Z‑0441.4   _____________________________________________

 

HOUSE BILL 1633

 

           _____________________________________________

 

State of Washington      57th Legislature     2001 Regular Session

 

By Representatives Campbell and Cody; by request of Insurance Commissioner

 

Read first time 01/31/2001.  Referred to Committee on Health Care.

_1      AN ACT Relating to technical corrections to chapters 79 and 80,

_2  Laws of 2000; and amending RCW 48.20.025, 48.41.030, 48.41.100,

_3  48.41.110, 48.43.005, 48.43.012, 48.43.015, 48.43.018, 48.43.025,

_4  48.44.017, 48.46.062, and 70.47.060.

     

_5  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

     

_6      Sec. 1.  RCW 48.20.025 and 2000 c 79 s 3 are each amended to read

_7  as follows:

_8      (1) The definitions in this subsection apply throughout this

_9  section unless the context clearly requires otherwise.

10      (a) "Claims" means the cost to the insurer of health care

11  services, as defined in RCW 48.43.005, provided to a policyholder

12  or paid to or on behalf of the policyholder in accordance with the

13  terms of a health benefit plan, as defined in RCW 48.43.005.  This

14  includes capitation payments or other similar payments made to

15  providers for the purpose of paying for health care services for a

16  policyholder.

17      (b) "Claims reserves" means:  (i) The liability for claims which

                               p. 1                       HB 1633

_1  have been reported but not paid; (ii) the liability for claims

_2  which have not been reported but which may reasonably be expected;

_3  (iii) active life reserves; and (iv) additional claims reserves

_4  whether for a specific liability purpose or not.

_5      (c) "Earned premiums" means premiums, as defined in RCW

_6  48.43.005, plus any rate credits or recoupments less any refunds,

_7  for the applicable period, whether received before, during, or

_8  after the applicable period.

_9      (d) "Incurred claims expense" means claims paid during the

10  applicable period plus any increase, or less any decrease, in the

11  claims reserves.

12      (e) "Loss ratio" means incurred claims expense as a percentage

13  of earned premiums.

14      (f) "Reserves" means:  (i) Active life reserves; and (ii)

15  additional reserves whether for a specific liability purpose or

16  not.

17      (2) An insurer shall file, for informational purposes only, a

18  notice of its schedule of rates for its individual health benefit

19  plans with the commissioner prior to use.

20      (3) An insurer shall file with the notice required under

21  subsection (2) of this section supporting documentation of its

22  method of determining the rates charged.  The commissioner may

23  request only the following supporting documentation:

24      (a) A description of the insurer's rate-making methodology;

25      (b) An actuarially determined estimate of incurred claims which

26  includes the experience data, assumptions, and justifications of

27  the insurer's projection;

28      (c) The percentage of premium attributable in aggregate for

29  nonclaims expenses used to determine the adjusted community rates

30  charged; and

31      (d) A certification by a member of the American academy of

32  actuaries, or other person approved by the commissioner, that the

33  adjusted community rate charged can be reasonably expected to

34  result in a loss ratio that meets or exceeds the loss ratio

35  standard established in subsection (7) of this section.

36      (4) The commissioner may not disapprove or otherwise impede the

37  implementation of the filed rates.

38      (5) By the last day of May each year any insurer ((providing))

HB 1633                        p. 2

_1  issuing or renewing individual health benefit plans in this state

_2  during the preceding calendar year shall file for review by the

_3  commissioner supporting documentation of its actual loss ratio for

_4  its individual health benefit plans offered or renewed in the

_5  state in aggregate for the preceding calendar year.  The filing

_6  shall include aggregate earned premiums, aggregate incurred

_7  claims, and a certification by a member of the American academy of

_8  actuaries, or other person approved by the commissioner, that the

_9  actual loss ratio has been calculated in accordance with accepted

10  actuarial principles.

11      (a) At the expiration of a thirty-day period beginning with the

12  date the filing is ((delivered to)) received by the commissioner,

13  the filing shall be deemed approved unless prior thereto the

14  commissioner contests the calculation of the actual loss ratio.

15      (b) If the commissioner contests the calculation of the actual

16  loss ratio, the commissioner shall state in writing the grounds

17  for contesting the calculation to the insurer.

18      (c) Any dispute regarding the calculation of the actual loss

19  ratio shall, upon written demand of either the commissioner or the

20  insurer, be submitted to hearing under chapters 48.04 and 34.05

21  RCW.

22      (6) If the actual loss ratio for the preceding calendar year is

23  less than the loss ratio established in subsection (7) of this

24  section, a remittance is due and the following shall apply:

25      (a) The insurer shall calculate a percentage of premium to be

26  remitted to the Washington state health insurance pool by

27  subtracting the actual loss ratio for the preceding year from the

28  loss ratio established in subsection (7) of this section.

29      (b) The remittance to the Washington state health insurance

30  pool is the percentage calculated in (a) of ((the [this])) this

31  subsection, multiplied by the premium earned from each enrollee in

32  the previous calendar year.  Interest shall be added to the

33  remittance due at a five percent annual rate calculated from the

34  end of the calendar year for which the remittance is due to the

35  date the remittance is made.

36      (c) All remittances shall be aggregated and such amounts shall

37  be remitted to the Washington state high risk pool to be used as

38  directed by the pool board of directors.

                               p. 3                       HB 1633

 

_1      (d) Any remittance required to be issued under this section

_2  shall be issued within thirty days after the actual loss ratio is

_3  deemed approved under subsection (5)(a) of this section or the

_4  determination by an administrative law judge under subsection

_5  (5)(c) of this section.

_6      (7) The loss ratio applicable to this section shall be seventy-

_7  four percent minus the premium tax rate applicable to the

_8  insurer's individual health benefit plans under RCW 48.14.0201.

     

_9      Sec. 2.  RCW 48.41.030 and 2000 c 79 s 6 are each amended to read

10  as follows:

11      The definitions in this section apply throughout this chapter

12  unless the context clearly requires otherwise.

13      (1) "Accounting year" means a twelve-month period determined by

14  the board for purposes of record-keeping and accounting.  The first

15  accounting year may be more or less than twelve months and, from

16  time to time in subsequent years, the board may order an

17  accounting year of other than twelve months as may be required for

18  orderly management and accounting of the pool.

19      (2) "Administrator" means the entity chosen by the board to

20  administer the pool under RCW 48.41.080.

21      (3) "Board" means the board of directors of the pool.

22      (4) "Commissioner" means the insurance commissioner.

23      (5) "Covered person" means any individual resident of this

24  state who is eligible to receive benefits from any member, or

25  other health plan.

26      (6) "Health care facility" has the same meaning as in RCW

27  70.38.025.

28      (7) "Health care provider" means any physician, facility, or

29  health care professional, who is licensed in Washington state and

30  entitled to reimbursement for health care services.

31      (8) "Health care services" means services for the purpose of

32  preventing, alleviating, curing, or healing human illness or

33  injury.

34      (9) "Health carrier" or "carrier" has the same meaning as in

35  RCW 48.43.005.

36      (10) "Health coverage" means any group or individual disability

37  insurance policy, health care service contract, and health

HB 1633                        p. 4

_1  maintenance agreement, except those contracts entered into for the

_2  provision of health care services pursuant to Title XVIII of the

_3  Social Security Act, 42 U.S.C. Sec. 1395 et seq.  The term does not

_4  include short-term care, long-term care, dental, vision, accident,

_5  fixed indemnity, disability income contracts, ((civilian health

_6  and medical program for the uniform services (CHAMPUS), 10 U.S.C.

_7  55,)) limited benefit or credit insurance, coverage issued as a

_8  supplement to liability insurance, insurance arising out of the

_9  worker's compensation or similar law, automobile medical payment

10  insurance, or insurance under which benefits are payable with or

11  without regard to fault and which is statutorily required to be

12  contained in any liability insurance policy or equivalent self-

13  insurance.

14      (11) "Health plan" means any arrangement by which persons,

15  including dependents or spouses, covered or making application to

16  be covered under this pool, have access to hospital and medical

17  benefits or reimbursement including any group or individual

18  disability insurance policy; health care service contract; health

19  maintenance agreement; uninsured arrangements of group or group-

20  type contracts including employer self-insured, cost-plus, or

21  other benefit methodologies not involving insurance or not

22  governed by Title 48 RCW; coverage under group-type contracts

23  which are not available to the general public and can be obtained

24  only because of connection with a particular organization or

25  group; and coverage by medicare or other governmental benefits.

