BP BHEAD INT S

AN ACT Relating to health care reform; amending RCW 48.21.010, 48.21.050, 48.30.300, 48.44.220, 48.46.370, 70.47.010, 70.47.020, 70.47.030, 70.47.060, 70.47.080, 70.47.120, 70.170.010, 70.170.020, 70.170.030, 70.170.040, 70.170.050, 70.170.080, 70.170.100, 70.170.110, 18.130.160, 18.130.190, 70.41.200, 82.24.020, and 82.26.020; adding new sections to Title 48 RCW; adding a new section to chapter 70.170 RCW; adding a new section to chapter 70.41 RCW; adding a new section to chapter 71.12 RCW; adding a new section to chapter 18.68 RCW; adding new sections to chapter 7.70 RCW; adding a new section to chapter 18.130 RCW; adding a new section to Title 70 RCW; adding a new section to chapter 48.22 RCW; adding new chapters to Title 48 RCW; creating new sections; repealing RCW 7.70.080; prescribing penalties; making an appropriation; and providing an effective date.

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

PARTS PAGE #

PART I - INTENT............................................... 3

PART II - VOLUNTARY FORMATION OF STATE-WIDE HEALTH

INSURANCE PURCHASING POOL................. 3

PART III - INSURANCE COMMISSIONER AUTHORITY................... 4

PART IV - MANAGED HEALTH CARE................................. 5

PART V - INSURANCE REFORM..................................... 14

PART VI - INSURANCE CODE REVISIONS............................ 18

PART VII - BASIC HEALTH PLAN EXPANSION........................ 20

PART VIII - HEALTH DATA....................................... 30

PART IX - DISCLOSURE OF HOSPITAL AND PHARMACY CHARGES......... 39

PART X - COMMISSION ON THE BEGINNING OF LIFE

AND THE END OF LIFE.................... 42

PART XI - MALPRACTICE......................................... 43

PART XII - REVENUE............................................ 51

PART XIII - MISCELLANEOUS..................................... 52

PART I - INTENT

NEW SECTION. Sec. 101. LEGISLATIVE INTENT. The legislature declares that:

(1) Insurance reform is essential to assure that an affordable basic health care coverage is available to all residents.

Individuals should be able to change their employment without fear of losing access to health insurance coverage.

(2) The basic health plan must be expanded to all parts of the state and to assure access to citizens unable to afford insurance, the number of subsidized individuals in the plan must be increased.

(3) Health providers must be aware of the costs of treatments and prescription medications.

(4) General principles of ethical practice must be developed for the appropriate medical practice at the beginning and end of life.

PART II - VOLUNTARY FORMATION OF STATE-WIDE HEALTH

INSURANCE PURCHASING POOL

NEW SECTION. Sec. 201. A new section is added to Title 48 RCW to read as follows:

DEFINITION OF A BASIC HEALTH CARE BENEFIT PACKAGE. Carriers regulated under chapters 48.20, 48.21, 48.44, and 48.46 RCW may collectively design a basic health care benefit package. The health services in the benefit package shall not be less than those provided through the basic health plan under chapter 70.47 RCW. Each carrier shall submit a schedule of premiums for the basic benefit package to the commissioner. The insurance commissioner shall review each carrier's schedule of premiums to determine whether they are reasonable in relation to the basic benefit package. Only when the commissioner determines that rates are reasonable shall the carriers offer the basic benefit package.

NEW SECTION. Sec. 202. HEALTH INSURANCE REFORMS. Basic benefit plans authorized under section 201 of this act should be offered subject to the following provisions:

(1) Should not deny, exclude, or limit benefits for a covered individual for losses incurred more than six months following the effective date of the eligible individual's coverage due to a preexisting condition.

(2) Should not modify, decrease, exclude, or restrict benefits through riders, conditions, restrictions, endorsements, or otherwise, on the basis of sex, age, or health status or health condition of the eligible individual.

(3) Should not modify, decrease, or restrict coverage through riders, conditions, restrictions, endorsements, or otherwise, on the basis of category of business trade, employment skill, or vocation or profession of the eligible individual.

(4) Should guarantee renewability of coverage except for nonpayment of premium unless the insurer has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the carrier's ability to perform its contractual duties.

(5) Entities offering health benefit plans should assume the full financial risk of providing the health benefit plan to all enrollees or participate in risk distribution methods authorized under section 203 of this act.

NEW SECTION. Sec. 203. A new section is added to Title 48 RCW to read as follows:

MEDICAL RISK DISTRIBUTION. The insurance commissioner shall establish methods to assure the fair distribution of high medical risk enrollees among carriers subject to section 201 of this act or fair financial compensation for basic benefit plans that have a disproportionately large number of high medical risk enrollees. This shall be done in a manner to assure that costs associated with providing services to high medical risk enrollees is fairly distributed among the regulated carriers.

PART III - INSURANCE COMMISSIONER AUTHORITY

NEW SECTION. Sec. 301. A new section is added to Title 48 RCW to read as follows:

If the insurance commissioner determines that less than ninety-five percent of the regulated carriers in the state have not complied with sections 201 through 203 of this act by July 1, 1994, the commissioner shall exercise duties and responsibilities under sections 401 through 409 and 601 through 605 of this act.

PART IV - MANAGED HEALTH CARE

NEW SECTION. Sec. 401. DEFINITIONS. In this chapter, unless the context clearly indicates otherwise:

(1) "Basic benefit package" means the uniform, appropriate, confidentially provided, and affordable set of personal health services to be made available to enrollees by certified health plans.

(2) "Carrier" means an entity that provides health insurance benefits in Washington state as an insurance company, health services contractor, or health maintenance organization and is regulated by the state of Washington under chapter 48.20, 48.21, 48.44, or 48.46 RCW.

(3) "Certified health plans" means health benefit plans offered as managed care plans and certified by the commissioner to provide the basic benefit package.

(4) "Eligible individual" means a resident of the state of Washington who is eligible to receive the basic benefit package.

(5) "Employee" means a resident who is actively employed with an employer, or is a proprietor, partner, or corporate officer of the employer of the state of Washington, is paid on a regular, periodic basis through the employer's payroll system, regularly works on a full-time basis and has a normal work week of twenty or more hours, and is expected to continue in this employment capacity.

(6) "Enrollee" means a resident who receives the basic benefit package from a certified health plan for himself or herself and for his or her dependents.

(7) "Health benefit plan" means a hospital or medical policy, health care service contract, health maintenance organization subscriber contract, or plan provided by another benefit arrangement. The term does not include accident only, credit, dental only, vision only, medicare supplements, or disability income insurance coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, or automobile medical payment insurance.

(8) "Individual point of service cost sharing" means moneys paid to a certified health plan by an enrollee for basic benefit package health care services at the time of delivery of such services in an amount not to exceed limits established by the commissioner.

(9) "Insurance commissioner" or "commissioner" means the insurance commissioner as defined in Title 48 RCW.

(10) "Managed health care" means an integrated system of insurance and delivery system functions using a defined network of health care providers that provide the basic benefit package in a cost-effective manner and on a prepaid capitated basis to a defined patient population according to provisions established under this chapter.

(11) "Premium" means the level of payment a certified health plan receives from an enrollee or sponsor on behalf of an enrollee for expenses, including administration, operation, and capital for providing the basic benefit package to enrollees.

(12) "Preexisting condition" means a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment immediately preceding the effective date of coverage or a condition for which medical advice, diagnosis, care, or treatment was recommended or received during the six months immediately preceding the effective date of coverage or a pregnancy existing on the effective date of coverage.

(13) "Resident" means an individual who lives in the state of Washington and who has not come to the state for the purpose of obtaining health services.

(14) "Small employer" means a person, firm, corporation, partnership, or association actively engaged in business, that, on at least fifty percent of its working days during the preceding calendar quarter, employed no more than one hundred employees, the majority of whom are residents.

(15) "Sponsor" means an employer, the state, or other persons or entities, other than the enrollee, who pays to the pool on behalf of the enrollee premiums in return for provision of the basic benefit package to the enrollee.

