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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, 48.44.020, 48.46.060, 48.44.260, 48.46.380, 48.44.220, 18.72.400, 43.70.320, 18.130.190, 70.41.200, 70.41.230, 5.60.070, 4.22.070, 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 48.21.200; adding a new section to chapter 70.47 RCW; adding a new section to Title 43 RCW; adding a new section to chapter 41.05 RCW; adding new sections to chapter 70.170 RCW; adding a new section to chapter 71.12 RCW; adding new sections to chapter 48.20 RCW; adding a new section to chapter 48.30 RCW; adding a new section to chapter 48.21 RCW; adding a new section to chapter 48.44 RCW; adding a new section to chapter 48.46 RCW; adding new sections to chapter 43.70 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 48.46.370, 48.46.160, and 48.46.905; prescribing penalties; making appropriations; providing an effective date; 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....................................................................................................................................................... 5

PART III. STATE-PURCHASED HEALTH SERVICES............................................................................................................... 19

PART IV. DATA COLLECTION........................................................................................................................................................... 29

PART V. HEALTH PROFESSIONAL SHORTAGES..................................................................................................................... 35

PART VI. HEALTH SERVICES COMMISSION‑-CERTIFIED HEALTH PLANS................................................................. 45

PART VII. HEALTH INSURANCE PROVISIONS.......................................................................................................................... 61

PART VIII. PRACTICE GUIDELINES.............................................................................................................................................. 69

PART IX. HEALTH CARE LIABILITY REFORM....................................................................................................................... 70

PART X. PUBLIC HEALTH SERVICES IMPROVEMENT PLAN........................................................................................... 84

PART XI. STATE HEALTH SERVICES BUDGET, TRUST FUND, AND ACCOUNTS........................................................ 86

PART XII. STUDIES AND ADMINISTRATIVE DIRECTIVES.................................................................................................. 88

PART XIII. WORKERS' COMPENSATION...................................................................................................................................... 90

PART XIV. APPROPRIATIONS.......................................................................................................................................................... 92

PART XV. REVENUES......................................................................................................................................................................... 93

PART XVI. MISCELLANEOUS.......................................................................................................................................................... 102

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 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, 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) 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, so long as such supplemental services are purchased through certified health plans or purchased directly from health care providers;

(d) All state residents, businesses, employees, and government participate in payment for health services, and total costs to individuals be on a sliding scale based on income with the lowest income citizens exempt from most payments; and

(e) 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.

(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 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 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.

(4) "Subsidized enrollee" means an individual, or an individual plus the individual's spouse and/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 and/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, the administrator shall not contract for prenatal or postnatal 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 606 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, the administrator shall not contract for prenatal or postnatal services that are provided under the medical assistance program under chapter 74.09 RCW 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 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 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 cost of the plan for nonsubsidized enrollees 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 619 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.

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 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.

(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; 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 based upon the income of the employee;

(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 indemnity 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 school district employees.

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

(a) Three 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 is retired;

((~~(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 section 606 of 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 prepaid 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 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. Beginning in January 1994, the governor shall submit necessary legislation to place all state-purchased health services in a community-rated, single risk pool under the direct administrative authority of the state purchasing agent by July 1, 1997, including at least the basic health plan, the purchasing of health benefits for K-12 system active and retired employees, the medical aid fund portion of the workers' compensation program, personal health services purchased through the department of health, the Washington state health insurance purchasing cooperative established under section 309 of this act, and state employee and retiree health benefits. At the earliest opportunity the governor shall seek necessary federal waivers and state legislation to place the medical assistance program of the department of social and health services in this single risk pool after July 1995, but in no event later than July 1997.

(2) At a minimum, and regardless of other legislative enactments, the state medical care purchasing agent must:

(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 614 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, health care facility, health maintenance organization, health care service contractor, group disability insurer, and a 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 or receive care from them;

(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) Notwithstanding other provisions of law, assure that state residents receiving public subsidies for health care in July 1995 or thereafter, are enrolled in a certified health plan and receive the uniform benefits package as adopted and from time to time revised by the Washington health services commission, as provided in section 614 of this act.

