Z-0795.2  _______________________________________________

                          HOUSE BILL 2253

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Representatives Cody, H. Sommers, Conway, Wood, Blalock, Fisher and Murray; by request of Governor Locke

Read first time 03/13/97.  Referred to Committee on Health Care.

Establishing an office of health policy.

    AN ACT Relating to the office of health policy; amending RCW 43.70.066, 43.70.068, and 43.72.310; reenacting and amending RCW 42.17.310; adding new sections to chapter 43.73 RCW; adding a new section to chapter 41.06 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 an office of health policy by July 1, 1997.  The office is to develop coordinated and cost-effective methods of purchasing health care for state government and to provide policy analysis and recommendations to the governor and appropriate committees of the legislature on methods to improve the state health care system.

    (2) The office has the following responsibilities:

    (a) Develop by January 1, 1999, a coordinated and cost-effective purchasing process for health care services purchased by the health care authority and the medical assistance program of the department of social and health services.  In developing the process, the office shall consider:  A single request for proposal and review instrument for any common components; a single contract period; uniform standards for financial requirements, data requirements, and quality improvement requirements; and coordination of related staff of the department of social and health services and the state health care authority;

    (i) Seek necessary federal waivers to implement this section;

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

    (b) In cooperation with other health-related state agencies, analyze the feasibility and desirability of including other state purchased health care programs in the coordinated purchasing process set forth in this section and report its findings to the appropriate committees of the legislature by July 1, 1999;

    (c) Establish an advisory committee, in coordination with the office of financial management and appropriate legislative representatives, to make recommendations on the long-term stabilization of the health services account by November 1, 1998;

    (d) Work with an interagency group of all health-related state agencies to identify duplication and inefficiencies in state health care purchasing, management, and regulatory activities and make recommendations to the governor on ways to improve the state's health care activities;

    (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 of the office of health policy 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 may employ up to eight personnel exempt from the provisions of chapter 41.06 RCW.  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;

    (3) Appoint advisory committees including consumers, providers, business representatives, labor representatives, insurance industry representatives, and other interested parties; and

    (4) 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 office of health policy ((board)) 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 office of health policy 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)) reports 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)) office of health policy 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)) office of health policy 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)) office of health policy 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)) office of health policy:

    (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)) office of health policy 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)) office of health policy.

    The ((commission)) office of health policy 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)) office of health policy 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)) office of health policy 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)) office of health policy 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)) office of health policy 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)) office of health policy shall periodically review petitioned conduct through, at least, annual progress reports from petitioners, annual or more frequent reviews by the ((commission)) office of health policy that evaluate whether the conduct is consistent with the petition, and whether the benefits continue to outweigh any disadvantages.  If the ((commission)) office of health policy determines that the likely benefits of any conduct approved through rule, petition, or otherwise by the ((commission)) office of health policy no longer outweigh the disadvantages attributable to potential reduction in competition, the ((commission)) office of health policy shall order a modification or discontinuance of such conduct.  Conduct ordered discontinued by the ((commission)) office of health policy 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 office of health policy.  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 office of health policy.

    (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 office of health policy.  All cabinets, furniture, office equipment, motor vehicles, and other tangible property employed by the health care policy board shall be made available to the office of health policy.  All funds, credits, or other assets held by the health care policy board shall be assigned to the office of health policy.

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

    (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 office of health policy consistent with appropriations.  All employees classified under chapter 41.06 RCW, the state civil service law, are assigned to the office of health policy 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 office of health policy.  All existing contracts and obligations shall remain in full force and shall be performed by the office of health policy.

    (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.  A new section is added to chapter 41.06 RCW to read as follows:

    In addition to the exemptions under RCW 41.06.070, the provisions of this chapter shall not apply in the office of health policy to the director and persons exempt under section 2 of this act.

NEW SECTION. Sec. 8.  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.

    Sec. 9.  RCW 42.17.310 and 1996 c 305 s 2, 1996 c 253 s 302, 1996 c 191 s 88, and 1996 c 80 s 1 are each reenacted and amended to read as follows:

    (1) The following are exempt from public inspection and copying:

    (a) Personal information in any files maintained for students in public schools, patients or clients of public institutions or public health agencies, or welfare recipients.

    (b) Personal information in files maintained for employees, appointees, or elected officials of any public agency to the extent that disclosure would violate their right to privacy.

