AN ACT Relating to health care; amending RCW 28A.58.420, 41.04.205, 41.05.025, 43.84.090, 41.05.050, 43.84.090, 48.46.180, 48.62.030, 48.62.100, 48.62.110, 51.44.020, 51.44.110, and 74.09.510; adding new sections to chapter 41.05 RCW; adding a new chapter to Title 43 RCW; adding new sections to chapter 43.131 RCW; adding a new section to chapter 48.62 RCW; adding a new section to chapter 51.44 RCW; adding a new section to chapter 74.09 RCW; providing an expiration date; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. This chapter shall be known as the state health care purchasing reform act of 1985.

NEW SECTION. Sec. 2. The legislature finds that the rising increase in health costs for public employees and persons within the state's care is a major public policy concern and that unless addressed through specific statutory direction adequate health care will not be attainable through the expenditure of public funds. The legislature further finds that prevalent methods of health care delivery and cost reimbursement are often inefficient and wasteful.

It is therefore the intent of the legislature to control costs of state purchased health care while maintaining an adequate level of care; promote wellness; encourage the development of managed health care systems and other systems that have been effective in controlling costs; place within one authority the responsibility and power to control cost while insuring adequate care; and place the state of Washington in a leadership position in cost containment.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.

(1) "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 state employees insurance board, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.

(2) "Unit" means the state health care purchasing unit.

(3)(a) "Managed health care" means a system which shall include these components:

(i) Provision of insurance and responsibility for delivery of care through the same organization;

(ii) A comprehensive range of services either directly or on contract with other providers;

(iii) Control of utilization through identified management intervention points;

(iv) A data collection system that includes, as a minimum, utilization data on all clients and quality of care review; and

(v) Financial risk to the provider organization.

(b) It may as an option also include the following:

(i) A mechanism to resolve complaints;

(ii) Incorporation of health promotion activities as a regular part of medical care;

(iii) Membership education regarding appropriate use of facilities and services;

(iv) Quality of care reviews, utilization review, and peer review;

(v) Financial incentives to the consumer to control costs; and

(vi) Public assistance enrollment of approximately the same proportion as all public assistance recipients to the general population of the service area.

NEW SECTION. Sec. 4. (1) There is hereby created, within the office of financial management, the state health care purchasing unit. The unit shall have the following powers and responsibilities:

(a) To adopt standards for acceptable state purchased health care programs. Standards shall be modeled after the managed health care definition, and other effective cost containing approaches;

(b) To review and approve all agency proposals for purchasing health care, provided that they are in compliance with purchasing standards;

(d) To coordinate the activities of other state agencies with respect to health care cost containment policies;

(e) To explore new ways to control cost while maintaining adequate levels of care;

(f) To submit to the legislature by January 7, 1987, legislation to streamline health care purchasing procedures and remove unnecessary barriers, including but not limited to state contracting procedures;

(g) To encourage the private sector to participate in managed health care systems and other effective approaches;

(h) To coordinate and encourage efforts to establish proven health promotion and disease and accident prevention efforts within state-purchased health care programs including, but not limited to education, monitoring, and counseling of consumers on effective methods to minimize illness;

(i) To establish an information gathering capacity, using existing data systems to the extent possible, that enables the unit to fulfill its responsibilities, including:

(i) Monitoring the number of persons in state purchased health care programs, types of benefit packages, and costs;

(ii) Developing, where feasible, comparisons between rates of payments for similar health care by different health care purchasing agencies;

(iii) Preparing and submitting to the legislature and state health care purchasing agencies, by July 1 of each even-numbered year:

(A) Biennial and long-term projections for health care costs assuming the current level of expenditures; and

(B) A proposed target for total state expenditures for health care taking into consideration savings obtained through the implementation of this chapter;

(j) To establish procedures for volume purchasing of health care goods and equipment;

(k) To appoint a technical advisory committee that represents state employees and state agencies that are involved in the direct purchase, funding, or provision of health care, but whose majority shall be citizen taxpayers with no fiduciary interest in state purchased health care; and

(l) To promulgate rules and standards pursuant to chapter 34.04 RCW.