26  This term includes coverage through "health coverage" as defined

27  under this section, and specifically excludes those types of

28  programs excluded under the definition of "health coverage" in

29  subsection (10) of this section.

30      (12) "Medical assistance" means coverage under Title XIX of the

31  federal Social Security Act (42 U.S.C., Sec. 1396 et seq.) and

32  chapter 74.09 RCW.

33      (13) "Medicare" means coverage under Title XVIII of the Social

34  Security Act, (42 U.S.C. Sec. 1395 et seq., as amended).

35      (14) "Member" means any commercial insurer which provides

36  disability insurance or stop loss insurance, any health care

37  service contractor, and any health maintenance organization

38  licensed under Title 48 RCW.  "Member" also means the Washington

                               p. 5                       HB 1633

_1  state health care authority as issuer of the state uniform medical

_2  plan.  "Member" shall also mean, as soon as authorized by federal

_3  law, employers and other entities, including a self-funding entity

_4  and employee welfare benefit plans that provide health plan

_5  benefits in this state on or after May 18, 1987.  "Member" does not

_6  include any insurer, health care service contractor, or health

_7  maintenance organization whose products are exclusively dental

_8  products or those products excluded from the definition of "health

_9  coverage" set forth in subsection (10) of this section.

10      (15) "Network provider" means a health care provider who has

11  contracted in writing with the pool administrator or a health

12  carrier contracting with the pool administrator to offer pool

13  coverage to accept payment from and to look solely to the pool or

14  health carrier according to the terms of the pool health plans.

15      (16) "Plan of operation" means the pool, including articles, by-

16  laws, and operating rules, adopted by the board pursuant to RCW

17  48.41.050.

18      (17) "Point of service plan" means a benefit plan offered by

19  the pool under which a covered person may elect to receive covered

20  services from network providers, or nonnetwork providers at a

21  reduced rate of benefits.

22      (18) "Pool" means the Washington state health insurance pool as

23  created in RCW 48.41.040.

     

24      Sec. 3.  RCW 48.41.100 and 2000 c 79 s 12 are each amended to read

25  as follows:

26      (1) The following persons who are residents of this state are

27  eligible for pool coverage:

28      (a) Any person who provides evidence of a carrier's decision

29  not to accept him or her for enrollment in an individual health

30  benefit plan as defined in RCW 48.43.005 based upon, and within

31  ninety days of the receipt of, the results of the standard health

32  questionnaire designated by the board and administered by health

33  carriers under RCW 48.43.018;

34      (b) Any person who continues to be eligible for pool coverage

35  based upon the results of the standard health questionnaire

36  designated by the board and administered by the pool administrator

37  pursuant to subsection (3) of this section;

HB 1633                        p. 6

 

_1      (c) Any person who resides in a county of the state where no

_2  carrier or insurer regulated under chapter 48.15 RCW offers to the

_3  public an individual health benefit plan other than a catastrophic

_4  health plan as defined in RCW 48.43.005 at the time of application

_5  to the pool, and who makes direct application to the pool; ((and))

_6      (d) Any medicare eligible person upon providing evidence of

_7  rejection for medical reasons, a requirement of restrictive

_8  riders, an up-rated premium, or a preexisting conditions

_9  limitation on a medicare supplemental insurance policy under

10  chapter 48.66 RCW, the effect of which is to substantially reduce

11  coverage from that received by a person considered a standard risk

12  by at least one member within six months of the date of

13  application; and

14      (e) Any medicare eligible person whose health insurance

15  coverage, other than coverage under an individual or group health

16  plan, is involuntarily terminated for any reason other than

17  nonpayment of premium may apply for coverage under the plan.

18      (2) The following persons are not eligible for coverage by the

19  pool:

20      (a) Any person having terminated coverage in the pool unless

21  (i) twelve months have lapsed since termination, or (ii) that

22  person can show continuous other coverage which has been

23  involuntarily terminated for any reason other than nonpayment of

24  premiums;

25      (b) Any person on whose behalf the pool has paid out one

26  million dollars in benefits;

27      (c) Inmates of public institutions and persons whose benefits

28  are duplicated under public programs;

29      (d) Any person who resides in a county of the state where any

30  carrier or insurer regulated under chapter 48.15 RCW offers to the

31  public an individual health benefit plan other than a catastrophic

32  health plan as defined in RCW 48.43.005 at the time of application

33  to the pool and who does not qualify for pool coverage based upon

34  the results of the standard health questionnaire, or pursuant to

35  subsection (1)(d) of this section.

36      (3) When a carrier or insurer regulated under chapter 48.15 RCW

37  begins to offer an individual health benefit plan in a county

                               p. 7                       HB 1633

_1  where no carrier had been offering an individual health benefit

_2  plan:

_3      (a) If the health benefit plan offered is other than a

_4  catastrophic health plan as defined in RCW 48.43.005, any person

_5  enrolled in a pool plan pursuant to subsection (1)(c) of this

_6  section in that county shall no longer be eligible for coverage

_7  under that plan pursuant to subsection (1)(c) of this section, but

_8  may continue to be eligible for pool coverage based upon the

_9  results of the standard health questionnaire designated by the

10  board and administered by the pool administrator.  The pool

11  administrator shall offer to administer the questionnaire to each

12  person no longer eligible for coverage under subsection (1)(c) of

13  this section within thirty days of determining that he or she is

14  no longer eligible;

15      (b) Losing eligibility for pool coverage under this subsection

16  (3) does not affect a person's eligibility for pool coverage under

17  subsection (1)(a), (b), or (d) of this section; and

18      (c) The pool administrator shall provide written notice to any

19  person who is no longer eligible for coverage under a pool plan

20  under this subsection (3) within thirty days of the

21  administrator's determination that the person is no longer

22  eligible.  The notice shall:  (i) Indicate that coverage under the

23  plan will cease ninety days from the date that the notice is

24  dated; (ii) describe any other coverage options, either in or

25  outside of the pool, available to the person; (iii) describe the

26  procedures for the administration of the standard health

27  questionnaire to determine the person's continued eligibility for

28  coverage under subsection (1)(b) of this section; and (iv)

29  describe the enrollment process for the available options outside

30  of the pool.

     

31      Sec. 4.  RCW 48.41.110 and 2000 c 80 s 2 are each amended to read

32  as follows:

33      (1) The pool shall offer one or more care management plans of

34  coverage.  Such plans may, but are not required to, include point of

35  service features that permit participants to receive in-network

36  benefits or out-of-network benefits subject to differential cost

37  shares.  Covered persons enrolled in the pool on January 1, 2001,

HB 1633                        p. 8

_1  may continue coverage under the pool plan in which they are

_2  enrolled on that date.  However, the pool may incorporate managed

_3  care features into such existing plans.

_4      (2) The administrator shall prepare a brochure outlining the

_5  benefits and exclusions of the pool policy in plain language.

_6  After approval by the board, such brochure shall be made

_7  reasonably available to participants or potential participants.

