AN ACT Relating to
health insurance for retired and disabled state and school district employees;
amending RCW 41.05.022, 41.05.075, 41.05.080, 41.05.120, and 28A.400.400;
reenacting and amending RCW 41.05.011, 41.05.050, 41.05.065, and 41.05.140;
adding a new section to chapter 41.05 RCW; creating new sections; repealing RCW
41.05.250, 41.05.260, 41.05.270, and 28A.400.400; and providing effective
dates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
NEW SECTION. Sec.
1. It is the intent of the
legislature to increase access to health insurance for retired and disabled
state and school district employees and to increase equity between state and
school employees and between state and school retirees.
Sec. 2. RCW 41.05.011 and 1993 c
492 s 214 and 1993 c 386 s 5 are each reenacted and amended to read as follows:
Unless the context
clearly requires otherwise, the definitions in this section shall apply
throughout this chapter.
(1)
"Administrator" means the administrator of the authority.
(2) "State
purchased health care" or "health care" means medical and health
care, pharmaceuticals, and medical equipment purchased with state and federal
funds by the department of social and health services, the department of
health, the basic health plan, the state health care authority, the department
of labor and industries, the department of corrections, the department of
veterans affairs, and local school districts.
(3)
"Authority" means the Washington state health care authority.
(4) "Insuring
entity" means an insurer as defined in chapter 48.01 RCW, a health care
service contractor as defined in chapter 48.44 RCW, or a health maintenance
organization as defined in chapter 48.46 RCW. On and after July 1, 1995,
"insuring entity" means a certified health plan, as defined in RCW
43.72.010.
(5) "Flexible
benefit plan" means a benefit plan that allows employees to choose the
level of health care coverage provided and the amount of employee contributions
from among a range of choices offered by the authority.
(6)
"Employee" includes all full-time and career seasonal employees of
the state, whether or not covered by civil service; elected and appointed
officials of the executive branch of government, including full-time members of
boards, commissions, or committees; and includes any or all part-time and
temporary employees under the terms and conditions established under this
chapter by the authority; justices of the supreme court and judges of the court
of appeals and the superior courts; and members of the state legislature or of
the legislative authority of any county, city, or town who are elected to
office after February 20, 1970. "Employee" also includes: (a) By
October 1, 1995, all employees of school districts and educational service
districts. Between October 1, 1994, and September 30, 1995,
"employee" includes employees of those school districts and
educational service districts for whom the authority has undertaken the
purchase of insurance benefits. The transition to insurance benefits
purchasing by the authority may not disrupt existing insurance contracts
between school district or educational service district employees and
insurers. However, except to the extent provided in RCW 28A.400.200, any such
contract that provides for health insurance benefits coverage after October 1,
1995, shall be void as of that date if the contract was entered into, renewed,
or extended after July 1, 1993. Prior to October 1, 1994, "employee"
includes employees of a school district if the board of directors of the school
district seeks and receives the approval of the authority to provide any of its
insurance programs by contract with the authority; (b) employees of a county,
municipality, or other political subdivision of the state if the legislative
authority of the county, municipality, or other political subdivision of the
state seeks and receives the approval of the authority to provide any of its
insurance programs by contract with the authority, as provided in RCW
41.04.205; (c) employees of employee organizations representing state civil
service employees, at the option of each such employee organization, and,
effective October 1, 1995, employees of employee organizations currently pooled
with employees of school districts for the purpose of purchasing insurance
benefits, at the option of each such employee organization.
(7) "Board"
means the public employees' benefits board established under RCW 41.05.055.
(8) "Retired or
disabled school employee" means:
(a) Persons who
separated from employment with a school district or educational service
district and are receiving a retirement allowance under chapter 41.32 or 41.40
RCW as of September 30, 1993;
(b) Persons who
separate from employment with a school district or educational service district
on or after October 1, 1993, and immediately upon separation receive a
retirement allowance under chapter 41.32 or 41.40 RCW;
(c) Persons who
separate from employment with a school district or educational service district
((on or after October 1, 1993,)) due to a total and permanent
disability, and are eligible to receive a deferred retirement allowance under
chapter 41.32 or 41.40 RCW.
Sec. 3. RCW 41.05.022 and 1993 c
492 s 227 are each amended to read as follows:
(1) The health care
authority is hereby designated as the single state agent for purchasing health
services.