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 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, except that purchasing cooperative contracts may not include self-funded or insured indemnity plans as an option for enrollment. Until July 1, 1997, in negotiating and contracting with insuring entities on behalf of employees and purchasing cooperative members, two distinct experience pools shall be maintained. On and after that date, the purchasing cooperative shall be placed into the single risk pool for all 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) (a), (c), (d), and (e) 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) (a), (c), (d), and (e) of this section 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 adopted by the health services commission pursuant to section 614 of this act shall constitute the benefit package offered through the cooperative.

PART IV. DATA COLLECTION

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~~)). The commission and the department shall encourage and permit reporting by electronic transmission or hard copy as is practical and economical to reporters.

((~~(4)~~)) (3) 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~~)) useful to fulfill the purposes of chapter . . ., Laws of 1993 (this ((~~chapter~~)) act). 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~~)) is practical, 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)~~)) (4) 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)~~)) (5) 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 who are certified health plans, or who are purchasers of certified health plan services and shall be available within a reasonable period of time after the date of request. 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.

(6) 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. 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.

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

Consistent with the data reporting requirements of the department of health, each hospital licensed under RCW 70.41.090 or chapter 71.12 RCW, shall report to the department annually with respect to its operations in the preceding fiscal year, in a form as the department may by rule require. The report shall include, but not be limited to: (1) Salaries, by classification for each position in the hospital; (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 hospital; (5) the salaries paid to hospital employees by each related corporation and by the hospital to the employees of related corporations; and (6) a breakdown of hospital and department budgets by administrative, supervisory, and direct service categories.

NEW SECTION. Sec. 406. A new section is added to chapter 71.12 RCW to read as follows:

(1) 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 in-house health care services to be ordered for their patients. These charges shall be posted on the patient's chart and shall include total charges to date and an itemization of charges for the previous day. The physician or other health care provider may inform the patient of these charges.

(2) The department of health, in consultation with the Washington state hospital association, the Washington state medical association, Washington state nurses association, and other appropriate interested parties, shall develop a protocol that establishes a standardized system of disclosure of charges of hospital-based services for the purposes of chapter . . ., Laws of 1993 (this act); that promotes dialogue between hospitals, physicians, nurses, and other health care providers for encouraging a better cost consciousness regarding the services, procedures, medications and supplies which are ordered for hospital in-patients; that invites more cost-benefit comparisons of appropriate alternatives; and that minimizes the costs of instituting this standardized information system by the hospitals in this state.

(3) The department of health shall report to the legislature by December 31, 1993, on the status of the development of the protocol developed pursuant to this section and its implementation by hospitals, with recommendations on any necessary revisions to this act (chapter ..., Laws of 1993), including its continued necessity and the appropriateness of its repeal.

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

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

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

(q) 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) 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) 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.

Sec. 504. 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 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. 505. 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. 506. 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 18.71A 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 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. 507. 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. 508. MEDICAL SCHOOL TRAINING SHORTAGE PLAN DEVELOPMENT. The University of Washington school of medicine shall prepare by December 1, 1993, a medical school shortage plan that identifies specific activities that it will pursue within its current level of spending to increase the number of Washington residents serving as primary care physicians in rural and medically underserved urban areas of the state. The goal of the plan shall be to pursue activities that will result in no fewer than thirty-five percent of all medical school graduates being Washington residents who are primary care physicians serving in rural or medically underserved urban areas of the state by 1997. Rural and medically underserved urban areas shall be those identified in the state's health personnel resource plan as authorized in chapter 28B.125 RCW.

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) "Certified health plan" or "plan" means a disability group 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 consistent with the requirements of this chapter.

(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 person 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 eighty 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 uniform health benefits on a group basis from certified health plans; (b) purchases the benefits 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 five 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 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, 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 either:

(a) A physician licensed under chapter 18.71 or 18.57 RCW or any other licensed, certified, or registered health professional regulated under chapter 18.130 RCW whom the commission identifies as appropriate to provide health services;

(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, in-home care, nursing services, convalescent, custodial, chronic, and terminally ill care.

(14) "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.

(15) "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.

(16) "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.

(17) "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.