_8      (3) The health insurance policy issued by the pool shall pay

_9  only reasonable amounts for medically necessary eligible health

10  care services rendered or furnished for the diagnosis or treatment

11  of illnesses, injuries, and conditions which are not otherwise

12  limited or excluded.  Eligible expenses are the reasonable amounts

13  for the health care services and items for which benefits are

14  extended under the pool policy.  Such benefits shall at minimum

15  include, but not be limited to, the following services or related

16  items:

17      (a) Hospital services, including charges for the most common

18  semiprivate room, for the most common private room if semiprivate

19  rooms do not exist in the health care facility, or for the private

20  room if medically necessary, but limited to a total of one hundred

21  eighty inpatient days in a calendar year, and limited to thirty

22  days inpatient care for mental and nervous conditions, or alcohol,

23  drug, or chemical dependency or abuse per calendar year;

24      (b) Professional services including surgery for the treatment

25  of injuries, illnesses, or conditions, other than dental, which

26  are rendered by a health care provider, or at the direction of a

27  health care provider, by a staff of registered or licensed

28  practical nurses, or other health care providers;

29      (c) The first twenty outpatient professional visits for the

30  diagnosis or treatment of one or more mental or nervous conditions

31  or alcohol, drug, or chemical dependency or abuse rendered during

32  a calendar year by one or more physicians, psychologists, or

33  community mental health professionals, or, at the direction of a

34  physician, by other qualified licensed health care practitioners,

35  in the case of mental or nervous conditions, and rendered by a

36  state certified chemical dependency program approved under chapter

37  70.96A RCW, in the case of alcohol, drug, or chemical dependency

38  or abuse;

                               p. 9                       HB 1633

 

_1      (d) Drugs and contraceptive devices requiring a prescription;

_2      (e) Services of a skilled nursing facility, excluding custodial

_3  and convalescent care, for not more than one hundred days in a

_4  calendar year as prescribed by a physician;

_5      (f) Services of a home health agency;

_6      (g) Chemotherapy, radioisotope, radiation, and nuclear medicine

_7  therapy;

_8      (h) Oxygen;

_9      (i) Anesthesia services;

10      (j) Prostheses, other than dental;

11      (k) Durable medical equipment which has no personal use in the

12  absence of the condition for which prescribed;

13      (l) Diagnostic x-rays and laboratory tests;

14      (m) Oral surgery limited to the following:  Fractures of facial

15  bones; excisions of mandibular joints, lesions of the mouth, lip,

16  or tongue, tumors, or cysts excluding treatment for

17  temporomandibular joints; incision of accessory sinuses, mouth

18  salivary glands or ducts; dislocations of the jaw; plastic

19  reconstruction or repair of traumatic injuries occurring while

20  covered under the pool; and excision of impacted wisdom teeth;

21      (n) Maternity care services;

22      (o) Services of a physical therapist and services of a speech

23  therapist;

24      (p) Hospice services;

25      (q) Professional ambulance service to the nearest health care

26  facility qualified to treat the illness or injury; and

27      (r) Other medical equipment, services, or supplies required by

28  physician's orders and medically necessary and consistent with the

29  diagnosis, treatment, and condition.

30      (4) The board shall design and employ cost containment measures

31  and requirements such as, but not limited to, care coordination,

32  provider network limitations, preadmission certification, and

33  concurrent inpatient review which may make the pool more cost-

34  effective.

35      (5) The pool benefit policy may contain benefit limitations,

36  exceptions, and cost shares such as copayments, coinsurance, and

37  deductibles that are consistent with managed care products, except

38  that differential cost shares may be adopted by the board for

HB 1633                        p. 10

_1  nonnetwork providers under point of service plans.  The pool benefit

_2  policy cost shares and limitations must be consistent with those

_3  that are generally included in health plans approved by the

_4  insurance commissioner; however, no limitation, exception, or

_5  reduction may be used that would exclude coverage for any disease,

_6  illness, or injury.

_7      (6) The pool may not reject an individual for health plan

_8  coverage based upon preexisting conditions of the individual or

_9  deny, exclude, or otherwise limit coverage for an individual's

10  preexisting health conditions; except that it shall impose a six-

11  month benefit waiting period for preexisting conditions for which

12  medical advice was given, for which a health care provider

13  recommended or provided treatment, or for which a prudent

14  layperson would have sought advice or treatment, within six months

15  before the effective date of coverage.  The preexisting condition

16  waiting period shall not apply to prenatal care services.  The pool

17  may not avoid the requirements of this section through the

18  creation of a new rate classification or the modification of an

19  existing rate classification.  Credit against the waiting period

20  shall be as provided in subsection (7) of this section.

21      (7)(a) Except as provided in (b) of this subsection, the pool

22  shall credit any preexisting condition waiting period in its plans

23  for a person who was enrolled at any time during the sixty-three

24  day period immediately preceding the date of application for the

25  new pool plan ((in a group health benefit plan or an individual

26  health benefit plan other than a catastrophic health plan.  The pool

27  must credit the period of coverage the person was continuously

28  covered under the immediately preceding health plan)).  For the

29  person previously enrolled in a group health benefit plan, the

30  pool must credit the aggregate of all periods of preceding

31  coverage not separated by more than sixty-three days toward the

32  waiting period of the new health plan.  For the person previously

33  enrolled in an individual health benefit plan other than a

34  catastrophic health plan, the pool must credit the period of

35  coverage the person was continuously covered under the immediately

36  preceding health plan toward the waiting period of the new health

37  plan.  For the purposes of this subsection, a preceding health plan

38  includes an employer-provided self-funded health plan.

                               p. 11                       HB 1633

 

_1      (b) The pool shall waive any preexisting condition waiting

_2  period for a person who is an eligible individual as defined in

_3  section 2741(b) of the federal health insurance portability and

_4  accountability act of 1996 (42 U.S.C. 300gg-41(b)).

_5      (8) If an application is made for the pool policy as a result

_6  of rejection by a carrier, then the date of application to the

_7  carrier, rather than to the pool, should govern for purposes of

_8  determining preexisting condition credit.

     

_9     Sec. 5.  RCW 48.43.005 and 2000 c 79 s 18 are each amended to read

10  as follows:

11      Unless otherwise specifically provided, the definitions in this

12  section apply throughout this chapter.

13      (1) "Adjusted community rate" means the rating method used to

14  establish the premium for health plans adjusted to reflect

15  actuarially demonstrated differences in utilization or cost

16  attributable to geographic region, age, family size, and use of

17  wellness activities.

18      (2) "Basic health plan" means the plan described under chapter

19  70.47 RCW, as revised from time to time.

20      (3) "Basic health plan model plan" means a health plan as

21  required in RCW 70.47.060(2)(d).

22      (4) "Basic health plan services" means that schedule of covered

23  health services, including the description of how those benefits

24  are to be administered, that are required to be delivered to an

25  enrollee under the basic health plan, as revised from time to

26  time.

27      (((4))) (5) "Catastrophic health plan" means:

28      (a) In the case of a contract, agreement, or policy covering a

29  single enrollee, a health benefit plan requiring a calendar year

30  deductible of, at a minimum, one thousand five hundred dollars and

31  an annual out-of-pocket expense required to be paid under the plan

32  (other than for premiums) for covered benefits of at least three

33  thousand dollars; and

34      (b) In the case of a contract, agreement, or policy covering

35  more than one enrollee, a health benefit plan requiring a calendar

36  year deductible of, at a minimum, three thousand dollars and an

37  annual out-of-pocket expense required to be paid under the plan

HB 1633                        p. 12

_1  (other than for premiums) for covered benefits of at least five

_2  thousand five hundred dollars; or

_3      (c) Any health benefit plan that provides benefits for hospital

_4  inpatient and outpatient services, professional and prescription

_5  drugs provided in conjunction with such hospital inpatient and

_6  outpatient services, and excludes or substantially limits

_7  outpatient physician services and those services usually provided

_8  in an office setting.

_9      (((5))) (6) "Certification" means a determination by a review

10  organization that an admission, extension of stay, or other health

11  care service or procedure has been reviewed and, based on the

12  information provided, meets the clinical requirements for medical

13  necessity, appropriateness, level of care, or effectiveness under

14  the auspices of the applicable health benefit plan.

15      (((6))) (7) "Concurrent review" means utilization review

16  conducted during a patient's hospital stay or course of treatment.

17      (((7))) (8) "Covered person" or "enrollee" means a person

18  covered by a health plan including an enrollee, subscriber,

19  policyholder, beneficiary of a group plan, or individual covered

20  by any other health plan.

21      (((8))) (9) "Dependent" means, at a minimum, the enrollee's

22  legal spouse and unmarried dependent children who qualify for

23  coverage under the enrollee's health benefit plan.

24      (((9))) (10) "Eligible employee" means an employee who works on

25  a full-time basis with a normal work week of thirty or more

26  hours.  The term includes a self-employed individual, including a

27  sole proprietor, a partner of a partnership, and may include an

28  independent contractor, if the self-employed individual, sole

29  proprietor, partner, or independent contractor is included as an

30  employee under a health benefit plan of a small employer, but does

31  not work less than thirty hours per week and derives at least

32  seventy-five percent of his or her income from a trade or business

33  through which he or she has attempted to earn taxable income and

34  for which he or she has filed the appropriate internal revenue

35  service form.  Persons covered under a health benefit plan pursuant

36  to the consolidated omnibus budget reconciliation act of 1986

37  shall not be considered eligible employees for purposes of minimum

38  participation requirements of chapter 265, Laws of 1995.

