S-1584.1  _______________________________________________

                         SENATE BILL 5849

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Senator Benton

Read first time 02/17/97.  Referred to Committee on Financial Institutions, Insurance & Housing.

Providing for payment of health care providers in the event of a health insurer's insolvency.

    AN ACT Relating to payment of health care providers in the event of a health insurer's insolvency; adding a new section to chapter 48.44 RCW; adding a new section to chapter 48.46 RCW; and creating a new section.

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

NEW SECTION. Sec. 1.  It is the intent of the legislature that health care insurance companies that have received prepayment of premiums for enrollees and subsequently become insolvent be required to cover the services of health care providers providing services to those enrollees through the duration of the prepayment.

NEW SECTION. Sec. 2.  A new section is added to chapter 48.44 RCW to read as follows:

    (1) Every health care service contractor obtaining certification from the insurance commissioner shall provide and maintain a funded reserve of an amount equal to the sum of one month's premiums as reported on the most recent financial statement filed with the commissioner's office.  The funded reserve must be deposited with the commissioner or with any organization acceptable to the commissioner in the form of cash, securities eligible for investment under chapter 48.13 RCW, approved surety bond, or any combination of these, and must be equal to or exceed an amount equal to one month's premiums.  The funded reserve shall be established as an assurance that the unpaid expenditure obligations of the health care service contractor to health care providers on behalf of the enrolled Washington residents shall be paid.

    (2) Assets in the funded reserve must be used for the sole purpose of reimbursing health care providers for the cost of products and services incurred on behalf of enrollees in the event of insolvency.

    (3) All income from the funded reserve on deposit with the commissioner belongs to the depositing health care service contractor and must be paid to it as it becomes available.

NEW SECTION. Sec. 3.  A new section is added to chapter 48.46 RCW to read as follows:

    (1) Every health maintenance organization obtaining certification from the insurance commissioner shall provide and maintain a funded reserve of an amount equal to the sum of one month's premiums as reported on the most recent financial statement filed with the commissioner's office.  The funded reserve must be deposited with the commissioner or with any organization acceptable to the commissioner in the form of cash, securities eligible for investment under chapter 48.13 RCW, approved surety bond, or any combination of these, and must be equal to or exceed an amount equal to one month's premiums.  The funded reserve shall be established as an assurance that the unpaid expenditure obligations of the health maintenance organization to health care providers on behalf of the enrolled Washington residents shall be paid.

    (2) Assets in the funded reserve must be used for the sole purpose of reimbursing health care providers for the cost of products and services incurred on behalf of enrollees in the event of insolvency.

    (3) All income from the funded reserve on deposit with the commissioner belongs to the depositing health maintenance organization and must be paid to it as it becomes available.

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