5304-S

AN ACT Relating to health care; amending RCW 70.47.010, 70.47.020, 70.47.030, 70.47.060, 70.47.080, 70.47.120, 41.05.011, 41.05.021, 41.05.050, 41.05.055, 47.64.270, 41.05.065, 41,05.120, 41.05.140, 19.68.010, 70.05.010, 70.05.030, 70.05.040, 70.05.050, 70.05.070, 70.05.080, 70.05.120, 70.05.130, 70.05.150, 70.08.010, 70.12.030, 70.12.050, 70.46.020, 70.46.060, 70.46.080, 70.46.085, 70.46.090, 70.46.120, 82.44.110, 82.44.155, 70.170.100, 70.170.110, 28B.125.010, 28B.115.080, 70.185.030, 43.70.460, 43.70.470, 82.02.030, 82.08.020, 82.24.020, 82.04.260, 82.04.4289, 18.130.160, 18.130.190, 70.41.200, 42.17.2401, 43.20.030, 43.20.050, and 43.84.092; adding a new section to chapter 74.09 RCW; adding new sections to chapter 41.05 RCW; adding a new section to chapter 18.130 RCW; adding a new section to Title 43 RCW; adding new sections to chapter 70.05 RCW; adding new sections to chapter 70.170 RCW; adding new sections to chapter 70.185 RCW; adding new sections to Title 48 RCW; adding new sections to chapter 48.14 RCW; adding a new section to chapter 82.04 RCW; adding new sections to chapter 43.70 RCW; adding a new section to Title 70 RCW; adding a new section to chapter 48.22 RCW; adding a new section to chapter 70.41 RCW; adding a new section to chapter 71.12 RCW; adding new sections to chapter 18.68 RCW; adding a new section to chapter 18.51 RCW; adding a new chapter to Title 48 RCW; adding new chapters to Title 43 RCW; creating new sections; recodifying RCW 70.08.010; repealing RCW 70.05.005, 70.05.020, 70.05.132, 70.05.145, 70.08.005, 70.08.020, 70.08.030, 70.08.040, 70.08.050, 70.08.060, 70.08.070, 70.08.080, 70.08.090, 70.08.100, 70.08.110, 70.08.900, 70.12.005, 70.46.030, 70.46.040, 70.46.050, and 82.04.4288; 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

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

PART II. EARLY IMPLEMENTATION MEASURES................................................................................................................... 5

A. BASIC HEALTH PLAN EXPANSION.......................................................................................................................................... 6

B. EXPANDED MANAGED CARE FOR STATE EMPLOYEES................................................................................................. 17

C. HEALTH CARE PROVIDER CONFLICT OF INTEREST STANDARDS............................................................................. 27

D. CONSOLIDATED STATE HEALTH CARE PURCHASING AGENT................................................................................... 28

E. PUBLIC HEALTH FINANCING AND GOVERNANCE........................................................................................................... 30

F. DATA COLLECTION.......................................................................................................................................................................... 42

G. HEALTH PROFESSIONAL SHORTAGES................................................................................................................................. 48

H. JOINT UNDERWRITING AUTHORITY FOR LONG-TERM CARE..................................................................................... 59

I. TAXES.................................................................................................................................................................................................... 60

J. APPROPRIATIONS............................................................................................................................................................................. 69

PART III. HEALTH AND MEDICAL SYSTEM REFORM.......................................................................................................... 70

A. THE WASHINGTON HEALTH SERVICES COMMISSION................................................................................................... 73

B. PRACTICE INDICATORS................................................................................................................................................................. 80

C. HEALTH CARE LIABILITY REFORMS.................................................................................................................................... 81

D. CERTIFIED HEALTH PLANS...................................................................................................................................................... 87

E. EMPLOYERS' COOPERATIVE HEALTH CARE PURCHASING GROUPS...................................................................... 99

F. DISCLOSURE OF HOSPITAL, NURSING HOME, AND PHARMACY CHARGES......................................................... 100

G. STATE AND FEDERAL ANTI-TRUST IMMUNITY................................................................................................................ 104

H. THE UNIFORM BENEFIT PACKAGE....................................................................................................................................... 105

I. STATE RESIDENT AND EMPLOYER PARTICIPATION....................................................................................................... 108

J. PUBLIC HEALTH SERVICES IMPROVEMENT PLAN......................................................................................................... 110

K. STATE HEALTH SERVICES BUDGET, TRUST FUND, AND ACCOUNTS...................................................................... 112

L. IMPLEMENTATION SCHEDULE................................................................................................................................................ 114

M. INITIAL EXCLUSIONS, STUDIES, AND ADMINISTRATIVE DIRECTIVES................................................................. 116

N. WORKERS' COMPENSATION....................................................................................................................................................... 121

O. MISCELLANEOUS............................................................................................................................................................................ 122

PART I. FINDINGS, GOALS, AND INTENT

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

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

The legislature finds that businesses can no longer afford to pay for medical insurance and remain competitive in a global economy, and that individuals, the poor, and small businesses bear an inequitable medical insurance burden.

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

The legislature finds that while immediate steps must be taken to alleviate the medical and health care cost and access crisis, a long-term plan of reform is also needed.

NEW SECTION. Sec. 102. LEGISLATIVE INTENT AND GOALS. (1) The legislature intends that state government policy stabilize medical and health care costs, assure access to essential services for all residents, improve the public's health, and ensure that unwarranted medical care cost increases do not undermine the viability of nonmedical care businesses.

(2) The legislature intends that:

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

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

(c) Individuals and businesses have the option to purchase any health or medical services they may choose in addition to those contained in any benefits package determined by the state to be essential, so long as such supplemental services are purchased from certified health plans or purchased directly from health care providers;

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

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

(3) Accordingly, the legislature intends that chapter . . ., Laws of 1993 (this act) provide both early implementation measures and a long-term plan and process for reform.

PART II. EARLY IMPLEMENTATION MEASURES

NEW SECTION. Sec. 201. INTENT. The legislature intends that the provisions within sections 202 through 272 of this act be implemented as soon as possible to promote the proliferation of managed health care, to foster the collection of needed health care data, to expand access to basic health insurance using established programs, and to make other immediate improvements in the health care system that are consistent with the goals of long-term care reform.

A. BASIC HEALTH PLAN EXPANSION

Sec. 202. 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 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 or medicaid with gross family income at or below ((~~two~~)) three hundred percent of the federal poverty guidelines who share in the 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 to their satisfaction through private employer-based health plans, nor to replace satisfactory 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 by offering a cost-effective plan for those who may not be able to afford privately available coverage that may be purchased by employers at its full cost for employees whose incomes exceed three hundred percent of the federal poverty level.

(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, the legislature intends to make the program available to individuals in the state with incomes above three hundred percent of the federal poverty level who have no health insurance offering a greater level of coverage than the basic health plan benefit package, and who collectively or individually wish to exercise the opportunity to purchase health care coverage through the program 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, so long as exercising this system does not result in a lower standard of coverage for employees.

(c) The legislature directs that the basic health plan administrator identify enrollees who are eligible for medicaid and assist these individuals in applying for and receiving medicaid.

Sec. 203. RCW 70.47.020 and 1987 1st ex.s. c 5 s 4 are each amended to read as follows:

As used in this chapter:

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

(2) "Administrator" means the Washington basic health plan administrator.

(3) "Managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the administrator and rendered by duly licensed providers, on a prepaid capitated basis to a defined patient population enrolled in the plan and in the managed health care system. On July 1, 1997, "managed health care system" under this chapter shall mean "certified health plan" under section 302 of this act.

(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 or medicaid, 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 does not have health insurance equal to or more comprehensive than that offered by the Washington basic health plan, 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 for whom the premium for participation in the plan is paid by the individual, their employer, or other financial sponsor, who does not have health insurance equal to or more comprehensive than that offered by the Washington basic health plan, and who 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, their employer or other financial sponsor 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. 204. 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~~)) ninety-seven 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(10) (a) and (b) 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. 205. 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, prescription drugs and medications, 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. After July 1, 1997, services offered under this chapter shall equal the uniform benefit package established according to section 347 of this act and may only be purchased from certified health plans established according to section 319 of this act.

(2) To design and implement a structure of periodic premiums due the administrator from enrollees that is based upon gross family income, giving appropriate consideration to family size as well as the ages of all family members. The enrollment of children shall not require the enrollment of their parent or parents who are eligible for the plan.

(a) An employer or other financial sponsor may, with the approval of the administrator, pay the premium on behalf of any enrollee, by arrangement with the enrollee and through a mechanism acceptable to the administrator, but in no case shall the contribution made on behalf of the enrollee exceed eighty percent of total premiums due from the enrollee.

(b) Premiums due from nonsubsidized enrollees, who are not otherwise eligible to be enrollees, shall be in an amount equal to the cost charged by the managed health care system provider to the state for the plan plus the administrative cost of providing the plan to those enrollees.

(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)~~)) (5) To limit the payment of a subsidy to an enrollee, as defined in RCW 70.47.020, whose gross family income at the time of enrollment does not exceed that percentage of the federal poverty level adjusted for family size and determined annually by the federal department of health and human services, established in the biennial appropriations act.

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

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

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

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

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

(9) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and at least annually thereafter, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. An enrollee who remains current in payment of the sliding-scale premium, as determined under subsection (2) of this section, and whose gross family income has risen above ((~~twice~~)) that percentage of the federal poverty level established in the current biennial appropriations act, 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~~)) that percentage of the federal poverty level established in the current biennial appropriations act 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)(a) To accept applications from 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 works for the employer. Enrollment under this subsection shall be limited to those not otherwise eligible for medicare or medicaid, whose gross family income is greater than that established for subsidized enrollees, 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 health 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 business group enrolled according to this subsection 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.

(b) To accept applications from individuals residing in areas serviced by the plan, on behalf of themselves and their spouses and dependent children, under sixty-five years of age and not otherwise eligible for medicare or medicaid, whose gross family income at the time of enrollment exceeds that established for subsidized enrollees, 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 health 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 and the administrative cost of providing the plan to such nonsubsidized enrollees and shall not be eligible for any subsidy from the plan.

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

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

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

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

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

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

Sec. 206. 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 of those eligible for subsidies during any biennium shall not exceed the number established by the legislature in any act appropriating funds to the plan, and total subsidized enrollment shall not result in expenditures that exceed the total amount that has been made available by the legislature in any act appropriating funds to the plan. The legislature shall establish income limits expressed as a percentage of the federal poverty level, for subsidized enrollees in the omnibus appropriations act to ensure the orderly development of 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. 207. 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 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. 208. A new section is added to chapter 74.09 RCW to read as follows:

FEDERAL WAIVER FOR STATE MEDICAID PROGRAM. (1) The department shall negotiate with the United States congress and the federal department of health and human services to obtain a waiver of provisions of the medicaid statute, Title XIX of the federal social security act to require medicaid-eligible individuals to:

(a) Enroll in the state basic health plan and receive the benefits offered to basic health plan enrollees; and

(b) Participate financially in purchasing health care benefits through such means as premium sharing, copayments, and deductibles provided that such contributions will be implemented in a manner to encourage the appropriate use of effective medical care services and do not serve as a barrier to receiving necessary medical care services.

(2) The department shall report to the appropriate policy and fiscal standing committees of the senate and house of representatives by October 31, 1994, on the progress of such negotiations.

B. EXPANDED MANAGED CARE FOR STATE EMPLOYEES

Sec. 209. RCW 41.05.011 and 1990 c 222 s 2 are each amended to read as follows:

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

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

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

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

(4) "Insuring entity" means an insurance carrier as defined in chapter 48.21 or 48.22 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW.

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

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

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

(8) "Organized delivery system" means an integrated system of insurance-financing functions and delivery system functions, using a defined network of providers who agree to abide by the system's practices, reimbursement levels including cost sharing, quality improvement methods, and other requirements and incentives intended to maximize access to needed health services while providing appropriate services cost-effectively. An organized delivery system would assume financial risk, as well as the responsibility for ensuring acceptable standards of care. On July 1, 1997, "organized delivery system" under this chapter means "certified health plan" under section 319 of this act.

Sec. 210. RCW 41.05.021 and 1990 c 222 s 3 are each amended to read as follows:

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

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

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

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

((~~(b)~~)) (ii) Utilization of provider arrangements that encourage cost containment and ensure access to quality care, including assuring reasonable access to local providers, especially for enrollees residing in rural areas, and also including but not limited to prepaid delivery systems, utilization review, and prospective payment methods;

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

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

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

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

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

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

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

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

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

(a) Standardizing the benefit package;

(b) Soliciting competitive bids for the benefit package;

(c) Limiting the state's contribution to a percent of the lowest priced sealed bid of a qualified plan within a geographical area. If the state's contribution is less than one hundred percent of the lowest priced sealed bid, employee financial contributions shall be structured on a sliding-scale basis based upon the income of the employee;

(d) Ensuring access to quality health services, including assuring reasonable access to local providers, especially for enrollees residing in rural areas;

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

Sec. 211. RCW 41.05.050 and 1988 c 107 s 18 are each amended to read as follows:

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

(2) The contributions of any department, division, or separate agency of the state government, and such county, municipal, or other political subdivisions as are covered by this chapter, shall be set by the authority, subject to the approval of the governor for availability of funds as specifically appropriated by the legislature for that purpose. ((~~However,~~)) Insurance and health care contributions for ferry employees shall be governed by RCW 47.64.270 until December 31, 1996. On January 1, 1997, ferry employees shall enroll with certified health plans under chapter . . ., Laws of 1993 (this act).

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

Sec. 212. RCW 41.05.055 and 1989 c 324 s 1 are each amended to read as follows:

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

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

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

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

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

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

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

Sec. 213. RCW 47.64.270 and 1988 c 107 s 21 are each amended to read as follows:

Until December 31, 1996, absent a collective bargaining agreement to the contrary, the department of transportation shall provide contributions to insurance and health care plans for ferry system employees and dependents, as determined by the state health care authority, under chapter 41.05 RCW((.)); and the ferry system management and employee organizations may collectively bargain for other insurance and health care plans, and employer contributions may exceed that of other state agencies as provided in RCW 41.05.050, subject to RCW 47.64.180. On January 1, 1997, ferry employees shall enroll in certified health plans under the provisions of chapter . . ., Laws of 1993 (this act). To the extent that ferry employees by bargaining unit have absorbed the required offset of wage increases by the amount that the employer's contribution for employees' and dependents' insurance and health care plans exceeds that of other state general government employees in the 1985-87 fiscal biennium, employees shall not be required to absorb a further offset except to the extent the differential between employer contributions for those employees and all other state general government employees increases during any subsequent fiscal biennium. If such differential increases in the 1987-89 fiscal biennium or the 1985-87 offset by bargaining unit is insufficient to meet the required deduction, the amount available for compensation shall be reduced by bargaining unit by the amount of such increase or the 1985-87 shortage in the required offset. Compensation shall include all wages and employee benefits.

Sec. 214. RCW 41.05.065 and 1988 c 107 s 8 are each amended to read as follows:

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

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

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

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

(c) Wellness incentives that focus on proven strategies, such as smoking cessation, exercise, ((~~and~~)) automobile and motorcycle safety, blood cholesterol reduction, and nutrition education;

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

(e) Effective coordination of benefits;

(f) Minimum standards for health benefit carriers; and

(g) Minimum scope and content of standard benefit plans to be offered to enrollees participating in the employee benefit board plans. On or after July 1, 1995, the uniform benefits package and schedule of premiums and other individual cost-sharing adopted and from time to time revised by the Washington health services commission pursuant to section 347 of this act shall be implemented by the administrator for purposes of employee health benefit plans.

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

(4) The board shall utilize financial incentives to encourage employee enrollments in organized delivery systems. To encourage income equity, employee financial contributions shall be structured on a sliding-scale basis based upon the income of the employee. These incentives shall result in a target of at least seventy-five percent enrollment of employees and retirees in organized delivery systems by July 1994.

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

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

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

(7) The board shall report to the appropriate policy and fiscal committees of the legislature by December 1, 1994, on the following:

(a) The progress in meeting the organized delivery system target enrollment rate established in subsection (4) of this section and recommendations for increasing future participation above the target rate; and

(b) The impact on the growth of public employee benefit costs as the result of establishing organized delivery system target rates and required financial incentives to encourage enrollment in cost-efficient organized delivery systems.

