Z-0428.3                   _______________________________________________

 

                                                     SENATE BILL 5076

                              _______________________________________________

 

State of Washington                              53rd Legislature                             1993 Regular Session

 

By Senators Talmadge, Gaspard, Snyder and Pelz; by request of Governor Gardner

 

Read first time 01/12/93.  Referred to Committee on Health & Human Services.

 

Enacting comprehensive health care reform.


          AN ACT Relating to health care reform; amending RCW 70.47.010, 70.47.020, 70.47.030, 70.47.040, 70.47.060, 70.47.080, 70.47.120, 48.20.032, 48.21.050, 48.30.300, 48.44.220, 48.46.370, 70.170.010, 70.170.020, 70.170.080, 70.170.070, 5.60.070, 18.130.160, 18.130.190, 70.41.200, 48.14.020, 82.26.020, 82.24.020, 82.08.150, 82.08.160, 66.08.180, 66.24.210, 66.24.290, 41.16.050, and 41.24.030; adding a new section to chapter 70.47 RCW; adding a new section to chapter 48.20 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 a new section to chapter 70.170 RCW; adding new sections to chapter 7.70 RCW; adding a new section to chapter 18.130 RCW; adding a new section to Title 70 RCW; adding a new section to chapter 48.22 RCW; adding a new section to chapter 43.70 RCW; adding new sections to chapter 48.14 RCW; adding a new section to chapter 82.04 RCW; adding a new section to Title 51 RCW; adding new chapters to Title 70 RCW; creating new sections; prescribing penalties; making appropriations; providing effective dates; and declaring an emergency.

 

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


                                                                  TABLE OF CONTENTS

                                                                                                                                                               Page

PART I - HEALTH SERVICES COMMISSION................................................................................................................................   3

 

PART II - EXPANSION OF BASIC HEALTH PLAN.................................................................................................................... 16

 

PART III - HEALTH INSURANCE REFORM................................................................................................................................ 30

 

PART IV - LONG-TERM CARE........................................................................................................................................................... 39

 

PART V - HEALTH CARE DATA...................................................................................................................................................... 40

 

PART VI - LIABILITY REFORMS.................................................................................................................................................... 46

 

PART VII - PUBLIC HEALTH SERVICES IMPROVEMENT PLAN....................................................................................... 54

 

PART VIII - EXECUTIVE AGENCY INITIATIVE........................................................................................................................ 56

 

PART IX - INDIVIDUAL AND EMPLOYER RESPONSIBILITIES.......................................................................................... 57

 

PART X - TAXES FOR HEALTH SERVICES TRUST FUND.................................................................................................... 61


 

 

                                     PART I - HEALTH SERVICES COMMISSION

 

          NEW SECTION.  Sec. 101.  FINDINGS, INTENT, AND PRINCIPLES.  (1) The legislature finds that:

          (a) Despite the significant strides Washington state has made in addressing the lack of access to health services and rising health service costs, major system deficiencies still exist.  The number of persons without access or with increasingly limited access to health services continues to grow at an alarming rate, as health service costs continue to rise well above the rate of inflation;

          (b) Problems relating to health service access, assurance of quality of care, and cost control are likely to have a detrimental effect on the state's ability to be competitive in the international economy.  Further, growing health service costs and the inability to purchase insurance have had particularly harmful effects on small businesses, families, and individuals;

          (c) There are significant administrative inefficiencies in the structure of the current health system, which has numerous payers and administrators, involving excess paperwork and consuming much of a health provider's time and resources on nonclinical matters;

          (d) The health care liability system needs reform to reduce the incidence of medical malpractice and "defensive medicine," provide for prompt and efficient adjudication of malpractice disputes, and fairly compensate injured patients; and

          (e) Future reforms must be systemic, addressing total community as well as individual needs, and encompassing all major components of health service delivery and finance.  Reforms must also result in appropriate health service coverage for all state residents, promote quality of care, and include effective cost controls.

          (2) To address the problems set forth in subsection (1) of this section, it is the intent of the legislature to base a reformed health system on the following principles:

          (a) The fundamental purpose of the health system is to maintain or improve the health of all Washington residents at a reasonable cost.

          (b) The health system must balance the competing priorities of extending the lives of individuals and improving the collective health of our society.

          (c) There should be fundamental reform of the health system with due consideration for the strengths of the existing system.

          (d) Reforms of the health system should consider the special needs of underserved populations.

          (e) All Washington residents shall be guaranteed access to a comprehensive, uniform, and affordable set of confidential, appropriate, and effective health services, regardless of their ability to pay or preexisting health conditions.

          (f) Financing the uniform set of health services and controlling health system costs is the shared responsibility of all members of society.

          (g) Strong incentives and techniques are needed to control total health system costs, enhance the efficiency by which health services are delivered, reduce the provision of inappropriate and ineffective health services, promote prudent use of services by consumers, and equitably distribute the financing of the health system.

          (h) The costs of health services borne by individuals should not be a barrier to universal access to appropriate, effective, and affordable health services, but they should discourage inappropriate use of those services.

          (i) All residents should be assured their health problems will not result in their financial impoverishment.

          (j) Individuals and communities should assume greater responsibility for maintaining and improving their own health by minimizing unhealthy behaviors, taking appropriate preventive measures, and making informed, cost-effective decisions about the use of health services.

          (k) Public policy should strive to shift a substantial majority of the state's population into integrated delivery systems that manage care and assume financial risk for providing a uniform benefits package to their enrollees.

          (l) Negligent health care practices should be minimized, and residents who are injured as a result of such practices should be compensated appropriately.

          (m) All individuals and communities should have the right to make reasonable choices about their health, including reasonable choice of health service providers, and should have the information needed to make those choices.

          (n) There should be broad public participation in developing and implementing fundamental health system reform including business, labor, health service providers, insurers, government, and consumers.

          (3) In furtherance of the principles in subsection (2) of this section it is the intent of this chapter to bring about reforms of the health system by the following specific actions:

          (a) The system shall be restructured so that integrated and managed health care systems are developed and incentives are implemented that reward improved quality and decreased cost.  To accomplish this restructuring, a commission is formed that has the main task of structuring the health market so that incentives are in place, so that effective and appropriate competition ensues, so that costs grow no faster than real income, and so that sufficient information is available for consumers and purchasers of care.

          (b) Universal access to affordable health care for all employed and unemployed people shall be phased in over five years.  This will be accomplished by expanding the basic health plan, employer-based health coverage, and community-based services for people who are unable to access care through other means.  It is also the intent that small employers join together in large purchasing groups to enable small businesses more affordable access to insurance.  Once developed and ensured to be effective, these groups should become the primary mode of purchasing for small business.  Expanded access also requires reform of health insurance practices that exclude people and make insurance unaffordable.

          (c) Effective public health services that are cost-effective should be identified and appropriately funded.

          (d) The health care liability system should be improved for both consumers and providers.

 

          NEW SECTION.  Sec. 102.  DEFINITIONS.  In this chapter, unless the context otherwise requires:

          (1) "Certified health plan", "plan", or "plans" means a health care product, program, or service provided or administered by an entity that provides the uniform benefits package and meets standards established by the commission that are consistent with the requirements set forth in sections 105, 106, and 107 of this act.

          (2) "Chair" means the presiding officer and the chief administrative officer of the commission.

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

          (4) "Employer" means an employer as defined in RCW 50.04.080; a corporate officer; a partner in a partnership; a sole proprietor; and an individual who is an employee for whom an assessment is not collected or who earns self-employment or partnership income that is essentially equivalent to wages as defined in RCW 50.04.320. 

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

          (6) "Enrollee point of service cost-share" means fees paid to certified health plans or providers by enrollees at the time of receiving uniform benefits package services.

          (7) "Enrollee premium share" means a periodic payment paid to a sponsor or certified health plan by an enrollee or their family members for the uniform benefits package.

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

          (9) "Health insurance purchasing cooperative" means an organization that aggregates individuals and businesses into a larger group to achieve economies of scale in the purchase of health coverage.

          (10) "Health service provider" or "provider" means either:

          (a) A licensed, certified, or registered health professional regulated under chapter 18.130 RCW who 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.

          (11) "Maximum per capita premium" means the highest amount that a certified health plan may charge for the uniform benefits package.  This includes all contributions from individuals, employers, and public subsidies except for any enrollee point of service cost-sharing.

          (12) "Sponsor" means an employer, trade union, health insurance purchasing cooperative, or a public or private agency that purchases health coverage for a large number of people.

          (13) "Technology" means 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 the growing body of specialized professionals, medical equipment, procedures, and chemical formulations used for both diagnostic and therapeutic purposes.

          (14) "Uniform benefits package" means the appropriate and effective health services, as defined by the commission under section 107 of this act, that are offered through certified health plans.

          (15) "Washington resident" means individuals, including dependents, living in the state who intend to reside in the state permanently or indefinitely, or those individuals living in the state for the purpose of engaging in employment for more than one month, but not those individuals who enter the state for the primary purpose of obtaining health services.

 

          NEW SECTION.  Sec. 103.  CREATION OF COMMISSION‑-MEMBERSHIP‑-TERMS OF OFFICE‑-VACANCIES‑-SALARIES.  (1) The Washington health services commission is created with the responsibility of exercising strategies to control rapidly increasing health services expenditures and to improve access to health services.  The responsibilities and authorities of the commission shall include strategies that will reduce administrative waste, limit inefficient use of capital and technology, reduce defensive medical practices, structure payment mechanisms to provide incentives for efficient delivery of appropriate services, and define the uniform benefits package and the price that may be charged to provide that package to residents of the state.  The annual increase in the maximum per capita premium of the uniform benefits package is limited by section 105 of this act.  Implementation of these cost control strategies is necessary to meet the goal of universal access.

