H-1978.2  _______________________________________________

                          HOUSE BILL 2169

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Representatives Cody, Backlund, Murray, H. Sommers, Huff, Skinner, Wood, Dunshee, Keiser, Ogden and Blalock

Read first time 02/25/97.  Referred to Committee on Health Care.

Establishing a state health care purchasing and policy office.

    AN ACT Relating to the state health care purchasing and policy office; amending RCW 43.70.066, 43.70.068, and 43.72.310; adding new sections to chapter 43.73 RCW; repealing RCW 43.73.010, 43.73.020, and 43.73.040; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 43.73 RCW to read as follows:

    (1) The governor shall establish a state health care purchasing and policy office by July 1, 1997.  The purpose of this office is to develop and implement the most cost‑effective methods of purchasing health care coverage for public employees and other persons for whom the state purchases health care.  In establishing the office, the director shall utilize the personnel and resources of existing state health-related agencies to the extent possible.

    (2) The office has the following responsibilities:

    (a) Develop and implement, no later than January 1, 1999, a unified purchasing process through managed care structures for the following: Health care coverage provided to public employees as authorized by chapter 41.05 RCW; the basic health plan authorized by chapter 70.47 RCW; and the medical assistance program authorized by chapter 74.09 RCW.  In developing the process, the office shall consider, at least:  A single request for proposal and review instrument for any common request-for-proposal component for all contractors; a single contract period; unified requirements for plan governance, financial requirements, and quality improvement requirements; and coordination of related staff of the department of social and health services and the state health care authority.

    (b) Seek necessary federal waivers to implement this section.

    (c) Analyze state statutes and recommend amendments, if any, necessary to implement this section to the appropriate committees of the legislature by December 1, 1998.

    (d) In cooperation with other health-related state agencies, analyze the feasibility and desirability of consolidating other state purchased health care programs into the unified purchasing process set forth in this section and report its findings to the appropriate committees of the legislature by July 1, 1998.

    (e) Make periodic recommendations to the appropriate committees of the legislature on methods to improve the state health care system.

NEW SECTION. Sec. 2.  A new section is added to chapter 43.73 RCW to read as follows:

    The governor shall appoint the director who shall be the administrative officer and appointing authority of the office.  The director shall have the authority to employ personnel in accordance with chapter 41.06 RCW and prescribe their duties.  The director shall also have the following powers and duties:

    (1) Enter into contracts on behalf of the office;

    (2) Accept and expend donations, grants, and other funds received by the office; and

    (3) Appoint advisory committees and undertake studies, research, and analysis necessary to support activities of the office.

    Sec. 3.  RCW 43.70.066 and 1995 c 267 s 4 are each amended to read as follows:

    (1) The department of health in consultation with the ((health policy board)) state health care purchasing and policy office shall study the feasibility of a uniform quality assurance and improvement program for use by all public and private health plans and health care providers and facilities.  In this study, the department shall consult with:

    (a) Public and private purchasers of health care services;

    (b) Health carriers;

    (c) Health care providers and facilities; and

    (d) Consumers of health services.

    (2) In conducting the study, the department shall propose standards that meet the needs of affected persons and organizations, whether public or private, without creation of differing levels of quality assurance.  All consumers of health services should be afforded the same level of quality assurance.

    (3) At a minimum, the study shall include but not be limited to the following program components and indicators appropriate for consumer disclosure:

    (a) Health care provider training, credentialing, and licensure standards;

    (b) Health care facility credentialing and recredentialing;

    (c) Staff ratios in health care facilities;

    (d) Annual mortality and morbidity rates of cases based on a defined set of procedures performed or diagnoses treated in health care facilities, adjusted to fairly consider variable factors such as patient demographics and case severity;

    (e) The average total cost and average length of hospital stay for a defined set of procedures and diagnoses;

    (f) The total number of the defined set of procedures, by specialty, performed by each physician at a health care facility within the previous twelve months;

    (g) Utilization performance profiles by provider, both primary care and specialty care, that have been adjusted to fairly consider variable factors such as patient demographics and severity of case;

    (h) Health plan fiscal performance standards;

    (i) Health care provider and facility recordkeeping and reporting standards;

    (j) Health care utilization management that monitors trends in health service underutilization, as well as overutilization of services;

    (k) Health monitoring that is responsive to consumer, purchaser, and public health assessment needs; and

    (l) Assessment of consumer satisfaction and disclosure of consumer survey results.

    (4) In conducting the study, the department shall develop standards that permit each health care facility, provider group, or health carrier to assume responsibility for and determine the physical method of collection, storage, and assimilation of quality indicators for consumer disclosure.  The study may define the forms, frequency, and posting requirements for disclosure of information.

    In developing proposed standards under this subsection, the department shall identify options that would minimize provider burden and administrative cost resulting from duplicative private sector data submission requirements.