NEW SECTION. Sec. 215. A new section is added to chapter 41.05 RCW to read as follows:

Notwithstanding any other provisions of this title or rules or procedures adopted by the health care authority, the authority shall offer all retired or disabled employees at least two medicare supplemental insurance policies that conform to the requirements of chapter 48.66 RCW. One policy must include coverage for prescription drugs. These policies shall be available to retired or disabled state employees, or employees of county, municipal, or other political subdivisions eligible for coverage available under the authority and all offerings must be made available not later than January 1, 1994.

Sec. 216. RCW 41.05.120 and 1991 sp.s. c 13 s 100 are each amended to read as follows:

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

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

Sec. 217. RCW 41.05.140 and 1988 c 107 s 12 are each amended to read as follows:

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

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

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

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

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

NEW SECTION. Sec. 218. A new section is added to chapter 41.05 RCW to read as follows:

If the governor or the Washington health care commission does not secure a waiver of the medicare statute, Title XVIII of the federal social security act, sufficient to meet the requirements of chapter . . ., Laws of 1993 (this act) on or before January 1, 1995, then the medicare supplemental insurance policies authorized under section 215 of this act shall be made available as an offering to any resident of the state eligible for medicare benefits. Except for those state or public retirees already eligible to purchase such medicare supplemental benefits through the authority, those newly authorized to purchase such insurance coverage under this section shall be required to pay the full costs of any such medicare supplemental benefits.

C. HEALTH CARE PROVIDER CONFLICT OF INTEREST STANDARDS

Sec. 219. RCW 19.68.010 and 1973 1st ex.s. c 26 s 1 are each amended to read as follows:

It shall be unlawful for any person, firm, corporation or association, whether organized as a cooperative, or for profit or nonprofit, to pay, or offer to pay or allow, directly or indirectly, to any person licensed by the state of Washington to engage in the practice of medicine and surgery, drugless treatment in any form, dentistry, or pharmacy and it shall be unlawful for such person to request, receive or allow, directly or indirectly, a rebate, refund, commission, unearned discount or profit by means of a credit or other valuable consideration in connection with the referral of patients to any person, firm, corporation or association, or in connection with the furnishings of medical, surgical or dental care, diagnosis, treatment or service, on the sale, rental, furnishing or supplying of clinical laboratory supplies or services of any kind, drugs, medication, or medical supplies, or any other goods, services or supplies prescribed for medical diagnosis, care or treatment: PROVIDED, That ownership of a financial interest in any firm, corporation or association which furnishes any kind of clinical laboratory or other services prescribed for medical, surgical, or dental diagnosis shall not be prohibited under this section where (1) the referring practitioner affirmatively discloses to the patient in writing, the fact that such practitioner has a financial interest in such firm, corporation, or association; and (2) the referring practitioner provides the patient with a list of effective alternative facilities, informs the patient that he or she has the option to use one of the alternative facilities, and assures the patient that he or she will not be treated differently by the referring practitioner if the patient chooses one of the alternative facilities.

Any person violating the provisions of this section is guilty of a misdemeanor.

NEW SECTION. Sec. 220. A new section is added to chapter 18.130 RCW to read as follows:

CONFLICT OF INTEREST STANDARDS. The Washington health services commission established by section 303 of this act, in consultation with the secretary of health, and the health care disciplinary authorities under RCW 18.130.040(2)(b), shall establish standards and monetary penalties in rule prohibiting provider investments and referrals that present a conflict of interest resulting from inappropriate financial gain for the provider or his or her immediate family. These standards are not intended to inhibit the efficient operation of managed health care systems or certified health plans. The commission shall report to the health policy committees of the senate and house of representatives by June 30, 1994, on the development of the standards and any recommended statutory changes necessary to implement the standards.

D. CONSOLIDATED STATE HEALTH CARE PURCHASING AGENT

NEW SECTION. Sec. 221. A new section is added to Title 43 RCW to read as follows:

STATE HEALTH CARE PURCHASING AGENT DESIGNATION. (1) The health care authority is designated as the single state agent for purchasing health care. Beginning in January 1994, the governor shall submit necessary legislation to place all state-purchased health care in a strictly community rated, single risk pool under the direct administrative authority of the state purchasing agent by July 1, 1997, including at least the basic health plan, the purchasing of health benefits for K-12 system employees and retirees, ferry employees and retirees, the medical aid fund portion of the workers' compensation program, personal health services purchased through the department of health, and state employee and retiree health benefits. At the earliest opportunity the governor shall seek necessary federal waivers and state legislation to place the medical assistance program of the department of social and health services in this single risk pool after July 1995, but in no event later than July 1997.

(2) At a minimum, and regardless of any other legislative enactment, the state health care purchasing agent must:

(a) Ensure immediate coverage when any state resident eligible for state-subsidized medical care chooses to receive state-sponsored care;

(b) Require that any public agency that provides subsidies for a substantial portion of services now covered under the basic health plan or any uniform benefit package that may be required by the state use uniform eligibility processes, insofar as may be possible, and do not require multiple eligibility determinations;

(c) Require that any health care provider, health care facility, health maintenance organization, health care service contractor, group disability insurer, and any certified health plan that receives funds from any public program accept enrollment from any state resident receiving any state subsidy who may wish to enroll with them or receive care from them;

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

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

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

(g) Phase-in basic health plan coverage over a four-year period for uninsured subsidized residents consistent with funds and enrollment limitations provided in the omnibus appropriations act. The process shall seek to enroll those persons with the greatest financial need first; and

(h) Notwithstanding other provisions of law, assure that any state resident receiving a public subsidy for health care in July 1997 or thereafter, be enrolled in a certified health plan and receive no less than the uniform benefit package as required under chapter . . ., Laws of 1993 (this act).

E. PUBLIC HEALTH FINANCING AND GOVERNANCE

Sec. 222. RCW 70.05.010 and 1967 ex.s. c 51 s 1 are each amended to read as follows:

For the purposes of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)) and unless the context thereof clearly indicates to the contrary:

(1) "Local health departments" means the ((~~city, town,~~)) county or district which provides public health services to persons within the area;

(2) "Local health officer" means the legally qualified physician who has been appointed as the health officer for the ((~~city, town,~~)) county or district public health department;

(3) "Local board of health" means the ((~~city, town,~~)) county or district board of health.

(4) "Health district" means ((~~all territory encompassed within a single county and all cities and towns therein except cities with a population of over one hundred thousand, or~~)) all the territory consisting of one or more counties ((~~and all the cities and towns in all of the combined counties except cities of over one hundred thousand population which have been combined and~~)) organized pursuant to the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090: PROVIDED, That cities with a population of over one hundred thousand may be included in a health district as provided in RCW 70.46.040~~)).

(5) "Department" means the department of health.

Sec. 223. RCW 70.05.030 and 1967 ex.s. c 51 s 3 are each amended to read as follows:

In counties without a home rule charter, the board of county commissioners ((of each and every county in this state, except where such county is a part of a health district or is purchasing services under a contract as authorized by chapter 70.05 RCW and RCW 70.46.020 through 70.46.090,)) shall constitute the local board of health ((~~for such county, and said local board of health's jurisdiction~~)), unless the county is part of a health district pursuant to chapter 70.46 RCW. The jurisdiction of the local board of health shall be coextensive with the boundaries of said county((, except that nothing herein contained shall give said board jurisdiction in cities of over one hundred thousand population or in such other cities and towns as are providing health services which meet health standards pursuant to RCW 70.46.090)).

Sec. 224. RCW 70.05.040 and 1984 c 25 s 1 are each amended to read as follows:

The local board of health shall elect a ((~~chairman~~)) chair and may appoint an administrative officer. A local health officer shall be appointed pursuant to RCW 70.05.050. Vacancies on the local board of health shall be filled by appointment within thirty days and made in the same manner as was the original appointment. At the first meeting of the local board of health, the members shall elect a ((~~chairman~~)) chair to serve for a period of one year. ((~~In home rule charter counties that have a local board of health established under RCW 70.05.050, the administrative officer may be appointed by the official designated under the county's charter.~~))

NEW SECTION. Sec. 225. A new section is added to chapter 70.05 RCW to read as follows:

In counties with a home rule charter, the county legislative authority shall establish a local board of health and may prescribe the membership and selection process for the board. The jurisdiction of the local board of health shall be coextensive with the boundaries of the county. The local health officer, as described in RCW 70.05.050, shall be appointed by the official designated under the provisions of the county charter. The same official designated under the provisions of the county charter may appoint an administrative officer, as described in RCW 70.05.045.

Sec. 226. RCW 70.05.050 and 1984 c 25 s 5 are each amended to read as follows:

((Each local board of health, other than boards which are established under RCW 70.05.030 and which are located in counties having home rule charters, shall appoint a local health officer. In home rule charter counties which have a local board of health established under RCW 70.05.030, the local health officer shall be appointed by the official designated under the provisions of the county's charter.))

The local health officer shall be an experienced physician licensed to practice medicine and surgery or osteopathy and surgery in this state and who is qualified or provisionally qualified in accordance with the standards prescribed in RCW 70.05.051 through 70.05.055 to hold the office of local health officer. No term of office shall be established for the local health officer but ((he)) the local health officer shall not be removed until after notice is given ((~~him~~)), and an opportunity for a hearing before the board or official responsible for his or her appointment under this section as to the reason for his or her removal. ((He)) The local health officer shall act as executive secretary to, and administrative officer for the local board of health and shall also be empowered to employ such technical and other personnel as approved by the local board of health except where the local board of health has appointed an administrative officer under RCW 70.05.040. The local health officer shall be paid such salary and allowed such expenses as shall be determined by the local board of health.

Sec. 227. RCW 70.05.070 and 1991 c 3 s 309 are each amended to read as follows:

The local health officer, acting under the direction of the local board of health or under direction of the administrative officer appointed under RCW 70.05.040 or section 225 of this act, if any, shall:

(1) Enforce the public health statutes of the state, rules of the state board of health and the secretary of health, and all local health rules, regulations and ordinances within his or her jurisdiction including imposition of penalties authorized under RCW 70.119A.030 and filing of actions authorized by RCW 43.70.190;

(2) Take such action as is necessary to maintain health and sanitation supervision over the territory within his or her jurisdiction;

(3) Control and prevent the spread of any dangerous, contagious or infectious diseases that may occur within his or her jurisdiction;

(4) Inform the public as to the causes, nature, and prevention of disease and disability and the preservation, promotion and improvement of health within his or her jurisdiction;

(5) Prevent, control or abate nuisances which are detrimental to the public health;

(6) Attend all conferences called by the secretary of health or his or her authorized representative;

(7) Collect such fees as are established by the state board of health or the local board of health for the issuance or renewal of licenses or permits or such other fees as may be authorized by law or by the rules of the state board of health;

(8) Inspect, as necessary, expansion or modification of existing public water systems, and the construction of new public water systems, to assure that the expansion, modification, or construction conforms to system design and plans;

(9) Take such measures as he or she deems necessary in order to promote the public health, to participate in the establishment of health educational or training activities, and to authorize the attendance of employees of the local health department or individuals engaged in community health programs related to or part of the programs of the local health department.

Sec. 228. RCW 70.05.080 and 1991 c 3 s 310 are each amended to read as follows:

If the local board of health or other official responsible for appointing a local health officer under RCW 70.05.050 refuses or neglects to appoint a local health officer after a vacancy exists, the secretary of health may appoint a local health officer and fix the compensation. The local health officer so appointed shall have the same duties, powers and authority as though appointed under RCW 70.05.050. Such local health officer shall serve until a qualified individual is appointed according to the procedures set forth in RCW 70.05.050. The board or official responsible for appointing the local health officer under RCW 70.05.050 shall also be authorized to appoint an acting health officer to serve whenever the health officer is absent or incapacitated and unable to fulfill his or her responsibilities under the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)).

Sec. 229. RCW 70.05.120 and 1984 c 25 s 8 are each amended to read as follows:

Any local health officer or administrative officer appointed under RCW 70.05.040, if any, who shall refuse or neglect to obey or enforce the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)) or the rules, regulations or orders of the state board of health or who shall refuse or neglect to make prompt and accurate reports to the state board of health, may be removed as local health officer or administrative officer by the state board of health and shall not again be reappointed except with the consent of the state board of health. Any person may complain to the state board of health concerning the failure of the local health officer or administrative officer to carry out the laws or the rules and regulations concerning public health, and the state board of health shall, if a preliminary investigation so warrants, call a hearing to determine whether the local health officer or administrative officer is guilty of the alleged acts. Such hearings shall be held pursuant to the provisions of chapter 34.05 RCW, and the rules and regulations of the state board of health adopted thereunder.

Any member of a local board of health who shall violate any of the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)) or refuse or neglect to obey or enforce any of the rules, regulations or orders of the state board of health made for the prevention, suppression or control of any dangerous contagious or infectious disease or for the protection of the health of the people of this state, shall be guilty of a misdemeanor, and upon conviction shall be fined not less than ten dollars nor more than two hundred dollars. Any physician who shall refuse or neglect to report to the proper health officer or administrative officer within twelve hours after first attending any case of contagious or infectious disease or any diseases required by the state board of health to be reported or any case suspicious of being one of such diseases, shall be guilty of a misdemeanor, and upon conviction shall be fined not less than ten dollars nor more than two hundred dollars for each case that is not reported.

Any person violating any of the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)) or violating or refusing or neglecting to obey any of the rules, regulations or orders made for the prevention, suppression and control of dangerous contagious and infectious diseases by the local board of health or local health officer or administrative officer or state board of health, or who shall leave any isolation hospital or quarantined house or place without the consent of the proper health officer or who evades or breaks quarantine or conceals a case of contagious or infectious disease or assists in evading or breaking any quarantine or concealing any case of contagious or infectious disease, shall be guilty of a misdemeanor, and upon conviction thereof shall be subject to a fine of not less than twenty-five dollars nor more than one hundred dollars or to imprisonment in the county jail not to exceed ninety days or to both fine and imprisonment.

Sec. 230. RCW 70.05.130 and 1991 c 3 s 313 are each amended to read as follows:

All expenses incurred by the state, health district, or county in carrying out the provisions of chapters 70.05 and 70.46 RCW ((~~and RCW 70.46.020 through 70.46.090~~)) or any other public health law, or the rules of the ((~~state~~)) department of health enacted under such laws, shall be paid by the county ((~~or city by which or in behalf of which such expenses shall have been incurred~~)) and such expenses shall constitute a claim against the general fund as provided herein.

Sec. 231. RCW 70.05.150 and 1967 ex.s. c 51 s 22 are each amended to read as follows:

In addition to powers already granted them, any ((~~city, town,~~)) county, district, or local health department may contract for either the sale or purchase of any or all health services from any local health department: PROVIDED, That such contract shall require the approval of the state board of health.

Sec. 232. RCW 70.08.010 and 1985 c 124 s 1 are each amended to read as follows:

Any city with one hundred thousand or more population and the county in which it is located, are authorized, as shall be agreed upon between the respective governing bodies of such city and said county, to establish and operate a combined city and county health department, and to appoint ((~~the director of public health~~)) a local health officer for the county served.

Sec. 233. RCW 70.12.030 and 1945 c 46 s 1 are each amended to read as follows:

Any county, ((~~first class city~~)) combined city-county health department, or health district is hereby authorized and empowered to create a "public health pooling fund", hereafter called the "fund", for the efficient management and control of all moneys coming to such county, ((~~first class city~~)) combined department, or district for public health purposes.

((~~"Health district" as used herein may mean all territory consisting of one or more counties and all cities with a population of one hundred thousand or less, and towns therein.~~))

Sec. 234. RCW 70.12.050 and 1945 c 46 s 3 are each amended to read as follows:

All expenditures in connection with salaries, wages and operations incurred in carrying on the health department of the county, ((~~first class city~~)) combined city-county health department, or health district shall be paid out of such fund.

Sec. 235. RCW 70.46.020 and 1967 ex.s. c 51 s 6 are each amended to read as follows:

Health districts consisting of two or more counties may be created whenever two or more boards of county commissioners shall by resolution establish a district for such purpose. Such a district shall consist of all the area of the combined counties ((~~including all cities and towns except cities of over one hundred thousand population~~)). The district board of health of such a district shall consist of not less than seven members, including two representatives from each county who are members of the board of county commissioners and who are appointed by the board of county commissioners of each county within the district, and shall have a jurisdiction coextensive with the combined boundaries. ((The remaining members shall be representatives of the cities and towns in the district selected by mutual agreement of the legislative bodies of the cities and towns concerned from their membership, taking into consideration the financial contribution of such cities and towns and representation from the several classifications of cities and towns.))

