Z 0745

Z‑0745.1 _____________________________________________

SENATE BILL 5817

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Senators Thibaudeau and Deccio; by request of Insurance Commissioner

Read first time 02/05/2001. Referred to Committee on Health & Long‑Term 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

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_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

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_1 ((~~providing~~)) issuing or renewing individual health benefit plans

_2 in this state during the preceding calendar year shall file for

_3 review by the commissioner supporting documentation of its actual

_4 loss ratio for its individual health benefit plans offered or

_5 renewed in the state in aggregate for the preceding calendar

_6 year. The filing shall include aggregate earned premiums, aggregate

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

_8 academy of actuaries, or other person approved by the

_9 commissioner, that the actual loss ratio has been calculated in

10 accordance with accepted 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.

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_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

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_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

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_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;

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_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

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_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,

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_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;

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_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

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_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.

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_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

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_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 SB 5817

_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

SB 5817 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 SB 5817

_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

SB 5817 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 SB 5817

_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

36 sixty-three days, is less than three months, the carrier must

37 credit any waiting period under the ((~~immediately~~)) preceding

SB 5817 p. 18

_1 health plan toward the new health plan. For the purposes of this

_2 subsection, a preceding health plan includes an employer-provided

_3 self-funded health plan and plans of the Washington state health

_4 insurance 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

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

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

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

21 any 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 SB 5817

_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

SB 5817 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 SB 5817

_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,

SB 5817 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 SB 5817

_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

SB 5817 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 SB 5817

_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,

SB 5817 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 SB 5817

_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.

SB 5817 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 SB 5817

_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

SB 5817 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 SB 5817

_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

SB 5817 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 SB 5817

_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 ‑‑‑

SB 5817 p. 34