(2) On and after ((July))
January 1, 1995, at least the following state-purchased health services
programs shall be merged into a single, community-rated risk pool: ((The
basic health plan;)) Health benefits for employees of school
districts and educational service districts; ((and)) health
benefits for state employees; health benefits for eligible retired or
disabled school employees not eligible for parts A and B of medicare; and
health benefits for eligible state retirees not eligible for parts A and B of
medicare. Beginning July 1, 1995, the basic health plan shall be included in
the risk pool. ((Until that date, in purchasing health services, the
health care authority shall maintain separate risk pools for each of the
programs in this subsection.)) The administrator may develop mechanisms to
ensure that the cost of comparable benefits packages does not vary widely
across the risk pools before they are merged. At the earliest
opportunity the governor shall seek necessary federal waivers and state
legislation to place the medical and acute care components of the medical
assistance program, the limited casualty program, and the medical care services
program of the department of social and health services in this single risk
pool. Long-term care services that are provided under the medical assistance
program shall not be placed in the single risk pool until such services have
been added to the uniform benefits package. On or before January 1, 1997, the
governor shall submit necessary legislation to place the purchasing of health
benefits for persons incarcerated in institutions administered by the
department of corrections into the single community-rated risk pool effective
on and after July 1, 1997.
(3) At a minimum, and
regardless of other legislative enactments, the state health services
purchasing agent shall:
(a) Require that a
public agency that provides subsidies for a substantial portion of services now
covered under the basic health plan or a uniform benefits package as adopted by
the Washington health services commission as provided in RCW 43.72.130, use uniform
eligibility processes, insofar as may be possible, and ensure that multiple
eligibility determinations are not required;
(b) Require that a
health care provider or a health care facility that receives funds from a
public program provide care to state residents receiving a state subsidy who
may wish to receive care from them consistent with the provisions of chapter
492, Laws of 1993, and that a health maintenance organization, health care
service contractor, insurer, or certified health plan that receives funds from
a public program accept enrollment from state residents receiving a state
subsidy who may wish to enroll with them under the provisions of chapter 492,
Laws of 1993;
(c) Strive to integrate
purchasing for all publicly sponsored health services in order to maximize the
cost control potential and promote the most efficient methods of financing and
coordinating services;
(d) Annually suggest
changes in state and federal law and rules to bring all publicly funded health
programs in compliance with the goals and intent of chapter 492, Laws of 1993;
(e) Consult regularly
with the governor, the legislature, and state agency directors whose operations
are affected by the implementation of this section.
Sec. 4. RCW 41.05.050 and 1993 c
492 s 216 and 1993 c 386 s 7 are each reenacted and amended to read as follows:
(1) Every department,
division, or separate agency of state government, and such county, municipal, school
district, educational service district, or other political subdivisions as
are covered by this chapter, shall provide contributions to insurance and
health care plans for its employees and their dependents, the content of such
plans to be determined by the authority. Contributions, paid by the county,
the municipality, school district, educational service district, or
other political subdivision for their employees, shall include an amount
determined by the authority to pay such administrative expenses of the
authority as are necessary to administer the plans for employees of those
groups. Until October 1, 1995, contributions to be paid by school
districts or educational service districts shall be adjusted by the authority
to reflect ((that retired school employees are covered under RCW 41.05.250,
and are not covered under RCW 41.05.080. All such contributions will be paid
into the public employees' health insurance account)) the remittance
provided under RCW 28A.400.400.
(2) The contributions
of any department, division, or separate agency of the state government, and
such county, municipal, or other political subdivisions as are covered by this
chapter, shall be set by the authority, subject to the approval of the governor
for availability of funds as specifically appropriated by the legislature for
that purpose. Insurance and health care contributions for ferry employees
shall be governed by RCW 47.64.270 until December 31, 1996. On and after
January 1, 1997, ferry employees shall enroll with certified health plans under
chapter 492, Laws of 1993.
(3) The administrator
with the assistance of the public employees' benefits board shall survey
private industry and public employers in the state of Washington to determine
the average employer contribution for group insurance programs under the
jurisdiction of the authority. Such survey shall be conducted during each
even-numbered year but may be conducted more frequently. The survey shall be
reported to the authority for its use in setting the amount of the recommended
employer contribution to the employee insurance benefit program covered by this
chapter. The authority shall transmit a recommendation for the amount of the
employer contribution to the governor and the director of financial management
for inclusion in the proposed budgets submitted to the legislature.
Sec. 5. RCW 41.05.065 and 1993 c
492 s 218 and 1993 c 386 s 9 are each reenacted and amended to read as follows:
(1) The board shall
study all matters connected with the provision of health care coverage, life
insurance, liability insurance, accidental death and dismemberment insurance,
and disability income insurance or any of, or a combination of, the enumerated
types of insurance for employees and their dependents on the best basis
possible with relation both to the welfare of the employees and to the state,
however liability insurance shall not be made available to dependents.