At the first meeting of a district board of health the members shall elect a ((~~chairman~~)) chair to serve for a period of one year.

Sec. 236. RCW 70.46.060 and 1967 ex.s. c 51 s 11 are each amended to read as follows:

The district board of health shall constitute the local board of health for all the territory included in the health district, and shall supersede and exercise all the powers and perform all the duties by law vested in the county ((~~or city or town~~)) board of health of any county((~~, city or town~~)) included in the health district((~~, except as otherwise in chapter 70.05 RCW and RCW 70.46.020 through 70.46.090 provided~~)).

Sec. 237. RCW 70.46.080 and 1971 ex.s. c 85 s 10 are each amended to read as follows:

Each health district shall establish a fund to be designated as the "district health fund", in which shall be placed all sums received by the district from any source, and out of which shall be expended all sums disbursed by the district. ((~~The county treasurer of the county in the district embracing only one county; or,~~)) In a district composed of more than one county the county treasurer of the county having the largest population shall be the custodian of the fund, and the county auditor of said county shall keep the record of the receipts and disbursements, and shall draw and the county treasurer shall honor and pay all warrants, which shall be approved before issuance and payment as directed by the board((: PROVIDED, That in local health departments wherein a city of over one hundred thousand population is a part of said department, the local board of health may pool the funds available for public health purposes in the office of the city treasurer in a special pooling fund to be established and which shall be expended as set forth above)).

Each county((~~, city or town~~)) which is included in the district shall contribute such sums towards the expense for maintaining and operating the district as shall be agreed upon between it and the local board of health in accordance with guidelines established by the state board of health ((after consultation with the Washington state association of counties and the association of Washington cities. In the event that no agreement can be reached between the district board of health and the county, city or town, the matter shall be resolved by a board of arbitrators to consist of a representative of the district board of health, a representative from the county, city or town involved, and a third representative to be appointed by the two representatives, but if they are unable to agree, a representative shall be appointed by a judge in the county in which the city or town is located. The determination of the proportionate share to be paid by a county, city or town shall be binding on all parties. Payments into the fund of the district may be made by the county or city or town members during the first year of membership in said district from any funds of the respective county, city or town as would otherwise be available for expenditures for health facilities and services, and thereafter the members shall include items in their respective budgets for payments to finance the health district)).

Sec. 238. RCW 70.46.085 and 1967 ex.s. c 51 s 20 are each amended to read as follows:

The expense of providing public health services shall be borne by each county((~~, city or town~~)) within the health district((, and the local health officer shall certify the amount agreed upon or as determined pursuant to RCW 70.46.080, and remaining unpaid by each county, city or town to the fiscal or warrant issuing officer of such county, city or town.

If the expense as certified is not paid by any county, city or town within thirty days after the end of the fiscal year, the local health officer shall certify the amount due to the auditor of the county in which the governmental unit is situated who shall promptly issue his warrant on the county treasurer payable out of the current expense fund of the county, which fund shall be reimbursed by the county auditor out of the money due said governmental unit at the next monthly settlement or settlements of the collection of taxes and shall be transferred to the current expense fund)).

Sec. 239. RCW 70.46.090 and 1967 ex.s. c 51 s 21 are each amended to read as follows:

Any county ((~~or any city or town~~)) may withdraw from membership in said health district any time after it has been within the district for a period of two years, but no withdrawal shall be effective except at the end of the calendar year in which the county((~~, city or town~~)) gives at least six months' notice of its intention to withdraw at the end of the calendar year. No withdrawal shall entitle any member to a refund of any moneys paid to the district nor relieve it of any obligations to pay to the district all sums for which it obligated itself due and owing by it to the district for the year at the end of which the withdrawal is to be effective: PROVIDED, That any county((~~, city or town~~)) which withdraws from membership in said health district shall immediately establish a health department or provide health services which shall meet the standards for health services promulgated by the state board of health: PROVIDED FURTHER, That no local health department shall be deemed to provide adequate public health services unless there is at least one full time professionally trained and qualified physician as set forth in RCW 70.05.050.

Sec. 240. RCW 70.46.120 and 1963 c 121 s 1 are each amended to read as follows:

In addition to all other powers and duties, health districts shall have the power to charge fees in connection with the issuance or renewal of a license or permit required by law: PROVIDED, That the fees charged shall not exceed the actual cost involved in issuing or renewing the license or permit((: PROVIDED FURTHER, That no fees shall be charged pursuant to this section within the corporate limits of any city or town which prior to the enactment of this section charged fees in connection with the issuance or renewal of a license or permit pursuant to city or town ordinance and where said city or town makes a direct contribution to said health district, unless such city or town expressly consents thereto)).

Sec. 241. RCW 82.44.110 and 1991 c 199 s 221 are each amended to read as follows:

The county auditor shall regularly, when remitting license fee receipts, pay over and account to the director of licensing for the excise taxes collected under the provisions of this chapter. The director shall forthwith transmit the excise taxes to the state treasurer.

(1) The state treasurer shall deposit the excise taxes collected under RCW 82.44.020(1) as follows:

(a) 1.60 percent into the motor vehicle fund to defray administrative and other expenses incurred by the department in the collection of the excise tax.

(b) 8.15 percent into the Puget Sound capital construction account in the motor vehicle fund.

(d) ((~~8.83~~)) 5.88 percent into the general fund to be distributed under RCW 82.44.155.

(e) 4.75 percent into the municipal sales and use tax equalization account in the general fund created in RCW 82.14.210.

(f) 1.60 percent into the county sales and use tax equalization account in the general fund created in RCW 82.14.200.

(g) 62.6440 percent into the general fund through June 30, 1993, 57.6440 percent into the general fund beginning July 1, 1993, and 66 percent into the general fund beginning January 1, 1994.

(h) 5 percent into the transportation fund created in RCW 82.44.180 beginning July 1, 1993.

(i) 5.9686 percent into the county criminal justice assistance account created in RCW 82.14.310 through December 31, 1993.

(j) 1.1937 percent into the municipal criminal justice assistance account for distribution under RCW 82.14.320 through December 31, 1993.

(k) 1.1937 percent into the municipal criminal justice assistance account for distribution under RCW 82.14.330 through December 31, 1993.

(l) 2.95 percent into the general fund to be distributed by the state treasurer to county health departments to be used exclusively for public health. The state treasurer shall distribute these funds proportionately among the counties based on population as determined by the most recent United States census.

(2) The state treasurer shall deposit the excise taxes collected under RCW 82.44.020(2) into the transportation fund.

(3) The state treasurer shall deposit the excise tax imposed by RCW 82.44.020(3) into the air pollution control account created by RCW 70.94.015.

Sec. 242. RCW 82.44.155 and 1991 c 199 s 223 are each amended to read as follows:

When distributions are made under RCW 82.44.150, the state treasurer shall apportion and distribute the motor vehicle excise taxes deposited into the general fund under RCW 82.44.110((~~(4)~~)) (1)(d) to the cities and towns ratably on the basis of population as last determined by the office of financial management. When so apportioned, the amount payable to each such city and town shall be transmitted to the city treasurer thereof, and shall be used by the city or town for the purposes of police and fire protection ((~~and the preservation of the public health~~)) in the city or town, and not otherwise. If it is adjudged that revenue derived from the excise taxes imposed by RCW 82.44.020 (1) and (2) cannot lawfully be apportioned or distributed to cities or towns, all moneys directed by this section to be apportioned and distributed to cities and towns shall be credited and transferred to the state general fund.

NEW SECTION. Sec. 243. RCW 70.08.010, as amended by this act, shall be recodified in chapter 70.05 RCW.

NEW SECTION. Sec. 244. The following acts or parts of acts are each repealed:

(1) RCW 70.05.005 and 1989 1st ex.s. c 9 s 243;

(2) RCW 70.05.020 and 1967 ex.s. c 51 s 2;

(3) RCW 70.05.132 and 1984 c 25 s 9 & 1983 1st ex.s. c 39 s 6;

(4) RCW 70.05.145 and 1983 1st ex.s. c 39 s 5;

(5) RCW 70.08.005 and 1989 1st ex.s. c 9 s 244;

(6) RCW 70.08.020 and 1985 c 124 s 2 & 1949 c 46 s 2;

(7) RCW 70.08.030 and 1985 c 124 s 3, 1984 c 25 s 3, & 1949 c 46 s 3;

(8) RCW 70.08.040 and 1985 c 124 s 4, 1980 c 57 s 1, & 1949 c 46 s 4;

(9) RCW 70.08.050 and 1991 c 3 s 314, 1979 c 141 s 85, & 1949 c 46 s 8;

(10) RCW 70.08.060 and 1961 ex.s. c 5 s 4 & 1949 c 46 s 9;

(11) RCW 70.08.070 and 1982 c 203 s 1, 1980 c 57 s 2, & 1949 c 46 s 5;

(12) RCW 70.08.080 and 1980 c 57 s 3 & 1949 c 46 s 6;

(13) RCW 70.08.090 and 1949 c 46 s 7;

(14) RCW 70.08.100 and 1949 c 46 s 10;

(15) RCW 70.08.110 and 1949 c 46 s 11;

(16) RCW 70.08.900 and 1980 c 57 s 4;

(17) RCW 70.12.005 and 1989 1st ex.s. c 9 s 245;

(18) RCW 70.46.030 and 1991 c 363 s 141, 1969 ex.s. c 70 s 1, 1967 ex.s. c 51 s 5, & 1945 c 183 s 3;

(19) RCW 70.46.040 and 1967 ex.s. c 51 s 7 & 1945 c 183 s 4; and

(20) RCW 70.46.050 and 1967 ex.s. c 51 s 8, 1957 c 100 s 1, & 1945 c 183 s 5.

NEW SECTION. Sec. 245. It is hereby requested that the governing authorities of the association of Washington cities, the Washington state association of counties, and the Washington association of county officials jointly initiate a study and develop consensus recommendations regarding implementation of the provisions of sections 222 through 244 of this act. The study and recommendations should at a minimum include consideration of the fiscal impact of these sections on counties, the desirability of maintaining a process whereby city officials can effectively communicate concerns regarding the delivery of public health services to both the counties and the state, the need for larger cities to be able to continue to provide supplemental health care services when needed, and other matters as the three associations agree are of substance in the implementation of sections 222 through 244 of this act. The agreed upon recommendations shall be presented to the senate health and human services and house of representatives health care committees prior to December 31, 1993.

F. DATA COLLECTION

Sec. 246. RCW 70.170.100 and 1990 c 269 s 12 are each amended to read as follows:

(1) To promote the public interest consistent with the purposes of chapter . . ., Laws of 1993 (this act), the department is responsible for the development, implementation, and custody of a state-wide ((~~hospital~~)) health care data system, with policy direction and oversight to be provided by the Washington health services commission. As part of the design stage for development of the system, the department shall undertake a needs assessment of the types of, and format for, ((~~hospital~~)) health care data needed by consumers, purchasers, health care payers, ((~~hospitals~~)) providers, and state government as consistent with the intent of chapter . . ., Laws of 1993 (this act) ((~~chapter~~)). The department shall identify a set of ((~~hospital~~)) health care data elements and report specifications which satisfy these needs. The ((~~council~~)) Washington health services commission, created by section 303 of this act, shall review the design of the data system ((~~and~~)) may ((~~direct the department to~~)) establish a technical advisory committee on health data and may recommend that the department contract with a private vendor for assistance in the design of the data system or for any part of the work to be performed under this section. The data elements, specifications, and other ((~~design~~)) distinguishing features of this data system shall be made available for public review and comment and shall be published, with comments, as the department's first data plan by ((~~January 1, 1990~~)) July 1, 1994.

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

~~(3)~~)) In designing the state-wide ((~~hospital~~)) health care data system and any data plans, the department shall identify ((~~hospital~~)) health care data elements relating to ((~~both hospital finances~~)) health care costs, the quality of health care services, the outcomes of health care services, and ((~~the~~)) use of ((~~services by patients~~)) health care by consumers. Data elements ((~~relating to hospital finances~~)) shall be reported ((~~by hospitals~~)) as the Washington health services commission directs by reporters in conformance with a uniform ((~~system of~~)) reporting ((~~as specified by the department and shall~~)) system established by the department, which shall be adopted by reporters. "Reporter" means an individual or 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 or Title 48 RCW, that is primarily engaged in furnishing or insuring for medical, surgical, and other health services to persons. In the case of hospitals this includes data elements identifying each hospital's revenues, expenses, contractual allowances, charity care, bad debt, other income, total units of inpatient and outpatient services, and other financial information reasonably necessary to fulfill the purposes of chapter . . ., Laws of 1993 (this ((~~chapter~~)) act), for hospital activities as a whole and, as feasible and appropriate, for specified classes of hospital purchasers and payers. Data elements relating to use of hospital services by patients shall, at least initially, be the same as those currently compiled by hospitals through inpatient discharge abstracts ((~~and reported to the Washington state hospital commission~~)). The commission and the department shall encourage and permit reporting by electronic transmission or hard copy as is practical and economical to reporters.

((~~(4)~~)) (3) The state-wide ((~~hospital~~)) health care data system shall be uniform in its identification of reporting requirements for ((~~hospitals~~)) reporters across the state to the extent that such uniformity is ((~~necessary~~)) useful to fulfill the purposes of chapter . . ., Laws of 1993 (this ((~~chapter~~)) act). Data reporting requirements may reflect differences ((~~in hospital size; urban or rural location; scope, type, and method of providing service; financial structure; or other pertinent distinguishing factors~~)) that involve pertinent distinguishing features as determined by the Washington health services commission by rule. So far as ((~~possible~~)) is practical, the data system shall be coordinated with any requirements of the trauma care data registry as authorized in RCW 70.168.090, the federal department of health and human services in its administration of the medicare program, ((~~and~~)) the state in its role of gathering public health statistics, or any other payer program of consequence so as to minimize any unduly burdensome reporting requirements imposed on ((~~hospitals~~)) reporters.

((~~(5)~~)) (4) In identifying financial reporting requirements under the state-wide ((~~hospital~~)) health care data system, the department may require both annual reports and condensed quarterly reports from reporters, so as to achieve both accuracy and timeliness in reporting, but shall craft such requirements with due regard of the data reporting burdens of reporters.

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

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

~~(8)~~)) (5) The ((~~hospital~~)) health care data collected ((~~and~~)), maintained, and studied by the department or the Washington health services commission shall only be available for retrieval in original or processed form to public and private requestors and shall be available within a reasonable period of time after the date of request. The cost of retrieving data for state officials and agencies shall be funded through the state general appropriation. The cost of retrieving data for individuals and organizations engaged in research or private use of data or studies shall be funded by a fee schedule developed by the department which reflects the direct cost of retrieving the data or study in the requested form.

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

Sec. 247. RCW 70.170.110 and 1989 1st ex.s. c 9 s 511 are each amended to read as follows:

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

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

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

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

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

NEW SECTION. Sec. 248. A new section is added to chapter 70.170 RCW to read as follows:

Notwithstanding the provisions of chapter 42.17 RCW, any material contained within the state-wide health care data system or in the files of either the department or the Washington health services commission shall be subject to the following limitations: (1) Records obtained, reviewed by, or on file that contain information concerning medical treatment of individuals shall be exempt from public inspection and copying; and (2) any actuarial formulas, statistics, and assumptions submitted by a certified health plan to the commission or department upon request shall be exempt from public inspection and copying in order to preserve trade secrets or prevent unfair competition.

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

NEW SECTION. Sec. 249. A new section is added to chapter 70.170 RCW to read as follows:

The Washington health services commission shall have access to all health data presently available to the secretary of health. To the extent possible, the commission shall use existing data systems and coordinate among existing agencies. The department of health shall be the designated depository agency for all health data collected pursuant to chapter . . ., Laws of 1993 (this act). The following data sources shall be developed or made available:

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

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

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

NEW SECTION. Sec. 250. A new section is added to chapter 70.170 RCW to read as follows:

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

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

G. HEALTH PROFESSIONAL SHORTAGES

NEW SECTION. Sec. 251. LEGISLATIVE INTENT. The legislature finds that the successful implementation of health care reform will depend on a sufficient availability of primary health care providers throughout the state. Many rural and medically underserved urban areas lack primary health care providers and because of this basic health care services are limited or unavailable to populations living in these areas. The legislature has in recent years initiated new programs to address these provider shortage needs but funding has been insufficient and additional specific providers shortage needs still remain.

