by Washington state liquor stores and agencies, and including sales to class H licensees. All revenues collected during any month from this additional tax shall be deposited in the drug enforcement and education account under RCW 69.50.520 by the twenty-fifth day of the following month.

(6) An additional tax is imposed equal to ten percent multiplied by the taxes payable under subsections (1), (2), and (3) of this section. All revenues collected during any month from this additional tax shall be deposited in the health services trust account created under section 1201 of this act by the twenty-fifth day of the following month.

(7) The tax imposed in RCW 82.08.020, as now or hereafter amended, shall not apply to sales of spirits or strong beer in the original package.

((~~(7)~~)) (8) The taxes imposed in this section shall be paid by the buyer to the seller, and each seller shall collect from the buyer the full amount of the tax payable in respect to each taxable sale under this section. The taxes required by this section to be collected by the seller shall be stated separately from the selling price and for purposes of determining the tax due from the buyer to the seller, it shall be conclusively presumed that the selling price quoted in any price list does not include the taxes imposed by this section.

((~~(8)~~)) (9) As used in this section, the terms, "spirits," "strong beer," and "package" shall have the meaning ascribed to them in chapter 66.04 RCW.

Sec. 1210. RCW 66.08.180 and 1987 c 458 s 10 are each amended to read as follows:

Moneys in the liquor revolving fund shall be distributed by the board at least once every three months in accordance with RCW 66.08.190, 66.08.200 and 66.08.210: PROVIDED, That the board shall reserve from distribution such amount not exceeding five hundred thousand dollars as may be necessary for the proper administration of this title: AND PROVIDED FURTHER, That all license fees, penalties and forfeitures derived under this act from class H licenses or class H licensees shall every three months be disbursed by the board as follows:

(1) 5.95 percent to the University of Washington and 3.97 percent to Washington State University for alcoholism and drug abuse research and for the dissemination of such research;

(2) 1.75 percent, but in no event less than one hundred fifty thousand dollars per biennium, to the University of Washington to conduct the state toxicological laboratory pursuant to RCW ((~~68.08.107~~)) 68.50.107;

(3) 88.33 percent to the general fund to be used by the department of social and health services solely to carry out the purposes of RCW 70.96.085((~~, as now or hereafter amended~~));

(4) The first fifty-five dollars per license fee provided in RCW 66.24.320 and 66.24.330 up to a maximum of one hundred fifty thousand dollars annually shall be disbursed every three months by the board to the general fund to be used for juvenile alcohol and drug prevention programs for kindergarten through third grade to be administered by the superintendent of public instruction;

(5) Twenty percent of the remaining total amount derived from license fees pursuant to RCW 66.24.320, 66.24.330, 66.24.340, 66.24.350, 66.24.360, and 66.24.370, shall be transferred to the general fund to be used by the department of social and health services solely to carry out the purposes of RCW 70.96.085; and

(6) One-fourth cent per liter of the tax imposed by RCW 66.24.210(1) shall every three months be disbursed by the board to Washington State University solely for wine and wine grape research, extension programs related to wine and wine grape research, and resident instruction in both wine grape production and the processing aspects of the wine industry in accordance with RCW 28B.30.068. The director of financial management shall prescribe suitable accounting procedures to ensure that the funds transferred to the general fund to be used by the department of social and health services and appropriated are separately accounted for.

Sec. 1211. RCW 66.24.210 and 1991 c 192 s 3 are each amended to read as follows:

(1) There is hereby imposed upon all wines sold to wine wholesalers and the Washington state liquor control board, within the state a tax at the rate of twenty and one-fourth cents per liter: PROVIDED, HOWEVER, That wine sold or shipped in bulk from one winery to another winery shall not be subject to such tax. The tax provided for in this section may, if so prescribed by the board, be collected by means of stamps to be furnished by the board, or by direct payments based on wine purchased by wine wholesalers. Every person purchasing wine under the provisions of this section shall on or before the twentieth day of each month report to the board all purchases during the preceding calendar month in such manner and upon such forms as may be prescribed by the board, and with such report shall pay the tax due from the purchases covered by such report unless the same has previously been paid. Any such purchaser of wine whose applicable tax payment is not postmarked by the twentieth day following the month of purchase will be assessed a penalty at the rate of two percent a month or fraction thereof. If this tax be collected by means of stamps, every such person shall procure from the board revenue stamps representing the tax in such form as the board shall prescribe and shall affix the same to the package or container in such manner and in such denomination as required by the board and shall cancel the same prior to the delivery of the package or container containing the wine to the purchaser. If the tax is not collected by means of stamps, the board may require that every such person shall execute to and file with the board a bond to be approved by the board, in such amount as the board may fix, securing the payment of the tax. If any such person fails to pay the tax when due, the board may forthwith suspend or cancel the license until all taxes are paid.