(16) "State-wide health insurance purchasing pool" or "pool" means a state-wide health insurance purchasing agent that obtains the basic benefit package for employers and individuals on a prepaid capitated basis from a certified health plan through a system of competitive bidding under terms established in this chapter.

NEW SECTION. Sec. 402. STATE-WIDE HEALTH INSURANCE PURCHASING POOL--MEMBERSHIP. Subject to the exercise of authority in section 301 of this act, the insurance commissioner shall create the state-wide health insurance purchasing pool.

NEW SECTION. Sec. 403. STATE-WIDE HEALTH INSURANCE PURCHASING POOL--POWERS AND DUTIES. (1) The duties of the insurance commissioner include:

(a) To define and update the basic benefit package as provided for in this chapter;

(b) To enforce the premium growth rate targets for the basic benefit package established under this chapter;

(2) The insurance commissioner shall have the following duties for certified health plans offered through the pool:

(a) To set the maximum amount of individual premium payments and individual point of service cost-sharing, which includes, deductibles, coinsurance, and copayments to be paid by enrollees for basic benefit package services. This includes:

(i) Setting the maximum premium amount sponsors may pay on behalf of enrollees and dependents for the basic benefit package. The amount shall be established at no less than fifty percent and no more than ninety percent of the lowest bid premium received from a certified health plan among those certified health plans available to an enrollee. The enrollee shall be responsible for payment amounts in excess of these amounts;

(ii) Determining individual point of service cost-sharing for enrollees, required cost-sharing shall be structured to 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;

(b) To determine the methods by which certified health plans pay providers to deliver the basic health benefit package services;

(c) To establish payment methods for reimbursing providers in certified health plans in a manner to encourage cost-effective delivery of health care services;

(d) To assess the need for, and if necessary, establish methods to assure fair distribution of high medical risk enrollees among certified health plans or fair financial compensation for certified health plans that have a disproportionately large number of high medical risk enrollees. This shall be done in a manner to ensure that costs associated with providing services to high medical risk enrollees is fairly distributed among the certified health plans in the pool;

(e) To establish rules of participation for employers and enrollees who obtain basic benefit package services through the pool. The method used shall reflect actual risk to the certified health plan;

(f) To establish a schedule of uniform premium rate adjustments to be used by each certified health plan sold through the pool. The schedule shall allow certified health plans to adjust premium rates based upon the age and gender of individual enrollees and for the cost of providing the basic benefit package within major geographic areas within the state;

(g) To establish an administrative fee as part of premiums charged for the basic benefit package to support the pool activities required under this chapter;

(h) To conduct an annual open enrollment for the purpose of offering certified health plans to enrollees;

(i) To monitor the performance of the certified health plans and to make recommendations to the governor and the legislature for needed statutory changes to improve the delivery and the quality of the basic benefit package;

(j) To form technical advisory committees from time to time for the purpose of receiving advice from technical experts and other interest groups on issues within the purview of the insurance commissioner;

(k) To determine, in consultation with the health care data, quality assurance, and cost control council under chapter 70.170 RCW, whether new high cost medical technologies and experimental procedures are cost-effective and efficacious and shall be included as reimbursable services as part of the basic benefit package;

(l) To establish an outcome-based accountability and reporting system and a system of continuous quality improvement to monitor the appropriate utilization and quality of health care services provided by certified health plans; and

(m) To contract for consultation and actuarial services necessary to perform duties provided under this chapter.

NEW SECTION. Sec. 404. BASIC BENEFIT PACKAGE DESIGN. (1) The commissioner, through a public process, shall design and update the basic benefit package. The basic benefit package shall be the minimum set of personal health services that must be provided by health benefit plans subject to this chapter. The initial basic benefit package shall be adopted by March 1, 1994. Services shall be selected and included in the basic benefit package based upon an assessment of the cost-effectiveness of such services in the maintenance of the health of the public. The best available scientific evidence and cost utilization studies shall be used in the assessment.

(2) The legislature intends that the basic benefit package be sufficient to meet the needs of state residents. The categories of coverage shall, at least, include the following:

(a) Personal health services, including inpatient and outpatient services;

(b) Wellness and disease and injury prevention services;

(d) Clinical preventive services;

(e) Emergency health services;

(f) Reproductive and maternity services;

(g) Clinical management and provision of treatment; and

(h) Therapeutic drugs, biologicals, supplies, and equipment.

(3) The commissioner shall determine which services will be excluded.

NEW SECTION. Sec. 405. APPLICABILITY. Subject to the exercise of authority in section 301 of this act:

(1) Effective July 1, 1994, every carrier offering health benefit plans to individuals and small employers shall also offer the basic benefit package as a certified health plan and shall offer such certified health plans through the pool in every area of the state where they provide health insurance benefits to any small employer or individual. Nothing in this subsection shall prevent a carrier from offering health benefit plans to individuals or small employers outside the pool, provided the benefits meet the requirements of chapter 48.-- RCW (sections 501 through 506 of this act).

(2) Effective January 1, 1996, every carrier offering health benefit plans to individuals or employers that includes any of the services in the basic benefit package shall: (a) Be certified under this chapter to provide all of the basic benefit package services and meet other requirements established in this chapter, or (b) meet the requirements of chapter 48.-- RCW (sections 501 through 506 of this act).

(3)(a) Effective July 1, 2000, every health benefit plan offered to residents of the state of Washington that includes any of the services in the basic benefit package, shall: (i) Be certified under this chapter to provide all the basic benefit services and meet other requirements of this chapter, or (ii) meet the requirements of chapter 48.-- RCW (sections 501 through 506 of this act).

(b) Prior to the effective date established under this subsection, the commissioner shall negotiate with the United States congress for a statutory exemption from provisions of the federal employer retirement income security act that would prohibit the state from implementing this subsection.

(4) Nothing in this section prohibits an individual or employer from voluntarily obtaining the basic benefit package through the pool on a date earlier than required under this section, provided such individuals and employers meet participation requirements set forth under this chapter. The pool shall permit voluntary enrollment only to the extent that the pool has the capacity to provide certified health plans to such employers.

(5) Nothing in this chapter shall prohibit a carrier or other entity offering the basic benefit plan from offering supplemental plans.

NEW SECTION. Sec. 406. CERTIFIED HEALTH PLANS. The basic benefit package shall be provided through certified health plans. The commissioner shall begin certification of health plans by July 1, 1994. To be certified, a health benefit plan shall meet the following requirements:

(1) Provide or assure the provision of health care services in the basic benefit package.

(2) With respect to carriers, offer the basic benefit package services in every geographic area of the state where the carrier provides any type of health benefit plan.

(3) Comply with data requirements of the commissioner and the health data, quality assurance, and cost control council established under chapter 70.170 RCW.

(4) Comply with rules of participation under this chapter or provisions of chapter 48.-- RCW (sections 501 through 506 of this act).

NEW SECTION. Sec. 407. MANAGED COMPETITION‑-RULES OF PARTICIPATION. All certified health plans offered through the pool shall abide by the provisions in this section. A certified health plan shall:

(1) Not deny, exclude, or limit benefits for a covered individual for expenses incurred more than six months following the effective date of the eligible individual's coverage due to a preexisting condition. (2) Not modify, decrease, exclude, or restrict benefits through riders, conditions, restrictions, endorsements, or otherwise, on the basis of sex, age, or health status or health condition of the eligible individual.

(3) Not modify, decrease, or restrict coverage through riders, conditions, restrictions, endorsements, or otherwise, on the basis of category of business trade, employment skill, or vocation or profession of the eligible individual.

(4) Assume financial risk of providing the basic benefit to all enrolled individuals subject to any medical risk sharing arrangements that may be authorized under this chapter.

(5) Determine and adjust annual premium rates based on the experience of the state as a community, except that adjustments in the premium rates may be made, following the schedule established by the commissioner, for age and gender of individual enrollees and for the cost of providing the basic benefit package within major geographic areas within the state. No coverage may be denied to an enrollee during the contract enrollment period provided that premium payments are made and other conditions of participation are met in accordance with this chapter.

(6) Provide the basic health package in a manner to promote the use of cost-effective managed health care delivery.