Sec. 252. RCW 28B.125.010 and 1991 c 332 s 5 are each amended to read as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sec. 253. RCW 28B.115.080 and 1991 c 332 s 21 are each amended to read as follows:

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

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

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

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

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

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

Sec. 254. RCW 70.185.030 and 1991 c 332 s 9 are each amended to read as follows:

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

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

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

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

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

NEW SECTION. Sec. 255. A new section is added to chapter 70.185 RCW to read as follows:

(1) The department may develop a mechanism for underserved rural or urban communities to contract with education and training programs for student positions above the full time equivalent lids. The goal of this program is to provide additional capacity, educating students who will practice in underserved communities.

(2) Eligible education and training programs are those programs approved by the department that lead to eligibility for a credential as a credentialed health care professional. Eligible professions are those licensed under chapters 18.57, 18.57A, 18.71, and 18.71A RCW and advanced registered nurse practitioners and certified nurse midwives licensed under chapter 18.88 RCW, and may include other providers identified as needed in the health personnel resource plan.

(3) Students participating in the community contracted educational positions shall meet all applicable educational program requirements and provide assurances, acceptable to the community, that they will practice in the sponsoring community following completion of education and necessary licensure.

(4) Participants in the program incur an obligation to repay any contracted funds with interest set by state law, unless they serve at least three years in the sponsoring community.

(5) The department may provide funds to communities for use in contracting.

NEW SECTION. Sec. 256. A new section is added to chapter 70.185 RCW to read as follows:

AREA HEALTH EDUCATION CENTERS. The secretary may establish and contract with area health education centers in the eastern and western parts of the state. Consistent with the recruitment and retention objectives of this chapter, the centers shall provide or facilitate the provision of health professional educational and continuing education programs that strengthen the delivery of primary health care services in rural and medically underserved urban areas of the state. The center shall assist in the development and operation of health personnel recruitment and retention programs that are consistent with activities authorized under this chapter. The centers shall further provide technical expertise in the development of well managed health care delivery systems in rural Washington consistent with the goals and objectives of chapter . . ., Laws of 1993 (this act).

Sec. 257. RCW 43.70.460 and 1992 c 113 s 2 are each amended to read as follows:

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

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

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

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

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

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

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

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

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

Sec. 258. RCW 43.70.470 and 1992 c 113 s 3 are each amended to read as follows:

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

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

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

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

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

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

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

NEW SECTION. Sec. 259. MEDICAL SCHOOL GRADUATES SERVING IN RURAL AND MEDICALLY UNDERSERVED AREAS OF THE STATE--LEGISLATIVE INTENT. The legislature finds that the shortage of primary care physicians practicing in rural and medically underserved areas of the state has created a severe public health and safety problem. If unaddressed, this problem is expected to worsen with health care reform since an increased demand for primary care services will only contribute further to these shortages.

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

NEW SECTION. Sec. 260. MEDICAL SCHOOL PRIMARY CARE PHYSICIAN SHORTAGE PLAN DEVELOPMENT. The University of Washington medical school shall prepare a primary care physician shortage plan. The plan shall identify specific activities that the school of medicine will pursue to increase the number of Washington residents serving as primary care physicians in rural and medically underserved urban areas of the state. A goal of the plan shall be to assure that by 2000 no fewer than fifty percent of all medical school graduates who are Washington state residents at the time of matriculation will enter into primary care residencies, to the extent possible, in Washington state. The plan shall also assure that the medical school will establish as among its highest training priorities the distribution of primary care physician graduates from the school, and its associated postgraduate residencies, to rural and medically underserved urban areas. Pursuant to this, the school shall establish the goal of assuring that by 1995 the annual number of graduates from the family practice residency network entering rural or medically underserved practices shall be increased by forty percent over a baseline period from 1988 to 1990. A further goal shall be to establish and make operational by 1997 at least two additional family practice residency programs within the state in geographic areas identified by the plan as underserved in family practice. The geographic areas identified by the plan as being underserved by family practice physicians shall be consistent with any such similar designations as may be made in the health personnel resource plan as authorized under chapter 28B.125 RCW. The plan shall be submitted to the health policy committees of the legislature no later than December 1, 1993, and shall be implemented within current biennial appropriations for the University of Washington school of medicine. Expansions of the family practice residency network shall be made subject to additional appropriations, including appropriations made in this act.

NEW SECTION. Sec. 261. TRANSFER OF AUTHORITY TO PURCHASE SERVICES FROM COMMUNITY HEALTH CENTERS. (1) State general funds appropriated to the department of health for the purposes of funding community health centers to provide primary medical and dental care services, migrant health services, and maternity health care services shall be transferred to the state health care authority. Any related administrative funds expended by the department of health for this purpose shall also be transferred to the health care authority. The health care authority shall exclusively expend these funds through contracts with community health centers to provide primary medical and dental care services, migrant health services, and maternity care services. The administrator of the health care authority shall establish requirements necessary to assure community health centers provide quality health care services that are appropriate and effective and are delivered in a cost-efficient manner. The administrator shall further assure community health centers have appropriate referral arrangements for acute care and medical specialty services not provided by the community health centers.

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

H. JOINT UNDERWRITING AUTHORITY FOR LONG-TERM CARE

NEW SECTION. Sec. 262. A new section is added to Title 48 RCW to read as follows:

The insurance commissioner shall by July 1997 create a joint underwriting authority for long-term care.

I. TAXES

Sec. 263. RCW 82.02.030 and 1990 c 42 s 319 are each amended to read as follows:

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

(2) The rate of the additional taxes under RCW 82.26.020(2) shall be 92 percent through June 30, 1994, 101 percent for the period July 1, 1994, through June 30, 1995, 143 percent for the period July 1, 1995, through June 30, 1996, 189 percent from July 1, 1996, through June 30, 1997, and 194 percent thereafter; and

(3) The rate of the additional taxes under RCW 82.08.150(4) shall be ((~~fourteen~~)) 32 percent through June 30, 1994, 38 percent for the period July 1, 1994, through June 30, 1995, 86 percent for the period July 1, 1995, through June 30, 1996, 111 percent from July 1, 1996, through June 30, 1997, 135 percent from July 1, 1997, to June 30, 1998, and 152 percent thereafter.

The additional moneys collected under subsections (2) and (3) of this section shall be deposited in the Washington health services trust account created under section 355 of this act.

Sec. 264. RCW 82.08.020 and 1992 c 194 s 9 are each amended to read as follows:

(1) There is levied and there shall be collected a tax on each retail sale in this state equal to six and five-tenths percent of the selling price.

(2) There is levied and there shall be collected an additional tax on each retail car rental, regardless of whether the vehicle is licensed in this state, equal to five and nine-tenths percent of the selling price. Ninety-one percent of the revenue collected under this subsection shall be deposited and distributed in the same manner as motor vehicle excise tax revenue collected under RCW 82.44.020(1). Nine percent of the revenue collected under this subsection shall be deposited in the transportation fund and distributed in the same manner as motor vehicle excise tax revenue collected under RCW 82.44.020(2).

(3) There is levied and there shall be collected an additional tax on each retail sale of beer as defined by RCW 66.04.010(2) equal to .19 percent of the selling price for the period July 1, 1993, through June 30, 1994, .29 percent of the selling price for the period July 1, 1994, through June 30, 1995, .83 percent of the selling price for the period July 1, 1995, through June 30, 1996, 1.10 percent of the selling price for the period July 1, 1996, through June 30, 1997, 1.35 percent of the selling price for the period July 1, 1997, through June 30, 1998, and 1.5 percent of the selling price from July 1, 1998, and thereafter. The revenue collected under this subsection shall be deposited in the Washington health services trust account created under section 355 of this act.

(4) There is levied and there shall be collected an additional tax on each retail sale of wine as defined by RCW 66.04.010(34) equal to .19 percent of the selling price for the period July 1, 1993, through June 30, 1994, .29 percent of the selling price for the period July 1, 1994, through June 30, 1995, .83 percent of the selling price for the period July 1, 1995, through June 30, 1996, 1.10 percent of the selling price for the period July 1, 1996, through June 30, 1997, 1.35 percent of the selling price for the period July 1, 1997, through June 30, 1998, and 1.5 percent of the selling price from July 1, 1998, and thereafter. The revenue collected under this subsection shall be deposited in the Washington health services trust account created under section 355 of this act.

(5) The taxes imposed under this chapter shall apply to successive retail sales of the same property.

((~~(4)~~)) (6) The rates provided in this section apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

Sec. 265. RCW 82.24.020 and 1989 c 271 s 504 are each amended to read as follows:

(1) There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling, possession or distribution of all cigarettes, in an amount equal to the rate of ((~~eleven~~)) twenty-one and one-half mills per cigarette through June 30, 1994, twenty-two and one-half mills per cigarette for the period July 1, 1994, through June 30, 1995, twenty-seven and one-half mills per cigarette for the period July 1, 1995, through June 30, 1996, thirty-three mills per cigarette from July 1, 1996, through June 30, 1997, and thirty-three and one-half mills per cigarette thereafter. The additional moneys collected under this subsection shall be deposited in the Washington health services trust account created under section 355 of this act.

(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 or her 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.

NEW SECTION. Sec. 266. 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 pay a tax on or before the first day of March of each year to the state treasurer through the insurance commissioner's office on amounts received or collected by the health maintenance organization during the preceding calendar year as prepayments for comprehensive health care services.

(2) The amount of the tax shall be equal to the total amount of all prepayments for comprehensive health care services received by the health maintenance organization during the calendar year multiplied by the rate of .25 percent for calendar year 1994; .5 percent for calendar year 1995; 1.5 percent for calendar year 1996; 1.75 percent for calendar year 1997; and 2.0 percent thereafter.

(3) Health maintenance organizations must prepay their tax liability. The minimum amount of the prepayments shall be percentages of the health maintenance organization's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year. For the prepayment of taxes due during calendar year 1994, the minimum amount of the prepayments shall be percentages of the health maintenance organization's tax obligation that would have been due had the tax been in effect during calendar year 1993. The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

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

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

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

(4) The moneys collected under this section shall be deposited in the Washington health services trust account created under section 355 of this act.

NEW SECTION. Sec. 267. 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 pay a tax on or before the first day of March of each year to the state treasurer through the insurance commissioner's office on amounts received or collected by the health care service contractor during the preceding calendar year as prepayments for health care services.

(2) The amount of the tax shall be equal to the total amount of all prepayments for health care services received by the health care service contractor during the calendar year multiplied by the rate of .25 percent for calendar year 1994; .5 percent for calendar year 1995; 1.5 percent for calendar year 1996; 1.75 percent for calendar year 1997; and 2 percent thereafter.

(3) Health care service contractors must prepay their tax liability. The minimum amount of the prepayments shall be percentages of the health care service contractor's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year. For the prepayment of taxes due during calendar year 1994, the minimum amount of the prepayments shall be percentages of the health care service contractor's tax obligation that would have been due had the tax been in effect during calendar year 1993. The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

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

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

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

(4) The moneys collected under this section shall be deposited in the Washington health services trust account created under section 355 of this act.

NEW SECTION. Sec. 268. A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to any health maintenance organization in respect to prepayments for health care services that are taxable under section 266 of this act, to any health care service contractor in respect to prepayments for health care services that are taxable under section 267 of this act, or to any certified health plan in respect to premiums that are taxable under section 271 of this act.

NEW SECTION. Sec. 269. RCW 82.04.4288 and 1980 c 37 s 9 are each repealed.

Sec. 270. RCW 82.04.260 and 1991 c 272 s 15 are each amended to read as follows:

(1) Upon every person engaging within this state in the business of buying wheat, oats, dry peas, dry beans, lentils, triticale, corn, rye and barley, but not including any manufactured or processed products thereof, and selling the same at wholesale; the tax imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of one one-hundredth of one percent.

(2) Upon every person engaging within this state in the business of manufacturing wheat into flour, barley into pearl barley, soybeans into soybean oil, or sunflower seeds into sunflower oil; as to such persons the amount of tax with respect to such business shall be equal to the value of the flour, pearl barley, or oil manufactured, multiplied by the rate of one-eighth of one percent.

(3) Upon every person engaging within this state in the business of splitting or processing dried peas; as to such persons the amount of tax with respect to such business shall be equal to the value of the peas split or processed, multiplied by the rate of one-quarter of one percent.

(4) Upon every person engaging within this state in the business of manufacturing seafood products which remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing by that person; as to such persons the amount of tax with respect to such business shall be equal to the value of the products manufactured, multiplied by the rate of one-eighth of one percent.

(5) Upon every person engaging within this state in the business of manufacturing by canning, preserving, freezing or dehydrating fresh fruits and vegetables; as to such persons the amount of tax with respect to such business shall be equal to the value of the products canned, preserved, frozen or dehydrated multiplied by the rate of three-tenths of one percent.

(6) Upon every nonprofit corporation and nonprofit association engaging within this state in research and development, as to such corporations and associations, the amount of tax with respect to such activities shall be equal to the gross income derived from such activities multiplied by the rate of forty-four one-hundredths of one percent.

(7) Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of twenty-five one-hundredths of one percent through June 30, 1986, and one-eighth of one percent thereafter.

(8) Upon every person engaging within this state in the business of making sales, at retail or wholesale, of nuclear fuel assemblies manufactured by that person, as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the assemblies multiplied by the rate of twenty-five one-hundredths of one percent.

(9) Upon every person engaging within this state in the business of manufacturing nuclear fuel assemblies, as to such persons the amount of tax with respect to such business shall be equal to the value of the products manufactured multiplied by the rate of twenty-five one-hundredths of one percent.

(10) Upon every person engaging within this state in the business of acting as a travel agent; as to such persons the amount of the tax with respect to such activities shall be equal to the gross income derived from such activities multiplied by the rate of twenty-five one-hundredths of one percent.

(11) Upon every person engaging within this state in business as an international steamship agent, international customs house broker, international freight forwarder, vessel and/or cargo charter broker in foreign commerce, and/or international air cargo agent; as to such persons the amount of the tax with respect to only international activities shall be equal to the gross income derived from such activities multiplied by the rate of thirty-three one-hundredths of one percent.

(12) Upon every person engaging within this state in the business of stevedoring and associated activities pertinent to the movement of goods and commodities in waterborne interstate or foreign commerce; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds derived from such activities multiplied by the rate of thirty-three one hundredths of one percent. Persons subject to taxation under this subsection shall be exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this subsection. Stevedoring and associated activities pertinent to the conduct of goods and commodities in waterborne interstate or foreign commerce are defined as all activities of a labor, service or transportation nature whereby cargo may be loaded or unloaded to or from vessels or barges, passing over, onto or under a wharf, pier, or similar structure; cargo may be moved to a warehouse or similar holding or storage yard or area to await further movement in import or export or may move to a consolidation freight station and be stuffed, unstuffed, containerized, separated or otherwise segregated or aggregated for delivery or loaded on any mode of transportation for delivery to its consignee. Specific activities included in this definition are: Wharfage, handling, loading, unloading, moving of cargo to a convenient place of delivery to the consignee or a convenient place for further movement to export mode; documentation services in connection with the receipt, delivery, checking, care, custody and control of cargo required in the transfer of cargo; imported automobile handling prior to delivery to consignee; terminal stevedoring and incidental vessel services, including but not limited to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

(13) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 43.145.010; as to such persons the amount of the tax with respect to such business shall be equal to the gross income of the business, excluding any fees imposed under chapter 43.200 RCW, multiplied by the rate of fifteen percent.

(a) The rate specified in this subsection shall be reduced to ten percent on May 20, 1991.

(b) The rate specified in this subsection shall be further reduced to five percent on January 1, 1992.

If the gross income of the taxpayer is attributable to activities both within and without this state, the gross income attributable to this state shall be determined in accordance with the methods of apportionment required under RCW 82.04.460.

(14) Upon every person engaging within this state as an insurance agent, insurance broker, or insurance solicitor licensed under chapter 48.17 RCW; as to such persons, the amount of the tax with respect to such licensed activities shall be equal to the gross income of such business multiplied by the rate of one percent.

(15) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, as to such persons, the amount of tax with respect to such activities shall be equal to the gross income of the business multiplied by the rate of 1.5 percent through June 30, 1996, 1.75 percent for the period July 1, 1996, through June 30, 1997, and 2.0 percent thereafter.

The moneys collected under subsection (15) of this section shall be deposited in the Washington health services trust account created under section 355 of this act.