          The commission's responsibilities and authorities shall include regulation that aids market forces as an effective means of cost control.  Increasing the use of integrated health systems to maintain and improve the health of enrollees and to provide health services emphasizing preventive and primary care shall guide the commission's regulatory responsibilities and authorities.

          (2) The commission shall consist of five members appointed by the governor with the consent of the senate.  One member shall be designated by the governor as chair and shall serve at the pleasure of the governor.  The other four members shall serve five-year terms.  Of the initial members, one shall be appointed for a term of two years, 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.

          (3) Members of the commission shall have no pecuniary interest during their term of office 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.

          (4) Members of the commission shall occupy their positions on a full-time basis and are exempt from the provisions of chapter 41.06 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. 104.  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.  The chair may appoint persons to administer any entity established pursuant to subsection (8) of this section, and up to seven additional full-time 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 this chapter; and

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

 

          NEW SECTION.  Sec. 105.  POWERS AND DUTIES OF THE COMMISSION.  The activities of the commission shall be limited to the following powers and duties:

          (1) Adopt necessary rules in accordance with chapter 34.05 RCW to carry out the purposes of this chapter.

          (2) Establish the uniform benefits package, as provided in section 107 of this act, which shall be offered to enrollees of a certified health plan.  The uniform benefits package shall be provided at a premium no greater than that specified in subsection (3) of this section.  The uniform benefits package should be coordinated with public health activities to achieve the greatest improvement in health status.

          (3) Establish for each year a maximum premium for the uniform benefits package that an individual may be charged by a certified health plan.  The premium cost of the uniform benefits package in 1994 shall be allowed to increase by a rate no greater than the average growth rate in the cost of the package between 1990 and 1993 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.

          (4) Evaluate and monitor barriers to access for special populations and develop strategies to address these barriers.

          (5) Evaluate and monitor the extent to which racial and ethnic minorities have access to and receive health services within the state.  The commission should include this information when certifying health plans to ensure the plans are fulfilling their obligation to provide equitable access.  The commission shall make recommendations to the governor and the legislature concerning access problems identified in this process that are not within the authority of the commission.

          (6) Monitor the actual growth in total annual health services expenditures in the state.

          (7) Encourage selective contracting by certified health plans or groups of plans for expensive medical technology.  The commission shall monitor capital expenditures for plant and equipment and shall have the authority to set standards for health plan certification for investment in capital and for maximum prices for expensive services to control abuses.

          (8) Make recommendations to and cooperate with the department of health in their development of the health personnel resources plan.

          (9) Work with other interested parties to determine how clinical and health-related research may be financed.  Levels of support for research should be explicit and within the overall spending limits established for the health system.

          (10) After consultation with certified health plans, health service providers, purchasers, and consumers of health services, adopt practice guidelines in specific practice areas, for providers participating in any certified health plan.  Such practice guidelines shall be used to promote appropriate use of technology, services, drugs, and supplies, and for cost containment and quality assurance.

          (11) Encourage the development of at least two private health insurance purchasing cooperatives, one east of the Cascade mountains, and one on the west side of the mountains.  These cooperatives should assist individuals and small businesses to aggregate their purchasing power and simplify their administrative functions in the purchase of health coverage from certified health plans.

          (12) Develop standards for allowable methods of payment, such as capitation, salary, diagnosis-related groups, or a resource-based relative value scale, by certified plans to health service providers for the uniform benefits package.  Such standards shall be designed to promote improved management of care, provide incentives for improved efficiency and effectiveness within the delivery system, and include the cost of administration, operation, capital, and technology.

          (13) Establish standards for certified health plans for individual cost sharing.  For employees, the enrollee premium share shall be between five and fifty percent of the lowest cost certified health plan in a geographical area as determined by the commission.  The commission shall develop guidelines to be used by employers for the enrollee premium share that are adjusted on the basis of gross family income so that the premium is affordable for low-income enrollees.  Other cost sharing measures, such as copayments, shall be established as part of the uniform benefits package.

          (14) For health services provided under the uniform benefits package, adopt standards for enrollment, billing for services, claims processing, accountability, and utilization management.  The standards shall ensure that these procedures are performed in a simplified, economical, and equitable manner for all parties concerned.  Subject to federal approval or phase-in schedules whenever necessary or appropriate, the standards shall also apply to health services purchased by the department of social and health services, the department of labor and industries, the department of health, the health care authority, the basic health plan, and plans that provide the uniform benefits package to local governments and public school employees.

          (15) Advise the department of health on the development and updating of a health care data system as provided in section 504 of this act.  The commission may adopt the data standards developed by the department of health as criteria for certification of health plans.

          (16) Adopt standards that prevent conflicts of interest by health service providers as provided in section 109 of this act.

          (17) Certify health plans to provide the uniform benefits package if determined to meet all requirements established by the commission under this chapter.

          (18) Ensure that no certified health plan or its participating providers charge any additional fees or engage in any form of balance billing, except as allowed under the enrollee cost sharing or premium sharing guidelines established by the commission.

          (19) Establish standards for certified health plan grievance and complaint procedures whereby an enrollee may file a complaint or grievance regarding any aspect of the plan and such grievance is addressed expeditiously.

          (20) 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 by the federal government and its implications.

          (21) Monitor certified health plans for compliance with standards established pursuant to this section.  Establish a uniform mechanism to monitor certified health plans for cost, quality, and outcome of services and ensure that certified plans make this comparative information available to providers, individuals, employers, and sponsors.

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

          (23) Establish standards for enrollment and prohibit discrimination based upon age, sex, marital status, sexual orientation, ethnicity, race, health condition, geographic location, employment, or economic status in enrollment by certified health plans.

          (24) Develop mechanisms to assess and to distribute equitably the financial effects of medical risks among certified health plans.  The commission should recommend a proposed structure for a voluntary reinsurance pool program to be funded by the plans themselves.

          (25) Develop a plan with the department of social and health services to integrate medicaid into the reformed health care system.  Also, develop a plan to integrate medicare into the cost control, quality improvement, and system development aspects of this state-based reform.  Support the governor in requests for waivers or modifications to federal laws necessary to implement this chapter.

          To the extent the exercise 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 the other state agency, office, or commission.  In the event there are administrative activities now being done by other agencies, public or private, that fall within the authority of the commission, interagency agreements or contracts shall be developed so that the activity is accomplished according to the standards of the commission and there is no unnecessary duplication of activity.

 

          NEW SECTION.  Sec. 106.  CERTIFIED HEALTH PLANS--REQUIREMENTS FOR APPROVAL.  The uniform benefits package established under section 107 of this act shall be provided through certified health plans.  To participate, a plan must meet at least the following requirements:

          (1) Provide or assure the provision of services in the uniform benefits package within a defined geographic area.

          (2) Bear full financial risk and responsibility for the uniform benefits package provided to enrollees.

          (3) Provide assurances that all contracts with sponsors and enrollees shall include a subrogation clause under which an enrollee agrees to reimburse the plan for benefits paid if the enrollee recovers on a claim in a medical malpractice action against a third party health care provider.  Reimbursement under this section is limited to the excess the enrollee has received from the third party health care provider remaining after the enrollee is fully compensated for his or her loss.

          (4) Comply with commission standards regarding health data and certified health plan evaluation.

          (5) Comply with the commission standards regarding the maximum per capita premium.

          (6) Comply with all other standards, including appropriate penalties for noncompliance, established by the commission pursuant to section 105 of this act.

 

          NEW SECTION.  Sec. 107.  UNIFORM BENEFITS PACKAGE DESIGN.  (1) In developing the uniform benefits package, the commission should be guided by the following principles:

          (a) There should be one comprehensive, uniform, and affordable package of  confidential, appropriate, and effective health services accessible to all Washington residents, encompassing their basic needs for disease and injury prevention, personal health services, population-based services, and other public health services.

          (b) The uniform package should assure the receipt of only those health services that are appropriate and effective.

          (c) While the uniform package should encompass a significant share of total health service expenditures, the package must also be affordable to society.

          (d) To help finance a comprehensive package, the package should include cost-sharing provisions based on an individual's ability to pay.

          (e) The uniform package should give the highest priority to appropriate and effective health services that improve the health of the overall population, providing universal access to disease and injury prevention; health promotion; and diagnosis and treatment of diseases, injuries, and disabling conditions that impair a person's capacity to work and carry out the general functions of daily life.  Development of the uniform package should give priority to defining and covering primary care as the foundation of personal health services.

          (f) Development of the uniform package should begin by considering the health services common to most current health benefit plans and public health programs.  This process should not exclude services based solely on arbitrary distinctions among types of body systems, or exclude those services essential to achieving the health outcomes expected from a covered service.

          (g) The uniform package should be defined in terms of health services, not providers.  Potential limitations on providers should be addressed as a matter of cost-effective service provision once the services are determined.

          (h) The uniform package should include acceptable techniques and incentives to encourage appropriate use of the health services.  In particular, the uniform package should require individuals to help finance their health services in order to promote prudent utilization and purchasing decisions, without imposing barriers to universal access to those services.