(7) Participate in an open enrollment period each year at a time established by the commissioner.

(8) Offer incentives to encourage providers to offer high quality, cost-effective health care services.

(9) Participate in an insurance commissioner-adopted uniform outcome-based accountability and reporting system to allow the commissioner, employers, and other individuals to compare the price and best value of certified health plans.

(10) Provide such data as is requested by the commissioner and the health data, quality assurance, and cost control council under chapter 70.170 RCW that is necessary to implement the provisions of this chapter.

NEW SECTION. Sec. 408. POOL COMPETITIVE BIDDING PROCESS WITH MANAGED HEALTH CARE PROVIDERS. Subject to the exercise of authority in section 301 of this act:

(1) By January 1, 1994, the commissioner shall adopt rules for accepting competitive bids from certified health plans to offer the basic benefit package through the pool. The rules shall assure that certified health plans compete based upon the best price, service, quality, and value of providing the basic benefit package to enrollees.

(2) Beginning July 1, 1994, and on that date each year thereafter, the commissioner shall accept the bids from certified health plans and make such plans available to pool enrollees according to the provisions of this chapter.

NEW SECTION. Sec. 409. HEALTH CARE INSURANCE PREMIUM GROWTH RATE TARGETS. To assure the cost of health care services in the state remains affordable, the commissioner shall establish health insurance premium growth rate targets. The purpose of this section shall be to establish the maximum state-wide premium growth rate targets for insured health care services provided on a capitated bases and to initiate activities to limit the growth of spending should the targets be exceeded. The targets shall be established as follows:

(1)(a) For the basic benefit package health care services purchased through the pool, the initial base premium shall be established by the commissioner. In establishing the initial base premium, the commissioner shall conduct an analysis of the 1993 cost experience of health benefit plans offering health care benefits similar to the basic benefit package to groups in the state of Washington whose enrollment size is similar to what the commissioner anticipates for the pool. The commissioner may also consider other factors in establishing the initial base premium such as, but not limited to, the expected use of managed care systems required under this chapter and the expected administrative savings resulting from implementation of the other provisions of chapter . . ., Laws of 1993 (this act). Annual premium growth rate targets established thereafter shall be at ten percent for 1995, nine percent for 1998, and seven percent for 2000. After 2000, the premium growth rate target shall increase at a rate no more than is generally consistent with the rate of growth in the state's gross domestic product adjusted for increased demand for services as the result of the aging of the general population.

(b) The commissioner shall monitor premium growth rate increases and shall inform certified health plans if such increases exceed targets. If premium rate increases exceed the target rates established under this subsection after 1998, the commissioner shall require that certified health plans reduce premium rate increases to no more than the target rate. In addition, the commissioner may reduce premium rate increases by an additional one percent below the target rate for a period of one year.

(2)(a) For health benefit plans subject to section 405(2) of this act the commissioner shall establish an initial premium base using the 1995 average premium rate of plans subject to subsection (1)(a) of this section. The premium growth rate targets thereafter shall be established at ten percent for 1998, nine percent for 2000, and seven percent for 2002. After 2002, the premium growth rate target shall grow at a rate no more than is generally consistent with the rate of growth in the state's gross domestic product adjusted for increased demand for services as the result of the aging of the general population.

(b) The commissioner shall monitor premium rate increases and shall inform certified health plans if such increases exceed targets. If premium rate increases exceed the target rates established under this subsection after 2000, the commissioner shall require that certified health plans reduce premium rate increases to no more than the target rate. In addition, the commissioner may reduce premium rate increases by an additional one percent below the target rate for a period of one year.

(3)(a) For health benefit plans subject to section 405(3) of this act the commissioner shall establish an initial premium base using the 1999 average premium rate of plans subject to subsection (1)(a) of this section. The premium growth rate targets thereafter shall be established at ten percent for 2002, nine percent for 2004, and seven percent for 2006. After 2006, the premium growth rate target shall grow at a rate no more than is generally consistent with the rate of growth in the state's gross domestic product adjusted for increased demand for services as the result of the aging of the general population.

(b) The commissioner shall monitor premium rate increases and shall inform certified health plans if such increases exceed targets. If premium rate increases exceed the target rates established under this subsection after 2004, the commissioner shall require that certified health plans reduce premium rate increases to no more than the target rate. In addition, the commissioner may reduce premium rate increases by an additional one percent below the target rate for a period of one year.

(4) The annual premium growth targets established in subsections (1) through (3) of this section may be annually adjusted by the commissioner to an amount equal to the United States consumer price index if the growth in the consumer price index exceeds the premium growth rate targets established under subsections (1) through (3) of this section.

(5) The commissioner shall annually report to the governor and to the fiscal and health policy committees of the legislature concerning compliance with the targets and commissioner activities undertaken to assure compliance when targets have been exceeded.

NEW SECTION. Sec. 410. Sections 401 through 409 of this act shall constitute a new chapter in Title 48 RCW.

PART V - INSURANCE REFORM

NEW SECTION. Sec. 501. SHORT TITLE. This chapter shall be known and cited as the employer and individual health coverage act.

NEW SECTION. Sec. 502. DEFINITIONS. As used in this chapter:

(1) "Basic benefit package" means the uniform, appropriate, confidentially provided, and affordable set of personal health services designed by the commissioner and to be made available to enrollees by certified health plans.

(2) "Carrier" means an entity that provides a health insurance benefit plan to employers and individuals in Washington state as an insurance company, health services contractor, or health maintenance organization, and is regulated by the state of Washington under chapter 48.20, 48.21, 48.44, or 48.46 RCW.

(3) "Certified health plans" means health insurance plans offered by carriers and certified by the commissioner to provide the basic benefit package.

(4) "Eligible individual" means (a) an individual person who elects to purchase a health benefit plan for himself or herself and his or her dependents, or (b) an active employee, proprietor, partner, or corporate officer of an employer group who elects to purchase a health benefit plan for himself or herself and his or her dependents where the eligible individual resides, is paid on a regular, periodic basis through the group's payroll system, regularly works on a full-time basis and has a normal work week of twenty or more hours, and is expected to continue in this employment capacity.

(5) "Employer" means a person, firm, corporation, partnership, or association that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar quarter, employed eligible individuals, the majority of whom were employed within Washington state.

(6) "Enrollee" means an eligible individual who receives the basic benefit package from a carrier.

(7) "Health benefit plan" means a hospital or medical policy, health care service contract, health maintenance organization subscriber contract, or plan provided by any other benefit arrangement. The term does not include accident only, credit, dental only, vision only, medicare supplement, or disability income insurance coverage issued as a supplement to liability insurance, workers' compensation or similar insurance, or automobile medical payment insurance.

(8) "Insurance commissioner" or "commissioner" means the state health insurance purchasing pool board as established under chapter 48.-- RCW (sections 401 through 409 of this act).

(9) "Preexisting condition" means a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment immediately preceding the effective date of coverage or a condition for which medical advice, diagnosis, care, or treatment was recommended or received during the six months immediately preceding the effective date of coverage, or a pregnancy existing on the effective date of coverage.

(10) "Rating period" means the twelve-month period for which premium rates established by a carrier are presumed to be in effect.

NEW SECTION. Sec. 503. SCOPE AND APPLICABILITY. Subject to the exercise of authority in section 301 of this act, except for health benefit plans offered under chapter 48.-- RCW (sections 401 through 409 of this act), the provisions of this chapter shall apply to all health insurance benefits offered to individuals and employers in Washington state by state-regulated insurance companies under chapter 48.20 or 48.21 RCW, health services contractors under chapter 48.44 RCW, or health maintenance organizations under chapter 48.46 RCW.

NEW SECTION. Sec. 504. GENERAL REQUIRED PRACTICES IN THE EMPLOYER AND INDIVIDUAL HEALTH BENEFIT PLAN MARKET. Health benefit plans subject to the provisions of this chapter:

(1) Shall not deny, exclude, or limit benefits for a covered individual for losses incurred more than six months following the effective date of the eligible individual's coverage due to a preexisting condition.