(2) The public
employees' benefits board shall develop employee benefit plans that include
comprehensive health care benefits for all employees. In developing these
plans, the board shall consider the following elements:
(a) Methods of
maximizing cost containment while ensuring access to quality health care;
(b) Development of
provider arrangements that encourage cost containment and ensure access to
quality care, including but not limited to prepaid delivery systems and
prospective payment methods;
(c) Wellness incentives
that focus on proven strategies, such as smoking cessation, exercise,
automobile and motorcycle safety, blood cholesterol reduction, and nutrition
education;
(d) Utilization review
procedures including, but not limited to prior authorization of services,
hospital inpatient length of stay review, requirements for use of outpatient
surgeries and second opinions for surgeries, review of invoices or claims
submitted by service providers, and performance audit of providers;
(e) Effective
coordination of benefits;
(f) Minimum standards
for insuring entities; and
(g) Minimum scope and
content of standard benefit plans to be offered to enrollees participating in
the employee health benefit plans. On and after July 1, 1995, the uniform
benefits package shall constitute the minimum level of health benefits offered
to employees. To maintain the comprehensive nature of employee health care
benefits, employee eligibility criteria related to the number of hours worked
and the benefits provided to employees shall be substantially equivalent to the
state employees' health benefits plan and eligibility criteria in effect on
January 1, 1993.
(3) The board shall
design benefits and determine the terms and conditions of employee
participation and coverage, including establishment of eligibility criteria.
(4) The board shall
attempt to achieve enrollment of all employees and retirees in managed health
care systems by July 1994.
The board may authorize
premium contributions for an employee and the employee's dependents in a manner
that encourages the use of cost-efficient managed health care systems.
(5) Employees shall
choose participation in one of the health care benefit plans developed by the
board.
(6) The board shall
review plans proposed by insurance carriers that desire to offer property
insurance and/or accident and casualty insurance to state employees through
payroll deduction. The board may approve any such plan for payroll deduction
by carriers holding a valid certificate of authority in the state of Washington
and which the board determines to be in the best interests of employees and the
state. The board shall promulgate rules setting forth criteria by which it
shall evaluate the plans.
(((7) The board
shall develop benefit plans that provide health care benefits for retired or
disabled school employees and their dependents, and shall establish terms and
conditions of coverage under the plans. The board shall make available
separate and appropriate plans that supplement medicare for retired or disabled
school employees who are eligible for federal medicare coverage. The board
shall also consider the elements referenced in subsection (2) of this section
in developing the plans.))
Sec. 6. RCW 41.05.075 and 1993 c
386 s 10 are each amended to read as follows:
(1) The administrator
shall provide benefit plans designed by the board through a contract or
contracts with insuring entities, through self-funding, self-insurance, or
other methods of providing insurance coverage authorized by RCW 41.05.140.
(2) The administrator
shall establish a contract bidding process that:
(a) Encourages
competition among insuring entities((,));
(b) Maintains an
equitable relationship between premiums charged for similar benefits and
between risk pools including premiums charged for retired state and school
district employees under the separate risk pools established by RCW 41.05.022
and 41.05.080 such that insuring entities may not avoid risk when establishing
the premium rates for retirees eligible for medicare;
(c) Is timely to
the state budgetary process((,)); and
(d) Sets
conditions for awarding contracts to any insuring entity.
(3) The administrator
shall establish a requirement for review of utilization and financial data from
participating insuring entities on a quarterly basis.
(4) The administrator
shall centralize the enrollment files for all employee and retired or disabled
school employee health plans offered under chapter 41.05 RCW and develop
enrollment demographics on a plan-specific basis.
(5) The administrator
shall establish methods for collecting, analyzing, and disseminating to covered
individuals information on the cost and quality of services rendered by
individual health care providers.
(6) All claims data
shall be the property of the state. The administrator may require of any
insuring entity that submits a bid to contract for coverage all information
deemed necessary including subscriber or member demographic and claims data
necessary for risk assessment and adjustment calculations in order to
fulfill the administrator's duties as set forth in this chapter.
(7) All contracts with
insuring entities for the provision of health care benefits shall provide that
the beneficiaries of such benefit plans may use on an equal participation basis
the services of practitioners licensed pursuant to chapters 18.22, 18.25,
18.32, 18.53, 18.57, 18.71, 18.74, 18.83, and 18.88 RCW. However, nothing in
this subsection may preclude the administrator from establishing appropriate
utilization controls approved pursuant to RCW 41.05.065(2) (a)(((i))),
(b), and (d).