    (5) The department shall submit a preliminary report to the legislature by December 31, 1995, including recommendations for initial legislation pursuant to subsection (6) of this section, and shall submit supplementary reports and recommendations as completed, consistent with appropriated funds and staffing.

    (6) The department shall not adopt any rule implementing the uniform quality assurance program or consumer disclosure provisions unless expressly directed to do so by an act of law.

    Sec. 4.  RCW 43.70.068 and 1995 c 267 s 5 are each amended to read as follows:

    ((No later than July 1, 1995, the health care policy board)) The state health care purchasing and policy office together with the department of health, the health care authority, the department of social and health services, the office of the insurance commissioner, and the department of labor and industries shall form an interagency group for coordination and consultation on quality assurance activities and collaboration on final recommendations for the study required under RCW 43.70.066.  ((By December 31, 1996, the group shall review all state agency programs governing health service quality assurance, in light of legislative actions pursuant to RCW 43.70.066(6), and shall recommend to the legislature, the consolidation, coordination, or elimination of rules and programs that would be made unnecessary pursuant to the development of a uniform quality assurance and improvement program.))

    Sec. 5.  RCW 43.72.310 and 1995 c 267 s 8 are each amended to read as follows:

    (1) Until May 8, 1995, and after June 30, 1996, a ((certified health plan)) health carrier, health care facility, health care provider, or other person involved in the development, delivery, or marketing of health care or ((certified health plans)) health carriers may request, in writing, that the ((commission)) state health care purchasing and policy office obtain an informal opinion from the attorney general as to whether particular conduct is authorized by chapter 492, Laws of 1993.  Trade secret or proprietary information contained in a request for informal opinion shall be identified as such and shall not be disclosed other than to an authorized employee of the ((commission)) state health care purchasing and policy office or attorney general without the consent of the party making the request, except that information in summary or aggregate form and market share data may be contained in the informal opinion issued by the attorney general.  The attorney general shall issue such opinion within thirty days of receipt of a written request for an opinion or within thirty days of receipt of any additional information requested by the attorney general necessary for rendering an opinion unless extended by the attorney general for good cause shown.  If the attorney general concludes that such conduct is not authorized by chapter 492, Laws of 1993, the person or organization making the request may petition the ((commission)) state health care purchasing and policy office for review and approval of such conduct in accordance with subsection (3) of this section.

    (2) After obtaining the written opinion of the attorney general and consistent with such opinion, the ((health services commission)) state health care purchasing and policy office:

    (a) May authorize conduct by a ((certified health plan)) health carrier, health care facility, health care provider, or any other person that could tend to lessen competition in the relevant market upon a strong showing that the conduct is likely to achieve the policy goals of chapter 492, Laws of 1993 and a more competitive alternative is impractical;

    (b) Shall adopt rules governing conduct among providers, health care facilities, and ((certified health plans)) health carriers including rules governing provider and facility contracts with ((certified health plans)) health carriers, rules governing the use of "most favored nation" clauses and exclusive dealing clauses in such contracts, and rules providing that ((certified health plans)) health carriers in rural areas contract with a sufficient number and type of health care providers and facilities to ensure consumer access to local health care services;

    (c) Shall adopt rules permitting health care providers within the service area of a plan to collectively negotiate the terms and conditions of contracts with a ((certified health plan)) health carrier including the ability of providers to meet and communicate for the purposes of these negotiations; and

    (d) Shall adopt rules governing cooperative activities among health care facilities and providers.

    (3) Until May 8, 1995, and after June 30, 1996, a ((certified health plan)) health carrier, health care facility, health care provider, or any other person involved in the development, delivery, and marketing of health services or ((certified health plans)) health carriers may file a written petition with the ((commission)) state health care purchasing and policy office requesting approval of conduct that could tend to lessen competition in the relevant market.  Such petition shall be filed in a form and manner prescribed by rule of the ((commission)) state health care purchasing and policy office.

    The ((commission)) state health care purchasing and policy office shall issue a written decision approving or denying a petition filed under this section within ninety days of receipt of a properly completed written petition unless extended by the ((commission)) state health care purchasing and policy office for good cause shown.  The decision shall set forth findings as to benefits and disadvantages and conclusions as to whether the benefits outweigh the disadvantages.

    (4) In authorizing conduct and adopting rules of conduct under this section, the ((commission)) state health care purchasing and policy office with the advice of the attorney general, shall consider the benefits of such conduct in furthering the goals of health care reform including but not limited to:

    (a) Enhancement of the quality of health services to consumers;

    (b) Gains in cost efficiency of health services;

    (c) Improvements in utilization of health services and equipment;

    (d) Avoidance of duplication of health services resources; or

    (e) And as to (b) and (c) of this subsection:  (i) Facilitates the exchange of information relating to performance expectations; (ii) simplifies the negotiation of delivery arrangements and relationships; and (iii) reduces the transactions costs on the part of ((certified health plans)) health carriers and providers in negotiating more cost-effective delivery arrangements.