                               p. 13                       HB 1633

 

_1      (((10))) (11) "Emergency medical condition" means the emergent

_2  and acute onset of a symptom or symptoms, including severe pain,

_3  that would lead a prudent layperson acting reasonably to believe

_4  that a health condition exists that requires immediate medical

_5  attention, if failure to provide medical attention would result in

_6  serious impairment to bodily functions or serious dysfunction of a

_7  bodily organ or part, or would place the person's health in

_8  serious jeopardy.

_9      (((11))) (12) "Emergency services" means otherwise covered

10  health care services medically necessary to evaluate and treat an

11  emergency medical condition, provided in a hospital emergency

12  department.

13      (((12))) (13) "Enrollee point-of-service cost-sharing" means

14  amounts paid to health carriers directly providing services,

15  health care providers, or health care facilities by enrollees and

16  may include copayments, coinsurance, or deductibles.

17      (((13))) (14) "Grievance" means a written complaint submitted

18  by or on behalf of a covered person regarding:  (a) Denial of

19  payment for medical services or nonprovision of medical services

20  included in the covered person's health benefit plan, or (b)

21  service delivery issues other than denial of payment for medical

22  services or nonprovision of medical services, including

23  dissatisfaction with medical care, waiting time for medical

24  services, provider or staff attitude or demeanor, or

25  dissatisfaction with service provided by the health carrier.

26      (((14))) (15) "Health care facility" or "facility" means

27  hospices licensed under chapter 70.127 RCW, hospitals licensed

28  under chapter 70.41 RCW, rural health care facilities as defined

29  in RCW 70.175.020, psychiatric hospitals licensed under chapter

30  71.12 RCW, nursing homes licensed under chapter 18.51 RCW,

31  community mental health centers licensed under chapter 71.05 or

32  71.24 RCW, kidney disease treatment centers licensed under chapter

33  70.41 RCW, ambulatory diagnostic, treatment, or surgical

34  facilities licensed under chapter 70.41 RCW, drug and alcohol

35  treatment facilities licensed under chapter 70.96A RCW, and home

36  health agencies licensed under chapter 70.127 RCW, and includes

37  such facilities if owned and operated by a political subdivision

HB 1633                        p. 14

_1  or instrumentality of the state and such other facilities as

_2  required by federal law and implementing regulations.

_3      (((15))) (16) "Health care provider" or "provider" means:

_4      (a) A person regulated under Title 18 or chapter 70.127 RCW, to

_5  practice health or health-related services or otherwise practicing

_6  health care services in this state consistent with state law; or

_7      (b) An employee or agent of a person described in (a) of this

_8  subsection, acting in the course and scope of his or her

_9  employment.

10      (((16))) (17) "Health care service" means that service offered

11  or provided by health care facilities and health care providers

12  relating to the prevention, cure, or treatment of illness, injury,

13  or disease.

14      (((17))) (18) "Health carrier" or "carrier" means a disability

15  insurer regulated under chapter 48.20 or 48.21 RCW, a health care

16  service contractor as defined in RCW 48.44.010, or a health

17  maintenance organization as defined in RCW 48.46.020.

18      (((18))) (19) "Health plan" or "health benefit plan" means any

19  policy, contract, or agreement offered by a health carrier to

20  provide, arrange, reimburse, or pay for health care services

21  except the following:

22      (a) Long-term care insurance governed by chapter 48.84 RCW;

23      (b) Medicare supplemental health insurance governed by chapter

24  48.66 RCW;

25      (c) Limited health care services offered by limited health care

26  service contractors in accordance with RCW 48.44.035;

27      (d) Disability income;

28      (e) Coverage incidental to a property/casualty liability

29  insurance policy such as automobile personal injury protection

30  coverage and homeowner guest medical;

31      (f) Workers' compensation coverage;

32      (g) Accident only coverage;

33      (h) Specified disease and hospital confinement indemnity when

34  marketed solely as a supplement to a health plan;

35      (i) Employer-sponsored self-funded health plans;

36      (j) Dental only and vision only coverage; and

37      (k) Plans deemed by the insurance commissioner to have a short-

38  term limited purpose or duration, or to be a student-only plan

                               p. 15                       HB 1633

_1  that is guaranteed renewable while the covered person is enrolled

_2  as a regular full-time undergraduate or graduate student at an

_3  accredited higher education institution, after a written request

_4  for such classification by the carrier and subsequent written

_5  approval by the insurance commissioner.

_6      (((19))) (20) "Material modification" means a change in the

_7  actuarial value of the health plan as modified of more than five

_8  percent but less than fifteen percent.

_9      (((20))) (21) "Preexisting condition" means any medical

10  condition, illness, or injury that existed any time prior to the

11  effective date of coverage.

12      (((21))) (22) "Premium" means all sums charged, received, or

13  deposited by a health carrier as consideration for a health plan

14  or the continuance of a health plan.  Any assessment or any

15  "membership," "policy," "contract," "service," or similar fee or

16  charge made by a health carrier in consideration for a health plan

17  is deemed part of the premium.  "Premium" shall not include amounts

18  paid as enrollee point-of-service cost-sharing.

19      (((22))) (23) "Review organization" means a disability insurer

20  regulated under chapter 48.20 or 48.21 RCW, health care service

21  contractor as defined in RCW 48.44.010, or health maintenance

22  organization as defined in RCW 48.46.020, and entities affiliated

23  with, under contract with, or acting on behalf of a health carrier

24  to perform a utilization review.

25      (((23))) (24) "Small employer" or "small group" means any

26  person, firm, corporation, partnership, association, political

27  subdivision except school districts, or self-employed individual

28  that is actively engaged in business that, on at least fifty

29  percent of its working days during the preceding calendar quarter,

30  employed no more than fifty eligible employees, with a normal work

31  week of thirty or more hours, the majority of whom were employed

32  within this state, and is not formed primarily for purposes of

33  buying health insurance and in which a bona fide employer-employee

34  relationship exists.  In determining the number of eligible

35  employees, companies that are affiliated companies, or that are

36  eligible to file a combined tax return for purposes of taxation by

37  this state, shall be considered an employer.  Subsequent to the

38  issuance of a health plan to a small employer and for the purpose

HB 1633                        p. 16

_1  of determining eligibility, the size of a small employer shall be

_2  determined annually.  Except as otherwise specifically provided, a

_3  small employer shall continue to be considered a small employer

_4  until the plan anniversary following the date the small employer

_5  no longer meets the requirements of this definition.  The term

_6  "small employer" includes a self-employed individual or sole

_7  proprietor.  The term "small employer" also includes a self-employed

_8  individual or sole proprietor who derives at least seventy-five

_9  percent of his or her income from a trade or business through

10  which the individual or sole proprietor has attempted to earn

11  taxable income and for which he or she has filed the appropriate

12  internal revenue service form 1040, schedule C or F, for the

13  previous taxable year.

14      (((24))) (25) "Utilization review" means the prospective,

15  concurrent, or retrospective assessment of the necessity and

16  appropriateness of the allocation of health care resources and

17  services of a provider or facility, given or proposed to be given

18  to an enrollee or group of enrollees.

19      (((25))) (26) "Wellness activity" means an explicit program of

20  an activity consistent with department of health guidelines, such

21  as, smoking cessation, injury and accident prevention, reduction

22  of alcohol misuse, appropriate weight reduction, exercise,

23  automobile and motorcycle safety, blood cholesterol reduction, and

24  nutrition education for the purpose of improving enrollee health

25  status and reducing health service costs.

     

26      Sec. 6.  RCW 48.43.012 and 2000 c 79 s 19 are each amended to read

27  as follows:

28      (1) No carrier may reject an individual for an individual

29  health benefit plan based upon preexisting conditions of the

30  individual except as provided in RCW 48.43.018.