          (2) The commission shall establish procedures to determine the specific schedule of health services to be included in the uniform benefits package.  To assist the commission in this task, the services effectiveness advisory committee shall provide guidance related to appropriate and effective health services.

          (3) In establishing the uniform benefits package, the commission shall seek the opinions of, and information from, the public.  The commission shall consider results of official public health assessment and policy development activities, including recommendations of the state board of health, the department of health, and the state health report in discharging its responsibilities under this section. It shall coordinate this activity with the state board of health in its development of the state health report pursuant to RCW 43.20.050.

          (4) While the uniform package is to be similar for all people, it should be designed so as to not limit innovation in the delivery of health services as long as the innovation improves quality, increases access, or decreases the cost of the services.

 

          NEW SECTION.  Sec. 108.  SUPPLEMENTAL BENEFITS.  Nothing in this chapter shall preclude disability group insurers, health care service contractors, or health maintenance organizations from insuring, providing, or contracting for health services not included in the uniform benefits package.  Nothing in this chapter shall restrict the right of an employer to offer, an employee representative to negotiate for, or an individual to purchase services or coverage not included in the uniform benefits package.

 

          NEW SECTION.  Sec. 109.  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 operation of certified health plans.

 

          NEW SECTION.  Sec. 110.  REPORTS OF THE HEALTH CARE COMMISSION.  In carrying out its powers and duties under this chapter the commission shall consider the reports of the Washington health care commission established under House Concurrent Resolution No. 4443 adopted by the legislature in 1990.  Nothing in this chapter requires the commission, created by section 103 of this act, to follow any specific recommendation contained in those reports except as it may also be included in this chapter or other law.

 

          NEW SECTION.  Sec. 111.  ADVISORY COMMITTEES.  In an effort to ensure effective participation in the commission's deliberations, the chair shall appoint a standing advisory committee with a balanced representation of members representing consumers, business, government, labor, insurers, and health service providers.  The chair may also appoint ad hoc and special committees for a specified time period.

          The chair shall also appoint a service effectiveness advisory committee to provide technical guidance related to appropriate and effective health services, and development of the uniform benefits package.  This committee 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.

          Members of any committee 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. 112.  RESERVATION OF LEGISLATIVE POWER.  The legislature reserves the right to amend or repeal all or any part of sections 101 through 111 of this act at any time and there shall be no vested private right of any kind against such amendment or repeal.  All rights, privileges, or immunities conferred by sections 101 through 111 of this act or any act done pursuant thereto shall exist subject to the power of the legislature to amend or repeal sections 101 through 111 of this act at any time.

 

          NEW SECTION.  Sec. 113.  NEW CHAPTER CREATED IN TITLE 70 RCW.  Sections 101 through 112 of this act shall constitute a new chapter in Title 70 RCW.

 

          NEW SECTION.  Sec. 114.  The sum of three million nine 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 Washington health services commission to initiate the activities and purposes of the agency.

 

          NEW SECTION.  Sec. 115.  Sections 101 through 114 of this act are 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 July 1, 1993.

 

                                 PART II - EXPANSION OF 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 202 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.  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 they configure their own professional and business relationships into a managed care system.

          (b) As a consequence, but always limited to the extent to which funds might be available to subsidize the costs of health services for those in need, enrollment limitations have been modified and the program shall be expanded to additional geographic areas of the state.

          (c) In addition, 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 it 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.

 

        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) "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.  Nonsubsidized enrollees shall be considered enrollees unless otherwise specified.

          (5) "Nonsubsidized enrollee" means an enrollee who pays or on whose behalf is paid the full costs for participation in the plan and shall not be eligible for 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 enrollee plus the administrative cost to the plan of providing the plan to that 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. 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 under RCW 70.47.060 (11) and (12) 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 enrollees in the plan and payment of costs of administrating 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)) 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 with those of the health care authority or any other state-administered health care program.

 

        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 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 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 January 1, 1995, the uniform benefits package adopted and from time to time revised by the Washington health services commission pursuant to section 105 of this act shall be implemented by the administrator as the schedule of covered basic health care services.

          (2) 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 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.

          (a) 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 any enrollee, by arrangement with the enrollee and through a mechanism acceptable to the administrator.

          (b) Any premium, rate, or other amount determined to be due from nonsubsidized enrollees shall be in an amount equal to the amount negotiated by the administrator with the participating managed health care system or systems plus the administrative cost of providing the plan to those enrollees.

          (c) The administrator shall comply with any schedule of deductibles, copayments, and coinsurance that may be adopted by the Washington health services commission, but in particular reference to premium sharing by subsidized enrollees the powers, duties, and responsibilities of the administrator under this section and chapter shall not be superseded by action of the commission.

          (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 limit the payment of any subsidies only to those enrollees, as defined in RCW 70.47.020, whose gross family income at the time of enrollment does not exceed twice the federal poverty level adjusted for family size and determined annually by the federal department of health and human services.

          (7) 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))) (8) 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))) (9) 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))) (10) 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 plus the administrative cost of providing the plan to that enrollee.  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))) (11) To accept applications from small business owners on behalf of themselves and their employees, spouses, and dependent children 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.  For the purposes of this subsection, an employee means an individual who regularly works for the employer for at least twenty hours per week.  Such businesses shall have no more than one hundred employees at the time of initial enrollment and enrollment shall be limited to those not eligible for medicare, who wish to enroll in the plan at no cost to the state 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.  No enrollee of a small business group shall be eligible for any subsidy from the plan and at no time shall the administrator allow the credit of the state or funds from the trust account to be used or extended on their behalf.

          (12) On and after July 1, 1994, to accept applications from individuals residing in areas serviced by the plan, on behalf of themselves and their spouses and dependent children, and not eligible for medicare, who wish to enroll in the plan at no cost to the state and choose to obtain the basic health care coverage and services from a managed care system participating in the plan.  Any such nonsubsidized enrollees must pay the amount negotiated by the administrator with the participating managed health care system or systems and the administrative cost of providing the plan to such nonsubsidized enrollees and shall not be eligible for any subsidy from the plan.

          (13) 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))) (14) 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))) (15) 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))) (16) 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))) (17) To develop a program of proven preventive health measures and to integrate it into the plan wherever possible and consistent with this chapter.

          (((15))) (18) 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)) 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.

          ((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 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).

 

        Sec. 214.  RCW 70.47.120 and 1987 1st ex.s. c 5 s 14 are each amended to read as follows:

          In addition to the powers and duties specified in RCW 70.47.040 and 70.47.060, the administrator has the power to enter into contracts for the following functions and services:

          (1) With public or private agencies, to assist the administrator in her or his duties to design or revise the schedule of covered basic health care services, and/or to monitor or evaluate the performance of participating managed health care systems.

          (2) With public or private agencies, to provide technical or professional assistance to health care providers, particularly public or private nonprofit organizations and providers serving rural areas, who show serious intent and apparent capability to participate in the plan as managed health care systems.

          (3) With public or private agencies, including health care service contractors registered under RCW 48.44.015, and doing business in the state, for marketing and administrative services in connection with participation of managed health care systems, enrollment of enrollees, billing and collection services to the administrator, and other administrative functions ordinarily performed by health care service contractors, other than insurance except that the administrator may purchase or arrange for the purchase of reinsurance, or self-insure for reinsurance, on behalf of its participating managed health care systems.  Any activities of a health care service contractor pursuant to a contract with the administrator under this section shall be exempt from the provisions and requirements of Title 48 RCW.

 

          NEW SECTION.  Sec. 215.  The sum of eighty-five 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 Washington basic health plan to increase the number of subsidized enrollees and expand the program into additional urban and rural areas of the state.

 

          NEW SECTION.  Sec. 216.  Sections 201 through 214 of this act are 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 July 1, 1993.

 

                                     PART III - HEALTH INSURANCE REFORM

 

          NEW SECTION.  Sec. 301.  The legislature finds that in order to make the cost of health coverage more affordable and accessible to individuals and to businesses and their employees, certain marketing and underwriting practices by disability insurers, health care service contractors, and health maintenance organizations must be reformed and more aggressively regulated.  Such reforms work in the public interest and guarantee coverage to individuals and businesses, and their employees and employees' dependents.  Practices that hinder access to, affordability of, and equity in health insurance coverage are unacceptable.

          It is the intent of the legislature to prohibit certain discriminatory practices and to require that insurers use community rating methods, at least for individuals, and small business owners and their employees, that more broadly pool and distribute risk, which is a fundamental principle of health insurance coverage.

 

          NEW SECTION.  Sec. 302.  A new section is added to chapter 48.20 RCW to read as follows:

          (1) For the purposes of this section:

          (a) "Group" means a person, firm, corporation, partnership, association, separate franchise, or other entity that employs less than one hundred individuals who reside in Washington state and are regularly scheduled to work at least twenty or more hours per week for at least twenty-six weeks per year.  For purposes of determining the number of employees of a group, all employees, owners, or principals of all branches and divisions of the principal group shall be included and may not be segregated by division, job responsibilities, employment status, or on any other basis.

          (b) "Preexisting condition" means a covered person's medical condition that caused that person to have received medical advice or treatment during the six months immediately prior to the effective date of coverage.

