Z-0416.1  _______________________________________________

                         SENATE BILL 6074

          _______________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Senators Thibaudeau and Winsley; by request of Department of Social and Health Services

Read first time 02/19/2001.  Referred to Committee on Health & Long‑Term Care.

Clarifying methods of payment and delivery of health care services.

    AN ACT Relating to clarifying the legislature's intent regarding the distinction between the fee-for-service and managed care methods of paying for and delivering health care services to clients eligible under chapter 74.09 RCW; reenacting and amending RCW 74.09.522; creating new sections; and declaring an emergency.

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

NEW SECTION. Sec. 1.  The legislature intends to clarify that the fee-for-service method of paying for and delivering medical services to clients eligible under chapter 74.09 RCW is, and always has been, separate and distinct from the managed care method of paying for and delivering such services.

    Sec. 2.  RCW 74.09.522 and 1997 c 59 s 15 and 1997 c 34 s 1 are each reenacted and amended to read as follows:

    (1) For the purposes of this section, "managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, health insuring organizations, or any combination thereof, that provides directly or by contract health care services covered under RCW 74.09.520 and rendered by licensed providers, on a prepaid capitated basis and that meets the requirements of section 1903(m)(1)(A) of Title XIX of the federal social security act or federal demonstration waivers granted under section 1115(a) of Title XI of the federal social security act.

    (2) The department of social and health services shall enter into agreements with managed health care systems to provide health care services to recipients of temporary assistance for needy families under the following conditions:

    (a) Agreements shall be made for at least thirty thousand recipients statewide;

    (b) Agreements in at least one county shall include enrollment of all recipients of temporary assistance for needy families;

    (c) To the extent that this provision is consistent with section 1903(m) of Title XIX of the federal social security act or federal demonstration waivers granted under section 1115(a) of Title XI of the federal social security act, recipients shall have a choice of systems in which to enroll and shall have the right to terminate their enrollment in a system:  PROVIDED, That the department may limit recipient termination of enrollment without cause to the first month of a period of enrollment, which period shall not exceed twelve months:  AND PROVIDED FURTHER, That the department shall not restrict a recipient's right to terminate enrollment in a system for good cause as established by the department by rule;

    (d) To the extent that this provision is consistent with section 1903(m) of Title XIX of the federal social security act, participating managed health care systems shall not enroll a disproportionate number of medical assistance recipients within the total numbers of persons served by the managed health care systems, except as authorized by the department under federal demonstration waivers granted under section 1115(a) of Title XI of the federal social security act;

    (e) In negotiating with managed health care systems the department shall adopt a uniform procedure to negotiate and enter into contractual arrangements, including standards regarding the quality of services to be provided; and financial integrity of the responding system;

    (f) The department shall seek waivers from federal requirements as necessary to implement this chapter;

    (g) The department shall, wherever possible, enter into prepaid capitation contracts that include inpatient care.  However, if this is not possible or feasible, the department may enter into prepaid capitation contracts that do not include inpatient care;

    (h) The department shall define those circumstances under which a managed health care system is responsible for out-of-plan services and assure that recipients shall not be charged for such services; and

    (i) Nothing in this section prevents the department from entering into similar agreements for other groups of people eligible to receive services under this chapter.

    (3)(a) The department is not liable for any payment to a provider under the following circumstances:

(i) The department and a managed health care system entered into an agreement under this section;

(ii) A provider renders a service included within the schedule of benefits under the agreement between the department and the managed health care system to a person enrolled with the managed health care system; and

(iii) The managed health care system does not, will not, or cannot pay the provider for the service rendered.

(b) The department is not liable even if the provider has a core provider agreement with the department under RCW 74.09.120.

(c) The department may authorize exceptions by rule.

(4) The department shall ensure that publicly supported community health centers and providers in rural areas, who show serious intent and apparent capability to participate as managed health care systems are seriously considered as contractors.  The department shall coordinate its managed care activities with activities under chapter 70.47 RCW.

    (((4))) (5) The department shall work jointly with the state of Oregon and other states in this geographical region in order to develop recommendations to be presented to the appropriate federal agencies and the United States congress for improving health care of the poor, while controlling related costs.

    (((5))) (6) The legislature finds that competition in the managed health care marketplace is enhanced, in the long term, by the existence of a large number of managed health care system options for medicaid clients.  In a managed care delivery system, whose goal is to focus on prevention, primary care, and improved enrollee health status, continuity in care relationships is of substantial importance, and disruption to clients and health care providers should be minimized.  To help ensure these goals are met, the following principles shall guide the department in its healthy options managed health care purchasing efforts:

    (a) All managed health care systems should have an opportunity to contract with the department to the extent that minimum contracting requirements defined by the department are met, at payment rates that enable the department to operate as far below appropriated spending levels as possible, consistent with the principles established in this section.

    (b) Managed health care systems should compete for the award of contracts and assignment of medicaid beneficiaries who do not voluntarily select a contracting system, based upon:

    (i) Demonstrated commitment to or experience in serving low-income populations;

    (ii) Quality of services provided to enrollees;

    (iii) Accessibility, including appropriate utilization, of services offered to enrollees;

    (iv) Demonstrated capability to perform contracted services, including ability to supply an adequate provider network;

    (v) Payment rates; and

    (vi) The ability to meet other specifically defined contract requirements established by the department, including consideration of past and current performance and participation in other state or federal health programs as a contractor.

    (c) Consideration should be given to using multiple year contracting periods.

    (d) Quality, accessibility, and demonstrated commitment to serving low-income populations shall be given significant weight in the contracting, evaluation, and assignment process.

    (e) All contractors that are regulated health carriers must meet state minimum net worth requirements as defined in applicable state laws.  The department shall adopt rules establishing the minimum net worth requirements for contractors that are not regulated health carriers.  This subsection does not limit the authority of the department to take action under a contract upon finding that a contractor's financial status seriously jeopardizes the contractor's ability to meet its contract obligations.

    (f) Procedures for resolution of disputes between the department and contract bidders or the department and contracting carriers related to the award of, or failure to award, a managed care contract must be clearly set out in the procurement document.  In designing such procedures, the department shall give strong consideration to the negotiation and dispute resolution processes used by the Washington state health care authority in its managed health care contracting activities.

    (((6))) (7) The department may apply the principles set forth in subsection (((5))) (6) of this section to its managed health care purchasing efforts on behalf of clients receiving supplemental security income benefits to the extent appropriate.

NEW SECTION. Sec. 3.  This act applies to requests for payment from the department of social and health services that are made on or after the effective date of this act, regardless of when the services were rendered.  This act also applies to requests for payment from the department of social and health services that were made before the effective date of this act, if such requests for payment are the subject in any way of a lawsuit that is pending or ongoing in any court of this state as of the effective date of this act.  To this extent, this act applies retroactively, but in all other respects it applies prospectively.

NEW SECTION. Sec. 4.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.

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