NEW SECTION. Sec. 271. A new section is added to chapter 48.14 RCW to read as follows:

(1) Each certified health plan, as defined by section 302 of this act, shall pay a tax on or before the first day of March of each year to the state treasurer through the insurance commissioner's office on premiums received or collected by the certified health plan during the preceding calendar year.

(2) The amount of the tax shall be equal to the total amount of all premiums collected or received by the certified health plan during the calendar year multiplied by the rate of .5 percent for calendar year 1995; 1.5 percent for calendar year 1996; 1.75 percent for calendar year 1997; and 2 percent thereafter.

(3) Certified health plans must prepay their tax liability. The minimum amount of the prepayments shall be percentages of the certified health plan's tax obligation for the preceding calendar year recomputed using the rate in effect for the current year: PROVIDED, That for the prepayment of taxes due during calendar year 1995, the minimum amount of the prepayments shall be percentages of the certified health plan's tax obligation that would have been due had the tax been in effect during calendar year 1994. The tax prepayments shall be paid to the state treasurer through the commissioner's office by the due dates and in the following amounts:

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

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

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

(4) The moneys collected under this section shall be deposited in the Washington health services trust account created under section 355 of this act.

Sec. 272. RCW 82.04.4289 and 1981 c 178 s 2 are each amended to read as follows:

((~~In computing tax there may be deducted from the measure of tax~~)) This chapter does not apply to amounts derived as compensation for services rendered to patients or from sales of prescription drugs as defined in RCW 82.08.0281 furnished as an integral part of services rendered to patients by ((~~a hospital, as defined in chapter 70.41 RCW, which is operated as a nonprofit corporation,~~)) a kidney dialysis facility operated as a nonprofit corporation, ((~~whether or not operated in connection with a hospital,~~)) nursing homes and homes for unwed mothers operated as religious or charitable organizations, but only if no part of the net earnings received by such an institution inures directly or indirectly, to any person other than the institution entitled to deduction hereunder. ((~~In no event shall any such deduction be allowed, unless the hospital building is entitled to exemption from taxation under the property tax laws of this state.~~))

J. APPROPRIATIONS

NEW SECTION. Sec. 273. (1) The sum of one hundred sixty-three million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the Washington health services trust account to the personal health services account for the purposes of expansion of the basic health plan to state residents with incomes below two hundred percent of poverty by June 30, 1995.

(2) The sum of thirty million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the Washington health services trust account to the public health account to be used for the purposes of the public health services improvement plan in section 355(2)(b) of this act and to meet the need for immediate improvements in public health programs including reducing the use of tobacco by minors and adults, containing and eradicating tuberculosis, reducing the incidences of sexually transmitted diseases, reducing teen pregnancy and slowing the spread of HIV infection.

(3) The sum of six million five hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the Washington health services trust account to the health professions, data systems, and research account for the purposes of section 355(2)(c) of this act.

(4) The sum of five million seven hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the Washington health services trust account to the department of health for the following purposes: Four hundred thousand dollars for preparation of the health personnel resource plan under chapter 28B.125 RCW, one million dollars for community-based health professional recruitment and retention activities under chapter 70.185 RCW, two hundred thousand dollars for the malpractice insurance program under RCW 43.70.460 and 43.70.470, three million five hundred thousand dollars for training of volunteer emergency medical services personnel under chapter 70.168 RCW, and six hundred thousand dollars to be distributed as needed for the studies authorized in sections 362, 363, and 364 of this act.

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

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

(7) The sum of five million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the Washington health services trust account to the health care authority exclusively for the purposes of increasing the number of migrant, homeless, refugee, and other persons receiving primary health care services through community health centers. These funds are intended as an increase over the funding levels provided for in the biennium ending June 30, 1993. These funds shall not be used to supplant existing funds received by the community health centers from federal, state, local government, private, and other sources.

PART III. HEALTH AND MEDICAL SYSTEM REFORM

NEW SECTION. Sec. 301. INTENT. The legislature intends that chapter . . ., Laws of 1993 (this act) establish structures, processes, and specific financial limits to stabilize the overall cost of medical care within the economy, to reduce the demand for unneeded medical care, to provide universal access to essential health and medical services, from all health care providers licensed in this state to provide such services to improve public health, and to ensure that medical system costs do not undermine the financial viability of nonmedical care businesses.

NEW SECTION. Sec. 302. DEFINITIONS. In this chapter and sections 317 through 339 and 346 through 350 of this act, unless the context otherwise requires:

(1) "Certified health plan" or "plan" means an entity certified by the insurance commissioner according to the provisions of section 319 of this act.

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

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

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

(5) "Employee" means a person who is in the employment of an employer, as defined by chapter 50.04 RCW. A full-time employee is an employee who is employed at least eighty hours during a calendar month. A part-time employee is an employee that works less than eighty hours during a calendar month.

(6) "Employers' cooperative health purchasing group" or "purchasing group" means a single group of employers in each of two distinct geographical regions separated by the crest of the Cascade mountains that: (a) Has as its purpose the purchase of uniform health benefits on a group basis from certified health plans; (b) purchases the benefits only for its members' employees and dependents; (c) is composed of members whose businesses or activities are principally located in that geographical region; and (d) does not deny participation to any business, partnership, or corporation within its geographical region.

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

(8) "Enrollee point of service cost-sharing" means fees paid to certified health plans by enrollees for receipt of specific uniform benefit package services, and may include deductibles all within limits established by the commission.

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

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

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

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

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

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

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

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

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

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

(16) "State health services budget" means total funds that may be included during any fiscal year within a document developed pursuant to section 354 of this act.

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

(18) "Uniform benefit package" means those appropriate and effective health services, defined by the commission under section 347 of this act, that must be offered to all Washington residents through certified health plans.

(19) "Washington resident" or "resident" means a person who intends to reside in the state permanently or indefinitely and who did not move to Washington for the primary purpose of securing health services under sections 317 through 339 and 346 through 350 of this act. "Washington resident" also includes people and their accompanying family members who are in the state for the purpose of engaging in employment for at least one month, who did not enter the state for the primary purpose of obtaining health services. The confinement of a person in a nursing home, hospital, or other medical institution in the state shall not by itself be sufficient to qualify such person as a resident.

A. THE WASHINGTON HEALTH SERVICES COMMISSION

NEW SECTION. Sec. 303. CREATION OF COMMISSION‑-MEMBERSHIP‑-TERMS OF OFFICE‑-VACANCIES‑-SALARIES. (1) There is created an agency of state government to be known as the Washington health services commission. The commission shall consist of the insurance commissioner, the state health officer and three other members appointed by the governor with the consent of the senate. One member, who may not be either the insurance commissioner or the state health officer, shall be designated by the governor as chair and shall serve at the pleasure of the governor. Of the initial members, one shall be appointed to a term of three years, one shall be appointed to a term of four years, and one shall be appointed to a term of five years. Thereafter, members shall be appointed to five-year terms. Vacancies shall be filled by appointment for the remainder of the unexpired term of the position being vacated.

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

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

NEW SECTION. Sec. 304. ADVISORY COMMITTEES. (1) The commission shall establish a standing technical advisory committee with balanced representation including physicians, hospitals, seniors, researchers, allied health professions, business, labor, insurers, and consumers. The commission may establish ad hoc technical advisory task forces to provide advice on specific issues.

(2) The commission shall establish a "service effectiveness advisory committee" to provide technical guidance to the commission. The advisory committee shall be composed of ten to fifteen technical experts, such as general practitioners, specialty health care providers, health service researchers, health ethicists, epidemiologists, and public health experts, who reflect the state's ethnic and cultural diversity. The advisory committee shall perform several functions, such as assessing the effectiveness of the uniform benefit package based on the health status of the population.

(3) Committee members 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. 305. POWERS AND DUTIES OF THE CHAIR. The chair shall be the chief administrative officer and the appointing authority of the commission and has the following powers and duties:

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

(2) Employ personnel of the commission, in accordance with chapter 41.06 RCW, and prescribe their duties. With the approval of a majority of the commission, the chair may appoint persons to administer any entity established pursuant to subsection (8) of this section, and up to seven additional employees all of whom shall be exempt from the provisions of chapter 41.06 RCW;

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

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

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

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

(7) Preside at meetings of the commission;

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

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

NEW SECTION. Sec. 306. POWERS AND DUTIES OF THE COMMISSION. The commission has the following powers and duties:

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

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

(3) Develop a total state health services budget, according to the requirements of section 354 of this act.

(4) Adopt necessary rules in accordance with chapter 34.05 RCW to carry out the purposes of chapter . . ., Laws of 1993 (this act), provided that an initial set of draft rules establishing at least the commission's organization structure, the uniform benefit package, limits on maximum enrollee financial participation, methods for developing the state health services budget, and standards for certified health plan and health care purchasing cooperative certification, must be submitted in draft form to the legislature by January 1995.

(5) Establish, and from time to time modify, the uniform benefit package, as provided in section 347 of this act, which shall be offered to enrollees of a certified health plan. The benefit package shall be provided at no more than the maximum premium specified in subsection (6) of this section.

(6) Establish for each year a strictly community-rated maximum premium for the uniform benefits package that a certified health plan may receive. The premium cost of the uniform benefits package in 1994 shall be based upon the actuarially determined cost of providing the uniform benefit package in view of the best observed practice of managed care plans operating in Washington between 1990 and 1993. The cost of the uniform benefit 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 premium shall be reduced by two percentage points per year until the growth rate is no greater than growth in the Washington consumer price index, as determined by the office of financial management. If the commission adds services or benefits to the uniform benefit package in subsequent years, it may increase the maximum premium to reflect the actual cost experience of a sample of the state's lowest cost providers of that service, adjusted actuarially. The addition of services or benefits shall not result in a redetermination of the entire cost of the uniform benefit package.

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

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

(9) Establish maximum enrollee financial participation according to chapter . . ., Laws of 1993 (this act).

(10) For health services provided under the uniform benefits package, adopt standards for enrollment, billing, and claims processing. 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.

(11) Propose or require that certified health plans have certain practice indicators or risk management protocols for quality assurance, utilization review, or provider payment. The commission may consider indicators or protocols recommended according to section 310 of this act for these purposes.

(12) Propose or require other guidelines to certified health plans for utilization management, use of technology and methods of payment, such as diagnosis‑related groups and a resource-based relative value scale. Such guidelines may be voluntary, but shall be mandatory if the commission determines that their uniform implementation will promote improved management of care, and provide incentives for improved efficiency and effectiveness within the delivery system.

(13) Monitor the availability of health services to both populations and geographic areas, to determine whether there are residents lacking in access to necessary services. In the case where individuals or populations may appear to be denied access to certified health plans, the commission shall notify both the plan and the commissioner of such a determination. In the case of finding a geographic area with an appreciable number of residents unable to access appropriate and effective health services the commission shall adopt by rule standards by which the insurance commissioner may, in such event, then require certified health plans in closest proximity to such persons to extend their catchment areas to such persons and offer them enrollment.

(14) Adopt standards and oversee and develop policy for a state-wide health care data system as provided in chapter 70.170 RCW.

(15) Adopt standards that prevent conflict of interest by health care providers as provided in RCW 19.68.010 and section 220 of this act.

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

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

(18) Develop standards for the employer's cooperative health care purchasing group certification process according to the provisions of this chapter.

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

(20) Evaluate whether Washington is experiencing a higher percentage in in-migration of residents from other states and territories than would be expected by normal trends as a result of the availability of comprehensive subsidized health care benefits for all residents and report to the governor and the legislature their findings.

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

NEW SECTION. Sec. 307. After consultation with the state health officer and the insurance commissioner, and on the basis of evidence established by independent actuarial analysis, if the governor finds that the economic viability of a significant portion of the state's certified health plans is seriously threatened, the governor may increase the maximum premium by an amount that is no more than one hundred fifty percent of the state average rate of growth in personal income, and must immediately thereafter submit to the legislature a proposal for a new formula for adjusting the maximum premium that must be approved by each house of the legislature by a sixty percent vote.

NEW SECTION. Sec. 308. CONTINUOUS QUALITY IMPROVEMENT AND TOTAL QUALITY MANAGEMENT. To ensure the highest quality health services at the lowest total cost, the commission shall establish a total quality management system of continuous quality improvement. Such endeavor shall be based upon the recognized quality science for continuous quality improvement. The commission shall impanel a committee composed of persons from the private sector and related sciences who have broad knowledge and successful experiences in continuous quality improvement and total quality management applications. It shall be the responsibility of the committee to develop standards for a Washington state health services supplier certification process and recommend such standards to the commission for review and adoption. Once adopted, the commission shall establish a schedule, with full compliance no later than July 1, 1996, whereby all health service providers and health service facilities shall be certified prior to providing uniform benefit package services. In conjunction with the commission's total quality management efforts, the department of health shall develop a regulatory system that supports the development and maintenance of quality assurance plans throughout the medical community.

NEW SECTION. Sec. 309. Sections 301 through 308 of this act shall constitute a new chapter in Title 43 RCW.

B. PRACTICE INDICATORS

NEW SECTION. Sec. 310. A new section is added to chapter 43.70 RCW to read as follows:

PRACTICE INDICATORS. The department of health shall consult with health care providers, purchasers, health professional regulatory authorities under RCW 18.130.040, appropriate research and clinical experts, and consumers of health care services to identify specific practice areas where practice indicators and risk management protocols have been developed. Practice indicators shall be based upon expert consensus and best available scientific evidence. The department shall:

(1) Develop a definition of expert consensus and best available scientific evidence so that practice indicators can serve as a standard for excellence in the provision of health care services.

(2) Establish a process to identify and evaluate practice indicators and risk management protocols as they are developed by the appropriate professional, scientific, and clinical communities.

(3) Recommend the use of practice indicators and risk management protocols in quality assurance, utilization review, or provider payment to the health services commission.

C. HEALTH CARE LIABILITY REFORMS

NEW SECTION. Sec. 311. A new section is added to Title 48 RCW to read as follows:

MEDICAL MALPRACTICE PROVISIONS FOR CERTIFIED HEALTH PLAN PARTICIPANTS. (1) No policy for medical malpractice that insures, indemnifies, or otherwise protects a certified health plan or a provider caring for patients according to a certified health plan contract from medical malpractice may maintain a ratio of losses to gross income from premiums that is less than eighty-five percent.

(2) Neither a certified health plan nor a health care provider caring for patients according to a certified health plan contract shall be subject to liability for harm under this chapter for health care provided in accordance with a practice indicator adopted by the health services commission unless the claimant establishes by a preponderance of the evidence that the provider's application or execution of the practice indicator was a failure to follow the accepted standard of care.

(3) A certified health plan shall be subrogated to a participant's claim under chapter 7.70 RCW against a health care provider and shall have a lien against any recovery based on such claim as provided in this section. The right of subrogation and the lien granted by this section is limited to payments made by the plan for health care relating to the claim. The lien shall be enforceable only if the recovery fully compensates the participant for his or her loss.

(4) No health care provider or facility may deliver care covered by a certified health plan without first presenting evidence of malpractice insurance in at least the amount specified by the commission.

Sec. 312. 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. 313. 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.

NEW SECTION. Sec. 314. 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 this section. 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. 315. 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 314 of this act.

Sec. 316. 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.

D. CERTIFIED HEALTH PLANS

NEW SECTION. Sec. 317. CERTIFIED HEALTH PLANS--REGISTRATION REQUIRED--PENALTY. (1) No person or entity in this state shall, by mail or otherwise, act or hold himself or herself out to be a certified health plan as defined by section 302 of this act without being registered with the insurance commissioner.

(2) Any one violating subsection (1) of this section is liable for a fine not to exceed ten thousand dollars and imprisonment not to exceed six months for each instance of such violation.

NEW SECTION. Sec. 318. PROVIDER ELIGIBILITY TO PARTICIPATE IN PLANS. All certified health plans and other health care coverage programs, irrespective of whether insured or self-insured, funded by state and local governments or private entities, subject to the jurisdiction of the state of Washington, may establish terms and conditions to be met by providers wishing to enter into an agreement with the plan to provide services to the plan's enrollees. No plan or agent of a plan may deny a provider the right to enter into such an agreement if the provider is willing and able to meet the qualifications and conditions established in that agreement. Plans may terminate providers in accordance with the agreement's terms. Providers terminated by a plan under any agreement need not be accepted by the plan into its other or subsequent agreements.