          (2) No insurer shall refuse to issue, cancel, or decline to renew an individual or group disability insurance policy because of the health condition of the individual or group or an individual in the group.  Every individual and group disability insurance policy shall conform to the following:

          (a) Every policy shall be guaranteed renewable except for nonpayment of premium unless the insurer has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the insurer's ability to perform its contractual duties;

          (b) An insurer may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of the category of business, trade, occupation, employment skill, or vocational or professional training of the individual, the group or any member of the group;

          (c) An insurer may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of age, sex, or health status or health condition of the individual, the group or any member of the group;

          (d) Individual and group disability insurance policies shall be rated on a strict community basis that pools the experience of both groups and individuals except that, with the prior written approval of the commissioner given at his or her discretion, the insurer may adjust the rate for an individual policy or a group policy according to demonstrated differences in the cost of obtaining health services within major geographical areas and according to differences in coverage; and

          (e) An insurer may not 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.

          (3) The provisions of this section do not apply to policies governed by chapters 48.66, 48.70, and 48.84 RCW.

          (4) The commissioner shall adopt all rules necessary to implement the provisions of this section by its effective date and thereafter as necessary.

 

          NEW SECTION.  Sec. 303.  A new section is added to chapter 48.21 RCW to read as follows:

          (1) For the purposes of this section:

          (a) "Group" means a person, firm, corporation, partnership, association, separate franchise, or other entity that employs less than one hundred individuals who reside in Washington state and are regularly scheduled to work at least twenty or more hours per week for at least twenty-six weeks per year.  For purposes of determining the number of employees of a group, all employees, owners, or principals of all branches and divisions of the principal group shall be included and may not be segregated by division, job responsibilities, employment status, or on any other basis.

          (b) "Preexisting condition" means a covered person's medical condition that caused that person to have received medical advice or treatment during the six months immediately prior to the effective date of coverage.

          (2) No insurer shall refuse to issue, cancel, or decline to renew any disability insurance policy because of the health condition of the individual or group or any individual in the group.  Every disability insurance policy shall conform to the following:

          (a) Every policy shall be guaranteed renewable except for nonpayment of premium unless the insurer has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the insurer's ability to perform its contractual duties;

          (b) An insurer may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of the category of business, trade, occupation, employment skill, or vocational or professional training of the individual, the group or any member of the group;

          (c) An insurer may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of age, sex, or health status or health condition of the individual, the group or any member of the group;

          (d) Individual and group disability insurance policies shall be rated on a strict community basis that pools the experience of both groups and individuals except that, with the prior written approval of the commissioner given at his or her discretion, the insurer may adjust the rate for an individual policy or a group policy according to demonstrated differences in the cost of obtaining health services within major geographical areas and according to differences in coverage; and

          (e) An insurer may not 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.

          (3) The provisions of this section do not apply to policies governed by chapters 48.66, 48.70, and 48.84 RCW.

          (4) The commissioner shall adopt all rules necessary to implement the provisions of this section by its effective date and thereafter as necessary.

 

          NEW SECTION.  Sec. 304.  A new section is added to chapter 48.44 RCW to read as follows:

          (1) For the purposes of this section:

          (a) "Group" means a person, firm, corporation, partnership, or association, separate franchise, or other entity that employs less than one hundred individuals who reside in Washington state and are regularly scheduled to work at least twenty or more hours per week for at least twenty-six weeks per year.  For purposes of determining the number of employees of a group, all employees, owners, or principals of all branches and divisions of the principal group shall be included and may not be segregated by division, job responsibilities, employment status, or on any other basis.

          (b) "Preexisting condition" means a covered person's medical condition that caused that person to have received medical advice or treatment during the six months immediately prior to the effective date of coverage.

          (2) No contractor shall refuse to issue, cancel, or decline to renew an individual or group contract because of the health condition of the individual or group or an individual in the group.  Every individual and group contract shall conform to the following:

          (a) Every contract shall be guaranteed renewable except for nonpayment of premium or other amounts owed to the health care service contractor by the subscriber unless the contractor has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the contractor's ability to perform its contractual duties;

          (b) A contractor may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of the category of business, trade, occupation, employment skill, or vocational or professional training of the individual, the group or any member of the group;

          (c) A contractor may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of age, sex, or health status or health condition of the individual, the group or any member of the group;

          (d) Individual and group health care service contracts shall be rated on a strict community basis that pools the experience of both groups and individuals except that the contractor may, with the prior written approval of the commissioner given at his or her discretion, adjust the rate for an individual contract or a group contract according to demonstrated differences in the cost of obtaining health services within major geographical areas and according to differences in coverage; and

          (e) A contractor may not 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 contract and who satisfied any six-month waiting period under such preceding policy, contract, or agreement.

          (3) The provisions of this section do not apply to contracts governed by chapters 48.66, 48.70, and 48.84 RCW.

          (4) The commissioner shall adopt all rules necessary to implement the provisions of this section by its effective date and thereafter as necessary.

 

          NEW SECTION.  Sec. 305.  A new section is added to chapter 48.46 RCW to read as follows:

          (1) For the purposes of this section:

          (a) "Group" means a person, firm, corporation, partnership, or association, separate franchise, or other entity that employs less than one hundred individuals who reside in Washington state and are regularly scheduled to work at least twenty or more hours per week for at least twenty-six weeks per year.  For purposes of determining the number of employees of a group, all employees, owners, or principals of all branches and divisions of the principal group shall be included and may not be segregated by division, job responsibilities, employment status, or on any other basis.

          (b) "Preexisting condition" means a covered person's medical condition that caused that person to have received medical advice or treatment during the six months immediately prior to the effective date of coverage.

          (2) No health maintenance organization shall refuse to issue, cancel, or decline to renew an individual or group agreement because of the health condition of the individual or group or an individual in the group.  Every individual and group agreement shall conform to the following:

          (a) Every agreement shall be guaranteed renewable except for nonpayment of premium or other amounts owed to the health maintenance organization by the agreement holder unless the health maintenance organization has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the organization's ability to perform its contractual duties;

          (b) An organization may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of the category of business, trade, occupation, employment skill, or vocational or professional training of the individual, the group or any member of the group;

          (c) An organization may not increase, decrease, restrict, modify, or exclude benefits, terms, rates, conditions, or type of coverage on the basis of age, sex, or health status or health condition of the individual, the group or any member of the group;

          (d) Individual and group agreements shall be rated on a strict community basis that pools the experience of both groups and individuals except that the organization may, with the prior written approval of the commissioner given at his or her discretion, adjust the rate for an individual agreement or a group agreement according to demonstrated differences in the cost of obtaining health services within major geographical areas and according to differences in coverage; and

          (e) An organization may not 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 agreement and who satisfied any six-month waiting period under such preceding policy, contract, or agreement.

          (3) The provisions of this section do not apply to agreements governed by chapters 48.66, 48.70, and 48.84 RCW.

          (4) The commissioner shall adopt all rules necessary to implement the provisions of this section by its effective date and thereafter as necessary.

 

        Sec. 306.  RCW 48.20.032 and 1951 c 229 s 4 are each amended to read as follows:

          Except as provided in RCW 48.18.130 and section 302 of this act, each such policy delivered or issued for delivery to any person in this state shall contain the provisions as specified in RCW 48.20.042 to 48.20.152, inclusive, in the words in which the same appear; except, that the insurer may((, at its option,)) substitute for one or more of such provisions corresponding provisions of different wording ((approved by the commissioner which)) if given prior written approval by the commissioner, in his or her discretion, if he or she determines that the words are in each instance not less favorable in any respect to the insured or the beneficiary.  Each such provision shall be preceded by the applicable caption shown or, at the insurer's option, by such appropriate individual or group caption or subcaption as the commissioner may approve.

 

        Sec. 307.  RCW 48.21.050 and 1947 c 79 s .21.05 are each amended to read as follows:

          Except as provided in section 303 of this act, every policy of group or blanket disability insurance shall contain in substance the provisions as set forth in RCW 48.21.060 to 48.21.090, inclusive, or provisions which in the opinion of the commissioner, and with his or her prior written approval, are more favorable to the individuals insured, or at least as favorable to such individuals and more favorable to the policyholder.  No such policy of group or blanket disability insurance shall contain any provision relative to notice or proof of loss, or to the time for paying benefits, or to the time within which suit may be brought upon the policy, which in the opinion of the commissioner is less favorable to the individuals insured than would be permitted by the standard provisions required for individual disability insurance policies.

 

        Sec. 308.  RCW 48.30.300 and 1975-'76 2nd ex.s. c 119 s 7 are each amended to read as follows:

          No person or entity engaged in the business of insurance in this state shall refuse to issue any contract of insurance or cancel or decline to renew such contract because of the sex or marital status, or the presence of any sensory, mental, or physical handicap of the insured or prospective insured.  The amount of benefits payable, or any term, rate, condition, or type of coverage shall not be restricted, modified, excluded, increased or reduced on the basis of the sex or marital status, or be restricted, modified, excluded or reduced on the basis of the presence of any sensory, mental, or physical handicap of the insured or prospective insured.  Except as provided in sections 302 through 305 of this act, 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.

 

        Sec. 309.  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.  Except as provided in section 304 of this act, 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.

 

        Sec. 310.  RCW 48.46.370 and 1983 c 106 s 15 are each amended to read as follows:

          No health maintenance organization may deny coverage to a person solely on account of the presence of any sensory, mental, or physical handicap.  Except as provided in section 305 of this act, nothing in this section may be construed as limiting a health maintenance organization'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 maintenance organization for purposes of determining coverage for any person.