(18) "Uniform benefits package" means those appropriate and effective health services, defined by the commission under section 614 of this act, that must be offered to all Washington residents through certified health plans.

(19) "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 619 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 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, and health care providers. 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, 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 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 financial participation, 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, 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 614 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 1991 and 1994 as actuarially determined. Beginning in 1995, 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 and shall not present a barrier to access for low-income residents. The commission shall establish regions within the state by rule.

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

(8) Establish standards for capital expenditures by certified health plans. A major capital expenditure is defined as any single expenditure for capital acquisitions, including medical technological equipment, as defined by the commission, costing more than one million dollars. Periodically the commission shall prioritize the proposed projects based on standards of cost-effectiveness and access. The commission shall then approve those projects in rank order that are within the limits of the capital budget. The Washington health care facilities authority authorized in chapter 70.37 RCW may not approve financing for a major capital expenditure unless it has been approved by the commission under this subsection.

(9) Establish maximum enrollee financial participation levels. The levels shall be related to enrollee household income and shall not present a barrier to access for low-income residents.

(10) Suggest that certified health plans adopt certain practice guidelines or risk management protocols 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.

(11) 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.

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

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

(14) 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).

(15) 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. In conjunction with the commission's total quality management efforts, the department of health shall develop a regulatory system that supports the development and maintenance of quality assurance plans throughout the medical community.

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.

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

(1) Provide the benefits prescribed by 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 provides 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 age, sex, family structure, ethnicity, race, health condition, geographic location, employment status, or other condition or situation;

(3) 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;

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

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

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

(7) 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 seventy percent of 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;

(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; and

(8) 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 twenty working days. The insurance commissioner in consultation with the commission shall establish standards for grievance procedures and resolution.

NEW SECTION. Sec. 611. EMPLOYERS' COOPERATIVE HEALTH CARE PURCHASING GROUP--DEFINITION, OPEN ACCESS, REGISTRATION. A purchasing group that intends to purchase health care coverage from a certified health plan shall furnish notice to the commissioner which shall: (1) Identify the principal name and address of the purchasing group, (2) furnish the names and addresses of the officers of the purchasing group, (3) include copies of letters of agreement for participation in the purchasing group including minimum term of participation, and (4) provide any other information as prescribed by the insurance commissioner in consultation with the commission to verify that the purchasing group is qualified and managed by competent and trustworthy individuals.

NEW SECTION. Sec. 612. ENFORCEMENT AUTHORITY OF COMMISSIONER. For the purposes of this chapter, the insurance commissioner shall have the same powers and duties of enforcement as are provided in RCW 48.02.080.

NEW SECTION. Sec. 613. 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 (1) contain the aggregate cost of most health services, (2) promote the comparability of health insurance products, (3) improve the cost-effectiveness of those products relative to health promotion, disease prevention, and the amelioration or cure of illness, (4) assure universal access to a publicly determined, uniform package of health benefits, and (5) 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. 614. 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 the availability of funding in the state health services budget.

(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 commission shall establish a schedule of enrollee point of service cost-sharing, 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.

(c) 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 commission shall consider the recommendations of health services effectiveness panels established pursuant to section 604 of this act in carrying out this task.

(3) 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.

(4) The commission shall submit its initial uniform benefits package and any changes it may wish to make to the legislature annually. The legislature may disapprove of the uniform benefits package by a concurrent resolution of the legislature at any time prior to the close of its regular annual legislative session. If such disapproval action is taken, the commission shall with all deliberate speed resubmit a modified uniform benefits package, which must be approved or disapproved within thirty days of submittal to the legislature.

NEW SECTION. Sec. 615. No health care provider may be required by law or contract in any circumstances to participate in the provision of any uniform benefit if she or he objects to so doing for reason of conscience or religion. No person may be discriminated against in employment or professional privileges because of such objection.

NEW SECTION. Sec. 616. SUPPLEMENTAL BENEFITS. Nothing in this chapter shall preclude certified health plans 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. 617. LONG-TERM CARE INTEGRATION PLAN. (1) To meet the health needs of the residents of Washington state, it is critical to establish a foundation for financing and providing community-based 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 community-based 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 community-based 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 that has the goal of phasing-in coverage of long-term care services through the uniform benefits package established under section 614 of this act within five years of the effective date of this section;

(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.