    (c) Information required of any taxpayer in connection with the assessment or collection of any tax if the disclosure of the information to other persons would (i) be prohibited to such persons by RCW 82.32.330 or (ii) violate the taxpayer's right to privacy or result in unfair competitive disadvantage to the taxpayer.

    (d) Specific intelligence information and specific investigative records compiled by investigative, law enforcement, and penology agencies, and state agencies vested with the responsibility to discipline members of any profession, the nondisclosure of which is essential to effective law enforcement or for the protection of any person's right to privacy.

    (e) Information revealing the identity of persons who are witnesses to or victims of crime or who file complaints with investigative, law enforcement, or penology agencies, other than the public disclosure commission, if disclosure would endanger any person's life, physical safety, or property.  If at the time a complaint is filed the complainant, victim or witness indicates a desire for disclosure or nondisclosure, such desire shall govern.  However, all complaints filed with the public disclosure commission about any elected official or candidate for public office must be made in writing and signed by the complainant under oath.

    (f) Test questions, scoring keys, and other examination data used to administer a license, employment, or academic examination.

    (g) Except as provided by chapter 8.26 RCW, the contents of real estate appraisals, made for or by any agency relative to the acquisition or sale of property, until the project or prospective sale is abandoned or until such time as all of the property has been acquired or the property to which the sale appraisal relates is sold, but in no event shall disclosure be denied for more than three years after the appraisal.

    (h) Valuable formulae, designs, drawings, and research data obtained by any agency within five years of the request for disclosure when disclosure would produce private gain and public loss.

    (i) Preliminary drafts, notes, recommendations, and intra-agency memorandums in which opinions are expressed or policies formulated or recommended except that a specific record shall not be exempt when publicly cited by an agency in connection with any agency action.

    (j) Records which are relevant to a controversy to which an agency is a party but which records would not be available to another party under the rules of pretrial discovery for causes pending in the superior courts.

    (k) Records, maps, or other information identifying the location of archaeological sites in order to avoid the looting or depredation of such sites.

    (l) Any library record, the primary purpose of which is to maintain control of library materials, or to gain access to information, which discloses or could be used to disclose the identity of a library user.

    (m) Financial information supplied by or on behalf of a person, firm, or corporation for the purpose of qualifying to submit a bid or proposal for (i) a ferry system construction or repair contract as required by RCW 47.60.680 through 47.60.750 or (ii) highway construction or improvement as required by RCW 47.28.070.

    (n) Railroad company contracts filed prior to July 28, 1991, with the utilities and transportation commission under RCW 81.34.070, except that the summaries of the contracts are open to public inspection and copying as otherwise provided by this chapter.

    (o) Financial and commercial information and records supplied by private persons pertaining to export services provided pursuant to chapter 43.163 RCW and chapter 53.31 RCW, and by persons pertaining to export projects pursuant to RCW 43.23.035.

    (p) Financial disclosures filed by private vocational schools under chapters 28B.85 and 28C.10 RCW.

    (q) Records filed with the utilities and transportation commission or attorney general under RCW 80.04.095 that a court has determined are confidential under RCW 80.04.095.

    (r) Financial and commercial information and records supplied by businesses or individuals during application for loans or program services provided by chapters 43.163, 43.160, 43.330, and 43.168 RCW, or during application for economic development loans or program services provided by any local agency.

    (s) Membership lists or lists of members or owners of interests of units in timeshare projects, subdivisions, camping resorts, condominiums, land developments, or common-interest communities affiliated with such projects, regulated by the department of licensing, in the files or possession of the department.

    (t) All applications for public employment, including the names of applicants, resumes, and other related materials submitted with respect to an applicant.

    (u) The residential addresses and residential telephone numbers of employees or volunteers of a public agency which are held by the agency in personnel records, employment or volunteer rosters, or mailing lists of employees or volunteers.

    (v) The residential addresses and residential telephone numbers of the customers of a public utility contained in the records or lists held by the public utility of which they are customers.

    (w)(i) The federal social security number of individuals governed under chapter 18.130 RCW maintained in the files of the department of health, except this exemption does not apply to requests made directly to the department from federal, state, and local agencies of government, and national and state licensing, credentialing, investigatory, disciplinary, and examination organizations; (ii) the current residential address and current residential telephone number of a health care provider governed under chapter 18.130 RCW maintained in the files of the department, if the provider requests that this information be withheld from public inspection and copying, and provides to the department an accurate alternate or business address and business telephone number.  On or after January 1, 1995, the current residential address and residential telephone number of a health care provider governed under RCW 18.130.140 maintained in the files of the department shall automatically be withheld from public inspection and copying unless the provider specifically requests the information be released, and except as provided for under RCW 42.17.260(9).