(2) All state agencies shall cooperate in assisting the unit implement the provisions of this chapter.

(3) The unit shall submit to the legislature no later than November 30, 1986, a report that includes a review of state health care regulatory agencies, including the hospital commission, the health planning and certificate of need sections of the department of social and health services, the board of health, department of licensing, health care facilities authority, and the office of the insurance commissioner.

The report shall describe the respective roles of these agencies regarding health care cost containment and their accomplishments over the preceding six years, and shall address ways to increase the combined efficiency of these agencies to control costs and maintain quality of care.

(4) The unit shall have an administrator who, along with one other employee, shall be exempt from civil service law, chapter 41.06 RCW. The unit shall employ other staff necessary to fulfill the requirements of this chapter who shall be subject to the civil service law, chapter 41.06 RCW.

NEW SECTION. Sec. 5. (1) The state employees' insurance board, the department of social and health services, the department of labor and industries, the department of veterans affairs, and the department of corrections shall individually or in cooperation with other agencies take any necessary actions to control costs without reducing the quality of care when reimbursing for or purchasing drugs. To accomplish this purpose, each agency shall investigate the feasibility of and may establish a drug formulary designating which drugs may be paid for through the respective health care programs. For purposes of this section, a drug formulary means a list of drugs, either inclusive or exclusive, that defines which drugs are eligible for reimbursement by the agency.

(2) In developing the drug formulary authorized by this section, agencies:

(a) Shall prohibit reimbursement for drugs that are determined to be ineffective by the United States food and drug administration;

(b) Shall adopt rules in order to ensure that less expensive generic drugs will be substituted for brand name drugs in those instances where the quality of care is not diminished;

(d) May limit the prices paid for drugs by such means as central purchasing, volume contracting, or setting maximum prices to be paid;

(e) Shall consider the approval of drugs with lower abuse potential in substitution for drugs with significant abuse potential; and

(f) May take other necessary measures to control costs of drugs without reducing the quality of care.

(3) Agencies may provide for reasonable exceptions to the drug formulary required by this section.

(4) Agencies may establish medical advisory committees, or utilize committees already established, to assist in the development of the drug formulary required by this section.

(5) Agencies shall report to the unit on the requirements in this section in a timely manner. The unit shall include a related status report in its November 30, 1986 report to the legislature.

Sec. 6. Section 28A.58.420, chapter 223, Laws of 1969 ex. sess. as last amended by section 1, chapter 255, Laws of 1977 ex. sess. and RCW 28A.58.420 are each amended to read as follows:

The board of directors of any of the state's school districts may make available liability, life, health, health care, accident, disability and salary protection or insurance or any one of, or a combination of the enumerated types of insurance, or any other type of insurance or protection, for the members of the boards of directors, the students, and employees of the school district, and their dependents. The board of directors may contract with the state insurance board to provide coverage under chapter 41.05 RCW. Whenever funds shall be available for these purposes the board of directors of the school district may contribute all or a part of the cost of such protection or insurance for the employees of their respective school districts and their dependents. The premiums on such liability insurance shall be borne by the school district. The premiums due on such protection or insurance shall be borne by the assenting school board member or student: PROVIDED, That the school district may contribute all or part of the costs, including the premiums, of life, health, health care, accident or disability insurance which shall be offered to all students participating in interschool activities on the behalf of or as representative of their school or school district. All contracts for insurance or protection written to take advantage of the provisions of this section shall provide that the beneficiaries of such contracts may utilize on an equal participation basis the services of those practitioners licensed pursuant to chapters 18.22, 18.25, 18.53, 18.57 and 18.71 RCW.