(2) An additional tax is imposed equal to ((~~the rate specified in RCW 82.02.030~~)) seven percent multiplied by the tax payable under subsection (1) of this section. All revenues collected during any month from this additional tax shall be transferred to the state general fund by the twenty-fifth day of the following month.

(3) An additional tax is imposed on wines subject to tax under subsection (1) of this section, at the rate of one-fourth of one cent per liter for wine sold after June 30, 1987. Such additional tax shall cease to be imposed on July 1, 1993. All revenues collected under this subsection (3) shall be disbursed quarterly to the Washington wine commission for use in carrying out the purposes of chapter 15.88 RCW.

(4) Until July 1, 1995, an additional tax is imposed on all wine subject to tax under subsection (1) of this section. The additional tax is equal to twenty-three and forty-four one-hundredths cents per liter on fortified wine as defined in RCW 66.04.010(34) when bottled or packaged by the manufacturer and one cent per liter on all other wine. All revenues collected during any month from this additional tax shall be deposited in the drug enforcement and education account under RCW 69.50.520 by the twenty-fifth day of the following month.

(5) An additional tax is imposed on all wine subject to taxes under subsection (1) of this section. The additional tax is equal to four cents per liter on fortified wine as defined in RCW 66.04.010(34) when bottled or packaged by the manufacturer and two cents per liter on all other wines. All revenues collected from the additional tax imposed under this subsection shall be deposited in the health services trust account created under section 1201 of this act.

Sec. 1212. RCW 66.24.290 and 1989 c 271 s 502 are each amended to read as follows:

(1) Any brewer or beer wholesaler licensed under this title may sell and deliver beer to holders of authorized licenses direct, but to no other person, other than the board; and every such brewer or beer wholesaler shall report all sales to the board monthly, pursuant to the regulations, and shall pay to the board as an added tax for the privilege of manufacturing and selling the beer within the state a tax of two dollars and sixty cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer shall pay a tax computed in gallons at the rate of two dollars and sixty cents per barrel of thirty-one gallons. Any brewer or beer wholesaler whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof. Each such brewer or wholesaler shall procure from the board revenue stamps representing such tax in form prescribed by the board and shall affix the same to the barrel or package in such manner and in such denominations as required by the board, and shall cancel the same prior to commencing delivery from his or her place of business or warehouse of such barrels or packages. Beer shall be sold by brewers and wholesalers in sealed barrels or packages. The revenue stamps herein provided for need not be affixed and canceled in the making of resales of barrels or packages already taxed by the affixation and cancellation of stamps as provided in this section.

(3) Until July 1, 1995, an additional tax is imposed on all beer subject to tax under subsection (1) of this section. The additional tax is equal to two dollars per barrel of thirty-one gallons. All revenues collected during any month from this additional tax shall be deposited in the drug enforcement and education account under RCW 69.50.520 by the twenty-fifth day of the following month.

(4) An additional tax is imposed on all beer subject to tax under subsection (1) of this section. The additional tax is equal to forty-two cents per barrel of thirty-one gallons. The moneys collected under this subsection shall be deposited in the health services trust account created under section 1201 of this act.

(5) The tax imposed under this section shall not apply to "strong beer" as defined in this title.

Sec. 1213. RCW 82.02.030 and 1990 c 42 s 319 are each amended to read as follows:

((~~(1)~~)) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), ((~~66.24.210(2), 66.24.290(2),~~)) 82.04.2901, 82.16.020(2), ((~~82.26.020(2),~~)) 82.27.020(5), and 82.29A.030(2) shall be seven percent((~~; and~~

~~(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent~~)).