    (x) Information obtained by the board of pharmacy as provided in RCW 69.45.090.

    (y) Information obtained by the board of pharmacy or the department of health and its representatives as provided in RCW 69.41.044, 69.41.280, and 18.64.420.

    (z) Financial information, business plans, examination reports, and any information produced or obtained in evaluating or examining a business and industrial development corporation organized or seeking certification under chapter 31.24 RCW.

    (aa) Financial and commercial information supplied to the state investment board by any person when the information relates to the investment of public trust or retirement funds and when disclosure would result in loss to such funds or in private loss to the providers of this information.

    (bb) Financial and valuable trade information under RCW 51.36.120.

    (cc) Client records maintained by an agency that is a domestic violence program as defined in RCW 70.123.020 or 70.123.075 or a rape crisis center as defined in RCW 70.125.030.

    (dd) Information that identifies a person who, while an agency employee:  (i) Seeks advice, under an informal process established by the employing agency, in order to ascertain his or her rights in connection with a possible unfair practice under chapter 49.60 RCW against the person; and (ii) requests his or her identity or any identifying information not be disclosed.

    (ee) Investigative records compiled by an employing agency conducting a current investigation of a possible unfair practice under chapter 49.60 RCW or of a possible violation of other federal, state, or local laws prohibiting discrimination in employment.

    (ff) Business related information protected from public inspection and copying under RCW 15.86.110.

    (gg) Financial, commercial, operations, and technical and research information and data submitted to or obtained by the clean Washington center in applications for, or delivery of, program services under chapter 70.95H RCW.

    (hh) Information and documents created specifically for, and collected and maintained by a quality improvement committee pursuant to RCW 43.70.510, regardless of which agency is in possession of the information and documents.

    (ii) Personal information in files maintained in a data base created under RCW 43.07.360.

(jj) Proprietary financial and commercial information that the submitting entity, with review by the office of health policy, or interagency quality committee, specifically identifies at the time it is submitted and that is provided to or obtained by:  (i) The office of health policy in connection with an application for, or the supervision of, an antitrust exemption sought by the submitting entity under RCW 43.72.310; (ii) the office of health policy under RCW 43.73.030 or section 2, chapter 281, Laws of 1996; or (iii) the interagency quality committee under RCW 43.70.068 in connection with its authority to study health care issues.  If a request for such information is received, the submitting entity must be notified of the request.  Within ten business days of receipt of the notice, the submitting entity shall provide a written statement of the continuing need for confidentiality, which shall be provided to the requester.  Upon receipt of such notice, the office of health policy or interagency quality committee shall continue to treat information designated under this section as exempt from disclosure.  If the requester initiates an action to compel disclosure under this chapter, the submitting entity must be joined as a party to demonstrate the continuing need for confidentiality.

(kk) Health care information, as defined in RCW 70.02.010(6), obtained by the office of health policy as authorized by RCW 43.73.030 or section 2, chapter 281, Laws of 1996 or the interagency quality committee as authorized by RCW 43.70.068 under its authority to study health care issues.  Such information shall be released in a form that the record does not identify the recipient of the health care or that would otherwise be permitted by chapter 70.02 RCW without consent of the patient.

    (2) Except for information described in subsection (1)(c)(i) of this section and confidential income data exempted from public inspection pursuant to RCW 84.40.020, the exemptions of this section are inapplicable to the extent that information, the disclosure of which would violate personal privacy or vital governmental interests, can be deleted from the specific records sought.  No exemption may be construed to permit the nondisclosure of statistical information not descriptive of any readily identifiable person or persons.

    (3) Inspection or copying of any specific records exempt under the provisions of this section may be permitted if the superior court in the county in which the record is maintained finds, after a hearing with notice thereof to every person in interest and the agency, that the exemption of such records is clearly unnecessary to protect any individual's right of privacy or any vital governmental function.

    (4) Agency responses refusing, in whole or in part, inspection of any public record shall include a statement of the specific exemption authorizing the withholding of the record (or part) and a brief explanation of how the exemption applies to the record withheld.

NEW SECTION. Sec. 10.  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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