Sec. 7. Section 1, chapter 106, Laws of 1975-'76 2nd ex. sess. and RCW 41.04.205 are each amended to read as follows:

(1) Notwithstanding the provisions of RCW 41.04.180, the employees, with their dependents, of any county, municipality, or other political subdivision of this state shall be eligible to participate in any insurance program administered under chapter 41.05 RCW if the legislative authority of any such county, municipality, or other political subdivisions of this state determines a transfer to an insurance program administered under chapter 41.05 RCW should be made: PROVIDED, That this section shall have no application to ((~~school district personnel provided for in RCW 28A.58.420 and~~)) members of the law enforcement officers' and fire fighters' retirement system under chapter 41.26 RCW: PROVIDED FURTHER, That in the event of a special district employee transfer pursuant to this section, members of the governing authority shall be eligible to be included in such transfer if such members are authorized by law as of June 25, 1976 to participate in the insurance program being transferred from and subject to payment by such members of all costs of insurance for members: PROVIDED FURTHER, That contributions by any county, municipality, or other political subdivision to which coverage is extended after the effective date of this 1985 act shall not receive the benefit of any surplus funds attributable to premiums paid prior to the date upon which coverage is extended.

(2) When the legislative authority of a county, municipality, or other political subdivision determines to so transfer, the state employees' insurance board, as defined in RCW 41.05.010 ((~~as now or hereafter amended~~)), shall:

(a) Establish the conditions under which the transfer may be made, which shall include the requirements that:

(i) All the eligible employees of the political subdivision transfer as a unit, and

(ii) the political subdivision involved obligate itself to make employer contributions in an amount at least equal to those provided by the state as employer; and

(b) Hold public hearings on the application for transfer; and

Approval of the application by the state employees' insurance board shall effect a transfer of the employees involved to the insurance or health care program applied for.

NEW SECTION. Sec. 8. A new section is added to chapter 41.05 RCW to read as follows:

The board shall establish a pilot health care program as follows:

(1) The board shall offer on a voluntary basis a less than comprehensive health benefit package to no more than one thousand public employees.

(2) The package shall include deductibles, copayments, and noncoverage for certain medical care procedures that have not demonstrated to be effective in reducing subsequent utilization.

(3) The board shall determine the amount saved for each enrollee and divide and distribute the savings equally between the general fund and each enrollee.

(4) The board shall assess the effectiveness of this pilot program by comparing its performance to the performance of nonpilot project programs in accomplishing the following goals:

(a) Reducing state and enrollee costs for comparable health care;

(b) Reducing the use of unnecessarily expensive forms of health care; and

(5) The board shall provide a report to the legislature on the results of its comparative analysis by January 1987.

Sec. 9. Section 2, chapter 136, Laws of 1977 ex. sess. as last amended by section 68, chapter 287, Laws of 1984 and RCW 41.05.025 are each amended to read as follows:

(1) There is hereby created a state employees' insurance board to be composed of the members of the present board holding office on the day prior to July 1, 1977, which such members shall serve until the expiration of the period of time of the term for which they were appointed and until their successors are appointed and qualified. Thereafter the board shall be composed as follows: The governor or the governor's designee; one administrative officer representing all of higher education to be appointed by the governor; two higher education faculty members to be appointed by the governor; the director of the department of personnel who shall act as trustee; one representative of an employee association certified as an exclusive representative of at least one bargaining unit of classified employees and one representative of an employee union certified as exclusive representative of at least one bargaining unit of classified employees, both to be appointed by the governor; one person who is retired and is covered by a program under the jurisdiction of the board, to be appointed by the governor; one member of the senate who shall be appointed by the president of the senate; and one member of the house of representatives who shall be appointed by the speaker of the house. The terms of office of the administrative officer representing higher education, the two higher education faculty members, the representative of an employee association, the retired person, and the representative of an employee union shall be for four years: PROVIDED, That the first term of one faculty member and one employee association or union representative member shall be for three years. Meetings of the board shall be at the call of the director of personnel. The board shall prescribe rules for the conduct of its business and shall elect a chairman and vice chairman annually. Members of the board shall be compensated in accordance with RCW 43.03.240 and shall be paid for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060, and legislative members shall receive allowances provided for in RCW 44.04.120.