NEW SECTION. Sec. 319. ELIGIBILITY REQUIREMENTS FOR CERTIFICATE OF REGISTRATION--APPLICATION REQUIREMENTS. Any corporation, cooperative group, partnership, association or groups of health professionals licensed by the state of Washington, public hospital district, or public institutions of higher education shall be entitled to a certificate from the insurance commissioner as a certified health plan if it:

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

(2) Accepts for enrollment any state resident working or residing in the area of the state serviced by the plan, and provides or assures the provision of all services within the uniform benefit package regardless of age, sex, family structure, ethnicity, race, health condition, geographic location within the plan's service area as filed with the insurance commissioner, employment status, or other condition or situation, however, the commissioner may grant a temporary exemption from this subsection, if, upon application by a certified health plan,the commissioner finds that the clinical, financial, or administrative capacity to serve existing enrollees will be impaired if a certified health plan is required to continue enrollment of additional eligible individuals;

(3) Demonstrates to the satisfaction of the insurance commissioner in consultation with the department of health and the health services commission that its facilities and personnel are adequate to provide the benefits prescribed in the uniform benefit package to enrolled Washington residents, and that it is financially capable of providing such residents with, or has made adequate contractual arrangements with health care providers and facilities to provide the residents with such services, including assuring reasonable access to local providers, especially for enrollees residing in rural areas;

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

(5) Submits an application for certification as a certified health plan, which shall be verified by an officer or authorized representative of the applicant, being in a form as the insurance commissioner prescribes in consultation with the health services commission;

(6) Meets the minimum net worth requirements set forth in section 331 of this act and the funding reserve requirements set forth in section 332 of this act;

(7) With the exception of employer self-funded health insurance arrangements, offers a policy for long-term care services defined by the health services commission that are not included in the uniform benefit package. Such offering shall be made to all plan enrollees wishing to purchase such a plan on a guaranteed-issue basis without underwriting;

(8) Discloses to patients the charity care requirements under chapter 70.170 RCW; and

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

A certified health plan may establish the geographic boundaries in which they will obligate themselves to deliver the services required under the uniform benefit package and include such information in their application for certification, but the commissioner shall review such boundaries and may disapprove, in conformance to guidelines adopted by the commission, those which have been clearly drawn to be exclusionary within a health care catchment area.

NEW SECTION. Sec. 320. Nothing in this chapter precludes an entity from insuring, providing, contracting, or receiving payment for health services or levels of services not included in the uniform benefit package, nor does anything in this chapter restrict an employer from offering, an employee representative from negotiating for, or an individual from purchasing, services or levels of service not included in the uniform benefit package directly.

NEW SECTION. Sec. 321. DENTAL HEALTH CARE SERVICE. If a corporation or cooperative group meets all requirements as a certified health plan under chapter . . ., Laws of 1993 (this act), except those in section 319(7) of this act, the commissioner may waive the requirement that such certified health plan provide all services within the uniform benefit package except dental services. The commissioner shall adopt rules necessary to implement this section.

NEW SECTION. Sec. 322. No health care provider may be required by law or contract in any circumstances to participate in the provision of any uniform benefit if she or he objects to so doing for reason of conscience or religion. No person may be discriminated against in employment or professional privileges because of such objection.

The provisions of this section are not intended to result in an enrollee being denied access to any service within the uniform benefit package. The commission shall establish procedures that certified health plans must follow to inform enrollees if any provider within the certified health plan may refuse to perform a uniform benefit package service out of conscience. The procedures shall include written information that lists the services that a provider may refuse to perform, and the name of a provider within the certified health plan who will provide each such service.

NEW SECTION. Sec. 323. ISSUANCE OF CERTIFICATE--GROUNDS FOR REFUSAL. The commissioner shall issue a certificate as a certified health plan to an applicant within one hundred twenty days of such filing unless the commissioner notifies the applicant within such time that such application is not complete and the reasons therefor; or that the commissioner is not satisfied that:

(1) The basic organization document of the applicant permits the applicant to conduct business as a certified health plan;

(2) The applicant has demonstrated the intent and ability to assure that the health services will be provided in a manner to assure both their availability and accessibility;

(3) The organization is financially responsible and may be reasonably expected to meet its obligations to its enrolled participants. In making this determination, the commissioner shall consider among other relevant factors:

(a) Any agreements with a casualty insurer, a government agency, or any other organization paying or insuring payment for health care services;

(b) Any agreements with providers for the provision of health care services; and

(4) The procedures for offering health care services are reasonable and equitable; and

(5) Procedures have been established to:

(a) Monitor the quality of care provided by the certified health plan including standards and guidelines provided by the health services commission and other appropriate state agencies;

(b) Operate internal peer review mechanisms; and

(c) Resolve complaints and grievances in accordance with section 336 of this act and rules established by the insurance commissioner in consultation with the commission.

NEW SECTION. Sec. 324. A certified health plan may not discriminate against a health care provider in offering health care services to beneficiaries under chapter . . ., Laws of 1993 (this act) where (1) the services are within the scope of practice of the health care provider; and (2) the benefit authorized by the commission is one that is provided by the certified health plan. Nothing in this section shall affect the ability of the certified health plan to utilize the most cost-effective and clinically efficacious treatment modalities.

NEW SECTION. Sec. 325. PREMIUMS AND ENROLLEE PAYMENT AMOUNTS--FILING OF PREMIUMS AND ENROLLEE PAYMENT AMOUNTS--ADDITIONAL CHARGES PROHIBITED. (1) The insurance commissioner shall verify that the certified health plan and its providers are charging no more than the maximum premiums and enrollee financial participation amounts during the course of financial and market conduct examinations or more frequently if justified in the opinion of the insurance commissioner or upon request by the health services commission.

(2) The certified health plans shall file the premium schedules including employer contributions, enrollee premium sharing, and enrollee point of service cost sharing amounts with the insurance commissioner, within thirty days of establishment by the health services commission.

(3) No certified health plan or its provider may charge any fees, assessments, or charges in addition to the premium amount or in excess of the maximum enrollee financial participation limits established by the health services commission. The certified health plan that directly provides health care services may charge and collect the enrollee point of service cost sharing fees as established in the uniform benefit package or other approved benefit plan.

NEW SECTION. Sec. 326. ANNUAL STATEMENT FILING--CONTENTS--PENALTY FOR FAILURE TO FILE--ACCURACY REQUIRED. (1) Every certified health plan shall annually not later than March 1 of the calendar year, file with the insurance commissioner a statement verified by at least two of its principal officers showing its financial condition as of December 31 of the preceding year.

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

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

(i) All prepayments and other payments received for health care services rendered pursuant to certified health plan benefit packages;

(ii) Expenditures to all categories of health care facilities, providers, and organizations with which the plan has contracted to fulfill obligations to enrolled residents arising out of the uniform benefit package and other approved supplemental benefit agreements, together with all other direct expenses including depreciation, enrollment, and commission; and

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

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

(c) The number of residents enrolled and terminated during the report period. Additional information regarding the enrollment and termination pattern for a certified health plan may be required by the commissioner to demonstrate compliance with the open enrollment and free access requirements of chapter . . ., Laws of 1993 (this act). The insurance commissioner shall specify additional information to be reported which may include but not be limited to age, sex, location, and health status information.

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

(e) Disclosure of any financial interests held by officers and directors in any providers associated with the certified health plan or provider of the certified health plan;

(3) The commissioner may require quarterly reporting of financial information, such information to be furnished in a format prescribed by the commissioner in consultation with the commission.

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

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

(6) The commission shall publish and make available to the health services commission and the major newspapers of the state an annual summary report of at least the information required in subsections (2) and (3) of this section.

(7) No person shall knowingly file with any public official or knowingly make, publish, or disseminate any financial statement of a certified health plan that does not accurately state the certified health plan's financial conditions.

NEW SECTION. Sec. 327. COVERAGE NOT DENIED--ENROLLMENT LIMITED TO ONE CERTIFIED HEALTH PLAN. No certified health plan may deny coverage to a resident residing within the service area of the certified health plan. No Washington resident may be enrolled in more than one certified health plan at any one time. An enrollee of a certified health plan who changes their place of employment or residence may remain enrolled with that plan. Coverage shall be transferable from one certified health plan to another certified health plan upon thirty days' written notice. Such transfer shall be without penalty or waiting period. Accidents and sickness that commenced under the prior certified health plan shall be covered by the replacement certified health plan from the effective date of coverage under the replacement certified health plan.

NEW SECTION. Sec. 328. MISREPRESENTATIONS TO INDUCE TERMINATION OR RETENTION OF ENROLLMENT PROHIBITED. No certified health plan or any person representing a certified health plan may make misrepresentation or misleading comparisons to induce or attempt to induce any enrollee or employer group to terminate or retain membership in a certified health plan.

NEW SECTION. Sec. 329. PENALTY FOR VIOLATIONS. A certified health plan which, or person who, violates any provision of this chapter is guilty of a gross misdemeanor, unless the penalty is otherwise specifically provided.

NEW SECTION. Sec. 330. PROVIDER CONTRACTS--ENROLLED RESIDENT'S LIABILITY, COMMISSIONER'S REVIEW. (1) Subject to subsection (2) of this section, every contract between a certified health plan and its providers of health care services shall be in writing and shall set forth that in the event the certified health plan fails to pay for health care services as set forth in the uniform benefit package, the enrollee is not liable to the provider for any sums owed by the certified health plan. Every such contract shall provide that this requirement shall survive termination of the contract.

(2) The provisions of subsection (1) of this section shall not apply to emergency care from a provider who is not a contracting provider with the certified health plan, or to emergent and urgently needed out-of-area services.

(3) The insurance commissioner in consultation with the health services commission shall adopt rules governing the content and structure of the provider contracts.

(4) The certified health plan shall file the contracts with the insurance commissioner for approval thirty days prior to use.

NEW SECTION. Sec. 331. MINIMUM NET WORTH--REQUIREMENTS TO MAINTAIN--DETERMINATION OF AMOUNT. (1) Every certified health plan must maintain a minimum net worth equal to the greater of:

(a) One million dollars; or

(b) Two percent of annual premium revenues as reported on the most recent annual financial statement filed with the insurance commissioner on the first one hundred fifty million dollars of premium and one percent of annual premium on the premium in excess of one hundred fifty million dollars; or

(c) An amount equal to the sum of three months' uncovered expenditures as reported on the most recent financial statement filed with the commissioner.

(2) Every health care service contractor, health maintenance organization, or disability insurance company that has a valid certificate of registration or certificate of authority issued prior to the effective date of this section, shall demonstrate to the insurance commissioner that it has achieved the minimum net worth standards set forth in subsection (1) of this section not later than January 1, 1994.

(3)(a) In determining net worth, no debt shall be considered fully subordinated unless the subordination clause is in a form acceptable to the commissioner. An interest obligation relating to the repayment of a subordinated debt must be similarly subordinated.

(b) The interest expenses relating to the repayment of a fully subordinated debt shall not be considered uncovered expenditures.

(c) A subordinated debt incurred by a note meeting the requirements of this section, and otherwise acceptable to the insurance commissioner, shall not be considered a liability and shall be recorded as equity.

(4) Every certified health plan shall, in determining liabilities, include an amount estimated in the aggregate to provide for unearned premiums and for the payment of claims for health care expenditures that have been incurred, whether reported or unreported, which are unpaid and for which such organization is or may be liable and to provide for the expense of adjustment or settlement of such claims.

The claims shall be computed in accordance with rules adopted by the insurance commissioner in consultation with the health services commission.

NEW SECTION. Sec. 332. FUNDED RESERVE REQUIREMENTS. (1) Each certified health plan obtaining certification from the insurance commissioner shall provide and maintain a funded reserve of one hundred fifty thousand dollars. The funded reserve shall be deposited with the insurance commissioner or with any organization acceptable to the commissioner in the form of cash, securities eligible for investment under chapter 48.13 RCW, approved surety bond, or any combination of these, and must be equal to or exceed one hundred fifty thousand dollars. The funded reserve shall be established as an assurance that the uncovered expenditures obligations of the certified health plan to the enrolled Washington residents shall be performed.

(2) All income from reserves on deposit with the commissioner shall belong to the depositing certified health plan and shall be paid to it as it becomes available.

(3) Funded reserves required by this section shall be considered an asset in determining the plan's net worth.

NEW SECTION. Sec. 333. EXAMINATION OF CERTIFIED HEALTH PLANS, POWERS OF COMMISSIONER, DUTIES OF PLANS, INDEPENDENT AUDIT REPORTS. (1) The insurance commissioner shall make an examination of the operations of a certified health plan as often as the commissioner deems it necessary in order to assure the financial security and health and safety of the enrolled residents. The insurance commissioner shall make an examination of a certified health plan not less than once every three calendar years.

(2) Every certified health plan shall submit its books and records relating to its operation for financial condition and market conduct examinations and in every way facilitate them. The quality or appropriateness of medical services and systems shall be examined by the department of health except that the insurance commissioner may review such areas to the extent that such items impact the financial condition or the market conduct of the certified health plan. For the purpose of the examinations the insurance commissioner may issue subpoenas, administer oaths, and examine the officers and principals of the certified health plans concerning their business.

(3) The insurance commissioner may elect to accept and rely on audit reports made by an independent certified public accountant for the certified health plan in the course of that part of the insurance commissioner's examination covering the same general subject matter as the audit. The commissioner may incorporate the audit report in his or her report of the examination.

(4) Certified health plans shall be equitably assessed to cover the cost of financial conditional and market conduct examinations, the costs of adopting rules, and the costs of enforcing the provisions of this chapter. The assessments shall be levied not less frequently than once every twelve months and shall be in an amount expected to fund the examinations, adoption of rules, and enforcement of the provisions of this chapter including a reasonable margin for cost variations. The assessments shall be established by rules adopted by the commissioner in consultation with the health services commission but shall not exceed five and one-half cents per month per resident enrolled in the certified health plan. The minimum assessment shall be one thousand dollars. Assessment receipts shall be deposited in the insurance commissioner's regulatory account in the state treasury and shall be used for the purpose of funding the examinations authorized in subsection (1) of this section. Assessments received shall be used to pay a pro rata share of the costs, including overhead of regulating certified health plans. Amounts remaining in the separate account at the end of a biennium shall be applied to reduce the assessments in succeeding biennia.

NEW SECTION. Sec. 334. INSOLVENCY--COMMISSIONER'S DUTIES, CONTINUATION OF BENEFITS, ALLOCATION OF COVERAGE. (1) In the event of insolvency of a certified health plan and upon order of the commissioner, all other certified health plans shall offer the enrolled Washington residents of the insolvent certified health plan the opportunity to enroll in a solvent certified health plan. Enrollment shall be without prejudice for any preexisting condition and shall be continuous provided the resident enrolls in the new certified health plan within thirty days of the date of insolvency and otherwise complies with the certified health plan's managed care procedures within the thirty-day open enrollment period.

(2) The insurance commissioner, in consultation with the health services commission, shall establish guidelines for the equitable distribution of the insolvent certified health plan's enrollees to the remaining certified health plans. Such guidelines may include limitations to enrollment based on financial conditions, provider delivery network, administrative capabilities of the certified health plan, and other reasonable measures of the certified health plan's ability to provide benefits to the newly enrolled residents.

(3) Each certified health plan shall have a plan for handling insolvency that allows for continuation of benefits for the duration of the coverage period for which premiums have been paid and continuation of benefits to enrolled Washington residents who are confined on the date of insolvency in an inpatient facility until their discharge or transfer to a new certified health plan as provided in subsection (1) of this section. Such plan shall be approved by the insurance commissioner at the time of certification and shall be submitted for review and approval on an annual basis. The commissioner shall approve such a plan if it includes:

(a) Insurance to cover the expenses to be paid for continued benefits after insolvency;

(b) Provisions in provider contracts that obligate the provider to provide services for the duration of the period after the certified health plan's insolvency for which premium payment has been made and until the enrolled participant is transferred to a new certified health plan in accordance with subsection (1) of this section. Such extension of coverage shall not obligate the provider of service beyond thirty days following the date of insolvency;

(d) Acceptable letters of credit or approved surety bonds; or

(e) Other arrangements the insurance commissioner and certified health plan mutually agree are appropriate to assure that benefits are continued.

NEW SECTION. Sec. 335. FINANCIAL FAILURE, SUPERVISION OF COMMISSIONER--PRIORITY OF DISTRIBUTION OF ASSETS. (1) Any rehabilitation, liquidation, or conservation of a certified health plan shall be deemed to be the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the insurance commissioner under the law governing the rehabilitation, liquidation, or conservation of insurance companies. The insurance commissioner may apply for an order directing the insurance commissioner to rehabilitate, liquidate, or conserve a certified health plan upon one or more of the grounds set forth in RCW 48.31.030, 48.31.050, and 48.31.080. Enrolled residents shall have the same priority in the event of liquidation or rehabilitation as the law provides to policyholders of an insurer.