(2) Shall not modify, decrease, exclude, or restrict benefits through riders, conditions, restrictions, endorsements, or otherwise, on the basis of sex, age, or health status or health condition of the eligible individual.

(3) Shall not modify, decrease, or restrict coverage through riders, conditions, restrictions, endorsements, or otherwise, on the basis of category of business trade, employment skill, or vocation or profession of the eligible individual.

(4) Entities offering health benefit plans shall:

(a) Assume the full financial risk of providing the health benefit plan to all enrollees;

(b) Determine and adjust annual premium rates based on a community basis using the entire state as the community pool;

(d) Require that employers:

(i) Enroll at least eighty percent of individuals in the employer's group;

(ii) Pay between fifty and ninety percent of premiums on behalf of employees enrolled in the health benefit plan; and

(iii) Require point of service cost-sharing as established by the pool under chapter 48.-- RCW (sections 401 through 409 of this act);

(e) Adjust premium rates for a rating period based upon the average of actual or expected variation in claims costs or actual or expected variation in the health status of the state community pool;

(f) Comply with premium growth rate targets prescribed under chapter 48.-- RCW (sections 401 through 409 of this act);

(g) Provide data as required by the health data, quality assurance, and cost control council under chapter 70.170 RCW; and

(h) Guarantee renewability of coverage except for nonpayment of premium unless the insurer has obtained the prior written approval of the commissioner who may, at his or her discretion, permit nonrenewal when renewal would impair the carrier's ability to perform its contractual duties.

NEW SECTION. Sec. 505. CERTIFICATION OF HEALTH BENEFIT PLANS REQUIRED. Subject to section 301 of this act:

(1) Effective January 1, 1996, all health benefit plans subject to the provisions of this chapter must be certified by the commissioner to offer the entire set of health services in the basic benefit package if the plans offer any health services included in the basic benefit package.

(2) The commissioner shall certify that the carrier provides the entire basic benefit package through managed care providers, abides by enrollee cost-sharing requirements prescribed in chapter 48.-- RCW (sections 401 through 409 of this act), and has paid a certification fee as established in rule by the commissioner.

(3) Nothing in this chapter shall prohibit carriers from offering supplemental plans that include services not provided in the basic benefit package.

NEW SECTION. Sec. 506. DUTIES OF THE INSURANCE COMMISSIONER. The commissioner shall adopt rules to implement sections 501 through 504 of this act.

NEW SECTION. Sec. 507. CODIFICATION DIRECTIONS. Sections 501 through 506 of this act shall constitute a new chapter in Title 48 RCW.

NEW SECTION. Sec. 508. IMPLEMENTATION. Sections 501 through 506 of this act are effective for health benefit plans issued or renewed after July 1, 1994.

PART VI - INSURANCE CODE REVISIONS

Sec. 601. RCW 48.21.010 and 1992 c 226 s 2 are each amended to read as follows:

Group disability insurance is that form of disability insurance, including stop loss insurance as defined in RCW 48.11.030, provided by a master policy issued to an employer, to a trustee appointed by an employer or employers, or to an association of employers formed for purposes other than obtaining such insurance, except as may be authorized in chapter 48.-- RCW (sections 401 through 409 of this act) and sections 201 through 203 of this act, covering, with or without their dependents, the employees, or specified categories of the employees, of such employers or their subsidiaries or affiliates, or issued to a labor union, or to an association of employees formed for purposes other than obtaining such insurance, covering, with or without their dependents, the members, or specified categories of the members, of the labor union or association, or issued pursuant to RCW 48.21.030. Group disability insurance shall also include such other groups as qualify for group life insurance under the provisions of this code.

Sec. 602. RCW 48.21.050 and 1947 c 79 s .21.05 are each amended to read as follows:

Except as provided for in chapter 48.-- RCW (sections 401 through 409 of this act), sections 201 through 203 of this act, and chapter 48.-- RCW (sections 501 through 506 of this act), every policy of group or blanket disability insurance shall contain in substance the provisions as set forth in RCW 48.21.060 to 48.21.090, inclusive, or provisions which in the opinion of the commissioner are more favorable to the individuals insured, or at least as favorable to such individuals and more favorable to the policyholder. No such policy of group or blanket disability insurance shall contain any provision relative to notice or proof of loss, or to the time for paying benefits, or to the time within which suit may be brought upon the policy, which in the opinion of the commissioner is less favorable to the individuals insured than would be permitted by the standard provisions required for individual disability insurance policies.

Sec. 603. RCW 48.30.300 and 1975-'76 2nd ex.s. c 119 s 7 are each amended to read as follows:

No person or entity engaged in the business of insurance in this state shall refuse to issue any contract of insurance or cancel or decline to renew such contract because of the sex or marital status, or the presence of any sensory, mental, or physical handicap of the insured or prospective insured. The amount of benefits payable, or any term, rate, condition, or type of coverage shall not be restricted, modified, excluded, increased or reduced on the basis of the sex or marital status, or be restricted, modified, excluded or reduced on the basis of the presence of any sensory, mental, or physical handicap of the insured or prospective insured. Except as provided for in chapter 48.-- RCW (sections 401 through 409 of this act), sections 201 through 203 of this act, and chapter 48.-- RCW (sections 501 through 506 of this act), these provisions shall not prohibit fair discrimination on the basis of sex, or marital status, or the presence of any sensory, mental, or physical handicap when bona fide statistical differences in risk or exposure have been substantiated.

Sec. 604. RCW 48.44.220 and 1983 c 154 s 4 are each amended to read as follows:

No health care service contractor shall deny coverage to any person solely on account of race, religion, national origin, or the presence of any sensory, mental, or physical handicap. Except as provided for in chapter 48.-- RCW (sections 401 through 409 of this act), sections 201 through 203 of this act, and chapter 48.-- RCW (sections 501 through 506 of this act), nothing in this section shall be construed as limiting a health care service contractor's authority to deny or otherwise limit coverage to a person when the person because of a medical condition does not meet the essential eligibility requirements established by the health care service contractor for purposes of determining coverage for any person.

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

Sec. 605. RCW 48.46.370 and 1983 c 106 s 15 are each amended to read as follows:

No health maintenance organization may deny coverage to a person solely on account of the presence of any sensory, mental, or physical handicap. Except as provided for in chapter 48.-- RCW (sections 401 through 409 of this act), sections 201 through 203 of this act, and chapter 48.-- RCW (sections 501 through 506 of this act), nothing in this section may be construed as limiting a health maintenance organization's authority to deny or otherwise limit coverage to a person when the person because of a medical condition does not meet the essential eligibility requirements established by the health maintenance organization for purposes of determining coverage for any person.

PART VII - BASIC HEALTH PLAN EXPANSION

Sec. 701. RCW 70.47.010 and 1987 1st ex.s. c 5 s 3 are each amended to read as follows:

(1) The legislature finds that:

(a) A significant percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of necessary basic health care services;

(b) This lack of basic health care coverage is detrimental to the health of the individuals lacking coverage and to the public welfare, and results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and all purchasers of health care, including the state; and

(c) The use of managed health care systems has significant potential to reduce the growth of health care costs incurred by the people of this state generally, and by low-income pregnant women who are an especially vulnerable population, along with their children, and who need greater access to managed health care.

(2) The purpose of this chapter is to provide or make available necessary basic health care services in an appropriate setting to working persons and others who lack coverage, at a cost to these persons that does not create barriers to the utilization of necessary health care services. To that end, this chapter establishes a program to be made available to those residents under sixty-five years of age not otherwise eligible for medicare with gross family income at or below ((~~two~~)) three hundred percent of the federal poverty guidelines who share in a portion of the cost or who pay the full cost of receiving basic health care services from a managed health care system.

(3) It is not the intent of this chapter to provide health care services for those persons who are presently covered through private employer-based health plans, nor to replace employer-based health plans. Further, it is the intent of the legislature to expand, wherever possible, the availability of private health care coverage and to discourage the decline of employer-based coverage.