31      (2) No carrier may deny, exclude, or otherwise limit coverage

32  for an individual's preexisting health conditions except as

33  provided in this section.

34      (3) For an individual health benefit plan originally issued on

35  or after March 23, 2000, preexisting condition waiting periods

36  imposed upon a person enrolling in an individual health benefit

37  plan shall be no more than nine months for a preexisting condition

                               p. 17                       HB 1633

_1  for which medical advice was given, for which a health care

_2  provider recommended or provided treatment, or for which a prudent

_3  layperson would have sought advice or treatment, within six months

_4  prior to the effective date of the plan.  No carrier may impose a

_5  preexisting condition waiting period on an individual health

_6  benefit plan issued to an eligible individual as defined in

_7  section 2741(b) of the federal health insurance portability and

_8  accountability act of 1996 (42 U.S.C. 300gg-41(b)).

_9      (4) Individual health benefit plan preexisting condition

10  waiting periods shall not apply to prenatal care services.

11      (5) No carrier may avoid the requirements of this section

12  through the creation of a new rate classification or the

13  modification of an existing rate classification.  A new or changed

14  rate classification will be deemed an attempt to avoid the

15  provisions of this section if the new or changed classification

16  would substantially discourage applications for coverage from

17  individuals who are higher than average health risks.  These

18  provisions apply only to individuals who are Washington residents.

     

19      Sec. 7.  RCW 48.43.015 and 2000 c 80 s 3 are each amended to read

20  as follows:

21      (1) For a health benefit plan offered to a group other than a

22  small group, every health carrier shall reduce any preexisting

23  condition exclusion or limitation for persons or groups who had

24  similar health coverage under a different health plan at any time

25  during the three-month period immediately preceding the date of

26  application for the new health plan ((if such person was

27  continuously covered under the immediately preceding health plan.

28  If the person was continuously covered for at least three months

29  under the immediately preceding health plan,)).  The carrier may not

30  impose a waiting period for coverage of preexisting conditions((.

31  If the person was continuously covered for less than three months

32  under the immediately preceding health plan)) if the aggregate of

33  all periods of preceding coverage, not separated by more than

34  sixty-three days, is at least three months.  If the aggregate of all

35  periods of preceding coverage, not separated by more than sixty-

36  three days, is less than three months, the carrier must credit any

37  waiting period under the ((immediately)) preceding health plan

HB 1633                        p. 18

_1  toward the new health plan.  For the purposes of this subsection, a

_2  preceding health plan includes an employer-provided self-funded

_3  health plan and plans of the Washington state health insurance

_4  pool.

_5      (2) For a health benefit plan offered to a small group, every

_6  health carrier shall reduce any preexisting condition exclusion or

_7  limitation for persons or groups who had similar health coverage

_8  under a different health plan at any time during the three-month

_9  period immediately preceding the date of application for the new

10  health plan ((if such person was continuously covered under the

11  immediately preceding health plan.  If the person was continuously

12  covered for at least nine months under the immediately preceding

13  health plan,)).  The carrier may not impose a waiting period for

14  coverage of preexisting conditions((.  If the person was

15  continuously covered for less than nine months under the

16  immediately preceding health plan)) if the aggregate of all

17  periods of previous coverage, not separated by more than sixty-

18  three days, is greater than nine months.  If the aggregate of all

19  periods of preceding coverage, not separated by more than sixty-

20  three days, is less than nine months, the carrier must credit any

21  waiting period under the ((immediately)) preceding health plan

22  toward the new health plan.  For the purposes of this subsection, a

23  preceding health plan includes an employer‑provided self-funded

24  health plan and plans of the Washington state health insurance

25  pool.

26      (3) For a health benefit plan offered to an individual, other

27  than an individual to whom subsection (4) of this section applies,

28  every health carrier shall credit any preexisting condition

29  waiting period in that plan for a person who was enrolled at any

30  time during the sixty-three day period immediately preceding the

31  date of application for the new health plan ((in a group health

32  benefit plan or an individual health benefit plan, other than a

33  catastrophic health plan)), and (a) ((the benefits under the

34  previous plan provide equivalent or greater overall benefit

35  coverage than that provided in the health benefit plan the

36  individual seeks to purchase; or (b))) the person is seeking an

37  individual health benefit plan due to his or her change of

38  residence from one geographic area in Washington state to another

                               p. 19                       HB 1633

_1  geographic area in Washington state where his or her current

_2  health plan is not offered, if application for coverage is made

_3  within ninety days of relocation; or (((c))) (b) the person is

_4  seeking an individual health benefit plan:  (i) Because a health

_5  care provider with whom he or she has an established care

_6  relationship and from whom he or she has received treatment within

_7  the past twelve months is no longer part of the carrier's provider

_8  network under his or her existing Washington individual health

_9  benefit plan; and (ii) his or her health care provider is part of

10  another carrier's provider network; and (iii) application for a

11  health benefit plan under that carrier's provider network

12  individual coverage is made within ninety days of his or her

13  provider leaving the previous carrier's provider network.  ((The

14  carrier must credit the period of coverage the person was

15  continuously covered under the immediately preceding health plan

16  toward the waiting period of the new health plan.))  For the

17  person previously enrolled in a group health benefit plan, the

18  carrier must credit the aggregate of all periods of preceding

19  coverage not separated by more than sixty-three days toward the

20  waiting period of the new health plan.  For the person previously

21  enrolled in an individual health benefit plan other than a

22  catastrophic health plan or a plan that provided equivalent or

23  greater overall benefit coverage than the coverage the individual

24  seeks to purchase, the carrier must credit the period of coverage

25  the person was continuously covered under the immediately

26  preceding health plan.  For the purposes of this subsection (3), a

27  preceding health plan includes an employer-provided self-funded

28  health plan and plans of the Washington state health insurance

29  pool.

30      (4) Every health carrier shall waive any preexisting condition

31  waiting period in its individual plans for a person who is an

32  eligible individual as defined in section 2741(b) of the federal

33  health insurance portability and accountability act of 1996 (42

34  U.S.C. 300gg-41(b)).

35      (5) Subject to the provisions of subsections (1) through (4) of

36  this section, nothing contained in this section requires a health

37  carrier to amend a health plan to provide new benefits in its

HB 1633                        p. 20

_1  existing health plans.  In addition, nothing in this section

_2  requires a carrier to waive benefit limitations not related to an

_3  individual or group's preexisting conditions or health history.

     

_4      Sec. 8.  RCW 48.43.018 and 2000 c 80 s 4 are each amended to read

_5  as follows:

_6      (1) Except as provided in (a) through (c) of this subsection, a

_7  health carrier may require any person applying for an individual

_8  health benefit plan to complete the standard health questionnaire

_9  designated under chapter 48.41 RCW.

10      (a) If a person is seeking an individual health benefit plan

11  due to his or her change of residence from one geographic area in

12  Washington state to another geographic area in Washington state

13  where his or her current health plan is not offered, completion of

14  the standard health questionnaire shall not be a condition of

15  coverage if application for coverage is made within ninety days of

16  relocation.

17      (b) If a person is seeking an individual health benefit plan:

18      (i) Because a health care provider with whom he or she has an

19  established care relationship and from whom he or she has received

20  treatment within the past twelve months is no longer part of the

21  carrier's provider network under his or her existing Washington

22  individual health benefit plan; and

23      (ii) His or her health care provider is part of another

24  carrier's provider network; and

25      (iii) Application for a health benefit plan under that

26  carrier's provider network individual coverage is made within

27  ninety days of his or her provider leaving the previous carrier's

28  provider network; then completion of the standard health

29  questionnaire shall not be a condition of coverage.

30      (c) If a person is seeking an individual health benefit plan

31  due to his or her having exhausted continuation coverage provided

32  under 29 U.S.C. Sec. 1161 et seq., completion of the standard

33  health questionnaire shall not be a condition of coverage if

34  application for coverage is made within ninety days of exhaustion

35  of continuation coverage.  A health carrier shall accept an

36  application without a standard health questionnaire from a person

37  currently covered by such continuation coverage if application is

                               p. 21                       HB 1633

_1  made within ninety days prior to the date the continuation

_2  coverage would be exhausted and the effective date of the

_3  individual coverage applied for is the date the continuation

_4  coverage would be exhausted, or within ninety days thereafter.