NEW SECTION. Sec. 618. INDIVIDUAL PARTICIPATION. (1) All residents of the state of Washington are required to participate in a certified health plan no later than July 1, 1997. If a federal waiver of the Employee Retirement Income Security Act is not obtained by July 1997, residents who have health coverage through self-insured employer plans shall be deemed to meet this requirement.

(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. 619. EMPLOYER PARTICIPATION. (1) On July 1, 1995, every employer employing more than five hundred full-time employees shall offer a choice of certified health plans 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 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.

(2) By July 1, 1996, every employer employing more than one hundred full-time employees shall offer a choice of certified health plans 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 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.

(3) By July 1, 1997, every employer shall offer a choice of certified health plans 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 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.

(4) 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 611 of this act.

(5) The commission shall submit its employer contribution levels and any changes it may wish to make to the legislature annually. The legislature may disapprove of the levels by a concurrent resolution of the legislature at any time prior to the close of its regular annual legislative session. If such disapproval action is taken, the commission shall with all deliberate speed resubmit a modified employer contribution level, which must be approved or disapproved within thirty days of submittal to the legislature.

NEW SECTION. Sec. 620. Sections 601 through 619 of this act shall constitute a new chapter in Title 43 RCW.

PART VII. HEALTH INSURANCE PROVISIONS

NEW SECTION. Sec. 701. A new section is added to chapter 48.20 RCW to read as follows:

Every insurer upon canceling, denying, or refusing to renew any individual 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. 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. 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. 702. 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. 703. A new section is added to chapter 48.30 RCW to read as follows:

(1) No disability insurer, health care service contractor, or health maintenance organization may deny, exclude, or limit coverage of preexisting conditions for a period longer than six months following the effective date of coverage and shall waive any preexisting condition exclusion or limitation for persons who had similar coverage under a different policy, contract, or agreement in the three-month period immediately preceding the effective date of coverage under the new policy and who satisfied any six-month waiting period under such preceding policy, contract, or agreement.

(2) The commissioner shall adopt rules establishing guidelines for identifying coverage that is similar and for determining when a preexisting condition waiting period has been satisfied.

Sec. 704. 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~~)) and no health care service contractor or health maintenance organization may refuse to issue any contract of insurance or contract or agreement for health care services or cancel or decline to renew such contract or agreement because of the sex or marital status, or the presence of any sensory, mental, or physical handicap of the insured, subscriber, or enrollee or prospective insured, subscriber, or enrollee. 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, subscriber, or enrollee or prospective insured, subscriber, or enrollee. 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, health care service contracts, and health maintenance agreements:

(a) No insurer, contractor, or health maintenance organization may terminate any person covered under an individual or group policy, contract, or agreement because of a change in the physical or mental condition or health of such person except that, after approval of the insurance commissioner, an insurer, health care service contractor, or health maintenance organization may discharge its obligation to continue coverage for such person by obtaining coverage with another insurer, contractor, or health maintenance organization, which coverage is comparable in terms of premiums and benefits.

(b) It is an unfair discriminatory practice to modify a policy, contract, or agreement form and fail to make such modification on a class basis. The insurer, contractor, or health maintenance organization may terminate a form if all policyholders, subscribers, or enrollees having such coverage are offered equivalent alternative coverage without health screening or, upon obtaining the written approval of the commissioner, the insurer, contractor, or health maintenance organization obtains coverage with another insurer, contractor, or health maintenance organization that provides equivalent benefits for value paid.

(c) It is an unfair practice for insurers, contractors, and health maintenance organizations to engage in a pattern or practice of subjecting high-risk persons to substantial rate increases by discontinuing issuance of policy, contract, or agreement forms and requiring the high-risk person covered under the form to undergo health screening to qualify for coverage under new, lower cost forms. The insurer, contractor, or health maintenance organization may limit issuance of coverage without health screening under a new form to a period of not less than thirty days from the date such coverage is offered.