(4) ((The program authorized under this chapter is strictly limited in respect to the total number of individuals who may be allowed to participate and the specific areas within the state where it may be established. All such restrictions or limitations shall remain in full force and effect until quantifiable evidence based upon the actual operation of the program, including detailed cost benefit analysis, has been presented to the legislature and the legislature, by specific act at that time, may then modify such limitations)) (a) It is the purpose of this chapter to acknowledge the initial success of this program that has (i) assisted thousands of families in their search for affordable health care; (ii) demonstrated that low-income uninsured families are willing to pay for their own health care coverage to the extent of their ability to pay; and (iii) proved that local health care providers are willing to enter into a public-private partnership as they configure their own professional and business relationships into a managed care system.

(b) As a consequence, the legislature intends to make the program available to individuals in the state with incomes below three hundred percent of federal poverty guidelines who reside in communities where the plan is operational, and who collectively or individually wish to exercise the opportunity to purchase health care coverage through the program if it is done at no cost to the state.

Sec. 702. RCW 70.47.020 and 1987 1st ex.s. c 5 s 4 are each amended to read as follows:

As used in this chapter:

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

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

(3) "Managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the administrator and rendered by duly licensed providers, on a prepaid capitated basis to a defined patient population enrolled in the plan and in the managed health care system.

(4) "Enrollee" means an individual, or an individual plus the individual's spouse and/or dependent children, all under the age of sixty-five and not otherwise eligible for medicare, who resides in an area of the state served by a managed health care system participating in the plan, ((whose gross family income at the time of enrollment does not exceed twice the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services,)) who chooses to obtain basic health care coverage from a particular managed health care system in return for periodic payments to the plan. Nonsubsidized enrollees shall be considered enrollees unless otherwise specified.

(5) "Nonsubsidized enrollee" means an enrollee who pays the full premium for participation in the plan and shall not be eligible for any subsidy from the plan.

(6) "Subsidy" means the difference between the amount of periodic payment the administrator makes, from funds appropriated from the basic health plan trust account, to a managed health care system on behalf of an enrollee plus the administrative cost to the plan of providing the plan to that enrollee, and the amount determined to be the enrollee's responsibility under RCW 70.47.060(2).

((~~(6)~~)) (7) "Premium" means a periodic payment, based upon gross family income and determined under RCW 70.47.060(2), which an enrollee makes to the plan as consideration for enrollment in the plan.

((~~(7)~~)) (8) "Rate" means the per capita amount, negotiated by the administrator with and paid to a participating managed health care system, that is based upon the enrollment of enrollees in the plan and in that system.

Sec. 703. RCW 70.47.030 and 1992 c 232 s 907 are each amended to read as follows:

(1) The basic health plan trust account is hereby established in the state treasury. ((~~All~~)) Any nongeneral fund-state funds collected for this program shall be deposited in the basic health plan trust account and may be expended without further appropriation. Moneys in the account shall be used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of enrollees in the plan and payment of costs of administering the plan. After July 1, 1993, the administrator shall not expend or encumber for an ensuing fiscal period amounts exceeding ninety-five percent of the amount anticipated to be spent for purchased services during the fiscal year.

(2) The basic health plan subscription account is created in the custody of the state treasurer. All receipts from amounts due under RCW 70.47.060 (11) 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. 704. RCW 70.47.060 and 1992 c 232 s 908 are each amended to read as follows:

The administrator has the following powers and duties:

(1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, and other services including prescription drugs and medications 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.

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

Premiums due from nonsubsidized enrollees, who are not otherwise eligible to be enrollees, shall be in an amount equal to the 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)(a) To limit the payment of a subsidy to only of those enrollees, as defined in RCW 70.47.020, whose gross family income at the time of enrollment does not exceed two and one-half times the federal poverty level adjusted for family size and determined annually by the federal department of health and human services.

(b) To limit participation of nonsubsidized enrollees in the plan to those whose family incomes at the time of enrollment does not exceed three times the federal poverty level adjusted for family size and determined annually by the federal department of health and human services.

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

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

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

~~(7)~~)) (8) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan. The administrator shall endeavor to assure that covered basic health care services are available to any enrollee of the plan from among a selection of two or more participating managed health care systems. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the administrator shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the several areas of the state.

((~~(8)~~)) (9) To receive periodic premiums from enrollees, deposit them in the basic health plan operating account, keep records of enrollee status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.

((~~(9)~~)) (10) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan as subsidized enrollees, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and at least annually thereafter, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. An enrollee who remains current in payment of the sliding-scale premium, as determined under subsection (2) of this section, and whose gross family income has risen above ((~~twice~~)) two and one-half times the federal poverty level, may continue enrollment as subsidized enrollees unless and until the enrollee's gross family income has remained above ((~~twice~~)) two and one-half times the poverty level for ((~~six~~)) eighteen consecutive months, by making payment at the unsubsidized rate required for the managed health care system in which he or she may be enrolled plus the administrative cost of providing the plan to that enrollee. No subsidy may be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to RCW 70.47.110, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW. If a number of enrollees drop their enrollment for no apparent good cause, the administrator may establish appropriate rules or requirements that are applicable to such individuals before they will be allowed to re-enroll in the plan.

((~~(10)~~)) (11) To accept applications from 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, whose gross family income at the time of enrollment does not exceed three times the federal poverty level as adjusted for family size and determined by the federal department of health and human services, who wish to enroll in the plan at no cost to the state and choose to obtain the basic health care coverage and services from a managed care system participating in the plan. Any such nonsubsidized enrollees must pay the amount negotiated by the administrator with the participating managed health care system and the administrative cost of providing the plan to such nonsubsidized enrollees and shall not be eligible for any subsidy from the plan.

(12) 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. In determining the rate to be paid to a contractor, the administrator shall strive to assure that the rate does not result in adverse cost shifting to other private payers of health care.

((~~(11)~~)) (13) 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)~~)) (14) 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)~~)) (15) 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)~~)) (16) To develop a program of proven preventive health measures and to integrate it into the plan wherever possible and consistent with this chapter.

((~~(15)~~)) (17) 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. 705. 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~~)) the average monthly 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.

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

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

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

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

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

PART VIII - HEALTH DATA

Sec. 801. RCW 70.170.010 and 1989 1st ex.s. c 9 s 501 are each amended to read as follows:

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

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

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

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

Sec. 802. RCW 70.170.020 and 1989 1st ex.s. c 9 s 502 are each amended to read as follows:

As used in this chapter:

(1) "Council" means the health care ((~~access~~)) data, quality assurance, and cost control council created by this chapter.

(2) "Department" means department of health.

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

(4) "Secretary" means secretary of health.

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

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

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

(8) "Health care" means all care, goods, technologies, or services provided to persons by providers of care intended to ascertain, improve, restore, or maintain the health and well-being of such persons. It specifically includes but is not limited to, the care, goods, technologies, or services of health care practitioners, programs, facilities, or other health care entities regulated by Title 18 or 70 RCW.

(9) "Providers" means all health care practitioners, programs, facilities, or other health care entities regulated under Title 18 or 70 RCW.

(10) "Health care payers" includes all state health care payment programs; all disability insurers, health care service contractors, and health maintenance organizations subject to the jurisdiction of the insurance commissioner under Title 48 RCW; all providers, carriers, and others subject to the provisions of chapter 48.-- RCW (sections 401 through 409 of this act), and all employers who provide health care benefits to employees through self-insurance.

(11) "Reporters" means providers and health care payers.

Sec. 803. RCW 70.170.030 and 1989 1st ex.s. c 9 s 503 are each amended to read as follows:

(1) There is created the health care ((~~access~~)) data, quality assurance, and cost control council within the department of health consisting of the following: The director of the department of labor and industries; the administrator of the health care authority; the secretary of social and health services; the insurance commissioner; the administrator of the basic health plan; a person representing the governor on matters of health policy; the secretary of health; and ((one member from the public-at-large to be selected by the governor who shall represent individual consumers of health care. The public member shall not have any fiduciary obligation to any health care facility or any financial interest in the provision of health care services)) six public members. Public members shall be appointed by the governor. In selecting public members, the governor shall assure that the council collectively has the technical expertise necessary to fulfill the purposes of this chapter and also reflects the perspectives of the users and reporters. Public members shall serve five-year terms. The governor shall designate three of the initial appointees to serve three-year terms in order to provide staggered terms. Thereafter all public members shall serve five-year terms. All persons appointed to fill vacancies shall be appointed in the same manner as the persons they are replacing. Members employed by the state shall serve without pay and participation in the council's work shall be deemed performance of their employment. The public member shall be compensated in accordance with RCW 43.03.240 and shall be reimbursed for related travel expenses in accordance with RCW 43.03.050 and 43.03.060.

