H-1799

AN ACT Relating to the basic health plan; amending RCW 70.47.020, 70.47.030, 70.47.060, 70.47.080, and 43.131.355; reenacting and amending RCW 43.131.356; adding a new section to chapter 70.47 RCW; creating new sections; and providing an effective date.

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

NEW SECTION. Sec. 1. 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 health care authority. All references to the administrator of the Washington basic health plan or the Washington basic health plan in the Revised Code of Washington shall be construed to mean the administrator of the Washington health care authority or the Washington health care authority.

NEW SECTION. Sec. 2. 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 health care authority. All cabinets, furniture, office equipment, motor vehicles, and other tangible property employed by the Washington basic health plan shall be made available to the Washington health care authority. All funds, credits, or other assets held by the Washington basic health plan shall be assigned to the Washington 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 health care authority.

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. 3. All employees of the Washington basic health plan are transferred to the jurisdiction of the Washington health care authority. All employees classified under chapter 41.06 RCW, the state civil service law, are assigned to the Washington 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. 4. All rules and all pending business before the Washington basic health plan shall be continued and acted upon by the Washington health care authority. All existing contracts and obligations shall remain in full force and shall be performed by the Washington health care authority.

NEW SECTION. Sec. 5. 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. 6. If apportionments of budgeted funds are required because of the transfers directed by sections 2 through 5 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. 7. Nothing contained in sections 1 through 6 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. 8. 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.

(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) "Enrollee" means an individual, or an individual plus the individual's spouse ((~~and/or~~)) and 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. Nonsubsidized enrollees shall be considered enrollees as restricted in this section.

(5) "Nonsubsidized enrollee" means an individual and, when requested, members of the individual's family, if the individual (a) is employed by a business licensed in the state of Washington not employing more than twenty-five full-time employees for more than six consecutive months during the immediately preceding calendar year as determined by the administrator, (b) resides in an area of the state serviced by a managed health care system participating in the plan, and (c) chooses to obtain health care coverage from a managed health care system participating in the plan in return for periodic payments paid by the individual, or her or his employer, covering the total cost of care.

(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 enrollee and the amount determined to be the 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 makes to the plan as consideration for enrollment in the plan.

((~~(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 enrollees in the plan and in that system.

Sec. 9. RCW 70.47.030 and 1987 1st ex.s. c 5 s 5 are each amended to read as follows:

The basic health plan trust account is hereby established in the state treasury. All funds appropriated for this chapter shall be deposited in the basic health plan trust account and may be expended without further appropriation. Disbursements from other moneys in the account shall be made pursuant to appropriation and upon warrants drawn by the Washington basic health plan administrator. 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. The earnings on any surplus balances in the basic health plan trust account shall be credited to the account, notwithstanding RCW 43.84.090. After January 1, 1988, the administrator shall not expend or encumber for an ensuing fiscal period amounts exceeding ninety percent of the amounts anticipated to accrue in the account during the fiscal period. No funds from the trust account or from enrollee premiums or other types of enrollee financial participation shall be used or expended to underwrite any part of nonsubsidized enrollees' coverage.

Sec. 10. RCW 70.47.060 and 1987 1st ex.s. c 5 s 8 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 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, shall include all services necessary for prenatal, postnatal, and well-child care, and shall include a separate schedule of basic health care services for children, eighteen years of age and younger, for those 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.

(2) To design and implement a structure of periodic premiums due the administrator from enrollees that is based upon gross family income, giving appropriate consideration to family size as well as 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. Premiums due from nonsubsidized enrollees, who are not otherwise eligible to be enrollees, shall be in an amount equal to the rates charged by the plan to the managed health care system.

(3) To design and implement a structure of nominal copayments due a managed health care system from 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.

(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.

(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.

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 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, 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 require that prospective enrollees who may be eligible for categorically needy medical coverage under RCW 74.09.510 or whose income does not exceed the medically needy income level under RCW 74.09.700 apply for such coverage, but the administrator shall enroll the individuals in the plan pending the determination of eligibility under chapter 74.09 RCW.

(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.

(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. The administrator shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the ((~~hospital commission~~)) department of health, to minimize duplication of effort.

(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.

(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.

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

(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. 11. 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).

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 enrollment limitations set forth in this section do not apply to nonsubsidized enrollees as defined in RCW 70.47.020(5).

NEW SECTION. Sec. 12. The school of public health and community medicine of the University of Washington shall, consistent with its ongoing evaluation of the basic health plan and in consultation with the legislative budget committee, submit an interim report on the plan to the governor and appropriate committees of the legislature by December 1, 1991. The report shall address, at least: A description of enrollees; enrollment and disenrollment patterns; utilization rates; costs; and issues of implementation.

Sec. 13. RCW 43.131.355 and 1987 1st ex.s. c 5 s 24 are each amended to read as follows:

The Washington basic health plan ((~~administrator~~)) under the authority of the Washington health care authority and its powers and duties shall be terminated on June 30, ((~~1992~~)) 1994, as provided in RCW 43.131.356.

Sec. 14. RCW 43.131.356 and 1987 1st ex.s. c 5 s 25 are each reenacted and amended to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, ((~~1993~~)) 1995:

(1) RCW 70.47.900 and 1987 1st ex.s. c 5 s 1;

(2) RCW 70.47.140 and 1987 1st ex.s. c 5 s 2;

(3) RCW 70.47.010 and 1987 1st ex.s. c 5 s 3;

(4) RCW 70.47.020 and 1987 1st ex.s. c 5 s 4;

(5) RCW 70.47.030 and 1987 1st ex.s. c 5 s 5;

(6) RCW 70.47.040 and 1987 1st ex.s. c 5 s 6;

(7) RCW 70.47.050 and 1987 1st ex.s. c 5 s 7;

(8) RCW 70.47.060 and 1987 1st ex.s. c 5 s 8;

(9) RCW 70.47.070 and 1987 1st ex.s. c 5 s 9;

(10) RCW 70.47.080 and 1987 1st ex.s. c 5 s 10;

(11) RCW 70.47.090 and 1987 1st ex.s. c 5 s 11;

(12) RCW 70.47.100 and 1987 1st ex.s. c 5 s 12;

(13) RCW 70.47.110 and 1987 1st ex.s. c 5 s 13;

(14) RCW 70.47.120 and 1987 1st ex.s. c 5 s 14;

(15) RCW 70.47.130 and 1987 1st ex.s. c 5 s 15;

(16) RCW 50.20.210 and 1987 1st ex.s. c 5 s 16;

(17) RCW 51.28.090 and 1987 1st ex.s. c 5 s 17; and

(18) RCW 74.04.033 and 1987 1st ex.s. c 5 s 18.

NEW SECTION. Sec. 15. Sections 1 through 7 of this act shall take effect July 1, 1992.