(2) For purposes of determining the priority of distribution of general assets, claims of enrolled residents and their dependents shall have the same priority as established by RCW 48.31.280 for policyholders and their dependents of insurance companies. If an enrolled resident is liable to a provider for services under and covered by a certified health plan, that liability shall have the status of an enrolled resident claim for distribution of general assets.

(3) A provider who is obligated by statute or agreement to hold enrolled residents harmless from liability for services provided under and covered by a certified health plan shall have a priority of distribution of the general assets immediately following that of enrolled residents and enrolled residents' dependents as described in this section, and immediately proceeding the priority of distribution described in RCW 48.31.280(2)(e).

NEW SECTION. Sec. 336. GRIEVANCE PROCEDURE. A certified health plan shall establish and maintain a grievance procedure approved by the commissioner, to provide a reasonable and effective resolution of complaints initiated by enrolled Washington residents concerning any matter relating to the provision of benefits under the uniform benefit package, access to health care services, and quality of services. Each certified health plan shall respond to complaints filed with the insurance commissioner within twenty working days. The insurance commissioner in consultation with the health care commission shall establish standards for grievance procedures and resolution.

E. EMPLOYERS' COOPERATIVE HEALTH CARE PURCHASING GROUPS

NEW SECTION. Sec. 337. EMPLOYERS' COOPERATIVE HEALTH CARE PURCHASING GROUP--DEFINITION, OPEN ACCESS, REGISTRATION. A purchasing group that intends to purchase health care coverage from a certified health plan shall furnish notice to the commissioner which shall: (1) Identify the principal name and address of the purchasing group, (2) furnish the names and addresses of the officers of the purchasing group, (3) include copies of letters of agreement for participation in the purchasing group including minimum term of participation, and (4) provide any other information as prescribed by the insurance commissioner in consultation with the health services commission to verify that the purchasing group is qualified and managed by competent and trustworthy individuals.

NEW SECTION. Sec. 338. ENFORCEMENT AUTHORITY OF COMMISSIONER. For the purposes of this chapter, the insurance commissioner shall have the same powers and duties of enforcement as are provided in RCW 48.02.080.

NEW SECTION. Sec. 339. ANNUAL REPORT BY THE INSURANCE COMMISSIONER TO THE HEALTH SERVICES COMMISSION. (1) The insurance commissioner shall report annually to the health services commission on the compliance of certified health plans and employers' cooperative health care purchasing groups with the provisions of chapter . . ., Laws of 1993 (this act). The report shall include information on (a) compliance with this act's open enrollment and antidiscrimination provisions, (b) financial solvency requirements, (c) the mix of enrollee characteristics within and among plans and groups including age, sex, ethnicity, and any easily obtainable information related to medical risk, (d) the geographic distribution of plans and groups, and (e) other information which the commission may request consistent with the goals of chapter . . ., Laws of 1993 (this act).

(2) Certified health plans and employers' cooperative health care purchasing groups shall comply with any request by the insurance commissioner to obtain information for the purposes of this section.

F. DISCLOSURE OF HOSPITAL, NURSING HOME, AND PHARMACY CHARGES

NEW SECTION. Sec. 340. A new section is added to chapter 70.41 RCW to read as follows:

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

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

NEW SECTION. Sec. 341. A new section is added to chapter 71.12 RCW to read as follows:

NEW SECTION. Sec. 342. A new section is added to chapter 18.68 RCW to read as follows:

The legislature finds that the spiraling costs of health care continue to surmount efforts to contain them, increasing at approximately twice the inflationary rate. One of the fastest growing segments of the health care expenditure involves prescription medications. By making physicians and other health care providers with prescriptive authority more aware of the cost consequences of health care treatments for consumers, these providers may be inclined to exercise more restraint in providing only the most relevant and cost-beneficial drug and medication treatments. The requirement of the pharmacy to inform physicians and other health care providers of the charges of prescription drugs and medications that they order may have a positive effect on containing health costs. Further, the option of the physician or other health care provider to inform the patient of these charges may strengthen the necessary dialogue in the provider-patient relationship that tends to be diminished by intervening third-party payers.

NEW SECTION. Sec. 343. A new section is added to chapter 18.68 RCW to read as follows:

The registered or licensed pharmacist of this chapter shall establish and maintain a procedure for disclosing to physicians and other health care providers with prescriptive authority information detailed by prescriber, of the cost and dispensation of all prescriptive medications prescribed by him or her for his or her patients on request. These charges should be made available on at least a quarterly basis for all requested patients and should include medication, dosage, number dispensed, and the cost of the prescription. Pharmacies may provide this information in a summary form for each prescribing physician for all patients rather than as individually itemized reports. All efforts should be made to utilize the existing computerized records and software to provide this information in the least costly format.

NEW SECTION. Sec. 344. A new section is added to chapter 18.51 RCW to read as follows:

(1) The legislature finds that the spiraling costs of nursing home care continue to surmount efforts to contain them, increasing at approximately twice the inflationary rate. The causes of this phenomenon are complex. By making nursing home facilities and care providers more aware of the cost consequences of care services for consumers, these providers may be inclined to exercise more restraint in providing only the most relevant and cost-beneficial services and care, with a potential for reducing the utilization of those services. The requirement of the nursing home to inform physicians, consumers, and other care providers of the charges of the services that they order may have a positive effect on containing health costs.

(2) The chief executive officer of a nursing home licensed under this chapter shall establish and maintain a procedure for disclosing to physicians, consumers, and other care providers the charges of all services to be ordered for residents. These charges shall be posted on the resident's bill and shall include total charges to date and an itemization of charges for each month.

NEW SECTION. Sec. 345. The department of health shall report to the legislature by December 31, 1994, with recommendations on any necessary revisions to sections 340 through 344 of this act, including their continued necessity and the appropriateness of their repeal.

G. STATE AND FEDERAL ANTI-TRUST IMMUNITY

NEW SECTION. Sec. 346. STATE AND FEDERAL ANTI-TRUST IMMUNITY. (1) The legislature finds that competition in the health services and insurance markets is not in the public interest unless it operates within publicly established constraints that seek to (a) contain the aggregate cost of most health services, (b) promote the comparability of health insurance products, (c) improve the cost-effectiveness of those products relative to health promotion, disease prevention, and the amelioration or cure of illness, (d) assure universal access to a publicly determined, uniform package of health benefits, and (e) create reasonable equity in the distribution of funds, treatment, and medical risk among purchasing groups, insurance groups, health care providers, and Washington residents.

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

(3) The legislature intends that reductions in health services or insurance competition occur as a result of chapter . . ., Laws of 1993 (this act) for the purposes stated in this section and elsewhere in chapter . . ., Laws of 1993 (this act). To these ends, any lawful actions taken by any entity created or regulated by chapter . . ., Laws of 1993 (this act) are declared to be taken pursuant to state statute and in furtherance of the public purposes of the state of Washington. Such actions are exempt from state and federal anti-trust statutes and shall be treated as state-authorized actions. However, such actions do not include practices, services, entities, plans, benefits, premiums, and other activities of certified health plans, health care purchasers, purchasing groups, health care providers, or Washington residents which amount to:

(a) Agreeing or conspiring to agree on the price two or more certified health plans charge for the uniform benefit package or any other service;

(b) Agreeing or conspiring to agree on the geographic boundaries which will be served by one or more certified health plans or purchasing groups in order to avoid financial risk, or to discriminate against any Washington resident, employer, or their duly authorized agents; or

(c) Agreeing or conspiring to agree on ways of attracting or discouraging enrollment by any resident or group of residents in any certified health plan or purchasing group because of the actual or perceived cost of providing the uniform benefit package to that resident or group.

(4) The legislature further finds that incentives should be provided for all of those who purchase, insure, or deliver health services to operate in ways that promote the purposes of chapter . . ., Laws of 1993 (this act). To this end, chapter . . ., Laws of 1993 (this act) extends certain rights and privileges to self-funded employer health insurance arrangements who voluntarily participate in achieving and maintaining standards required of certified health plans.

(5) The legislature finds that the goals of controlling health care costs and improving the quality of and access to health care services would be significantly enhanced by more extensive cooperation among health care providers, including especially physicians and hospitals. The legislature further finds that growth in cooperative activities is impeded by certain governmental policies, including state and federal antitrust laws that impose marketplace competition as the sole means for structuring and allocating resources offered by health care providers. The legislature directs the state attorney general, in conjunction with provider representatives, to study and make recommendations to the legislature on a process for state regulation of prohibited provider cooperative activities that would justify a grant of immunity from state antitrust laws and protection from federal antitrust laws through the state action doctrine.

H. THE UNIFORM BENEFIT PACKAGE

NEW SECTION. Sec. 347. UNIFORM BENEFIT PACKAGE DESIGN--LEGISLATIVE VETO. (1) The Washington health services commission shall define the uniform benefit package, which shall include those health services based on the best available scientific health information, deemed to be effective and necessary on a societal basis for the maintenance of the health of citizens of the state, and weighed against the availability of funding in the state health services budget.

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

The uniform benefit package shall include at least inpatient and outpatient services for physical, mental, and developmental illnesses and disabilities including some measure of the following:

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

(ii) Clinical preventive services;

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

(iv) Except as otherwise provided by state law, reproductive and maternity services;

(v) Clinical management and provision of treatment;

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

(vii) Vision, hearing, and dental care;

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

(ix) Inpatient and outpatient hospital and surgical services;

(x) Organ transplants;

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

(xii) Long-term care services, as defined in section 302(13) of this act.

(b) Uniform benefit package services shall not include:

(i) Cosmetic surgery and related services;

(ii) Examinations associated with life insurance applications or legal proceedings, except as may be required for workers' compensation; and

(iii) Infertility services.

(c) The Washington health services commission shall establish limits on maximum enrollee financial participation, related to enrollee household income, such that financial considerations are not a barrier to access for low-income persons, but that, for those of means, the uniform benefit package provides for moderate point of service cost-sharing.

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

(2) The Washington health services commission shall determine the specific schedule of health services within the uniform benefit package, including limitations on scope and duration of services. To assist the commission in this task, it may periodically establish health service review panels for specified periods of time to review existing information on need, efficacy, and cost-effectiveness of specific services and treatments. These panels shall use any services outcome data that may be available. These panels shall take into consideration available practice indicators, and appropriate use of expensive technology.

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

(4) The Washington health services commission shall submit its initial uniform benefits package and any changes it may wish to make to the legislature. The legislature may disapprove of the uniform benefits package by a majority vote in the house of representatives and in the senate at any time prior to the close of its regular annual legislative session. If such disapproval action is taken, the commission shall with all deliberate speed resubmit a modified uniform benefits package, which may be disapproved within thirty days of submittal to the legislature.

NEW SECTION. Sec. 348. LONG-TERM CARE INTEGRATION PLAN. (1) To meet the health needs of the residents of Washington state, it is critical to finance and provide long-term care and support services through an integrated, comprehensive systems that promotes human dignity and recognizes the individuality of all functionally disabled persons. This system shall be available, accessible, and responsive to all residents based upon an assessment of their functional disabilities. The governor and the legislature recognize that families, volunteers, and community organizations are essential for the delivery of effective and efficient long-term care and support services, and that this private and public service infrastructure should be supported and strengthened. Further, it is important to provide benefits in perpetuity without requiring family or program beneficiary impoverishment for service eligibility.

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

(a) Engage in a planning process, in conjunction with an advisory and technical assistance committee appointed for this purpose, for the inclusion of long-term care services in the uniform benefit package established under section 347 of this act as soon as possible, but not later than July 1, 1997.

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

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

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

I. STATE RESIDENT AND EMPLOYER PARTICIPATION

NEW SECTION. Sec. 349. INDIVIDUAL PARTICIPATION. (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 July 1, 1997.

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

NEW SECTION. Sec. 350. EMPLOYER PARTICIPATION. (1) On July 1, 1995, every employer employing more than five hundred full-time employees shall offer a choice of certified health plans to all full-time or part-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 certified health plan offered by the employer. On July 1, 1996, all dependents of full-time employees of these firms shall be offered a choice of certified health plans with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost certified health plan offered by the employer.

(2) By July 1, 1996, every employer employing more than one hundred full-time employees shall offer a choice of certified health plans to all full-time employees. The employer shall be required to pay no less than fifty percent and no more than ninety-five percent of the premium cost of the lowest cost certified health plan offered by the employer. For employees working less than full time the employer is required to pay a premium payment that equals a pro rata share of a full time employee's premium, based on the hours the part-time employee worked. On July 1, 1997, all dependents of full-time employees in these firms shall be offered a choice of certified health plans with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost certified health plan offered by the employer.

(3) By July 1, 1997, every employer shall offer a choice of certified health plans to all full-time employees. The employer shall be required to pay no less than fifty percent and no more than ninety-five percent of the premium cost of the lowest cost certified health plan offered by the employer. For employees working less than full time the employer is required to pay a premium payment that equals a pro rata share of a full time employee's premium, based on the hours the part-time employee worked. On July 1, 1998, all dependents of full-time employees in all firms shall be offered a choice of certified health plans with the employer paying no less than fifty percent and no more than ninety-five percent of the premium of the lowest cost certified health plan offered by the employer.

(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, plus the administrative cost to the plan of providing the plan to the employees, to the basic health plan within guidelines set by the plan administrator. 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.

(5) If a full-time employee is already enrolled with a certified health plan with which their employer does not have a relationship and the employee wishes to remain enrolled in that plan, the employer shall make payments to that plan on behalf of such an employee. The amount such an employer pays on behalf of such an employee shall be the same as the amount that employer pays certified health plans for other employees.

NEW SECTION. Sec. 351. (1) Sections 317 through 339 of this act shall constitute a new chapter in Title 48 RCW.

(2) Sections 346 through 350 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 352. The commission shall study the feasibility of implementing a residency-based health care system using one or a limited number of payers or sponsors, shall develop recommendations, and shall report to the governor and the state legislature by July 1, 1995.

J. PUBLIC HEALTH SERVICES IMPROVEMENT PLAN

NEW SECTION. Sec. 353. A new section is added to chapter 43.70 RCW to read as follows:

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

(2) The plan shall include:

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

(i) Enumeration of communities not meeting those standards;

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

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

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

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

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

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

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

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

(6) Among the specific population-based public health activities to be considered in the public health services improvement plan are: Health data assessment and chronic and infectious disease surveillance; rapid response to outbreaks of communicable disease; efforts to prevent and control specific communicable diseases, such as tuberculosis and acquired immune deficiency syndrome; health education to promote healthy behaviors and to reduce the prevalence of chronic disease, such as those linked to the use of tobacco; access to primary care; programs to ensure children are born as healthy as possible and they receive immunizations and adequate nutrition; efforts to prevent intentional and unintentional injury; programs to ensure the safety of drinking water and food supplies; poison control; trauma services; 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.

K. STATE HEALTH SERVICES BUDGET, TRUST FUND, AND ACCOUNTS

NEW SECTION. Sec. 354. STATE HEALTH SERVICES BUDGET. The state health services budget shall reflect total expenditures for all health services either funded by the state or federal government, regulated pursuant to chapter . . ., Laws of 1993 (this act), or voluntarily placed under the provisions of chapter . . ., Laws of 1993 (this act) by self-insured employers. The commission shall submit the state health services budget, which shall include estimated amounts in each of these categories as part of the governor's biennial budget request.

NEW SECTION. Sec. 355. TRUST ACCOUNTS. (1) The Washington health services trust account is hereby established in the state treasury. All public funds regulated by chapter . . ., Laws of 1993 (this act) or new revenues raised pursuant to chapter . . ., Laws of 1993 (this act) shall be deposited in the Washington health services trust account and shall be allocated in a manner consistent with state and federal laws, rules of the commission, and any waivers from federal laws or regulations that the state may receive consistent with the provisions of chapter . . ., Laws of 1993 (this act). The earnings on any surplus balances in the Washington health services trust account shall be credited to the account. These funds shall include at least:

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

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

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

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

(2) The trust account shall consist of three subsidiary accounts:

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

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

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

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

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

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

L. IMPLEMENTATION SCHEDULE

NEW SECTION. Sec. 356. IMPLEMENTATION SCHEDULE. Chapter . . ., Laws of 1993 (this act) shall be implemented in developmental phases as follows:

(1) By August 1, 1993, the director of the office of financial management shall constitute a transition team composed of staff of the department of social and health services, the Washington state health care authority, the department of health, the department of labor and industries, the Washington basic health plan, and the insurance commissioner's office. The director may request participation of the appropriate legislative staff.