_5      (2) If, based upon the results of the standard health

_6  questionnaire, the person qualifies for coverage under the

_7  Washington state health insurance pool, the following shall apply:

_8      (a) The carrier may decide not to accept the person's

_9  application for enrollment in its individual health benefit plan;

10  and

11      (b) Within fifteen business days of receipt of a completed

12  application, the carrier shall provide written notice of the

13  decision not to accept the person's application for enrollment to

14  both the person and the administrator of the Washington state

15  health insurance pool.  The notice to the person shall state that

16  the person is eligible for health insurance provided by the

17  Washington state health insurance pool, and shall include

18  information about the Washington state health insurance pool and

19  an application for such coverage.  If the carrier does not provide

20  or postmark such notice within fifteen business days, the

21  application is deemed approved.

22      (3) If the person applying for an individual health benefit

23  plan:  (a) Does not qualify for coverage under the Washington state

24  health insurance pool based upon the results of the standard

25  health questionnaire; (b) does qualify for coverage under the

26  Washington state health insurance pool based upon the results of

27  the standard health questionnaire and the carrier elects to accept

28  the person for enrollment; or (c) is not required to complete the

29  standard health questionnaire designated under this chapter under

30  subsection (1)(a) or (b) of this section, the carrier shall accept

31  the person for enrollment if he or she resides within the

32  carrier's service area and provide or assure the provision of all

33  covered services regardless of age, sex, family structure,

34  ethnicity, race, health condition, geographic location, employment

35  status, socioeconomic status, other condition or situation, or the

36  provisions of RCW 49.60.174(2).  The commissioner may grant a

37  temporary exemption from this subsection if, upon application by a

38  health carrier, the commissioner finds that the clinical,

HB 1633                        p. 22

_1  financial, or administrative capacity to serve existing enrollees

_2  will be impaired if a health carrier is required to continue

_3  enrollment of additional eligible individuals.

     

_4      Sec. 9.  RCW 48.43.025 and 2000 c 79 s 23 are each amended to read

_5  as follows:

_6      (1) For group health benefit plans for groups other than small

_7  groups, no carrier may reject an individual for health plan

_8  coverage based upon preexisting conditions of the individual and

_9  no carrier may deny, exclude, or otherwise limit coverage for an

10  individual's preexisting health conditions; except that a carrier

11  may impose a three-month benefit waiting period for preexisting

12  conditions for which medical advice was given, or for which a

13  health care provider recommended or provided treatment((, or for

14  which a prudent layperson would have sought advice or treatment,))

15  within three months before the effective date of coverage.  Any

16  preexisting condition waiting period or limitation relating to

17  pregnancy as a preexisting condition shall be imposed only to the

18  extent allowed in the federal health insurance portability and

19  accountability act of 1996.

20      (2) For group health benefit plans for small groups, no carrier

21  may reject an individual for health plan coverage based upon

22  preexisting conditions of the individual and no carrier may deny,

23  exclude, or otherwise limit coverage for an individual's

24  preexisting health conditions.  Except that a carrier may impose a

25  nine-month benefit waiting period for preexisting conditions for

26  which medical advice was given, or for which a health care

27  provider recommended or provided treatment((, or for which a

28  prudent layperson would have sought advice or treatment,)) within

29  six months before the effective date of coverage.  Any preexisting

30  condition waiting period or limitation relating to pregnancy as a

31  preexisting condition shall be imposed only to the extent allowed

32  in the federal health insurance portability and accountability act

33  of 1996.

34      (3) No carrier may avoid the requirements of this section

35  through the creation of a new rate classification or the

36  modification of an existing rate classification.  A new or changed

37  rate classification will be deemed an attempt to avoid the

                               p. 23                       HB 1633

_1  provisions of this section if the new or changed classification

_2  would substantially discourage applications for coverage from

_3  individuals or groups who are higher than average health risks.

_4  These provisions apply only to individuals who are Washington

_5  residents.

     

_6      Sec. 10.  RCW 48.44.017 and 2000 c 79 s 29 are each amended to read

_7  as follows:

_8      (1) The definitions in this subsection apply throughout this

_9  section unless the context clearly requires otherwise.

10      (a) "Claims" means the cost to the health care service

11  contractor of health care services, as defined in RCW 48.43.005,

12  provided to a contract holder or paid to or on behalf of a

13  contract holder in accordance with the terms of a health benefit

14  plan, as defined in RCW 48.43.005.  This includes capitation

15  payments or other similar payments made to providers for the

16  purpose of paying for health care services for an enrollee.

17      (b) "Claims reserves" means:  (i) The liability for claims which

18  have been reported but not paid; (ii) the liability for claims

19  which have not been reported but which may reasonably be expected;

20  (iii) active life reserves; and (iv) additional claims reserves

21  whether for a specific liability purpose or not.

22      (c) "Earned premiums" means premiums, as defined in RCW

23  48.43.005, plus any rate credits or recoupments less any refunds,

24  for the applicable period, whether received before, during, or

25  after the applicable period.

26      (d) "Incurred claims expense" means claims paid during the

27  applicable period plus any increase, or less any decrease, in the

28  claims reserves.

29      (e) "Loss ratio" means incurred claims expense as a percentage

30  of earned premiums.

31      (f) "Reserves" means:  (i) Active life reserves; and (ii)

32  additional reserves whether for a specific liability purpose or

33  not.

34      (2) A health care service contractor shall file, for

35  informational purposes only, a notice of its schedule of rates for

36  its individual contracts with the commissioner prior to use.

37      (3) A health care service contractor shall file with the notice

HB 1633                        p. 24

_1  required under subsection (2) of this section supporting

_2  documentation of its method of determining the rates charged.  The

_3  commissioner may request only the following supporting

_4  documentation:

_5      (a) A description of the health care service contractor's rate-

_6  making methodology;

_7      (b) An actuarially determined estimate of incurred claims which

_8  includes the experience data, assumptions, and justifications of

_9  the health care service contractor's projection;

10      (c) The percentage of premium attributable in aggregate for

11  nonclaims expenses used to determine the adjusted community rates

12  charged; and

13      (d) A certification by a member of the American academy of

14  actuaries, or other person approved by the commissioner, that the

15  adjusted community rate charged can be reasonably expected to

16  result in a loss ratio that meets or exceeds the loss ratio

17  standard established in subsection (7) of this section.

18      (4) The commissioner may not disapprove or otherwise impede the

19  implementation of the filed rates.

20      (5) By the last day of May each year any health care service

21  contractor ((providing)) issuing or renewing individual health

22  benefit plans in this state during the preceding calendar year

23  shall file for review by the commissioner supporting documentation

24  of its actual loss ratio for its individual health benefit plans

25  offered or renewed in this state in aggregate for the preceding

26  calendar year.  The filing shall include aggregate earned premiums,

27  aggregate incurred claims, and a certification by a member of the

28  American academy of actuaries, or other person approved by the

29  commissioner, that the actual loss ratio has been calculated in

30  accordance with accepted actuarial principles.

31      (a) At the expiration of a thirty-day period beginning with the

32  date the filing is ((delivered to)) received by the commissioner,

33  the filing shall be deemed approved unless prior thereto the

34  commissioner contests the calculation of the actual loss ratio.

35      (b) If the commissioner contests the calculation of the actual

36  loss ratio, the commissioner shall state in writing the grounds

37  for contesting the calculation to the health care service

38  contractor.

                               p. 25                       HB 1633

 

_1      (c) Any dispute regarding the calculation of the actual loss

_2  ratio shall upon written demand of either the commissioner or the

_3  health care service contractor be submitted to hearing under

_4  chapters 48.04 and 34.05 RCW.

_5      (6) If the actual loss ratio for the preceding calendar year is

_6  less than the loss ratio standard established in subsection (7) of

_7  this section, a remittance is due and the following shall apply:

_8      (a) The health care service contractor shall calculate a

_9  percentage of premium to be remitted to the Washington state

10  health insurance pool by subtracting the actual loss ratio for the

11  preceding year from the loss ratio established in subsection (7)

12  of this section.