 

                                              PART IV - LONG-TERM CARE

 

          NEW SECTION.  Sec. 401.  LONG-TERM CARE INTEGRATION PLAN.  To carry out the final recommendations that the Washington health care commission submitted to the governor and the legislature on November 30, 1992, in specific reference to long-term care, the governor shall establish a process within the executive branch to address the following:

          (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) Recognizing that financial stability is essential to the success of a comprehensive long-term care system and that current and future demands are exceeding available financial resources, it is likely that a dedicated fund comprised of state funds, matching federal funds, public insurance funds, and sliding fee contributions by program beneficiaries should be established.

          (3) It is the intent of this section that Washington state develop a program and financing structure for the provision of community-based long-term care and support services for functionally disabled persons as suggested in this section and that recommendations concerning any necessary statutory changes or modifications in public policy be made available 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 and the health services commission established under section 103 of this act will participate in the review of the long-term care needs enumerated in this section and the governor will call upon representatives of both the senate and house of representatives to join in these deliberations.

 

          NEW SECTION.  Sec. 402.  The sum of two hundred fifty 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 office of financial management to carry out the activities and purposes set forth in section 401 of this act.  The governor shall designate the lead agency for the review.  The director of the office of financial management shall allocate to participating departments and agencies such portions of this sum as may be necessary.

 

                                            PART V - HEALTH CARE DATA

 

        Sec. 501.  RCW 70.170.010 and 1989 1st ex.s. c 9 s 501 are each amended to read as follows:

          (1) The legislature finds and declares that there is a need for health care information that helps the general public understand health care issues and how they can be better consumers and that is useful to purchasers, payers, and providers in making health care choices and negotiating payments.  It is the purpose and intent of this chapter to establish a hospital and health services data collection, storage, and retrieval system which supports these data needs and which also provides public officials and others engaged in the development of state health policy the information necessary for the analysis of health care issues.

          (2) The legislature finds that rising health care costs and access to health care services are of vital concern to the people of this state.  It is, therefore, essential that strategies be explored that moderate health care costs and promote access to health care services.

          (3) The legislature further finds that access to health care is among the state's goals and the provision of such care should be among the purposes of health care providers and facilities.  Therefore, the legislature intends that charity care requirements and related enforcement provisions for hospitals be explicitly established.

          (4) The lack of reliable statistical information about the delivery of charity care is a particular concern that should be addressed.  It is the purpose and intent of this chapter to require hospitals to provide, and report to the state, charity care to persons with acute care needs, and to have a state agency both monitor and report on the relative commitment of hospitals to the delivery of charity care services, as well as the relative commitment of public and private purchasers or payers to charity care funding.

          (5) It is the intent of the legislature to develop an efficient health services data system that shall greatly improve the information available for consumers, providers, and payers.  The system shall include the development of an efficient electronic data system that will consist of a private transaction system or systems with uniform specifications, universal collection of information from those transactions, a public repository for information processed through the system, and public access to the information collected.  This data system will build upon the efforts now underway in the public and private sectors to more efficiently collect billing and payment information.  It is understood that this system will require a number of years to become fully operational, but it is important to phase in private and public sponsored data as soon as is practical.  The development of standards for the system and the development and maintenance of a repository of the information shall be equitably funded by an assessment on all health providers participating in the information system.

 

        Sec. 502.  RCW 70.170.020 and 1989 1st ex.s. c 9 s 502 are each amended to read as follows:

          As used in this chapter:

          (1) "Council" means the health care access and cost control council created by this chapter.

          (2) "Department" means department of health.

          (3) "Hospital" means any health care institution which is required to qualify for a license under RCW 70.41.020(2); or as a psychiatric hospital under chapter 71.12 RCW.

          (4) "Secretary" means secretary of health.

          (5) "Charity care" means necessary hospital health care rendered to indigent persons, to the extent that the persons are unable to pay for the care or to pay deductibles or co-insurance amounts required by a third-party payer, as determined by the department.

          (6) "Sliding fee schedule" means a hospital-determined, publicly available schedule of discounts to charges for persons deemed eligible for charity care; such schedules shall be established after consideration of guidelines developed by the department.

          (7) "Special studies" means studies which have not been funded through the department's biennial or other legislative appropriations.

          (8) "Medical service provider" means a business entity, other than a hospital, required to be registered with the department of revenue for payment of taxes imposed under chapter 82.04 RCW, that is primarily engaged in furnishing medical, surgical, and other health services to persons.

 

        Sec. 503.  RCW 70.170.080 and 1991 sp.s. c 13 s 71 are each amended to read as follows:

          (1) The basic expenses for the hospital and health services data collection and reporting activities of this chapter shall be financed by an assessment against hospitals ((of no more than)) and medical service providers.

          (2) Each hospital within this state shall pay, and the department shall collect, an annual assessment of four one-hundredths of one percent of each hospital's gross operating costs((, to be levied and collected from and after that date, upon which the similar assessment levied under chapter 70.39 RCW is terminated,)) for the provision of hospital services for its last fiscal year ending on or before June 30th of the preceding calendar year.  ((Budgetary requirements in excess of that limit must be financed by a general fund appropriation by the legislature.))  All moneys collected under this section shall be deposited by the state treasurer in the hospital and health services data collection account which is hereby created in the state treasury.  The department may also charge, receive, and dispense funds or authorize any contractor or outside sponsor to charge for and reimburse the costs associated with special studies as specified in RCW 70.170.050.

          (3) Each medical service provider engaging in business within this state shall pay, and the department of revenue shall collect, an annual assessment of four one-hundredths of one percent of each medical service provider's gross income of the business.  In administration of this subsection for the enforcement and collection of the assessments owing under this subsection, the department of revenue is authorized to apply the provisions of chapter 82.32 RCW.  All moneys collected under this subsection shall be deposited by the state treasurer in the hospital and health services data collection account created in the state treasury under subsection (2) of this section.

          (4) Budgetary requirements for hospital and health services data collection activities in excess of amounts raised by the collection of assessments from hospitals and medical service providers under subsections (2) and (3) of this section must be financed by a general fund appropriation by the legislature.  Any amounts raised by the collection of assessments from hospitals ((provided for in this section which)) and medical service providers that are not required to meet appropriations in the budget act for the current fiscal year shall be available to the department in succeeding years.

 

          NEW SECTION.  Sec. 504.  A new section is added to chapter 70.170 RCW to read as follows:

          (1) The goal of the health services data system is to develop an electronic billings and payments transaction system supported by public and private payers using uniform data elements and formats set by the state.  A repository for all appropriate data that passes through the transaction system or systems shall be established and maintained by the state and made available for public use.

          (2) The department is responsible for developing standards for a health services data system in collaboration with private and public purchasers, providers, and consumers of health care.  The department shall assure that a needs assessment is conducted of the types of, and format for, health data needed by consumers, purchasers, health care payers, providers, local health districts, and state and federal government consistent with the intent of this chapter.  The department may contract with a private nonprofit representative group to conduct the needs assessment.  The department shall be cognizant of the electronic claims and payment systems, eligibility, and transaction systems that are being developed and implemented in the public and private sectors.

          (3) The department shall adopt uniform standards for data transmissions and uniform core data requirements.  In developing these standards, the department shall use national standards to the extent possible.  The data elements, specifications, and other distinguishing features of the data system shall be established in rule by July 1, 1994.  The standards developed shall apply to all public and private electronic systems as soon as practical, but no later than July 1, 1996.

          (4) The department shall establish a data repository for the information collected.  The state may contract with a private vendor in the state of Washington to collect and store this data, but the data shall remain in the custody of the state.  There shall be public access to the data as long as confidentiality standards are maintained.  The department may require a nominal charge for the data.

          (5) The department shall assure that the data is available, analyzed, and disseminated to interested parties in a useable and understandable format.  The department may contract with private vendors to accomplish these tasks to the extent funds are available.

          (6) The department shall continue the state-wide hospital data system as required in RCW 70.170.100.  When the new health services data system is operational, the department shall make recommendations to the governor and legislature concerning possible integration with the hospital data system and any necessary statutory changes.

          (7) All persons and any public or private agencies or entities whatsoever subject to this section shall comply with any requirements established by rule in the acquisition of health services data and maintain the confidentiality of any information which may, in any manner, identify individual persons.

 

        Sec. 505.  RCW 70.170.070 and 1989 1st ex.s. c 9 s 507 are each amended to read as follows:

          (1) Every person who shall violate or knowingly aid and abet the violation of RCW 70.170.060 (5) or (6), 70.170.080, ((or)) 70.170.100, or section 504 of this act, or any valid orders or rules adopted pursuant to these sections, or who fails to perform any act which it is herein made his or her duty to perform, shall be guilty of a misdemeanor.  Following official notice to the accused by the department of the existence of an alleged violation, each day of noncompliance upon which a violation occurs shall constitute a separate violation.  Any person violating the provisions of this chapter may be enjoined from continuing such violation.  The department has authority to levy civil penalties not exceeding one thousand dollars for violations of this chapter and determined pursuant to this section.

          (2) Every person who shall violate or knowingly aid and abet the violation of RCW 70.170.060 (1) or (2), or any valid orders or rules adopted pursuant to such section, or who fails to perform any act which it is herein made his or her duty to perform, shall be subject to the following criminal and civil penalties:

          (a) For any initial violations:  The violating person shall be guilty of a misdemeanor, and the department may impose a civil penalty not to exceed one thousand dollars as determined pursuant to this section.