(2) A member of the council designated by the governor shall serve as chairman. The council shall elect a vice-chairman from its members biennially. Meetings of the council shall be held as frequently as its duties require. The council shall keep minutes of its meetings and adopt procedures for the governing of its meetings, minutes, and transactions.

(3) ((~~Four~~)) Six members shall constitute a quorum((~~, but a vacancy on the council shall not impair its power to act~~)). No action of the council shall be effective unless four members concur therein.

Sec. 804. RCW 70.170.040 and 1989 1st ex.s. c 9 s 504 are each amended to read as follows:

(1) In order to advise the department and the board of health in preparing executive request legislation and the state health report according to RCW 43.20.050, and, in order to represent the public interest, the council shall monitor and evaluate hospital and related health care services consistent with RCW 70.170.010. In fulfilling its responsibilities, the council shall have complete access to all the department's data and information systems.

(2) The council shall advise the department on the ((~~hospital~~)) health care data collection system required by this chapter.

(3) The council, in addition to participation in the development of the state health report, shall, from time to time, report to the governor and the appropriate committees of the legislature with proposed changes in hospital and related health care services, consistent with the findings in RCW 70.170.010.

((~~(4) The department may undertake, with advice from the council and within available funds, the following studies:~~

~~(a) Recommendations regarding health care cost containment, and the assurance of access and maintenance of adequate standards of care;~~

~~(b) Analysis of the effects of various payment methods on health care access and costs;~~

~~(c) The utility of the certificate of need program and related health planning process;~~

~~(d) Methods of permitting the inclusion of advance medical technology on the health care system, while controlling inappropriate use;~~

~~(e) The appropriateness of allocation of health care services;~~

~~(f) Professional liabilities on health care access and costs, to include:~~

~~(i) Quantification of the financial effects of professional liability on health care reimbursement;~~

(ii) Determination of the effects, if any, of nonmonetary factors upon the availability of, and access to, appropriate and necessary basic health services such as, but not limited to, prenatal and obstetrical care; and

~~(iii) Recommendation of proposals that would mitigate cost and access impacts associated with professional liability.~~

~~The department shall report its findings and recommendations to the governor and the appropriate committees of the legislature not later than July 1, 1991.~~))

Sec. 805. RCW 70.170.050 and 1989 1st ex.s. c 9 s 505 are each amended to read as follows:

The department shall have the authority to respond to requests ((~~of others~~)) for data, special studies, or analysis. The department may require ((~~such sponsors to pay~~)) payment of any or all of the reasonable costs associated with such requests that might be approved, but in no event may costs directly associated with any such special study be charged against the funds generated by the assessment authorized under RCW 70.170.080.

Sec. 806. RCW 70.170.080 and 1991 sp.s. c 13 s 71 are each amended to read as follows:

The basic expenses for the ((~~hospital~~)) data collection and reporting activities of this chapter shall be financed by an assessment ((~~against hospitals~~)) upon reporters of no more than four one-hundredths of one percent of ((each hospital's gross operating costs, to be levied and collected from and after that date, upon which the similar assessment levied under chapter 70.39 RCW is terminated, for the provision of hospital services for its last fiscal year ending on or before June 30th of the preceding calendar year)) the gross billed amount for the service that is the subject matter of the data. Budgetary requirements in excess of that limit must be financed by a general fund appropriation by the legislature. All moneys collected under this section shall be deposited by the state treasurer in the ((~~hospital~~)) health data collection account which is hereby created in the state treasury. This account is the successor to the hospital data collection account, the balance of which shall be placed in the health care data collection account. The department may also charge, receive, and dispense funds or authorize any contractor or outside sponsor to charge for and reimburse the costs associated with special studies as specified in RCW 70.170.050.

Any amounts raised by the collection of assessments from hospitals provided for in this section which are not required to meet appropriations in the budget act for the current fiscal year shall be available to the department in succeeding years.

Sec. 807. RCW 70.170.100 and 1990 c 269 s 12 are each amended to read as follows:

(1) The department, in consultation with the council, is responsible for the development, implementation, and custody of a state-wide ((~~hospital~~)) health care data system. As part of the design stage for development of the system, the ((~~department~~)) council 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, the Washington health insurance purchasing pool, and state government as consistent with the intent of this chapter and chapter 48.-- RCW (sections 401 through 409 of this act). The ((~~department~~)) council shall ((~~identify~~)) recommend to the department a set of ((~~hospital~~)) health care data elements and report specifications which satisfy these needs. The ((~~council shall review the design of the data system and may direct the department to~~)) department may contract with a private vendor ((~~for assistance in the design of the data system~~)) in the state of Washington for 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~~)) 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, and funded by, the legislature through the biennial appropriations process. 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 council and the department shall identify ((~~hospital~~)) health care data elements relating to ((~~both hospital finances~~)) health care costs, public health services, the quality of health care services, data needs necessary to implement provisions of chapter 48.-- RCW (sections 401 through 409 of this act) and ((~~the~~)) use of health care services by ((~~patients~~)) consumers. Data elements ((~~relating to hospital finances~~)) shall be reported ((~~by hospitals~~)) as the department 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 all reporters. In the case of hospitals this includes data elements identifying each hospital's revenues, expenses, contractual allowances, charity care, bad debt, other income, total units of inpatient and outpatient services, and other financial, service utilization, and quality-related information reasonably necessary to fulfill the purposes of this chapter, 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 department shall 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 this chapter. 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 recommended by the council and approved by the department in 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 shall be available for retrieval, unless deemed confidential, in original or processed form to public and private requestors 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 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 this chapter, including all state agencies, shall comply with requirements established by rule in the acquisition of data. The department shall each December 1 of even-numbered years report to the senate and house of representatives policy committees on health care on the status of the data system, the level of participation by payer and provider groups, and recommended statutory changes necessary to meet the objectives established in this chapter.

(7) The department shall establish in rule confidentiality standards to safeguard the information collected under this chapter from inappropriate use or release.

Sec. 808. 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~~)) vendor in the state of Washington to provide any studies or reports it chooses to conduct consistent with the purposes of this chapter. ((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.)) The department may perform such studies or any other studies consistent with the purposes of this chapter. These reports ((~~shall~~)) may include:

(1) Consumer guides on purchasing ((~~hospital care services and~~)) or consuming health care and publications providing verifiable and useful comparative information to ((~~consumers on hospitals and hospital~~)) the public on health care services and the quality of health care providers;

(2) Reports for use by classes of purchasers, 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;

(4) Any other studies deemed useful to assist the public in understanding the prudent and cost-effective use of the health care delivery system;

(5) Study and report each December 1 to the health policy and fiscal committees of the legislature and the governor on the number of uninsured residents in the state. The report shall provide enough detail to permit the legislature and the governor to monitor the effectiveness of the state's efforts to increase the availability of health insurance to state residents and to identify significant populations or groups who remain uninsured; and

(6) Any other studies necessary to fulfill the legislative intent of this chapter and the provisions of chapter 48.-- RCW (sections 401 through 409 of this act).

NEW SECTION. Sec. 809. A new section is added to chapter 70.170 RCW to read as follows:

COUNCIL STUDY. The council shall examine 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) Recommendations on elimination or consolidation of unnecessary or duplicative regulatory activities that would not result in a reduction in the health and safety objectives.

PART IX - DISCLOSURE OF HOSPITAL AND PHARMACY CHARGES

NEW SECTION. Sec. 901. 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 payors.