Sec. 705. RCW 48.44.020 and 1990 c 120 s 5 are each amended to read as follows:

(1) Any health care service contractor may enter into contracts with or for the benefit of persons or groups of persons which require prepayment for health care services by or for such persons in consideration of such health care service contractor providing one or more health care services to such persons and unless expressly provided, such activity shall not be subject to the laws relating to insurance if the health care services are rendered by the health care service contractor or by a participating provider.

(2) The commissioner may on examination, subject to the right of the health care service contractor to demand and receive a hearing under chapters 48.04 and 34.05 RCW, disapprove any contract form for any of the following grounds:

(a) If it contains or incorporates by reference any inconsistent, ambiguous or misleading clauses, or exceptions and conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the contract; or

(b) If it has any title, heading or other indication of its provisions which is misleading; or

(d) If, the benefits provided therein are unreasonable in relation to the amount charged for the contract;

(e) If it contains unreasonable restrictions on the treatment of patients;

(f) If it violates any provision of this chapter;

(g) If it fails to conform to minimum provisions or standards required by regulation made by the commissioner pursuant to chapter 34.05 RCW;

(h) If any contract for health care services with any state agency, division, subdivision, board or commission or with any political subdivision, municipal corporation, or quasi-municipal corporation fails to comply with state law.

(3)(a) Every contract between a health care service contractor and a participating provider of health care services shall be in writing and shall state that in the event the health care service contractor fails to pay for health care services as provided in the contract, the enrolled participant shall not be liable to the provider for sums owed by the health care service contractor. Every such contract shall provide that this requirement shall survive termination of the contract.

(b) No participating provider, agent, trustee or assignee may maintain any action against an enrolled participant to collect sums owed by the health care service contractor.

Sec. 706. RCW 48.46.060 and 1989 c 10 s 10 are each amended to read as follows:

(1) Any health maintenance organization may enter into agreements with or for the benefit of persons or groups of persons, which require prepayment for health care services by or for such persons in consideration of the health maintenance organization providing health care services to such persons. Unless expressly provided, such activity is not subject to the laws relating to insurance if the health care services are rendered directly by the health maintenance organization or by any provider which has a contract or other arrangement with the health maintenance organization to render health services to enrolled participants.

(2) All forms of health maintenance agreements issued by the organization to enrolled participants or other marketing documents purporting to describe the organization's comprehensive health care services shall comply with such minimum standards as the commissioner deems reasonable and necessary in order to carry out the purposes and provisions of this chapter, and which fully inform enrolled participants of the health care services to which they are entitled, including any limitations or exclusions thereof, and such other rights, responsibilities and duties required of the contracting health maintenance organization.

(3) Subject to the right of the health maintenance organization to demand and receive a hearing under chapters 48.04 and 34.05 RCW, the commissioner may disapprove an agreement form for any of the following grounds:

(a) If it contains or incorporates by reference any inconsistent, ambiguous, or misleading clauses, or exceptions or conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the agreement;

(b) If it has any title, heading, or other indication which is misleading;

(d) If the benefits provided therein are unreasonable in relation to the amount charged for the agreement;

(e) If it contains unreasonable restrictions on the treatment of patients;

(f) If it is in any respect in violation of this chapter or if it fails to conform to minimum provisions or standards required by the commissioner by rule under chapter 34.05 RCW; or

(g) If any agreement for health care services with any state agency, division, subdivision, board or commission or with any political subdivision, municipal corporation, or quasi-municipal corporation fails to comply with state law.

(4) No health maintenance organization authorized under this chapter shall cancel or fail to renew the enrollment on any basis of an enrolled participant or refuse to transfer an enrolled participant from a group to an individual basis for reasons relating solely to age, sex, race, or health status((~~: PROVIDED HOWEVER, That~~)). Nothing contained herein shall prevent cancellation of an agreement with enrolled participants (a) who violate any published policies of the organization which have been approved by the commissioner, or (b) who are entitled to become eligible for medicare benefits and fail to enroll for a medicare supplement plan offered by the health maintenance organization and approved by the commissioner, or (c) for failure of such enrolled participant to pay the approved charge, including cost-sharing, required under such contract, or (d) for a material breach of the health maintenance agreement.