NEW SECTION. Sec. 1214. On or before December 1, 1994, the health services commission shall provide a report to the governor and the legislature with recommendations regarding appropriate taxing mechanisms to redistribute health services system expenditures so that savings resulting from the cost control measures included in chapter . . ., Laws of 1993 (this act) can be applied to achieving universal access by July 1997.

PART XIII. MISCELLANEOUS

NEW SECTION. Sec. 1301. SHORT TITLE. This act may be known and cited as the Washington health services act of 1993.

Sec. 1302. RCW 42.17.2401 and 1991 c 200 s 404 are each amended to read as follows:

For the purposes of RCW 42.17.240, the term "executive state officer" includes:

(1) The chief administrative law judge, the director of agriculture, the administrator of the office of marine safety, the administrator of the Washington basic health plan, the director of the department of services for the blind, the director of the state system of community and technical colleges, the director of community development, the secretary of corrections, the director of ecology, the commissioner of employment security, the chairman of the energy facility site evaluation council, the director of the energy office, the secretary of the state finance committee, the director of financial management, the director of fisheries, the executive secretary of the forest practices appeals board, the director of the gambling commission, the director of general administration, the secretary of health, the administrator of the Washington state health care authority, the executive secretary of the health care facilities authority, the executive secretary of the higher education facilities authority, the director of the higher education personnel board, the executive secretary of the horse racing commission, the executive secretary of the human rights commission, the executive secretary of the indeterminate sentence review board, the director of the department of information services, the director of the interagency committee for outdoor recreation, the executive director of the state investment board, the director of labor and industries, the director of licensing, the director of the lottery commission, the director of the office of minority and women's business enterprises, the director of parks and recreation, the director of personnel, the executive director of the public disclosure commission, the director of retirement systems, the director of revenue, the secretary of social and health services, the chief of the Washington state patrol, the executive secretary of the board of tax appeals, the director of trade and economic development, the secretary of transportation, the secretary of the utilities and transportation commission, the director of veterans affairs, the director of wildlife, the president of each of the regional and state universities and the president of The Evergreen State College, each district and each campus president of each state community college;

(2) Each professional staff member of the office of the governor;

(3) Each professional staff member of the legislature; and

(4) Central Washington University board of trustees, board of trustees of each community college, each member of the state board for community and technical colleges ((~~education~~)), state convention and trade center board of directors, committee for deferred compensation, Eastern Washington University board of trustees, Washington economic development finance authority, The Evergreen State College board of trustees, forest practices appeals board, forest practices board, gambling commission, Washington health care facilities authority, each member of the Washington health services commission, higher education coordinating board, higher education facilities authority, higher education personnel board, horse racing commission, state housing finance commission, human rights commission, indeterminate sentence review board, board of industrial insurance appeals, information services board, interagency committee for outdoor recreation, state investment board, liquor control board, lottery commission, marine oversight board, oil and gas conservation committee, Pacific Northwest electric power and conservation planning council, parks and recreation commission, personnel appeals board, personnel board, board of pilotage ((~~[commissioners]~~)) commissioners, pollution control hearings board, public disclosure commission, public pension commission, shorelines hearing board, ((~~state~~)) public employees' benefits board, board of tax appeals, transportation commission, University of Washington board of regents, utilities and transportation commission, Washington state maritime commission, Washington public power supply system executive board, Washington State University board of regents, Western Washington University board of trustees, and wildlife commission.

Sec. 1303. RCW 43.20.050 and 1992 c 34 s 4 are each amended to read as follows:

(1) The state board of health shall provide a forum for the development of public health policy in Washington state. It is authorized to recommend to the secretary means for obtaining appropriate citizen and professional involvement in all public health policy formulation and other matters related to the powers and duties of the department. It is further empowered to hold hearings and explore ways to improve the health status of the citizenry.

(a) At least every five years, the state board shall convene regional forums to gather citizen input on public health issues.