(2) The board shall study all matters connected with the providing of adequate health care coverage, life insurance, liability insurance, accidental death and dismemberment insurance, and disability income insurance or any one of, or a combination of, the enumerated types of insurance and health care plans 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 liability insurance shall not be made available to dependents. The board shall design benefits, devise specifications, analyze carrier responses to advertisements for bids, determine the terms and conditions of employee participation and coverage, and decide on the award of contracts which shall be signed by the trustee on behalf of the board: PROVIDED, That all contracts for insurance, health care plans, including panel medicine plans, or protection applying to employees covered by RCW 28B.10.660 and chapters 41.04 and 41.05 RCW shall provide that the beneficiaries of such insurance, health care plans, or protection may utilize on an equal participation basis the services of practitioners licensed pursuant to chapters 18.22, 18.25, 18.32, 18.53, 18.57, 18.71, 18.74, 18.83, and 18.88 RCW: PROVIDED FURTHER, That the boards of trustees and boards of regents of the several institutions of higher education shall retain sole authority to provide liability insurance as provided in RCW 28B.10.660. The board shall from time to time review and amend such plans. Contracts for all plans shall be rebid and awarded at least every five years.

(3) The board shall develop and provide as a part of the employee insurance benefit program an employee health care benefit plan which may be provided through a contract or contracts with regularly constituted insurance carriers or health care service contractors as defined in chapter 48.44 RCW, and ((~~a plan to be provided by~~)) a panel medicine plan in its service area only when approved by the board: PROVIDED, That panel medicine plans be developed by solicitation of sealed bids: PROVIDED FURTHER, That the board may disapprove the offering of any panel medicine plan provided by an organization that declines to enter into an agreement to: (a) Offer premium rating based on the actual claim experience of the state employees' insurance board group or based on a community-rated class; and (b) provide periodic but not less than annual claim experience and administrative expense accounting for premium rating and experience refunding. However, the board may negotiate a delay of up to twelve months for implementation of (a) and (b) of this subsection (3) with respect to a panel medicine plan provided by an organization which does not initially have such internal administrative procedure as may be required for the plan to comply with such terms. The board's bidding procedures with organizations providing panel medicine plans shall not require federally qualified organizations to violate federal laws and regulations.

The board may but shall not be required to pay more for health benefits under a panel medicine plan than it would otherwise be required to pay for health benefits by a contract with a regularly constituted insurance carrier or health care service contractor in effect at the time the panel medicine plan is included in the employee health care benefit plan, as long as it is not more than the cost of the second lowest reasonable bid accepted by the board under the competitive sealed bid process for panel medicine plans. Except for panel medicine plans, the board may but is not required to contract with more than one insurance carrier or health care service contractor to provide similar benefits: PROVIDED, That employees may choose participation in only one of the health care benefit plans sponsored by the board. Active employees, as defined in RCW 41.05.010(2), eligible for medicare benefits shall have the option of continuing participation in health care programs on the same basis as all other employees or participation in medicare supplemental programs as may be developed by the board. These health care benefit plans shall provide coverage for all officials and employees and their dependents without premium or subscription cost to the individual employees and officials, unless the board approves a panel medicine plan at a subscription rate in excess of the premium of the regularly constituted insurance carrier or health care service contractor, in which circumstances an employee contribution may be authorized at an amount equal to such excess. Rates for self pay segments of state employee groups will be developed from the experience of the entire group. Such self pay rates will be established based on a separate rate for the employee, the spouse, and children.

(4) The board shall review plans proposed by insurance carriers who 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. (5) Premium rates for health care benefit plans made available to school district or educational service district employees may be based on the actual claims experience of those employees.