(5) No agreement form or amendment to an approved agreement form shall be used unless it is first filed with the commissioner.

Sec. 707. 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. 708. 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.

Sec. 709. RCW 48.44.220 and 1983 c 154 s 4 are each amended to read as follows:

((No health care service contractor shall deny coverage to any person solely on account of race, religion, national origin, or the presence of any sensory, mental, or physical handicap. Nothing in this section shall be construed as limiting a health care service contractor's authority to deny or otherwise limit coverage to a person when the person because of a medical condition does not meet the essential eligibility requirements established by the health care service contractor for purposes of determining coverage for any person.))

No health care service contractor shall refuse to provide reimbursement or indemnity to any person for covered health care services for reasons that the health care services were provided by a holder of a license under chapter 18.22 RCW.

NEW SECTION. Sec. 710. The following acts or parts of acts are each repealed:

(1) RCW 48.46.370 and 1983 c 106 s 15;

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

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

NEW SECTION. Sec. 711. 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 619 of this act, sections 601 through 619 of this act shall control.

NEW SECTION. Sec. 712. A new section is added to chapter 48.21 RCW to read as follows:

NEW SECTION. Sec. 713. 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 619 of this act, sections 601 through 619 of this act shall control.

NEW SECTION. Sec. 714. 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 619 of this act, sections 601 through 619 of this act shall control.

NEW SECTION. Sec. 715. 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. Practice guidelines shall be based upon best observed practice. The department shall:

(1) Develop a definition of "best observed practice" so that practice guidelines can serve as a standard for excellence in the provision of health care services.

(2) 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.

(3) 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 614 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 offered by the insurer. 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 thirty 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; and

(k) 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.

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, 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) 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.

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

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

(6) 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; 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. STATE HEALTH SERVICES BUDGET, TRUST FUND, AND ACCOUNTS

NEW SECTION. Sec. 1101. TRUST FUND AND ACCOUNTS. (1) The Washington health services trust fund is hereby established in the state treasury. All public funds regulated by chapter . . ., Laws of 1993 (this act) shall be deposited in the Washington health services trust fund. These funds shall include at least:

(a) Medicare, parts A and B, Title XVIII of the federal social security act, as amended;

(b) Medicaid, Title XIX of the federal social security act, as amended;

(c) Other federal funds that are allocated for the purposes of health services included in the accounts established pursuant to this section; and

(d) Legislative general fund‑-state appropriations for any health services purchased by the state on behalf of any state resident including state, local, or school district employees, those who are poor or near poor or those who are chronically disabled, elderly, or who, for any other reason, are dependent upon the state to finance their health services, and for any health system, data collection, data analysis, or regulatory activities required by chapter . . ., Laws of 1993 (this act) to include funds for the state health services commission and the state insurance commissioner.

(2) The trust fund shall consist of three accounts:

(a) The personal health services account from which funds shall be appropriated to appropriate agencies for contracts with certified health plans to deliver the uniform benefits package and other health services authorized by state or federal law to public employees and all persons eligible for public subsidies.

(b) The public health account from which funds shall be appropriated to maintain and improve the health of all Washington residents, by assuring adequate financing for a public system to: (i) Assess and report on the population's health status; (ii) develop public policy that promotes and maintains health; and (iii) assure the availability and delivery of appropriate and effective health interventions. This public system shall be composed of the state board of health, state department of health, and local public health departments and districts. No less than three percent of the state health services budget shall be used for these assessment, policy development, and assurance functions as defined by the state board of health in rule through this system by June 30, 1997, and no less than five percent of the state health services budget shall be used for the functions by June 30, 1999. These funds may include fees, federal funds, and general or dedicated state or local tax revenue. The state board of health shall develop policies regarding the extent to which local revenue or fees may be used to meet the five-percent requirement. None of the funds shall be used for any service reimbursable through the uniform benefits package. The department of health shall consider the results of official public health assessment and policy development including recommendations of the state board of health, the department of health, and the state health report in discharging its responsibilities, including the assurance of access to appropriate and effective health services and the determination of the actual percentage used for core public health functions.