13      (b) The remittance to the Washington state health insurance

14  pool is the percentage calculated in (a) of this subsection,

15  multiplied by the premium earned from each enrollee in the

16  previous calendar year.  Interest shall be added to the remittance

17  due at a five percent annual rate calculated from the end of the

18  calendar year for which the remittance is due to the date the

19  remittance is made.

20      (c) All remittances shall be aggregated and such amounts shall

21  be remitted to the Washington state high risk pool to be used as

22  directed by the pool board of directors.

23      (d) Any remittance required to be issued under this section

24  shall be issued within thirty days after the actual loss ratio is

25  deemed approved under subsection (5)(a) of this section or the

26  determination by an administrative law judge under subsection

27  (5)(c) of this section.

28      (7) The loss ratio applicable to this section shall be seventy-

29  four percent minus the premium tax rate applicable to the health

30  care service contractor's individual health benefit plans under

31  RCW 48.14.0201.

     

32      Sec. 11.  RCW 48.46.062 and 2000 c 79 s 32 are each amended to read

33  as follows:

34      (1) The definitions in this subsection apply throughout this

35  section unless the context clearly requires otherwise.

36      (a) "Claims" means the cost to the health maintenance

37  organization of health care services, as defined in RCW 48.43.005,

HB 1633                        p. 26

_1  provided to an enrollee or paid to or on behalf of the enrollee in

_2  accordance with the terms of a health benefit plan, as defined in

_3  RCW 48.43.005.  This includes capitation payments or other similar

_4  payments made to providers for the purpose of paying for health

_5  care services for an enrollee.

_6      (b) "Claims reserves" means:  (i) The liability for claims which

_7  have been reported but not paid; (ii) the liability for claims

_8  which have not been reported but which may reasonably be expected;

_9  (iii) active life reserves; and (iv) additional claims reserves

10  whether for a specific liability purpose or not.

11      (c) "Earned premiums" means premiums, as defined in RCW

12  48.43.005, plus any rate credits or recoupments less any refunds,

13  for the applicable period, whether received before, during, or

14  after the applicable period.

15      (d) "Incurred claims expense" means claims paid during the

16  applicable period plus any increase, or less any decrease, in the

17  claims reserves.

18      (e) "Loss ratio" means incurred claims expense as a percentage

19  of earned premiums.

20      (f) "Reserves" means:  (i) Active life reserves; and (ii)

21  additional reserves whether for a specific liability purpose or

22  not.

23      (2) A health maintenance organization shall file, for

24  informational purposes only, a notice of its schedule of rates for

25  its individual agreements with the commissioner prior to use.

26      (3) A health maintenance organization shall file with the

27  notice required under subsection (2) of this section supporting

28  documentation of its method of determining the rates charged.  The

29  commissioner may request only the following supporting

30  documentation:

31      (a) A description of the health maintenance organization's rate-

32     making methodology;

33      (b) An actuarially determined estimate of incurred claims which

34  includes the experience data, assumptions, and justifications of

35  the health maintenance organization's projection;

36      (c) The percentage of premium attributable in aggregate for

37  nonclaims expenses used to determine the adjusted community rates

38  charged; and

                               p. 27                       HB 1633

 

_1      (d) A certification by a member of the American academy of

_2  actuaries, or other person approved by the commissioner, that the

_3  adjusted community rate charged can be reasonably expected to

_4  result in a loss ratio that meets or exceeds the loss ratio

_5  standard established in subsection (7) of this section.

_6      (4) The commissioner may not disapprove or otherwise impede the

_7  implementation of the filed rates.

_8      (5) By the last day of May each year any health maintenance

_9  organization ((providing)) issuing or renewing individual health

10  benefit plans in this state during the preceding calendar year

11  shall file for review by the commissioner supporting documentation

12  of its actual loss ratio for its individual health benefit plans

13  offered or renewed in the state in aggregate for the preceding

14  calendar year.  The filing shall include aggregate earned premiums,

15  aggregate incurred claims, and a certification by a member of the

16  American academy of actuaries, or other person approved by the

17  commissioner, that the actual loss ratio has been calculated in

18  accordance with accepted actuarial principles.

19      (a) At the expiration of a thirty-day period beginning with the

20  date the filing is ((delivered to)) received by the commissioner,

21  the filing shall be deemed approved unless prior thereto the

22  commissioner contests the calculation of the actual loss ratio.

23      (b) If the commissioner contests the calculation of the actual

24  loss ratio, the commissioner shall state in writing the grounds

25  for contesting the calculation to the health maintenance

26  organization.

27      (c) Any dispute regarding the calculation of the actual loss

28  ratio shall, upon written demand of either the commissioner or the

29  health maintenance organization, be submitted to hearing under

30  chapters 48.04 and 34.05 RCW.

31      (6) If the actual loss ratio for the preceding calendar year is

32  less than the loss ratio standard established in subsection (7) of

33  this section, a remittance is due and the following shall apply:

34      (a) The health maintenance organization shall calculate a

35  percentage of premium to be remitted to the Washington state

36  health insurance pool by subtracting the actual loss ratio for the

37  preceding year from the loss ratio established in subsection (7)

38  of this section.

HB 1633                        p. 28

 

_1      (b) The remittance to the Washington state health insurance

_2  pool is the percentage calculated in (a) of this subsection,

_3  multiplied by the premium earned from each enrollee in the

_4  previous calendar year.  Interest shall be added to the remittance

_5  due at a five percent annual rate calculated from the end of the

_6  calendar year for which the remittance is due to the date the

_7  remittance is made.

_8      (c) All remittances shall be aggregated and such amounts shall

_9  be remitted to the Washington state high risk pool to be used as

10  directed by the pool board of directors.

11      (d) Any remittance required to be issued under this section

12  shall be issued within thirty days after the actual loss ratio is

13  deemed approved under subsection (5)(a) of this section or the

14  determination by an administrative law judge under subsection

15  (5)(c) of this section.

16      (7) The loss ratio applicable to this section shall be seventy-

17  four percent minus the premium tax rate applicable to the health

18  maintenance organization's individual health benefit plans under

19  RCW 48.14.0201.

     

20      Sec. 12.  RCW 70.47.060 and 2000 c 79 s 34 are each amended to read

21  as follows:

22      The administrator has the following powers and duties:

23      (1) To design and from time to time revise a schedule of

24  covered basic health care services, including physician services,

25  inpatient and outpatient hospital services, prescription drugs and

26  medications, and other services that may be necessary for basic

27  health care.  In addition, the administrator may, to the extent that

28  funds are available, offer as basic health plan services chemical

29  dependency services, mental health services and organ transplant

30  services; however, no one service or any combination of these

31  three services shall increase the actuarial value of the basic

32  health plan benefits by more than five percent excluding

33  inflation, as determined by the office of financial management.

34  All subsidized and nonsubsidized enrollees in any participating

35  managed health care system under the Washington basic health plan

36  shall be entitled to receive covered basic health care services in

37  return for premium payments to the plan.  The schedule of services

                               p. 29                       HB 1633

_1  shall emphasize proven preventive and primary health care and

_2  shall include all services necessary for prenatal, postnatal, and

_3  well-child care.  However, with respect to coverage for subsidized

_4  enrollees who are eligible to receive prenatal and postnatal

_5  services through the medical assistance program under chapter

_6  74.09 RCW, the administrator shall not contract for such services

_7  except to the extent that such services are necessary over not

_8  more than a one-month period in order to maintain continuity of

_9  care after diagnosis of pregnancy by the managed care provider.

10  The schedule of services shall also include a separate schedule of

11  basic health care services for children, eighteen years of age and

12  younger, for those subsidized or nonsubsidized enrollees who

13  choose to secure basic coverage through the plan only for their

14  dependent children.  In designing and revising the schedule of

15  services, the administrator shall consider the guidelines for

16  assessing health services under the mandated benefits act of 1984,

17  RCW 48.47.030, and such other factors as the administrator deems

18  appropriate.

19      (2)(a) To design and implement a structure of periodic premiums

20  due the administrator from subsidized enrollees that is based upon

21  gross family income, giving appropriate consideration to family

22  size and the ages of all family members.  The enrollment of children

23  shall not require the enrollment of their parent or parents who

24  are eligible for the plan.  The structure of periodic premiums shall

25  be applied to subsidized enrollees entering the plan as

26  individuals pursuant to subsection (9) of this section and to the

27  share of the cost of the plan due from subsidized enrollees

28  entering the plan as employees pursuant to subsection (10) of this

29  section.