(8) Beginning in
January 1990, and each January thereafter until January 1996, the
administrator shall publish and distribute to each school district a
description of health care benefit plans available through the authority and
the estimated cost if school district employees were enrolled.
Sec. 7. RCW 41.05.080 and 1993 c
386 s 11 are each amended to read as follows:
Retired or disabled
state employees, retired or disabled school employees, or employees of
county, municipal, or other political subdivisions covered by this chapter who
are retired((, but not including retired or disabled school employees,))
may continue their participation in insurance plans and contracts after
retirement or disablement, under the qualifications, terms, conditions, and
benefits set by the board: PROVIDED, That the rates charged ((such retired
or disabled employees for health care will be developed from the same
experience pool as active employees)) retired or disabled employees,
spouses, or dependent children who are not eligible for parts A and B of
medicare shall be based on the experience of the community rated risk pool
established under RCW 41.05.022: PROVIDED FURTHER, That rates charged to retired
or disabled employees, spouses, or children who are eligible for parts A and B
of medicare shall be calculated from a separate experience risk pool comprised
only of individuals eligible for parts A and B of medicare; however, the
premiums charged to medicare-eligible retirees and disabled employees shall be
reduced by the amount of the subsidy provided under section 8 of this act:
PROVIDED FURTHER, That ((such)) retired or disabled employees shall ((bear
the full cost of premiums required to provide such coverage)) be
responsible for payment of premium rates developed by the authority which shall
include the cost to the authority of providing insurance coverage including any
amounts necessary for reserves and administration in accordance with this
chapter: PROVIDED FURTHER, That such self pay rates will be established
based on a separate rate for the employee, the spouse, and the children((:
PROVIDED FURTHER, That rates for a retired or disabled employee, spouse, or
child who is eligible for and who elects to apply for medicare will be
actuarially reduced to reflect the value of Part A and Part B of medicare)).
The term "retired state employees" for the purpose of this section
shall include but not be limited to members of the legislature whether voluntarily
or involuntarily leaving state office.
NEW SECTION. Sec.
8. A new section is added
to chapter 41.05 RCW to read as follows:
Beginning with the
appropriations act for the 1995-1997 biennium, the legislature shall establish
as part of both the state employees' and the school and educational service
district employees' insurance benefit allocation the portion of the allocation
to be used to provide a subsidy to reduce the health care insurance premiums
charged to retired or disabled school district and educational service district
employees, or retired state employees, who are eligible for parts A and B of
medicare. The amount of any premium reduction shall be established by the
board, but shall not result in a premium reduction of more than fifty percent.
The board may also determine the amount of any subsidy to be available to
spouses and dependents.
Sec. 9. RCW 41.05.120 and 1993 c
492 s 219 are each amended to read as follows:
(1) The public
employees' and retirees' insurance account is hereby established in the
custody of the state treasurer, to be used by the administrator for the deposit
of contributions, the remittance paid by school districts and educational
service districts under RCW 28A.400.400, reserves, dividends, and refunds,
and for payment of premiums for employee and retiree insurance benefit
contracts and subsidy amounts provided under section 8 of this act.
Moneys from the account shall be disbursed by the state treasurer by warrants
on vouchers duly authorized by the administrator.
(2) The state treasurer
and the state investment board may invest moneys in the public employees' and
retirees' insurance account. All such investments shall be in accordance
with RCW 43.84.080 or 43.84.150, whichever is applicable. The administrator
shall determine whether the state treasurer or the state investment board or
both shall invest moneys in the public employees' insurance account.
Sec. 10. RCW 41.05.140 and 1993 c
492 s 220 and 1993 c 386 s 12 are each reenacted and amended to read as
follows:
(1) The authority may
self-fund, self-insure, or enter into other methods of providing insurance
coverage for insurance programs under its jurisdiction except property and
casualty insurance. The authority shall contract for payment of claims or
other administrative services for programs under its jurisdiction. If a
program does not require the prepayment of reserves, the authority shall
establish such reserves within a reasonable period of time for the payment of
claims as are normally required for that type of insurance under an insured
program.
(2) Reserves
established by the authority for employee and retiree benefit programs
shall be held in a separate trust fund by the state treasurer and shall be
known as the public employees' and retirees' insurance reserve fund.
The state investment board shall act as the investor for the funds and, except
as provided in RCW 43.33A.160, one hundred percent of all earnings from these
investments shall accrue directly to the public employees' and retirees'
insurance reserve fund.