          (b) For a subsequent violation of RCW 70.170.060 (1) or (2) within five years following a conviction:  The violating person shall be guilty of a misdemeanor, and the department may impose a penalty not to exceed three thousand dollars as determined pursuant to this section.

          (c) For a subsequent violation with intent to violate RCW 70.170.060 (1) or (2) within five years following a conviction:  The criminal and civil penalties enumerated in (a) of this subsection; plus up to a three-year prohibition against the issuance of tax exempt bonds under the authority of the Washington health care facilities authority; and up to a three-year prohibition from applying for and receiving a certificate of need.

          (d) For a violation of RCW 70.170.060 (1) or (2) within five years of a conviction under (c) of this subsection:  The criminal and civil penalties and prohibition enumerated in (a) and (b) of this subsection; plus up to a one-year prohibition from participation in the state medical assistance or medical care services authorized under chapter 74.09 RCW.

          (3) The provisions of chapter 34.05 RCW shall apply to all noncriminal actions undertaken by the department of health, the department of social and health services, and the Washington health care facilities authority pursuant to chapter 9, Laws of 1989 1st ex. sess.

 

                                            PART VI - LIABILITY REFORMS

 

          NEW SECTION.  Sec. 601.  A new section is added to chapter 7.70 RCW to read as follows:

          MANDATORY MEDIATION.  (1) All causes of action, whether based on tort, contract, or otherwise, for damages for 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 for 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 by the parties in the same amount and manner as judges pro tempore of the superior court;

          (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.  Such 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. 602.  A new section is added to chapter 7.70 RCW to read as follows:

          TOLLING OF STATUTE OF LIMITATIONS.  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. 603.  A new section is added to chapter 7.70 RCW to read as follows:

          OPTION OF TRIAL BY JURY NOT ABRIDGED.  Section 601 of this act may not be construed to abridge the right to trial by jury following an unsuccessful attempt at mediation.

 

        Sec. 604.  RCW 5.60.070 and 1991 c 321 s 1 are each amended to read as follows:

          MEDIATION--DISCLOSURE--TESTIMONY.  (1) If there is a court order to mediate or a written agreement between the parties to mediate, or if mediation is mandated pursuant to section 601 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;

          (c) When a written agreement to mediate permits disclosure;

          (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 601 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.

 

          NEW SECTION.  Sec. 605.  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 107 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. 606.  A new section is added to Title 70 RCW to read as follows:

          RISK MANAGEMENT TRAINING WITHIN HEALTH FACILITIES.  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 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 under section 605 of this act.

 

 

          NEW SECTION.  Sec. 607.  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 those adverse health outcomes that 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 605 of this act.

 

        Sec. 608.  RCW 18.130.160 and 1986 c 259 s 8 are each amended to read as follows:

          FINDING OF UNPROFESSIONAL CONDUCT--ORDERS--SANCTIONS--STAY--COSTS.  Upon a finding that a license holder or applicant has committed unprofessional conduct or is unable to practice with reasonable skill and safety due to a physical or mental condition, the disciplining authority may issue an order providing for one or any combination of the following:

          (1) Revocation of the license;

          (2) Suspension of the license for a fixed or indefinite term;

          (3) Restriction or limitation of the practice;

          (4) Requiring the satisfactory completion of a specific program of remedial education or treatment;

          (5) The monitoring of the practice by a supervisor approved by the disciplining authority;

          (6) Censure or reprimand;

          (7) Compliance with conditions of probation for a designated period of time;

          (8) Payment of a fine for each violation of this chapter, not to exceed ((one)) five thousand dollars per violation.  Funds received shall be placed in the health professions account;

          (9) Denial of the license request;

          (10) Corrective action;

          (11) Refund of fees billed to and collected from the consumer.

          Any of the actions under this section may be totally or partly stayed by the disciplining authority.  In determining what action is appropriate, the disciplining authority must first consider what sanctions are necessary to protect or compensate the public.  Only after such provisions have been made may the disciplining authority consider and include in the order requirements designed to rehabilitate the license holder or applicant.  All costs associated with compliance with orders issued under this section are the obligation of the license holder or applicant.

 

        Sec. 609.  RCW 18.130.190 and 1991 c 3 s 271 are each amended to read as follows:

          PRACTICE WITHOUT LICENSE--INVESTIGATION OF COMPLAINTS--TEMPORARY CEASE AND DESIST ORDERS--INJUNCTIONS--PENALTY.  (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 any 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 such civil penalty shall occur only subsequent to a hearing in conformance with the provisions of chapter 34.05 RCW in any case in which the secretary finds that there has been a failure or refusal to comply with the provisions of any chapters specified in RCW 18.130.040.

 

        Sec. 610.  RCW 70.41.200 and 1991 c 3 s 336 are each amended to read as follows:

          MEDICAL MALPRACTICE PREVENTION PROGRAM--QUALITY ASSURANCE COMMITTEE--SANCTION AND GRIEVANCE PROCEDURES--INFORMATION COLLECTION AND REPORTING.  (1) Every hospital shall maintain a coordinated program for the identification and prevention of medical malpractice.  The program shall include at least the following:

          (a) The establishment of a quality assurance committee with the responsibility to review the services rendered in the hospital in order to improve the quality of medical care of patients and to prevent medical malpractice.  The committee shall oversee and coordinate the 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, including but not limited to, mediation, 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 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 medical malpractice prevention program, or who, in substantial good faith, participates on the quality assurance committee, or who, in substantial good faith, assists in a broader scope of quality assurance by health care service providers 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, collected, and maintained about health care providers arising out of the matters that are under review or have been evaluated by a review committee conducting quality assurance reviews or that are related to general quality assurance activities 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 or quality assurance activities shall be permitted or required to testify in any civil action as to the content of such proceedings or activities.  This subsection does not preclude:  (a) 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) 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 committees regarding such health care provider; (c) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any; or (d) 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.

 

          NEW SECTION.  Sec. 611.  DEPARTMENT OF HEALTH STUDY.  By December 1, 1993, the department of health, in cooperation with the board of health, shall evaluate and make recommendations to the governor and the legislature concerning additional medical facilities, such as ambulatory surgical centers and medical clinics, which should be subject to licensing by the state.

 

          NEW SECTION.  Sec. 612.  REVIEW BY LEGISLATIVE BUDGET COMMITTEE.  By December 1, 1993, the legislative budget committee shall complete an evaluation of the specific recommendations submitted November 30, 1992, to the governor and the legislature by the Washington health care commission, dealing with the health care liability system.  This evaluation should extend to any legislative or executive agency response or action, including that of private agencies or professional associations, based upon any of the seventeen prevention and process strategies.  The committee shall report its findings, together with any new recommendations related to the health care liability system the committee may adopt, to the governor and the chairs of the judiciary committee of the house of representatives and the law and justice committee of the senate prior to the 1994 session of the legislature.

 

                       PART VII - PUBLIC HEALTH SERVICES IMPROVEMENT PLAN

 

          NEW SECTION.  Sec. 701.  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 current public health system, how any additional public health funding would be used, describe the benefits expected from any new expenditures, and outline appropriate funding sources for any proposed expenditure.

          (2) The plan shall include:

          (a) Definition of minimum standards for public health protection;

          (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;

          (b) Evaluation of governance and funding issues affecting public health;

          (i) Analysis of current financial, administrative, and governance structures in the public health system;

          (ii) Recommendations on the funding responsibilities of state and local government for public health;

          (iii) Recommendations for improving the efficiency of the system including how duplication of services will be avoided and the role of nongovernmental agencies; and

          (c) 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 personal care system where feasible; and

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

          (3) By December 1, 1993, the department shall provide initial recommendations of the public health services improvement plan to the legislature regarding minimum public health standards, governance issues, and public health programs needed to address urgent needs, such as those cited in the state health report.

          (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 1999.

          (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; assurance that health care providers are appropriately trained and health services are provided safely, 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.

 

          NEW SECTION.  Sec. 702.  The sum of two hundred ninety 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 to carry out the activities and purposes set forth in section 701 of this act.

 

                                  PART VIII - EXECUTIVE AGENCY INITIATIVE

 

          NEW SECTION.  Sec. 801.  A new section is added to Title 51 RCW to read as follows:

          The workers' compensation advisory committee shall conduct a study of the relationship between workers' compensation and the uniform benefits package being developed by the Washington health services commission established by section 103 of this act.  This study shall examine issues such as twenty-four hour coverage, the connection between medical benefits and disability benefits, the possibility of a common premium for health services and workers' compensation coverage, the impact of allowing private insurers to provide medical benefits to injured workers, and any other relevant issues.

          The workers' compensation advisory committee shall, by January 1, 1994, formulate such recommendations as it deems appropriate.  These recommendations shall be reported to the Washington health services commission.

 

          NEW SECTION.  Sec. 802.  The sum of two hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the medical aid fund and the accident fund to the department of labor and industries to offset the costs of the study.

 

                        PART IX - INDIVIDUAL AND EMPLOYER RESPONSIBILITIES

 

          NEW SECTION.  Sec. 901.  FINDINGS, INTENT, AND PRINCIPLES.  The legislature finds that:  It is in the state's interest that access to health services be made available to all of the residents of the state.  Expanding access is a necessary part of both health care cost containment and improved health outcomes.  This expansion is the responsibility of individuals, employers, and government.