30      (b) To determine the periodic premiums due the administrator

31  from nonsubsidized enrollees.  Premiums due from nonsubsidized

32  enrollees shall be in an amount equal to the cost charged by the

33  managed health care system provider to the state for the plan plus

34  the administrative cost of providing the plan to those enrollees

35  and the premium tax under RCW 48.14.0201.

36      (c) An employer or other financial sponsor may, with the prior

37  approval of the administrator, pay the premium, rate, or any other

HB 1633                        p. 30

_1  amount on behalf of a subsidized or nonsubsidized enrollee, by

_2  arrangement with the enrollee and through a mechanism acceptable

_3  to the administrator.

_4      (d) To develop, as an offering by every health carrier

_5  providing coverage identical to the basic health plan, as

_6  configured on January 1, 2001, a basic health plan model plan with

_7  uniformity in enrollee cost-sharing requirements.

_8      (3) To design and implement a structure of enrollee cost-

_9  sharing due a managed health care system from subsidized and

10  nonsubsidized enrollees.  The structure shall discourage

11  inappropriate enrollee utilization of health care services, and

12  may utilize copayments, deductibles, and other cost-sharing

13  mechanisms, but shall not be so costly to enrollees as to

14  constitute a barrier to appropriate utilization of necessary

15  health care services.

16      (4) To limit enrollment of persons who qualify for subsidies so

17  as to prevent an overexpenditure of appropriations for such

18  purposes.  Whenever the administrator finds that there is danger of

19  such an overexpenditure, the administrator shall close enrollment

20  until the administrator finds the danger no longer exists.

21      (5) To limit the payment of subsidies to subsidized enrollees,

22  as defined in RCW 70.47.020.  The level of subsidy provided to

23  persons who qualify may be based on the lowest cost plans, as

24  defined by the administrator.

25      (6) To adopt a schedule for the orderly development of the

26  delivery of services and availability of the plan to residents of

27  the state, subject to the limitations contained in RCW 70.47.080

28  or any act appropriating funds for the plan.

29      (7) To solicit and accept applications from managed health care

30  systems, as defined in this chapter, for inclusion as eligible

31  basic health care providers under the plan for either subsidized

32  enrollees, or nonsubsidized enrollees, or both.  The administrator

33  shall endeavor to assure that covered basic health care services

34  are available to any enrollee of the plan from among a selection

35  of two or more participating managed health care systems.  In

36  adopting any rules or procedures applicable to managed health care

37  systems and in its dealings with such systems, the administrator

38  shall consider and make suitable allowance for the need for health

                               p. 31                       HB 1633

_1  care services and the differences in local availability of health

_2  care resources, along with other resources, within and among the

_3  several areas of the state.  Contracts with participating managed

_4  health care systems shall ensure that basic health plan enrollees

_5  who become eligible for medical assistance may, at their option,

_6  continue to receive services from their existing providers within

_7  the managed health care system if such providers have entered into

_8  provider agreements with the department of social and health

_9  services.

10      (8) To receive periodic premiums from or on behalf of

11  subsidized and nonsubsidized enrollees, deposit them in the basic

12  health plan operating account, keep records of enrollee status,

13  and authorize periodic payments to managed health care systems on

14  the basis of the number of enrollees participating in the

15  respective managed health care systems.

16      (9) To accept applications from individuals residing in areas

17  served by the plan, on behalf of themselves and their spouses and

18  dependent children, for enrollment in the Washington basic health

19  plan as subsidized or nonsubsidized enrollees, to establish

20  appropriate minimum-enrollment periods for enrollees as may be

21  necessary, and to determine, upon application and on a reasonable

22  schedule defined by the authority, or at the request of any

23  enrollee, eligibility due to current gross family income for

24  sliding scale premiums.  Funds received by a family as part of

25  participation in the adoption support program authorized under RCW

26  26.33.320 and 74.13.100 through 74.13.145 shall not be counted

27  toward a family's current gross family income for the purposes of

28  this chapter.  When an enrollee fails to report income or income

29  changes accurately, the administrator shall have the authority

30  either to bill the enrollee for the amounts overpaid by the state

31  or to impose civil penalties of up to two hundred percent of the

32  amount of subsidy overpaid due to the enrollee incorrectly

33  reporting income.  The administrator shall adopt rules to define the

34  appropriate application of these sanctions and the processes to

35  implement the sanctions provided in this subsection, within

36  available resources.  No subsidy may be paid with respect to any

37  enrollee whose current gross family income exceeds twice the

38  federal poverty level or, subject to RCW 70.47.110, who is a

HB 1633                        p. 32

_1  recipient of medical assistance or medical care services under

_2  chapter 74.09 RCW.  If a number of enrollees drop their enrollment

_3  for no apparent good cause, the administrator may establish

_4  appropriate rules or requirements that are applicable to such

_5  individuals before they will be allowed to reenroll in the plan.

_6      (10) To accept applications from business owners on behalf of

_7  themselves and their employees, spouses, and dependent children,

_8  as subsidized or nonsubsidized enrollees, who reside in an area

_9  served by the plan.  The administrator may require all or the

10  substantial majority of the eligible employees of such businesses

11  to enroll in the plan and establish those procedures necessary to

12  facilitate the orderly enrollment of groups in the plan and into a

13  managed health care system.  The administrator may require that a

14  business owner pay at least an amount equal to what the employee

15  pays after the state pays its portion of the subsidized premium

16  cost of the plan on behalf of each employee enrolled in the plan.

17  Enrollment is limited to those not eligible for medicare who wish

18  to enroll in the plan and choose to obtain the basic health care

19  coverage and services from a managed care system participating in

20  the plan.  The administrator shall adjust the amount determined to

21  be due on behalf of or from all such enrollees whenever the amount

22  negotiated by the administrator with the participating managed

23  health care system or systems is modified or the administrative

24  cost of providing the plan to such enrollees changes.

25      (11) To determine the rate to be paid to each participating

26  managed health care system in return for the provision of covered

27  basic health care services to enrollees in the system.  Although the

28  schedule of covered basic health care services will be the same or

29  actuarially equivalent for similar enrollees, the rates negotiated

30  with participating managed health care systems may vary among the

31  systems.  In negotiating rates with participating systems, the

32  administrator shall consider the characteristics of the

33  populations served by the respective systems, economic

34  circumstances of the local area, the need to conserve the

35  resources of the basic health plan trust account, and other

36  factors the administrator finds relevant.

37      (12) To monitor the provision of covered services to enrollees

38  by participating managed health care systems in order to assure

                               p. 33                       HB 1633

_1  enrollee access to good quality basic health care, to require

_2  periodic data reports concerning the utilization of health care

_3  services rendered to enrollees in order to provide adequate

_4  information for evaluation, and to inspect the books and records

_5  of participating managed health care systems to assure compliance

_6  with the purposes of this chapter.  In requiring reports from

_7  participating managed health care systems, including data on

_8  services rendered enrollees, the administrator shall endeavor to

_9  minimize costs, both to the managed health care systems and to the

10  plan.  The administrator shall coordinate any such reporting

11  requirements with other state agencies, such as the insurance

12  commissioner and the department of health, to minimize duplication

13  of effort.

14      (13) To evaluate the effects this chapter has on private

15  employer-based health care coverage and to take appropriate

16  measures consistent with state and federal statutes that will

17  discourage the reduction of such coverage in the state.

18      (14) To develop a program of proven preventive health measures

19  and to integrate it into the plan wherever possible and consistent

20  with this chapter.

21      (15) To provide, consistent with available funding, assistance

22  for rural residents, underserved populations, and persons of

23  color.

24      (16) In consultation with appropriate state and local

25  government agencies, to establish criteria defining eligibility

26  for persons confined or residing in government-operated

27  institutions.

28      (17) To administer the premium discounts provided under RCW

29  48.41.200(3)(a) (i) and (ii) pursuant to a contract with the

30  Washington state health insurance pool.

 

‑‑‑ END ‑‑‑

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