(c) The health professions, data systems, health systems regulation and research account from which funds shall be appropriated to:

(i) Retain needed health care providers in a manner consistent with the health professional shortage provisions set forth in chapter 332, Laws of 1991;

(ii) Conduct research as may be needed on the operation of certified health plans, conduct the operations and activities of the commission, as required by this act, or to conduct research on public health consistent with the principles set forth in chapter . . ., Laws of 1993 (this act); and

(iii) Finance the development, operation, and maintenance of the health data system according to chapter 70.170 RCW to support the purposes of chapter . . ., Laws of 1993 (this act).

PART XII. STUDIES AND ADMINISTRATIVE DIRECTIVES

NEW SECTION. Sec. 1201. 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), as prepared by the transition team pursuant to 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 commission in consultation with the governor 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):

(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 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).

If the commission fails to obtain all necessary federal statutory changes or regulatory waivers necessary to fully implement chapter . . ., Laws of 1993 (this act) by January 1, 1996, it shall report to the governor and appropriate committees of the legislature on the extent to which chapter . . ., Laws of 1993 (this act) can be implemented without receipt of all of such waivers.

(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.

NEW SECTION. Sec. 1202. 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. 1203. EVALUATIONS, PLANS, AND STUDIES. (1) By July 1, 1997, the legislative budget committee either directly or by contract shall conduct studies to determine the desirability and feasibility of consolidating the following programs, services, and funding sources into the certified health plans:

(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 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. The report, including recommendations and an outline of any needed legislation, shall be submitted to the governor and the appropriate committees of the legislature by October 1, 1997, for consideration by the legislature during the 1998 session;

(b) State and federal veterans' health services; and

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

(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.

PART XIII. WORKERS' COMPENSATION

NEW SECTION. Sec. 1301. WORKERS' COMPENSATION MEDICAL BENEFITS. (1) An employer who makes premium payments to a certified health plan on behalf of employees, or who self-insures for employee medical benefits or workers' compensation benefits and who meets the requirements for a certified health plan under section 610 of this act, may apply to the department of labor and industries for an exemption from the requirements of Title 51 RCW regarding the medical portion of the workers' compensation program.

(2) The director of the department of labor and industries shall grant such an exemption if he or she finds that (a) the applicant employer has a record of no less than two years of compliance with the requirements to be a certified health plan, (b) the uniform benefits package provided by the certified health plan that would assume workers' compensation responsibilities include medically necessary services available under the workers' compensation program in 1992, including payments for disability determinations, (c) the state has achieved access by no less than ninety-seven percent of all state residents to coverage for the uniform benefits package, (d) there is no reasonable expectation that granting such an exemption will result in a reduction in needed time loss awards or rehabilitative services, (e) the employees' share of workers' compensation medical aid fund contributions are returned to the employee as increased wages, and (f) a majority of employees in the employer's company do not object to the exemption.

(3) If, after periodic review of exemptions granted under this section, the director of labor and industries finds that the conditions in subsection (2) of this section are not present, he or she may withdraw the exemption and immediately require the employer to reestablish a separate workers' compensation medical aid fund program.

(4) In consultation with representatives of organized labor and the large and small business communities of the state, and consistent with chapter . . ., Laws of 1993 (this act), the long-term disability task force and the department of labor and industries shall propose a plan and timeline for including the medical services of the workers' compensation program of the department of labor and industries in the services offered by certified health plans. No plan or timeline may be proposed that does not 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 which are medically necessary under the workers' compensation program in 1993, including payment for medical determinations of disability under chapter . . . . . RCW, (c) statutory assurances are provided that time loss benefits and rehabilitative services will not be reduced as a result of the transfer, (d) employers who self-fund for health insurance or workers' compensation and who do not choose to become certified health plans under chapter . . ., Laws of 1993 (this act), will continue to be required to provide workers' compensation benefits as required under 1993 law, (e) the employees' share of the workers' compensation medical aid fund contribution is returned to employees as increased wages, and (f) a majority of employees in the employer's company do not object to the change.

To help in developing this plan the department of labor and industries may immediately implement pilot projects to assess the effects of this consolidation on the cost, quality comparability, and employer/employee satisfaction with various consolidation proposals.