          A healthy and productive work force is part of the foundation of the economy of the state of Washington.  Primary and preventive services can protect and prolong the health of employees.  The cost of medical care in cases of sudden need may consume all or an excessive part of an employee's resources and compromise the employee's ability to maintain a home for his or her family.  Prepaid health coverage through a certified health plan provides protection for these employees.  Although most employees in the state already enjoy coverage of this type either by virtue of collective bargaining agreements, employer-sponsored plans, or individual initiative, there is a need to extend that protection to workers and their dependents who at present do not possess any or possess only inadequate coverage.  Smaller business firms are important to economic growth in this state, and it is in the interest of the state that small firms be given special consideration as an expanded requirement is placed on employers.

          The intent of this chapter is to enumerate the responsibilities of individuals and employers.

 

          NEW SECTION.  Sec. 902.  DEFINITIONS.  In this chapter, unless the context otherwise requires:

          (1) "Commission" means the Washington health services commission created under section 103 of this act.

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

          (3) An "employer" means an employer as defined in Title 50 RCW.  If an individual is concurrently an employee of two or more employers, the principal employer is the employer who pays the employee the most wages.  If one of the employers who does not pay the most wages employs the employee for at least thirty-five hours per week the employee may determine that employer to be his or her principal employer.  All other employers are secondary employers.  An employer so designated as the principal employer shall remain the principal employer for one year or until a change of employment, whichever is earlier.

          (4) An "employee"  means a person who is in the employment, as defined in chapter 50.04 RCW, of an employer and a resident of the state of Washington.  A full-time employee is an employee who is employed at least eighty hours during a calendar month.

 

          NEW SECTION.  Sec. 903.  INDIVIDUAL RESPONSIBILITY.  (1) All residents must participate in a health system so that access may be improved and so that costs may be controlled.  It is the responsibility of individuals to participate in available and affordable health insurance.

          (2) All residents of the state of Washington are required to participate in a certified health plan no later than March 1, 1997.  Residents who have health coverage through self-insured employer plans shall be deemed to meet this requirement.

          (3) The Washington health services commission established under section 103 of this act 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. 904.  EMPLOYER RESPONSIBILITY.  (1) On July 1, 1994, every employer employing more than five hundred full-time employees shall offer a certified health plan 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, 1995, all dependents of full-time employees of these firms shall be offered a certified health plan 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.

          (2) By July 1, 1995, every employer employing more than one hundred full-time employees shall offer a certified health plan 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, 1996, all dependents of full-time employees in these firms shall be offered a certified health plan with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost plan.

          (3) By July 1, 1996, every employer shall offer a certified health plan 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 all firms shall be offered a certified health plan with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost plan.

          (4) In lieu of offering coverage for employees and their dependents, an employer may combine the employer contribution with that of the employee's contribution and pay the full cost of the basic health plan benefit to the basic health plan within guidelines set by the plan administrators.  The administrator of the basic health plan may require all or a 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.  Enrollment in the basic health plan is authorized via the mechanism under this subsection, notwithstanding the provisions of RCW 70.47.060 concerning the maximum size of firms allowed to enroll.

 

          NEW SECTION.  Sec. 905.  EMPLOYERS OFFERING COVERAGE.  The employer shall offer the coverage required in this chapter for any full-time employee and his or her dependents when the employee has been an employee for two consecutive weeks. 

          An employer who has been notified by the employee, on a form prescribed by the commission, that they are not the principal employer shall be relieved of the duty of providing the coverage required by this chapter until they are subsequently notified by the employee that they have become the principal employer.  In the event two adults in a family are full-time employees, their dependents shall be covered by both employers in an equitable fashion.  The commission shall establish by rule a mechanism for sharing the cost of dependents.

 

          NEW SECTION.  Sec. 906.  SELF-INSURED EMPLOYERS--EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.  Employers who provide self-insured coverage now regulated by the employee retirement income security act of 1974 shall not be subject to the requirements in this chapter until a change in the employee retirement income security act of 1974 is accomplished.

          The governor with the assistance of the commission shall seek changes in the employee retirement income security act of 1974 to ensure that all employees and their dependents in the state have sufficient health coverage as determined by the commission.

 

          NEW SECTION.  Sec. 907.  PENALTIES.  Any employer who fails to offer coverage as required by this chapter shall be liable to pay for the health care costs incurred by an eligible employee or dependent during the period in which the employer failed to offer coverage.

          If an employer fails to comply with this chapter, he or she shall pay a penalty at a rate of 1.25 times the cost of the lowest cost certified health plan calculated on a daily basis.  The penalty shall be assessed under rules established under this section and shall be deposited in the premium supplementation trust fund.

 

          NEW SECTION.  Sec. 908.  PREMIUM SUPPLEMENTATION TRUST FUND CREATED--ASSISTANCE FOR SMALL BUSINESS.  (1) The premium supplementation trust fund is created in the custody of the treasurer.  Expenditures from the fund may be used only for the supplementation of premiums paid to certified health plans by small businesses.  All premium supplementation payable under this section shall be paid from this fund.   The fund shall consist of all money appropriated by the state for premium supplementation and all fines and penalties collected pursuant to this chapter.

          (2) The commission shall, subject to appropriation or subject to the availability of unappropriated funds, establish a premium supplementation program to assist employers severely impacted by the requirements of this chapter. 

          (a) The program shall, subject to available funds, provide assistance to employers with fewer than ten employees and a total profit of less than fifty thousand dollars for supplementing the premiums paid to certified health plans.  An employer shall be eligible for subsidization of that portion of premium costs above five percent of employee wages, hereby termed "excess premium costs."  Only that portion of excess premium costs above ten percent of an employer's total profit may be subsidized.

          (b) An employer qualifying for the supplementation shall file a claim in the manner set out in rule by the commission.

          (c) For the purposes of this section "total profit" means the sum of any profit, income of owners, wages of highly compensated employees, and retained earnings directly attributable to the business in which such employees are employed.

 

          NEW SECTION.  Sec. 909.  RESPONSIBILITY OF HEALTH SERVICES COMMISSION.  The chair of the Washington health services commission shall administer and enforce this chapter.  The commission shall adopt necessary rules in accordance with chapter 34.05 RCW to carry out the purposes of this chapter.

 

          NEW SECTION.  Sec. 910.  NEW CHAPTER CREATED IN TITLE 70 RCW.  Sections 901 through 909 of this act shall constitute a new chapter in Title 70 RCW.

 

                           PART X - TAXES FOR HEALTH SERVICES TRUST FUND

 

          NEW SECTION.  Sec. 1001.  HEALTH SERVICES TRUST FUND CREATED.  The health services trust fund is created in the custody of the state treasurer.  All designated receipts generated under the provisions of sections 1002 through 1004 of this act and RCW 48.14.020, 82.26.020, 82.24.020, 82.08.150, 82.08.160, 66.08.180, 66.24.210, 66.24.290, and 41.16.050 shall be deposited in the health services trust fund, subject to appropriation.  Expenditures from the fund may be used only for the enrollment of those individuals or families that require a subsidy in the Washington basic health plan, the support of activities of the commission established under this chapter, and such other public programs engaged in the delivery or provision of health services as the legislature may deem appropriate.

 

          NEW SECTION.  Sec. 1002.  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(3), shall on or before March 1, 1995, and the first day of March of each year thereafter, pay to the state treasurer through the commissioner's office a tax on prepayments for health care services.  Such tax shall be in the amount of one and fifty-five one-hundredths 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:  PROVIDED, That the minimum amount of prepayments due during calendar year 1994 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;

          (c) On or before December 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 1001 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. 1003.  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(1), shall on or before March 1, 1995, and the first day of March of each year thereafter, pay to the state treasurer through the commissioner's office a tax on prepayments for health care services.  Such tax shall be in the amount of one and fifty-five one-hundredths 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:  PROVIDED, That the minimum amount of prepayments due during calendar year 1994 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;

          (c) On or before December 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.

          (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 1001 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. 1004.  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.

 

        Sec. 1005.  RCW 48.14.020 and 1986 c 296 s 1 are each amended to read as follows:

          (1) Subject to other provisions of this chapter, each authorized insurer except title insurers 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 premiums.  Except as provided in subsection (2) of this section, such tax shall be in the amount of ((two)) one and fifty-five one-hundredths percent of all premiums, excluding amounts returned to or the amount of reductions in premiums allowed to holders of industrial life policies for payment of premiums directly to an office of the insurer, collected or received by the insurer during the preceding calendar year other than ocean marine and foreign trade insurances, after deducting premiums paid to policyholders as returned premiums, upon risks or property resident, situated, or to be performed in this state.  For the purposes of this section the consideration received by an insurer for the granting of an annuity shall not be deemed to be a premium.

          (2) In the case of insurers which require the payment by their policyholders at the inception of their policies of the entire premium thereon in the form of premiums or premium deposits which are the same in amount, based on the character of the risks, regardless of the length of term for which such policies are written, such tax shall be in the amount of ((two)) one and fifty-five one-hundredths percent of the gross amount of such premiums and premium deposits upon policies on risks resident, located, or to be performed in this state, in force as of the thirty-first day of December next preceding, less the unused or unabsorbed portion of such premiums and premium deposits computed at the average rate thereof actually paid or credited to policyholders or applied in part payment of any renewal premiums or premium deposits on one-year policies expiring during such year.