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

NEW SECTION. Sec. 902. A new section is added to chapter 71.12 RCW to read as follows:

NEW SECTION. Sec. 903. 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. The prescription drug market is extremely cost competitive. The causes of these phenomena are complex. 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. 904. A new section is added to chapter 18.68 RCW to read as follows:

The registered or licensed pharmacist under 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 across his or her patients. These charges shall be easily read and provided to the physician or other health care provider on a monthly basis by the pharmacy. The physician or other health care provider may inform the patient of these charges.

NEW SECTION. Sec. 905. The department of health shall report to the legislature by December 31, 1993, with recommendations on any necessary revisions to sections 901 through 904 of this act, including their continued necessity and the appropriateness of their repeal.

NEW SECTION. Sec. 906. Sections 901 through 904 of this act shall take effect July 1, 1994.

PART X - COMMISSION ON THE BEGINNING OF LIFE

AND THE END OF LIFE

NEW SECTION. Sec. 1001. 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.

NEW SECTION. Sec. 1002. The sum of seventy-five thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the general fund to the commission on the beginning and end of life for the purposes of section 1001 of this act.

PART XI - MALPRACTICE

NEW SECTION. Sec. 1101. A new section is added to chapter 7.70 RCW to read as follows:

NONECONOMIC DAMAGES‑-JOINT AND SEVERAL LIABILITY‑-LEGISLATIVE INTENT. The legislature finds that in Sofie v. Fibreboard Corp., 112 Wn.2d 636 (1989), the Washington state supreme court struck down the limit on noneconomic damages enacted by the legislature in 1986, because the court found that the statutory limitation on noneconomic damages interfered with the jury's province to determine damages, and thus violated a plaintiff's constitutionally protected right to trial by jury.

The legislature further finds that reforms in existing law for actions involving fault are necessary and proper to avoid catastrophic economic consequences for state and local governmental entities as well as private individuals and businesses.

Therefore, the legislature declares that to remedy the economic inequities which may arise from Sofie, defendants in actions involving fault should be held financially liable in closer proportion to their respective degree of fault. To treat them differently is unfair and inequitable.

It is further the intent of the legislature to partially eliminate causes of action based on joint and several liability as provided by this chapter for the purpose of reducing costs associated with the civil justice system.

NEW SECTION. Sec. 1102. A new section is added to chapter 7.70 RCW to read as follows:

JOINT AND SEVERAL LIABILITY RESTRICTIONS. (1) For the purposes of this section, the term "economic damages" means objectively verifiable monetary losses, including medical expenses, loss of earnings, burial costs, cost of obtaining substitute domestic services, loss of employment, and loss of business or employment opportunities. "Economic damages" does not include subjective, nonmonetary losses such as pain and suffering, mental anguish, emotional distress, disability and disfigurement, inconvenience, injury to reputation, humiliation, destruction of the parent-child relationship, the nature and extent of an injury, loss of consortium, society, companionship, support, love, affection, care, services, guidance, training, instruction, and protection.

(2) In all actions involving fault of more than one entity, the trier of fact shall determine the percentage of the total fault which is attributable to every entity which caused the claimant's injuries, including the claimant or person suffering personal injury, defendants, third-party defendants, entities released by the claimant, entities immune from liability to the claimant, and entities with any other individual defense against the claimant. Judgment shall be entered against each defendant except those who have been released by the claimant or are immune from liability to the claimant or have prevailed on any other individual defense against the claimant in an amount that represents that party's proportionate share of the claimant's total damages. The liability of each defendant shall be several only and shall not be joint except:

(a) A party shall be responsible for the fault of another person or for payment of the proportionate share of another party where both were acting in concert or when a person was acting as an agent or servant of the party.

(b) If the trier of fact determines that the claimant or party suffering bodily injury was not at fault, the defendants against whom judgment is entered shall be jointly and severally liable for the sum of their proportionate shares of the claimant's economic damages.

(3) If a defendant is jointly and severally liable under one of the exceptions listed in subsection (2)(a) or (b) of this section, such defendant's rights to contribution against another jointly and severally liable defendant, and the effect of settlement by either such defendant, shall be determined under RCW 4.22.040, 4.22.050, and 4.22.060.

NEW SECTION. Sec. 1103. A new section is added to chapter 18.130 RCW to read as follows:

MALPRACTICE INSURANCE COVERAGE MANDATE. Except to the extent that liability insurance is not available, every licensed health care practitioner whose services are included in the uniform benefits package, as determined by section 403 of this act, and whose scope of practice includes independent practice, shall, as a condition of licensure and relicensure, be required to provide evidence of a minimum level of malpractice insurance coverage. On or before January 1, 1994, the department shall designate by rule:

(1) Those health professions whose scope of practice includes independent practice;

(2) For each health profession whose scope of practice includes independent practice, whether malpractice insurance is available; and

(3) If such insurance is available, the appropriate minimum level of mandated coverage.

NEW SECTION. Sec. 1104. A new section is added to Title 70 RCW to read as follows:

RISK MANAGEMENT TRAINING WITHIN HEALTH FACILITIES. Effective July 1, 1994, each health care provider, facility, or health maintenance organization that self-insures for liability risks related to medical malpractice and employs physicians or other independent health care practitioners in Washington state shall condition each physician's and practitioner's liability coverage by that entity upon that physician's or practitioner's participation in risk management training offered by the provider, facility, or health maintenance organization to its employees. The risk management training shall provide information related to avoiding adverse health outcomes resulting from substandard practice and minimizing damages associated with those adverse health outcomes that occur. For purposes of this section, "independent health care practitioner" means those health care practitioner licensing classifications designated by the department of health in rule under section 605 of this act.

NEW SECTION. Sec. 1105. A new section is added to chapter 48.22 RCW to read as follows:

RISK MANAGEMENT TRAINING OF INDEPENDENT HEALTH CARE PRACTITIONERS. Effective July 1, 1994, a casualty insurer's issuance of a new medical malpractice policy or renewal of an existing medical malpractice policy, to a physician or other independent health care practitioner, shall be conditioned upon that practitioner's participation in, and completion of, health care liability risk management training offered by the insurer. The risk management training shall provide information related to avoiding adverse health outcomes resulting from substandard practice and minimizing damages associated with those adverse health outcomes that occur. For purposes of this section, "independent health care practitioners" means those health care practitioner licensing classifications designated by the department of health in rule pursuant to section 605 of this act.

Sec. 1106. 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. 1107. RCW 18.130.190 and 1991 c 3 s 271 are each amended to read as follows:

PRACTICE WITHOUT LICENSE--INVESTIGATION OF COMPLAINTS--TEMPORARY CEASE AND DESIST ORDERS--INJUNCTIONS--PENALTY. (1) The secretary shall investigate complaints concerning practice by unlicensed persons of a profession or business for which a license is required by the chapters specified in RCW 18.130.040. In the investigation of the complaints, the secretary shall have the same authority as provided the secretary under RCW 18.130.050. The secretary shall issue a cease and desist order to a person after notice and hearing and upon a determination that the person has violated this subsection. If the secretary makes a written finding of fact that the public interest will be irreparably harmed by delay in issuing an order, the secretary may issue a temporary cease and desist order. The cease and desist order shall not relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy of a cease and desist order shall be in addition to any criminal liability. The cease and desist order is conclusive proof of unlicensed practice and may be enforced under RCW 7.21.060. This method of enforcement of the cease and desist order may be used in addition to, or as an alternative to, any provisions for enforcement of agency orders set out in chapter 34.05 RCW.

(2) The attorney general, a county prosecuting attorney, the secretary, a board, or any person may in accordance with the laws of this state governing injunctions, maintain an action in the name of this state to enjoin any person practicing a profession or business for which a license is required by the chapters specified in RCW 18.130.040 without a license from engaging in such practice or operating such business until the required license is secured. However, the injunction shall not relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy by injunction shall be in addition to any criminal liability.

(3) Unlicensed practice of a profession or operating a business for which a license is required by the chapters specified in RCW 18.130.040, unless otherwise exempted by law, constitutes a gross misdemeanor. All fees, fines, forfeitures, and penalties collected or assessed by a court because of a violation of this section shall be remitted to the health professions account.