Sec. 10. Section 9, chapter 2, Laws of 1983 as last amended by section 1, chapter 107, Laws of 1984 and RCW 41.05.050 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 state employees insurance board. Such contributions, which shall be paid by the county, the municipality, or other political subdivision for their employees, shall include an amount determined by the state employee's insurance board to pay the administrative expenses of the board and the salaries and wages and expenses of the benefits supervisor and other necessary personnel: PROVIDED, That this administrative service charge for state employees shall not result in an employer contribution in excess of the amount authorized by the governor and the legislature as prescribed in RCW 41.05.050(2), and that the sum of an employee's insurance premiums and administrative service charge in excess of such employer contribution shall be paid by the employee. All such contributions will be paid into the state employees insurance fund to be expended in accordance with RCW 41.05.030.

(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 state employees insurance board, subject to the approval of the governor for availability of funds as specifically appropriated by the legislature for that purpose: PROVIDED, ((~~That provision for school district personnel shall not be made under this chapter: PROVIDED FURTHER,~~)) That insurance and health care contributions for ferry employees shall be governed by RCW 47.64.270.

(3) The trustee with the assistance of the department of personnel 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 state employees insurance board. Such survey shall be conducted during each even-numbered year but may be conducted more frequently. The survey shall be reported to the board for its use in setting the amount of the recommended employer contribution to the employee insurance benefit program covered by this chapter. The board 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.

NEW SECTION. Sec. 11. A new section is added to chapter 41.05 RCW to read as follows:

(1) Trusteeship of those funds under the authority of the board is vested in the voting members of the board. The board may delegate any of its powers and duties to the director as deemed necessary for efficient administration and if consistent with the purposes of this chapter.

(2) No member of the board is liable for the negligence, default, or failure of any other person or other member of the board to perform the duties of the member's office and no member of the board shall be considered or held to be an insurer of the funds or assets of any of the funds nor is any nonvoting member liable for actions performed with the exercise of reasonable diligence within the scope of the member's authorized activities as a member of the board.

Sec. 12. Section 19, chapter 290, Laws of 1975 1st ex. sess. and RCW 48.46.180 are each amended to read as follows:

(1) The state government, or any political subdivision thereof, which offers its employees a health benefits plan shall make available to and inform its employees or members of the option to enroll in at least one health maintenance organization holding a valid certificate of authority which provides health care services in the geographic areas in which such employees or members reside.

(2) Except as provided in RCW 41.05.025(3), each employer, public or private, having more than fifty employees in this state which offers its employees a health benefits plan, and each employee benefits fund in this state having more than fifty members which offers its members any form of health benefits shall make available to and inform its employees or members of the option to enroll in at least one health maintenance organization holding a valid certificate of authority which provides health care services in the geographic areas in which a substantial number of such employees or members reside: PROVIDED, That unless at least twenty-five employees agree to participate in a health maintenance organization the employer need not provide such an option: PROVIDED FURTHER, That where such employees are members of a bona fide bargaining unit covered by a labor-management collective bargaining agreement, the selection of the options required by this section may be specified in such agreement: AND PROVIDED FURTHER, That the provisions of this section shall not be mandatory where such members are covered by a Taft-Hartley health care trust, except that the labor-management trustees may contract with a health maintenance organization if a feasibility study determines it is to the advantage of the members to so contract.

(3) Subsections (1) and (2) of this section shall impose no responsibilities or duties upon state government or any political subdivision thereof or any other employer, either public or private, to provide health maintenance organization coverage when no health maintenance organization exists for the purpose of providing health care services in the geographic areas in which the employees or members reside.

(4) No employer in this state shall in any way be required to pay more for health benefits as a result of the application of this section than would otherwise be required by any prevailing collective bargaining agreement or other legally enforceable contract of obligation for the provision of health benefits between such employer and its employees.