The transition team shall conduct analyses and identify:

(a) The necessary transfer and consolidation of responsibilities among state agencies under the state health care purchasing agent or other agencies to fully implement chapter . . ., Laws of 1993 (this act);

(b) State and federal laws that would need to be repealed, amended, or waived to implement chapter . . ., Laws of 1993 (this act); and

The transition team shall report its findings to the director, the commission, and appropriate committees of the legislature by January 1, 1994, and on that date be disbanded.

(2) By September 1, 1993, the commission shall be appointed. As soon as possible thereafter, the commission should: (a) Hire the necessary staff; (b) develop necessary data sources; (c) appoint the initial health service review panel; and (d) develop the necessary methods to establish the state health services budget.

(3) By December 20, 1993, the director of the office of financial management shall submit to the appropriate committees of the legislature an agency transfer and consolidation report, which shall address staffing, equipment, facilities, and funds, along with drafts of any necessary legislation. It shall also recommend appropriate cost guidelines for the administration of the plan.

(4) By October 1, 1994, the commission shall:

(a) Submit draft rules for review and comment to the legislature, as provided in chapter . . ., Laws of 1993 (this act); and

(b) Report on the extent that revisions of, or waivers from state and federal laws are needed to fully implement chapter . . ., Laws of 1993 (this act), and the status of its efforts to obtain the necessary waivers of, or exemptions from federal law, as provided in chapter . . ., Laws of 1993 (this act).

(5) By March 1, 1995, the commission shall have:

(a) Determined the uniform benefit package; and

(b) Developed standards and guidelines for certified health plans as required under chapter . . ., Laws of 1993 (this act).

(6) By December 20, 1995, consistent with the executive budget process, the commission shall submit the first state health services budget to the legislature.

(7) By January 1, 1996, if all necessary federal waivers or exemptions have not been obtained, the commission shall report, as provided in chapter . . ., Laws of 1993 (this act), on the extent to which chapter . . ., Laws of 1993 (this act) can be implemented without receipt of all of such waivers.

(8) By July 1, 1996, consistent with specific appropriations, all health services provided to recipients of medical assistance, medical care services, and the limited casualty program, as defined in RCW 74.09.010, all state employees eligible for employee health benefits plans pursuant to chapter 41.05 RCW, and all common school employees eligible for health, or health care insurance under RCW 28A.400.350 shall be enrolled exclusively with a certified health plan, consistent with all provisions of chapter . . ., Laws of 1993 (this act).

(9) By July 1, 1997, consistent with specific appropriations, all remaining provisions of chapter . . ., Laws of 1993 (this act) shall be in full effect of law.

M. INITIAL EXCLUSIONS, STUDIES, AND ADMINISTRATIVE DIRECTIVES

NEW SECTION. Sec. 357. CODE REVISIONS AND WAIVERS. (1) The commission shall consider the analysis of state and federal laws that would need to be repealed, amended, or waived to implement chapter . . ., Laws of 1993 (this act), as prepared by the transition team pursuant to chapter . . ., Laws of 1993 (this act), and report its recommendations, with proposed revisions to the Revised Code of Washington, to the governor, and appropriate committees of the legislature by January 1, 1994.

(2) The commission in consultation with the governor shall take the following steps in an effort to receive waivers or exemptions from federal statutes necessary to fully implement chapter . . ., Laws of 1993 (this act):

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

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

(c) Negotiate with the United States congress and the federal department of health and human services to obtain any statutory or regulatory waivers of provisions of the United States public health services act necessary to ensure integration of federally funded community health clinics and other health services funded through the public health services act into the health services system established pursuant to chapter . . ., Laws of 1993 (this act).

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

NEW SECTION. Sec. 358. 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 be subject to the requirements in this chapter.

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 comply with the requirement to enroll in and have their employers participate in financing their enrollment in certified health plans.

NEW SECTION. Sec. 359. PROGRAMS INITIALLY EXCLUDED FROM THE OPERATION OF CHAPTER . . ., LAWS OF 1993 (THIS ACT). Initially, the medical services of the workers' compensation program of the department of labor and industries, the residential portions of the mental health, developmental disabilities, and long-term care programs within the department of social and health services, including nursing homes, state mental hospitals and residential habilitation centers, state and federal veterans' health services, and the civilian health and medical program of the uniformed services (CHAMPUS) of the federal department of defense and other federal agencies, shall not be included in the program established by chapter . . ., Laws of 1993 (this act), but shall be studied for future inclusion.

NEW SECTION. Sec. 360. REPORTS OF HEALTH CARE COST CONTROL AND ACCESS COMMISSION. In carrying out its powers and duties under chapter . . ., Laws of 1993 (this act), the design of the uniform benefit package, and the development of guidelines and standards, the commission shall consider the reports of the health care cost control and access commission established under House Concurrent Resolution No. 4443 adopted by the legislature in 1990. Nothing in chapter . . ., Laws of 1993 (this act) requires the commission to follow any specific recommendation contained in those reports except as it may also be included in chapter . . ., Laws of 1993 (this act) or other law.

NEW SECTION. Sec. 361. EVALUATIONS, PLANS, AND STUDIES. (1) By July 1, 1997, the legislative budget committee either directly or by contract shall conduct studies to determine the desirability and feasibility of consolidating the following programs, services, and funding sources into the certified health plans:

(a) Developmental disabilities, mental health, and long-term care programs of the department of social and health services whose services are not included in the uniform benefit package as of July 1995;

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

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

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

NEW SECTION. Sec. 362. A new section is added to chapter 70.170 RCW to read as follows:

HOSPITAL REGULATION STUDY. The department, through a competitive bidding process restricted to those with suitable expertise to conduct such a study, shall contract for an examination of local, state, and federal regulations that apply to hospitals and shall report to the health care policy committees of the legislature by July 1, 1994, on the following:

(1) An inventory of health and safety regulations that apply to hospitals;

(2) A description of the costs to local, state, and federal agencies for operating the regulatory programs;

(3) An estimate of the costs to hospitals to comply with the regulations;

(4) A description of whether regulatory functions are duplicated among different regulatory programs;

(5) An analysis of the effectiveness of regulatory programs in meeting their safety and health objectives;

(6) An analysis of hospital charity care requirements under RCW 70.170.060 and their relevance under the health care reforms created under chapter . . ., Laws of 1993 (this act);

(7) Recommendations on elimination or consolidation of unnecessary or duplicative regulatory activities that would not result in a reduction in the health and safety objectives.

NEW SECTION. Sec. 363. A new section is added to chapter 70.170 RCW to read as follows:

NURSING HOME STUDY. The department, through a competitive bidding process restricted to those with suitable expertise to conduct such a study, shall contract for an examination of local, state, and federal regulations that apply to nursing homes and shall report to the health care policy committees of the legislature by July 1, 1994, on the following:

(1) An inventory of health and safety regulations that apply to nursing homes;

(2) A description of the costs to local, state, and federal agencies for operating the regulatory programs;

(3) An estimate of the costs to nursing homes to comply with the regulations;

(4) A description of whether regulatory functions are duplicated among different regulatory programs;

(5) An analysis of the effectiveness of regulatory programs in meeting their safety and health objectives;

(6) Recommendations on elimination or consolidation of unnecessary or duplicative regulatory activities that would not result in a reduction in the health and safety objectives.

NEW SECTION. Sec. 364. There is established a commission on the beginning and end of life. The commission shall consist of five members appointed by the governor. The commission shall be a multidisciplinary professional group of physicians, nurses, lay-members, and ethicists.

Consistent with funds appropriated specifically for this purpose, the commission may hire staff or contract for professional assistance. State agencies may provide staff support upon request of the commission. The commission may establish ad hoc technical advisory committees as necessary.

To conduct its business, the commission shall have access to all health data available by statute to the secretary of health. The commission shall provide the commission with requested health data or other relevant information maintained by the department of health in a timely and easy-to-comprehend manner.

The members of the commission shall receive no compensation for their service, except that travel expenses shall be reimbursed, from whatever funds are made available to the commission, pursuant to RCW 43.03.050 and 43.03.060.

By November 1, 1994, the commission shall examine the beginning of life and the end of life from the standpoint of appropriate medical and health care practice. The objective of the commission shall be the development of general principles of ethical practice dedicated to the preservation of comfort without unreasonable life prolongation in the presence of an untreatable condition. These guidelines shall be for use by health care providers and institutions. The commission shall report to the governor, the insurance commissioner, and the legislature on their recommendations. The commission shall cease to exist on December 1, 1994.

N. WORKERS' COMPENSATION

NEW SECTION. Sec. 365. WORKERS' COMPENSATION MEDICAL BENEFITS. (1) An employer who self-insures for employee medical benefits or workers' compensation benefits and who meets the requirements for a certified health plan under section 319 of this act, may apply to the department of labor and industries for an exemption from the requirements of Title 51 RCW regarding the medical portion of the workers' compensation program.

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

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

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

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

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

O. MISCELLANEOUS

NEW SECTION. Sec. 366. SHORT TITLE. This act may be known and cited as the Washington health system reform act of 1993.

Sec. 367. RCW 42.17.2401 and 1991 c 200 s 404 are each amended to read as follows:

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

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

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

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

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

NEW SECTION. Sec. 368. A new section is added to Title 48 RCW to read as follows:

(1) After July 1, 1999, no insurance policy that covers a home, automobile, other motor vehicle, marine vessel, commercial establishment, industrial establishment, or any other vehicle, conveyance, or location may contain coverage for medical payments related to personal injury or liability.

(2) The insurance commissioner shall determine the projected consumer cost of coverage for medical payments for personal injury protection and liability as described in this section on July 1, 1999. The insurance commissioner may, within reasonable limits, require any information from insurance companies needed to comply with this requirement.

(3) The insurance commissioner shall require rate reductions or cash rebates by insurers to all policy holders of insurance that contained coverage for medical payments for personal injury protection or arising from claims of liability from July 1, 1998, to July 1, 1999. Such rate reductions or rebates shall, as nearly as possible, equal the consumer cost of this coverage during the July 1, 1998, to July 1, 1999, period.

Sec. 369. RCW 43.20.030 and 1984 c 287 s 75 are each amended to read as follows:

The state board of health shall be composed of ten members. These shall be the secretary or the secretary's designee and nine other persons to be appointed by the governor, including four persons experienced in matters of health and sanitation, ((~~an elected city official who is a member of a local health board, an~~)) two elected county officials who ((~~is a~~)) are members of a local health board, a local health officer, and two persons representing the consumers of health care. ((~~Before appointing the city official, the governor shall consider any recommendations submitted by the association of Washington cities.~~)) Before appointing the county official, the governor shall consider any recommendations submitted by the Washington state association of counties. Before appointing the local health officer, the governor shall consider any recommendations submitted by the Washington state association of local public health officials. Before appointing one of the two consumer representatives, the governor shall consider any recommendations submitted by the state council on aging. The chairman shall be selected by the governor from among the nine appointed members. The department ((~~of social and health services~~)) shall provide necessary technical staff support to the board. The board may employ an executive director and a confidential secretary, each of whom shall be exempt from the provisions of the state civil service law, chapter 41.06 RCW.

Members of the board shall be compensated in accordance with RCW 43.03.240 and shall be reimbursed for their travel expenses in accordance with RCW 43.03.050 and 43.03.060.

Sec. 370. RCW 43.20.050 and 1992 c 34 s 4 are each amended to read as follows:

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

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

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

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

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

(iii) Be based on the best available information collected and reviewed according to RCW 43.70.050 and recommendations from the council;

(iv) Be developed with the input of state health care agencies. At least the following directors of state agencies shall provide timely recommendations to the state board on suggested health priorities for the ensuing biennium: The secretary of social and health services, the health care authority administrator, the insurance commissioner, the administrator of the basic health plan, the superintendent of public instruction, the director of labor and industries, the director of ecology, and the director of agriculture;

(v) Be used by state health care agency administrators in preparing proposed agency budgets and executive request legislation;

(vi) Be submitted by the state board to the governor by June 1 of each even-numbered year for adoption by the governor. The governor, no later than September 1 of that year, shall approve, modify, or disapprove the state public health report.

(c) In fulfilling its responsibilities under this subsection, the state board ((~~shall~~)) may create ad hoc committees or other such committees of limited duration as necessary. ((~~Membership should include legislators, providers, consumers, bioethicists, medical economics experts, legal experts, purchasers, and insurers, as necessary.~~))

(2) In order to protect public health, the state board of health shall:

(a) Adopt rules necessary to assure safe and reliable public drinking water and to protect the public health. Such rules shall establish requirements regarding:

(i) The design and construction of public water system facilities, including proper sizing of pipes and storage for the number and type of customers;

(ii) Drinking water quality standards, monitoring requirements, and laboratory certification requirements;

(iii) Public water system management and reporting requirements;

(iv) Public water system planning and emergency response requirements;

(v) Public water system operation and maintenance requirements;

(vi) Water quality, reliability, and management of existing but inadequate public water systems; and

(vii) Quality standards for the source or supply, or both source and supply, of water for bottled water plants.

(b) Adopt rules and standards for prevention, control, and abatement of health hazards and nuisances related to the disposal of wastes, solid and liquid, including but not limited to sewage, garbage, refuse, and other environmental contaminants; adopt standards and procedures governing the design, construction, and operation of sewage, garbage, refuse and other solid waste collection, treatment, and disposal facilities;

(c) Adopt rules controlling public health related to environmental conditions including but not limited to heating, lighting, ventilation, sanitary facilities, cleanliness and space in all types of public facilities including but not limited to food service establishments, schools, institutions, recreational facilities and transient accommodations and in places of work;

(d) Adopt rules for the imposition and use of isolation and quarantine;

(e) Adopt rules for the prevention and control of infectious and noninfectious diseases, including food and vector borne illness, and rules governing the receipt and conveyance of remains of deceased persons, and such other sanitary matters as admit of and may best be controlled by universal rule; and

(f) Adopt rules for accessing existing data bases for the purposes of performing health related research.

(3) The state board may delegate any of its rule-adopting authority to the secretary and rescind such delegated authority.

(4) All local boards of health, health authorities and officials, officers of state institutions, police officers, sheriffs, constables, and all other officers and employees of the state, or any county, city, or township thereof, shall enforce all rules adopted by the state board of health. In the event of failure or refusal on the part of any member of such boards or any other official or person mentioned in this section to so act, he shall be subject to a fine of not less than fifty dollars, upon first conviction, and not less than one hundred dollars upon second conviction.

(5) The state board may advise the secretary on health policy issues pertaining to the department of health and the state.

Sec. 371. RCW 43.84.092 and 1992 c 235 s 4 are each amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(2) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:

(a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the Eastern Washington University capital projects account, the federal forest revolving account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local sales and use tax account, the medical aid account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan I account, the public employees' retirement system plan II account, the Puyallup tribal settlement account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan I account, the teachers' retirement system plan II account, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' relief and pension principal account, the volunteer fire fighters' relief and pension administrative account, the Washington health services trust account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan I retirement account, the Washington law enforcement officers' and fire fighters' system plan II retirement account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (2)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The central Puget Sound public transportation account, the city hardship assistance account, the county arterial preservation account, the economic development account, the essential rail assistance account, the essential rail banking account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway construction stabilization account, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the special category C account, the state patrol highway account, the transfer relief account, the transportation capital facilities account, the transportation equipment fund, the transportation fund, the transportation improvement account, and the urban arterial trust account.

(3) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 372. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 373. SAVINGS CLAUSE. The enactment of this act does not have the effect of terminating, or in any way modifying, any obligation or any liability, civil or criminal, which was already in existence on the effective date of this act.

NEW SECTION. Sec. 374. CAPTIONS. Captions used in this act do not constitute any part of the law.

NEW SECTION. Sec. 375. EFFECTIVE DATE CLAUSE. (1) Sections 101 and 102, 201 through 221, 246 through 260, and 273 through 362 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 immediately; and sections 245, 262 through 265, and 273 of this act shall take effect July 1, 1993.

(2) Sections 266, 267, 268, and 271 of this act shall take effect January 1, 1994.

(3) Sections 222 through 244 of this act shall take effect July 1, 1994.

(4) Sections 269, 270, and 272 of this act shall take effect July 1, 1995.