(4) In addition to the remedies provided in this section, the secretary is authorized to impose a civil penalty of up to five thousand dollars on any person engaged, without a license, in a profession or business for which a license is required by the chapters specified in RCW 18.130.040. The imposition of such civil penalty shall occur only subsequent to a hearing in conformance with the provisions of chapter 34.05 RCW in any case in which the secretary finds that there has been a failure or refusal to comply with the provisions of any chapters specified in RCW 18.130.040.

Sec. 1108. RCW 70.41.200 and 1991 c 3 s 336 are each amended to read as follows:

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

(a) The establishment of a quality assurance committee with the responsibility to review the services rendered in the hospital in order to improve the quality of medical care of patients and to prevent medical malpractice. The committee shall oversee and coordinate the medical malpractice prevention program and shall insure that information gathered pursuant to the program is used to review and to revise hospital policies and procedures. At least one member of the committee shall be a member of the governing board of the hospital who is not otherwise affiliated with the hospital in an employment or contractual capacity;

(b) A medical staff privileges sanction procedure through which credentials, physical and mental capacity, and competence in delivering health care services are periodically reviewed as part of an evaluation of staff privileges;

(c) The periodic review of the credentials, physical and mental capacity, and competence in delivering health care services of all persons who are employed or associated with the hospital;

(d) A procedure, including but not limited to, mediation, for the prompt resolution of grievances by patients or their representatives related to accidents, injuries, treatment, and other events that may result in claims of medical malpractice;

(e) The maintenance and continuous collection of information concerning the hospital's experience with negative health care outcomes and incidents injurious to patients, patient grievances, professional liability premiums, settlements, awards, costs incurred by the hospital for patient injury prevention, and safety improvement activities;

(f) The maintenance of relevant and appropriate information gathered pursuant to (a) through (e) of this subsection concerning individual physicians within the physician's personnel or credential file maintained by the hospital;

(g) Education programs dealing with patient safety, injury prevention, staff responsibility to report professional misconduct, the legal aspects of patient care, improved communication with patients, and causes of malpractice claims for staff personnel engaged in patient care activities; and

(h) Policies to ensure compliance with the reporting requirements of this section.

(2) Any person who, in substantial good faith, provides information to further the purposes of the medical malpractice prevention program, or who, in substantial good faith, participates on the quality assurance committee, or who, in substantial good faith, assists in a broader scope of quality assurance by health care service providers shall not be subject to an action for civil damages or other relief as a result of such activity.

(3) Information and documents, including complaints and incident reports, created, collected, and maintained about health care providers arising out of the matters that are under review or have been evaluated by a review committee conducting quality assurance reviews or that are related to general quality assurance activities are not subject to discovery or introduction into evidence in any civil action, and no person who was in attendance at a meeting of such committee or board or quality assurance activities shall be permitted or required to testify in any civil action as to the content of such proceedings or activities. This subsection does not preclude: (a) In any civil action, the testimony of any person concerning the facts which form the basis for the institution of such proceedings of which the person had personal knowledge acquired independently of such proceedings; (b) in any civil action by a health care provider regarding the restriction or revocation of that individual's clinical or staff privileges, introduction into evidence information collected and maintained by quality assurance committees regarding such health care provider; (c) in any civil action, disclosure of the fact that staff privileges were terminated or restricted, including the specific restrictions imposed, if any; or (d) in any civil action, discovery and introduction into evidence of the patient's medical records required by regulation of the department of health to be made regarding the care and treatment received.

(4) The department of health shall adopt such rules as are deemed appropriate to effectuate the purposes of this section.

(5) The medical disciplinary board or the board of osteopathic medicine and surgery, as appropriate, may review and audit the records of committee decisions in which a physician's privileges are terminated or restricted. Each hospital shall produce and make accessible to the board the appropriate records and otherwise facilitate the review and audit. Information so gained shall not be subject to the discovery process and confidentiality shall be respected as required by subsection (3) of this section. Failure of a hospital to comply with this subsection is punishable by a civil penalty not to exceed two hundred fifty dollars.

(6) Violation of this section shall not be considered negligence per se.

NEW SECTION. Sec. 1109. A new section is added to chapter 7.70 RCW to read as follows:

(1) With respect to a health care liability action or claim, the total amount of damages received by an individual under such action or claim shall be reduced, in accordance with subsection (2) of this section, by any other payment that has been, or will be, made to an individual to compensate such individual for the injury that was the subject of such action or claim.

(2) The amount by which an award of damages to an individual for an injury shall be reduced under subsection (1) of this section shall be:

(a) The total amount of any payments, other than such award, that have been made or that will be made to such individual to compensate such individual for the injury that was the subject of the action or claim; minus

(b) The amount paid by such individual, or by the spouse, parent, or legal guardian of such individual, to secure the payments described in (a) of this subsection.

NEW SECTION. Sec. 1110. RCW 7.70.080 and 1975-'76 2nd ex.s. c 56 s 13 are each repealed.

PART XII - REVENUE

Sec. 1201. RCW 82.24.020 and 1989 c 271 s 504 are each amended to read as follows:

(1) There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling, possession or distribution of all cigarettes, in an amount equal to the rate of eleven and one-half mills per cigarette.

(2) Until July 1, 1995, an additional tax is imposed upon the sale, use, consumption, handling, possession, or distribution of all cigarettes, in an amount equal to the rate of one and one-half mills per cigarette. All revenues collected during any month from this additional tax shall be deposited in the drug enforcement and education account under RCW 69.50.520 by the twenty-fifth day of the following month.

(3) There is an additional tax imposed upon the sale, use, consumption, handling, possession, or distribution of all cigarettes, in an amount equal to ten cents per cigarette. All revenues collected from this additional tax shall be deposited in the basic health plan trust account.

(4) Wholesalers and retailers subject to the payment of this tax may, if they wish, absorb one-half mill per cigarette of the tax and not pass it on to purchasers without being in violation of this section or any other act relating to the sale or taxation of cigarettes.

((~~(4)~~)) (5) For purposes of this chapter, "possession" shall mean both (a) physical possession by the purchaser and, (b) when cigarettes are being transported to or held for the purchaser or his designee by a person other than the purchaser, constructive possession by the purchaser or his designee, which constructive possession shall be deemed to occur at the location of the cigarettes being so transported or held.

Sec. 1202. RCW 82.26.020 and 1983 2nd ex.s. c 3 s 16 are each amended to read as follows:

(1) From and after June 1, 1971, there is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all tobacco products in this state at the rate of forty-five percent of the wholesale sales price of such tobacco products. Such tax shall be imposed at the time the distributor (a) brings, or causes to be brought, into this state from without the state tobacco products for sale, (b) makes, manufactures, or fabricates tobacco products in this state for sale in this state, or (c) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

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

(3) An additional tax is imposed equal to 381.80 percent of the wholesale sales price of tobacco products.

(4) Revenues collected under subsection (3) of this section shall be deposited in the basic health plan trust account.

PART XIII - MISCELLANEOUS

NEW SECTION. Sec. 1301. The department of health shall study and report by December 31, 1993, the following:

(1) The development of a regulatory system for quality assurance plans throughout the medical community.

(2) The inclusion of communication techniques, cost control, liability insurance, and the health care liability system in continuing education programs.

(3) The inclusion of provider credentialing, the use of contracted providers, and quality assurance activities in health plan certification standards.

(4) Development and use, in consultation with providers, of practice guidelines.

NEW SECTION. Sec. 1302. The health care authority shall study the following, and report to the legislature by December 31, 1994:

(1) The development of a universal, uniform, comprehensive, and publicly accessible health care liability data system;

(2) The facilitation of programs that educate the public about how best to use health services, and promote realistic and reasonable consumer expectations of the health system.

NEW SECTION. Sec. 1303. The administrator for the courts shall study and report to the legislature by December 31, 1994, the development of an informal, voluntary system to facilitate prefiling review of malpractice claims by one or more medical or health services experts chosen from a pool maintained by each of the health care practitioner or provider associations.

NEW SECTION. Sec. 1304. CAPTIONS. Captions and part headings as used in this act constitute no part of the law.