(3) ((Reserves
established by the authority for programs for retired or disabled school
employees shall be held in a separate trust fund by the state treasurer and
shall be known as the retired school employees' insurance reserve fund hereby
created. The state investment board shall act as the investor for the funds
and, except as provided in RCW 43.33A.160, one hundred percent of all earnings
from these investments shall accrue directly to the retired school employees'
insurance reserve fund.
(4))) Any savings realized as a result of a program
created for employees and retirees under this section shall not be used
to increase benefits unless such use is authorized by statute.
(((5))) (4)
Any program created under this section shall be subject to the examination
requirements of chapter 48.03 RCW as if the program were a domestic insurer.
In conducting an examination, the commissioner shall determine the adequacy of
the reserves established for the program.
(((6))) (5)
The authority shall keep full and adequate accounts and records of the assets,
obligations, transactions, and affairs of any program created under this
section.
(((7))) (6)
The authority shall file a quarterly statement of the financial condition,
transactions, and affairs of any program created under this section in a form
and manner prescribed by the insurance commissioner. The statement shall
contain information as required by the commissioner for the type of insurance
being offered under the program. A copy of the annual statement shall be filed
with the speaker of the house of representatives and the president of the
senate.
Sec. 11. RCW 28A.400.400 and 1993
c 386 s 13 are each amended to read as follows:
(1) In a manner
prescribed by the state health care authority, school districts and educational
service districts shall remit to the health care authority for deposit in the
((retired school employees' subsidy account established in RCW 41.05.260))
public employees' and retirees' insurance account established in RCW
41.05.120:
(a) During the period
beginning October 1, 1993, and ending September 30, 1994:
(i) For each full-time
employee of the district, ten dollars for each month of the school year;
(ii) For each part-time
employee of the district who, at the time of the remittance, is employed in an
eligible position as defined in RCW 41.32.010 or 41.40.010 and is eligible for
employer fringe benefit contributions for basic benefits as defined in RCW
28A.400.270, ten dollars for each month of the school year, prorated by the
proportion of employer fringe benefit contributions for a full-time employee
that the part-time employee receives;
(b) Beginning October
1, 1994:
(i) For each full-time
employee of the district, an amount equal to four and seven-tenths percent
multiplied by the insurance benefit allocation rate in the appropriations act
for a certificated or classified staff, for each month of the school year;
(ii) For each part-time
employee of the district who, at the time of the remittance, is employed in an
eligible position as defined in RCW 41.32.010 or 41.40.010 and is eligible for
employer fringe benefit contributions for basic benefits as defined in RCW
28A.400.270, an amount equal to four and seven-tenths percent multiplied by the
insurance benefit allocation rate in the appropriations act for a certificated
or classified staff, for each month of the school year, prorated by the
proportion of employer fringe benefit contributions for a full-time employee
that the part-time employee receives.
(2) The legislature
reserves the right to increase or decrease the percent or amount required to be
remitted in this section.
NEW SECTION. Sec.
12. For the January 1, 1995,
through December 31, 1995, plan year, amounts remitted by school districts and
educational service districts under RCW 28A.400.400 may be used for the subsidy
provided under section 8 of this act. Amounts remitted under RCW 28A.400.400
may also be used to reduce the increase in the premiums for active employees
which may result from the single community rated risk pool under RCW
41.05.080. The reduction may be necessary before the enrollment of all active
school district and educational service district employees under the health
care authority plans as required under RCW 28A.400.350. This section shall
expire January 1, 1996.
NEW SECTION. Sec.
13. (1) On January 1, 1995,
the state treasurer shall transfer all moneys in the retired school employees'
subsidy account to the public employees' and retirees' insurance account.
(2) On January 1, 1995,
the state treasurer shall transfer all moneys in the retired school employees'
insurance account to the public employees' and retirees' insurance account.
(3) On January 1, 1995,
the state treasurer shall transfer all moneys in the retired school employees'
insurance reserve fund to the public employees' and retirees' reserve fund.
NEW SECTION. Sec.
14. The following acts or
parts of acts are each repealed:
(1) RCW 41.05.250 and 1993 c
386 s 14;
(2) RCW 41.05.260 and 1993 c
386 s 15; and
(3) RCW 41.05.270 and 1993 c
386 s 16.
NEW SECTION. Sec.
15. RCW 28A.400.400 and 1993
c 386 s 13 are each repealed.
NEW
SECTION. Sec. 16. This act shall take
effect January 1, 1995, except section 15 of this act, which takes effect
October 1, 1995.