NEW SECTION. Sec. 13. A new section is added to chapter 48.62 RCW to read as follows:

School districts and educational service districts may, either individually or in combination with other such districts, self-fund their employees' loss of time and health benefit plans if (1) the plans, their manner of operation, and the managers meet standards established by the superintendent of public instruction and the state health care purchasing unit created under section 4 of this act; and (2) the plan is fully covered by an excess loss insurance policy issued by an insurer which has a certificate authorizing it to provide insurance in this state. Claims under such plans shall be administered by competent, disinterested third parties acting independently of all school districts and their personnel. Such a plan or any trust established thereunder shall not be deemed to be an insurance company and shall not be deemed to be engaged in the business of insurance for purposes of the insurance code.

Any plan authorized to be formed by this section shall be subject to audit by the state auditor.

School districts and educational service districts may also enroll employees in health benefit plans offered by the state employees insurance board.

Sec. 14. Section 3, chapter 256, Laws of 1979 ex. sess. as amended by section 17, chapter 59, Laws of 1983 and RCW 48.62.030 are each amended to read as follows:

The governing body of any local governmental entity may, as an alternative or in addition to the establishment of a self-funded plan, a self-insurance reserve, or the purchasing of insurance, contract for or hire personnel to provide risk management, claims, and administrative services. Moneys made available and moneys expended by school districts and educational service districts for the purpose of implementing any provision of RCW 48.62.010 through 48.62.120 or RCW 36.16.138 shall be subject to such rules of the superintendent of public instruction as the superintendent may adopt governing the budgeting and accounting of such plan or reserves.

Sec. 15. Section 10, chapter 256, Laws of 1979 ex. sess. and RCW 48.62.100 are each amended to read as follows:

Any organization of local governmental entities that is organized under RCW 48.62.040 or section 15 of this 1985 act shall have the flexibility to perform its functions and at its option may, if such functions and actions are within its purview as established by the agreement or contract adopted pursuant to chapter 39.34 RCW that lists the powers and functions of the organization, do any of the following:

(1) Contract or otherwise provide for risk management and loss control services;

(2) Contract or otherwise provide legal counsel for the defense of claims and/or other legal services;

(3) Consult with the state insurance commissioner and/or the state risk manager;

(4) Jointly purchase insurance coverage in such form and amount as the organization's participants may by contract agree; and

(5) Possess any other powers and perform all other functions reasonably necessary to carry out the purposes of this chapter.

Sec. 16. Section 11, chapter 256, Laws of 1979 ex. sess. and RCW 48.62.110 are each amended to read as follows:

Any organization of local governmental entities that is organized under RCW 48.62.040 or section 15 of this 1985 act may provide for private meetings to consider litigation and settlement of claims when it appears that public discussion of these matters would impair the organization's ability to conduct its business effectively.

Notwithstanding any provision to the contrary contained in the public disclosure act, chapter 42.17 RCW, in a claim or action against the state or any local governmental entity, no person shall be entitled to discover that portion of funds or liability reserve established for purposes of satisfying a claim or cause of action, except that the reserve is discoverable in any supplemental or ancillary proceeding to enforce a judgment.

NEW SECTION. Sec. 17. A new section is added to chapter 51.44 RCW to read as follows:

The director of labor and industries shall submit to the legislature no later than January 1, 1986, a report that will propose methods to incrementally reduce the projected expenditures of the medical aid fund up to twenty percent for the period of July 1, 1986, to June 30, 1987. With each proposed incremental reduction, the report shall include: Methods of obtaining the reduction; effects upon injured workers; effects upon the service provider; and drafts of legislation necessary to implement the reductions.

Sec. 18. Section 51.44.020, chapter 23, Laws of 1961 and RCW 51.44.020 are each amended to read as follows:

There shall be, in the ((~~office of the~~)) state ((~~treasurer~~)) treasury, a fund to be known and designated as the "medical aid fund((.))," disbursements from which shall be made pursuant to appropriation except as provided in RCW 51.44.110.