    These benefits must outweigh disadvantages including and not limited to:

    (i) Reduced competition among ((certified health plans)) health carriers, health care providers, or health care facilities;

    (ii) Adverse impact on quality, availability, or price of health care services to consumers; or

    (iii) The availability of arrangements less restrictive to competition that achieve the same benefits.

    (5) Conduct authorized by the ((commission)) state health care purchasing and policy office shall be deemed taken pursuant to state statute and in the furtherance of the public purposes of the state of Washington.

    (6) With the assistance of the attorney general's office, the ((commission)) state health care purchasing and policy office shall actively supervise any conduct authorized under this section to determine whether such conduct or rules permitting certain conduct should be continued and whether a more competitive alternative is practical.  The ((commission)) state health care purchasing and policy office shall periodically review petitioned conduct through, at least, annual progress reports from petitioners, annual or more frequent reviews by the ((commission)) state health care purchasing and policy office that evaluate whether the conduct is consistent with the petition, and whether the benefits continue to outweigh any disadvantages.  If the ((commission)) state health care purchasing and policy office determines that the likely benefits of any conduct approved through rule, petition, or otherwise by the ((commission)) state health care purchasing and policy office no longer outweigh the disadvantages attributable to potential reduction in competition, the ((commission)) state health care purchasing and policy office shall order a modification or discontinuance of such conduct.  Conduct ordered discontinued by the ((commission)) state health care purchasing and policy office shall no longer be deemed to be taken pursuant to state statute and in the furtherance of the public purposes of the state of Washington.

    (7) Nothing contained in chapter 492, Laws of 1993 is intended to in any way limit the ability of rural hospital districts to enter into cooperative agreements and contracts pursuant to RCW 70.44.450 and chapter 39.34 RCW.

    (8) Only requests for informal opinions under subsection (1) of this section and petitions under subsection (3) of this section that were received prior to May 8, 1995, or after June 30, 1996, shall be considered.

NEW SECTION. Sec. 6.  A new section is added to chapter 43.73 RCW to read as follows:

    (1) The health care policy board is hereby abolished and its powers, duties, and functions are hereby transferred to the state health care purchasing and policy office.  All references to the chair or the health care policy board in the Revised Code of Washington shall be construed to mean the director or the state health care purchasing and policy office.

    (2)(a) All reports, documents, surveys, books, records, files, papers, or written material in the possession of the health care policy board shall be delivered to the custody of the state health care purchasing and policy office.  All cabinets, furniture, office equipment, motor vehicles, and other tangible property employed by the health care policy board shall be made available to the state health care purchasing and policy office.  All funds, credits, or other assets held by the health care policy board shall be assigned to the state health care purchasing and policy office.

    (b) Any appropriations made to the health care policy board shall, on the effective date of this section, be transferred and credited to the state health care purchasing and policy office.

    (c) If any question arises as to the transfer of any personnel, funds, books, documents, records, papers, files, equipment, or other tangible property used or held in the exercise of the powers and the performance of the duties and functions transferred, the director of financial management shall make a determination as to the proper allocation and certify the same to the state agencies concerned.

    (3) All employees of the health care policy board are transferred to the jurisdiction of the state health care purchasing and policy office.  All employees classified under chapter 41.06 RCW, the state civil service law, are assigned to the state health care purchasing and policy office to perform their usual duties upon the same terms as formerly, without any loss of rights, subject to any action that may be appropriate thereafter in accordance with the laws and rules governing state civil service.

    (4) All rules and all pending business before the health care policy board shall be continued and acted upon by the state health care purchasing and policy office.  All existing contracts and obligations shall remain in full force and shall be performed by the state health care purchasing and policy office.

    (5) The transfer of the powers, duties, functions, and personnel of the health care policy board shall not affect the validity of any act performed before the effective date of this section.

    (6) If apportionments of budgeted funds are required because of the transfers directed by this section, the director of financial management shall certify the apportionments to the agencies affected, the state auditor, and the state treasurer.  Each of these shall make the appropriate transfer and adjustments in funds and appropriation accounts and equipment records in accordance with the certification.

    (7) Nothing contained in this section may be construed to alter any existing collective bargaining unit or the provisions of any existing collective bargaining agreement until the agreement has expired or until the bargaining unit has been modified by action of the personnel board as provided by law.

NEW SECTION. Sec. 7.  The following acts or parts of acts are each repealed:

(1) RCW 43.73.010 and 1995 c 265 s 9;

(2) RCW 43.73.020 and 1995 c 265 s 10; and

(3) RCW 43.73.040 and 1995 c 265 s 12.

NEW SECTION. Sec. 8.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 1997, except section 1 of this act takes effect immediately.

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