(b) Every two years, in coordination with the development of the state biennial budget, the state board shall prepare the state public health report that outlines the health priorities of the ensuing biennium. The report shall:

(i) Consider the citizen input gathered at the ((~~health~~)) forums;

(ii) Be developed with the assistance of local health departments;

(iii) Be based on the best available information collected and reviewed according to RCW 43.70.050 and recommendations from the council;

(iv) Be developed with the input of state health care agencies. At least the following directors of state agencies shall provide timely recommendations to the state board on suggested health priorities for the ensuing biennium: The secretary of social and health services, the health care authority administrator, the insurance commissioner, the superintendent of public instruction, the director of labor and industries, the director of ecology, and the director of agriculture;

(v) Be used by state health care agency administrators in preparing proposed agency budgets and executive request legislation;

(vi) Be submitted by the state board to the governor by ((~~June~~)) January 1 of each even-numbered year for adoption by the governor. The governor, no later than ((~~September~~)) March 1 of that year, shall approve, modify, or disapprove the state public health report.

(c) In fulfilling its responsibilities under this subsection, the state board ((~~shall~~)) may create ad hoc committees or other such committees of limited duration as necessary. ((~~Membership should include legislators, providers, consumers, bioethicists, medical economics experts, legal experts, purchasers, and insurers, as necessary.~~))

(2) In order to protect public health, the state board of health shall:

(a) Adopt rules necessary to assure safe and reliable public drinking water and to protect the public health. Such rules shall establish requirements regarding:

(i) The design and construction of public water system facilities, including proper sizing of pipes and storage for the number and type of customers;

(ii) Drinking water quality standards, monitoring requirements, and laboratory certification requirements;

(iii) Public water system management and reporting requirements;

(iv) Public water system planning and emergency response requirements;

(v) Public water system operation and maintenance requirements;

(vi) Water quality, reliability, and management of existing but inadequate public water systems; and

(vii) Quality standards for the source or supply, or both source and supply, of water for bottled water plants.

(b) Adopt rules and standards for prevention, control, and abatement of health hazards and nuisances related to the disposal of wastes, solid and liquid, including but not limited to sewage, garbage, refuse, and other environmental contaminants; adopt standards and procedures governing the design, construction, and operation of sewage, garbage, refuse and other solid waste collection, treatment, and disposal facilities;

(c) Adopt rules controlling public health related to environmental conditions including but not limited to heating, lighting, ventilation, sanitary facilities, cleanliness and space in all types of public facilities including but not limited to food service establishments, schools, institutions, recreational facilities and transient accommodations and in places of work;

(d) Adopt rules for the imposition and use of isolation and quarantine;

(e) Adopt rules for the prevention and control of infectious and noninfectious diseases, including food and vector borne illness, and rules governing the receipt and conveyance of remains of deceased persons, and such other sanitary matters as admit of and may best be controlled by universal rule; and

(f) Adopt rules for accessing existing data bases for the purposes of performing health related research.

(3) The state board may delegate any of its rule-adopting authority to the secretary and rescind such delegated authority.

(4) All local boards of health, health authorities and officials, officers of state institutions, police officers, sheriffs, constables, and all other officers and employees of the state, or any county, city, or township thereof, shall enforce all rules adopted by the state board of health. In the event of failure or refusal on the part of any member of such boards or any other official or person mentioned in this section to so act, he shall be subject to a fine of not less than fifty dollars, upon first conviction, and not less than one hundred dollars upon second conviction.

(5) The state board may advise the secretary on health policy issues pertaining to the department of health and the state.

NEW SECTION. Sec. 1304. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 1305. SAVINGS CLAUSE. The enactment of this act does not have the effect of terminating, or in any way modifying, any obligation or any liability, civil or criminal, which was already in existence on the effective date of this act.

NEW SECTION. Sec. 1306. CAPTIONS. Captions used in this act do not constitute any part of the law.

NEW SECTION. Sec. 1307. RESERVATION OF LEGISLATIVE AUTHORITY. The legislature reserves the right to amend or repeal all or any part of this act at any time and there shall be no vested private right of any kind against such amendment or repeal. All the rights, privileges, or immunities conferred by this act or any acts done pursuant thereto shall exist subject to the power of the legislature to amend or repeal this act at any time.

NEW SECTION. Sec. 1308. EFFECTIVE DATE CLAUSE. (1) This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately except for sections 1207 through 1213 of this act which shall take effect July 1, 1993.

(2) Sections 1202, 1203, and 1204 of this act shall take effect January 1, 1994. Sections 1202 and 1203 of this act shall be effective in respect to taxes due March 1, 1995, and thereafter.