Sec. 19. Section 51.44.110, chapter 23, Laws of 1961 as last amended by section 68, chapter 350, Laws of 1977 ex. sess. and RCW 51.44.110 are each amended to read as follows:

Disbursement out of the several funds shall be made only upon warrants drawn by the department and disbursements out of the medical aid fund shall be made only pursuant to appropriation. The state treasurer shall pay every warrant out of the fund upon which it is drawn. If, at any time, there shall not be sufficient money appropriated in the fund on which any such warrant is drawn wherewith to pay the same, the warrant shall be paid out of the unappropriated portion of the fund. If, at any time, there shall not be sufficient money in the fund on which any such warrant is drawn wherewith to pay the same, the employer on account of whose worker it was that the warrant was drawn shall pay the same, and he or she shall be credited upon his or her next following contribution to such fund the amount so paid with interest thereon at the legal rate from the date of such payment to the date such next following contribution became payable and, if the amount of the credit shall exceed the amount of the contribution, he or she shall have a warrant upon the same fund for the excess and, if any such warrant shall not be so paid, it shall remain, nevertheless, payable out of the fund. If disbursements are made out of the unappropriated portion of the fund pursuant to this section, then the director shall make a full accounting to the legislative budget committee.

NEW SECTION. Sec. 20. A new section is added to chapter 74.09 RCW to read as follows:

In addition to its existing managed health care programs the department shall develop plans for two managed health care programs, one in the eastern part and one in the western part of the state. The plan shall include measures to ensure enrollment of at least five thousand medical assistance enrollees in each program, in addition to the number enrolled in managed health care programs as of June 30, 1985. The department shall report to the legislature no later than January 1, 1986, on the development of the plan.

Sec. 21. Section 4, chapter 30, Laws of 1967 ex. sess. as last amended by section 5, chapter 3, Laws of 1981 2nd ex. sess. and RCW 74.09.510 are each amended to read as follows:

Medical assistance may be provided in accordance with eligibility requirements established by the department of social and health services, including the prohibition under RCW 74.09.532 through 74.09.536 against the knowing and wilful assignment of property or cash for the purpose of qualifying for such assistance, as defined in the social security Title XIX state plan for mandatory categorically needy persons and: (1) Individuals who would be eligible for cash assistance except for their institutional status; (2) individuals who are under twenty-one years of age, who would be eligible for aid to families with dependent children, but do not qualify as dependent children and who are in (a) foster care, (b) subsidized adoption, (c) an intermediate care facility or an intermediate care facility for the mentally retarded, or (d) inpatient psychiatric facilities; (3) the aged, blind, and disabled who: (a) Receive only a state supplement, or (b) would not be eligible for cash assistance if they were not institutionalized; (4) individuals who would be eligible for but choose not to receive cash assistance; ((~~and~~)) (5) pregnant women who would be eligible for aid to families with dependent children if the child had been born and was living with the mother during the month of the payment, and the pregnancy has been medically verified; (6) individuals who are enrolled in managed health care systems, who have otherwise lost eligibility for medical assistance, but who have not completed a current six-month enrollment in a managed health care system, and who are eligible for federal financial participation under Title XIX of the social security act; and (7) other individuals eligible for medical services under RCW 74.09.035 and 74.09.700 for whom federal financial participation is available under Title XIX of the social security act.

NEW SECTION. Sec. 22. A new section is added to chapter 43.131 RCW to read as follows:

The state health care purchasing unit and its powers and duties shall be terminated on June 30, 1991, as provided in section 14 of this act.

NEW SECTION. Sec. 23. A new section is added to chapter 43.131 RCW to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 1992.

(1) Section 1 of this act;

(2) Section 2 of this act;

(3) Section 3 of this act;

(4) Section 4 of this act; and

(5) Section 5 of this act.

NEW SECTION. Sec. 24. Sections 1 through 5 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 25. Sections 18 and 20 of this act shall take effect July 1, 1987. The remainder of this act being necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1985.