The plan and timeline required under this subsection shall be presented to the governor and the appropriate committees of the legislature by January 1, 1995. The timeline shall include full implementation of needed rules by July 1, 1997.

PART XIV. APPROPRIATIONS

NEW SECTION. Sec. 1401. (1) A total of eighty million dollars is appropriated from the Washington health services trust fund to the basic health plan for the biennium ending June 30, 1995. This appropriation is subject to the following conditions and limitations:

(a) The administrator of the basic health plan shall devise a schedule to expand individual enrollment by twenty thousand individuals.

(b) The administrator shall devise a plan to enroll fifteen thousand subsidized business-sponsored individuals.

(d) In devising and implementing the enrollment increases in (a) through (c) of this subsection, the administrator shall: (i) Strive to phase-in enrollment evenly throughout the biennium; (ii) access actual enrollment growth on a quarterly basis. The administrator may distribute excess enrollment capacity from one category to another at the end of each quarter; (iii) ensure that the mix and number of enrollees in June 1995 results in a monthly state subsidy cost not exceeding four million five hundred eighty-three thousand dollars; (iv) manage enrollment to avoid sudden changes in enrollment levels or mix; (v) take into account the administrative delays which may be encountered in enrolling new members under (b) and (c) of this subsection.

(2) The sum of fifteen million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the health services trust fund to the public health account to be used for the purposes of the public health services improvement plan in section 1001 of this act and to meet the need for immediate improvements in public health programs including a counter-measure media campaign directed at reducing teen risk behaviors, reducing the incidences of sexually transmitted diseases, reducing teen pregnancy, and increasing rates of childhood immunization.

(3) The sum of six million five hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the health services trust fund to the health professions, data systems, and research account for the purposes of section 1001 of this act.

(4) The sum of one million seven hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the health services trust fund to the department of health for the following purposes: Four hundred thousand dollars for preparation of the health personnel resource plan under chapter 28B.125 RCW, one million dollars for community-based health professional recruitment and retention activities under chapter 70.185 RCW, and two hundred thousand dollars for the malpractice insurance program under RCW 43.70.460 and 43.70.470.

(5) The sum of two million three hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the health services trust fund to the University of Washington for the following purposes: Two million dollars for the state-wide family medicine program authorized under chapter 70.112 RCW and three hundred thousand dollars for the training of physician assistants.

(6) The sum of two million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the health services trust fund to the higher education coordinating board for the purposes of making awards through the health professional scholarship and loan repayment under chapter 28B.115 RCW.

PART XV. REVENUES

NEW SECTION. Sec. 1501. 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 fifty-five and seventy-seven one-hundredths percent of the sums collected and remitted to the state general fund, forty-one and ninety-one one-hundredths percent of the sums collected and remitted to the health services trust fund created under section 1101 of this act, one and twenty-three one-hundredths percent of the sums collected and remitted to the volunteer fire fighters' relief and pension principal fund created under RCW 41.24.030, and one and nine one-hundredths percent of the sums collected and remitted to the firemen's pension fund created under RCW 41.16.050.

NEW SECTION. Sec. 1502. 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. 1503. 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. 1504. 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 fund created under section 1101 of this act.

Sec. 1505. 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 fund created under section 1101 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. 1506. 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 fund created under section 1101 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. 1507. 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. 1508. 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 fund created under section 1101 of this act.

Sec. 1509. 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 fund created under section 1101 of this act.

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

Sec. 1510. 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~~)).

PART XVI. MISCELLANEOUS

NEW SECTION. Sec. 1601. SHORT TITLE. This act may be known and cited as the Washington health services act of 1993.

Sec. 1602. 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. 1603. 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. 1604. 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. 1605. 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. 1606. CAPTIONS. Captions used in this act do not constitute any part of the law.

NEW SECTION. Sec. 1607. 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. 1608. 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 1504 through 1510 of this act which shall take effect July 1, 1993.

(2) Sections 1501, 1502, and 1503 of this act shall take effect January 1, 1994. Sections 1501 and 1502 of this act shall be effective in respect to taxes due March 1, 1995, and thereafter.