          (3) Each authorized insurer shall with respect to all ocean marine and foreign trade insurance contracts written within this state during the preceding calendar year, on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax of ninety-five one-hundredths of one percent on its gross underwriting profit.  Such gross underwriting profit shall be ascertained by deducting from the net premiums (i.e., gross premiums less all return premiums and premiums for reinsurance) on such ocean marine and foreign trade insurance contracts the net losses paid (i.e., gross losses paid less salvage and recoveries on reinsurance ceded) during such calendar year under such contracts.  In the case of insurers issuing participating contracts, such gross underwriting profit shall not include, for computation of the tax prescribed by this subsection, the amounts refunded, or paid as participation dividends, by such insurers to the holders of such contracts.

          (4) The state does hereby preempt the field of imposing excise or privilege taxes upon insurers or their agents, other than title insurers, and no county, city, town or other municipal subdivision shall have the right to impose any such taxes upon such insurers or their agents.

          (5) If an authorized insurer collects or receives any such premiums on account of policies in force in this state which were originally issued by another insurer and which other insurer is not authorized to transact insurance in this state on its own account, such collecting insurer shall be liable for and shall pay the tax on such premiums.

          (6) This section shall be effective as to and shall govern the payment of all taxes due for calendar year 1994 and thereafter.

 

        Sec. 1006.  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 (a) forty-five percent, and (b) effective July 1, 1993, an additional nine and five-tenths percent, of the wholesale sales price of such tobacco products.  Such tax shall be imposed at the time the distributor (((a))) (i) brings, or causes to be brought, into this state from without the state tobacco products for sale, (((b))) (ii) makes, manufactures, or fabricates tobacco products in this state for sale in this state, or (((c))) (iii) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

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

          (3) The moneys collected under subsection (1)(b) of this section shall be deposited in the health services trust fund created under section 1001 of this act.

 

        Sec. 1007.  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 (a) eleven and one-half mills per cigarette, and (b) effective July 1, 1993, an additional two 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) 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) 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.

          (5) The moneys collected under subsection (1)(b) of this section shall be deposited in the health services trust fund created under section 1001 of this act.

 

        Sec. 1008.  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 (a) fifteen percent, and (b) effective July 1, 1993, an additional one and seven-tenths 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 (a) ten percent, and (b) effective July 1, 1993, an additional one and one-tenth 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 (a) one dollar and seventy-two cents, and (b) effective July 1, 1993, an additional twenty 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 multiplied by the taxes payable under subsections (1)(a), (2)(a), and (3)(a) 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) 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) 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) As used in this section, the terms, "spirits," "strong beer," and "package" shall have the meaning ascribed to them in chapter 66.04 RCW.

          (9) The moneys collected under subsections (1)(b), (2)(b), and (3)(b) of this section shall be deposited into the health services trust fund created under section 1001 of this act.

 

        Sec. 1009.  RCW 82.08.160 and 1982 1st ex.s. c 35 s 4 are each amended to read as follows:

          On or before the twenty-fifth day of each month, all taxes collected under RCW 82.08.150 during the preceding month shall be remitted to the state department of revenue, to be deposited with the state treasurer.  Upon receipt of such moneys the state treasurer shall credit one hundred percent of the sums collected and remitted under RCW 82.08.150 (1)(b), (2)(b), and (3)(b) to the health services trust fund created under section 1001 of this act; sixty-five percent of the sums collected and remitted under RCW 82.08.150 (1)(a) and (2)(a) and one hundred percent of the sums collected and remitted under RCW 82.08.150 (3)(a) and (4) to the state general fund; and thirty-five percent of the sums collected and remitted under RCW 82.08.150 (1)(a) and (2)(a) to a fund which is hereby created to be known as the "liquor excise tax fund."

 

        Sec. 1010.  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, except for the additional tax under RCW 66.24.210(5), 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. 1011.  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 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) Effective July 1, 1993, an additional tax is imposed on all wine subject to taxes under subsection (1) of this section.  The additional tax is equal to four and fifty-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 two and twenty-nine one-hundredths 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 1001 of this act.

 

        Sec. 1012.  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.

          (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 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) 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) Effective July 1, 1993, an additional tax is imposed on all beer subject to tax under subsection (1) of this section.  The additional tax is equal to forty-eight cents per barrel of thirty-one gallons.

          (5) The moneys collected under subsection (4) of this section shall be deposited in the health services trust fund created under section 1001 of this act.

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

 

        Sec. 1013.  RCW 41.16.050 and 1986 c 296 s 3 are each amended to read as follows:

          There is hereby created and established in the treasury of each municipality a fund which shall be known and designated as the firemen's pension fund, which shall consist of:  (1) All bequests, fees, gifts, emoluments or donations given or paid thereto; (2) forty-five percent of all moneys received by the state from taxes on fire insurance premiums; (3) one and nine one-hundredths percent of all taxes paid by health maintenance organizations under section 1003 of this act; (4) one and nine one-hundredths percent of all taxes paid by health care service contractors under section 1002 of this act; (5) taxes paid pursuant to the provisions of RCW 41.16.060; (((4))) (6) interest on the investments of the fund; and (((5))) (7) contributions by firemen as provided for herein.  The moneys received from the tax on fire insurance premiums under the provisions of this chapter shall be distributed in the proportion that the number of paid firemen in the city, town or fire protection district bears to the total number of paid firemen throughout the state to be ascertained in the following manner:  The secretary of the firemen's pension board of each city, town and fire protection district now or hereafter coming under the provisions of this chapter shall within thirty days after June 7, 1961, and on or before the fifteenth day of January thereafter, certify to the state treasurer the number of paid firemen in the fire department in such city, town or fire protection district.  The state treasurer shall on or before the first day of June of each year deliver to the treasurer of each city, town and fire protection district coming under the provisions of this chapter his warrant, payable to each city, town or fire protection district for the amount due such city, town or fire protection district ascertained as herein provided and the treasurer of each such city, town or fire protection district shall place the amount thereof to the credit of the firemen's pension fund of such city, town or fire protection district.

 

        Sec. 1014.  RCW 41.24.030 and 1992 c 97 s 1 are each amended to read as follows:

          (1) There is created in the state treasury a trust fund for the benefit of the fire fighters of the state covered by this chapter, which shall be designated the volunteer fire fighters' relief and pension principal fund and shall consist of:

          (a) All bequests, fees, gifts, emoluments, or donations given or paid to the fund.

          (b) An annual fee for each member of its fire department to be paid by each municipal corporation for the purpose of affording the members of its fire department with protection from death or disability as provided in this chapter as follows:

          (i) Ten dollars for each volunteer or part-paid member of its fire department;

          (ii) A sum equal to one and one-half of one percent of the annual salary attached to the rank of each full-paid member of its fire department, prorated for 1970 on the basis of services prior to March 1, 1970.

          (c) Where a municipal corporation has elected to make available to the members of its fire department the retirement provisions as provided in this chapter, an annual fee of sixty dollars for each of its fire fighters electing to enroll therein, thirty dollars of which shall be paid by the municipality and thirty dollars of which shall be paid by the fire fighter.

          (d) ((Forty percent of all moneys received by the state from taxes on fire insurance premiums shall be paid into the state treasury and credited to the administrative fund created in subsection (2) of this section.

          (e))) The state investment board, upon request of the state treasurer shall have full power to invest or reinvest such portion of the amounts credited to the principal fund as is not, in the judgment of the treasurer, required to meet current withdrawals.  Such investments shall be made in the manner prescribed by RCW 43.84.150 and not otherwise.

          (((f))) (e) All bonds or other obligations purchased according to (((e))) (d) of this subsection shall be forthwith placed in the custody of the state treasurer, and he or she shall collect the principal thereof and interest thereon when due.

          The state investment board may sell any of the bonds or obligations so acquired and the proceeds thereof shall be paid to the state treasurer.

          The interest and proceeds from the sale and redemption of any bonds or other obligations held by the fund and invested by the state investment board shall be credited to and form a part of the principal fund, less the allocation to the state investment board expense account pursuant to RCW 43.33A.160.

          All amounts credited to the principal fund shall be available for making the benefit payments required by this chapter.

          The state treasurer shall make an annual report showing the condition of the fund.

          (2) The volunteer fire fighters' relief and pension administrative fund is hereby created in the state treasury, and shall consist of forty percent of all  moneys received by the state from taxes on fire insurance premiums, one and twenty-three one-hundredths percent of all taxes paid by health maintenance organizations under section 1003 of this act, and one and twenty-three one-hundredths percent of all taxes paid by health care service contractors under section 1002 of this act.  Moneys in the account, including unanticipated revenues under RCW 43.79.270, may be spent only after appropriation, and may be used only for operating expenses of the volunteer fire fighters' relief and pension principal fund, the operating expenses of the volunteer fire fighters' relief and pension administrative fund, or for transfer from the administrative fund to the principal fund.

          (a) The state board shall compute a percentage of the amounts credited to the administrative fund to be paid into the principal fund.

          (b) For the purpose of providing amounts to be used to defray the cost of administration of the principal and administrative funds, the state board shall ascertain at the beginning of each biennium and request from the legislature an appropriation from the administrative fund sufficient to cover estimated expenses for the biennium.

 

          NEW SECTION.  Sec. 1015.  (1) Sections 1001 and 1006 through 1012 of this act are 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 July 1, 1993.

          (2) Sections 1002, 1003, 1004, 1013, and 1014 of this act shall take effect January 1, 1994.

 

          NEW SECTION.  Sec. 1016.  Table of contents, part headings, and section captions as used in this act constitute no part of the law.

 

          NEW SECTION.  Sec. 1017.  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.

 


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