BILL REQ. #:  H-1224.1 

Read first time 02/12/2003.   Referred to Committee on Health Care.

     AN ACT Relating to offering a new health care option through the public employees' benefits board; amending RCW 41.05.065; adding a new section to chapter 41.05 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that the cost of providing health care coverage for state employees is rapidly increasing not only for the state but also for state employees. Health care costs are continuing to escalate, indicating that state employees will be required to pay a larger portion of the cost of coverage. This impacts lower income state employees disproportionately because income is not a factor in determining the employees' contribution.
     The legislature further finds that it is necessary to create lower cost health care coverage options for state employees in order to ease the financial burden of health care coverage and to bring stability to the health care delivery system.

Sec. 2   RCW 41.05.065 and 2002 c 142 s 3 are each amended to read as follows:
     (1) The board shall study all matters connected with the provision of health care coverage, life insurance, liability insurance, accidental death and dismemberment insurance, and disability income insurance or any of, or a combination of, the enumerated types of insurance for employees and their dependents on the best basis possible with relation both to the welfare of the employees and to the state. However, liability insurance shall not be made available to dependents.
     (2) The board shall develop employee benefit plans that include comprehensive health care benefits for all employees, except as provided in subsection (5) of this section. In developing ((these)) plans under this section, the board shall consider the following elements:
     (a) Methods of maximizing cost containment while ensuring access to quality health care;
     (b) Development of provider arrangements that encourage cost containment and ensure access to quality care, including but not limited to prepaid delivery systems and prospective payment methods;
     (c) Wellness incentives that focus on proven strategies, such as smoking cessation, injury and accident prevention, reduction of alcohol misuse, appropriate weight reduction, exercise, automobile and motorcycle safety, blood cholesterol reduction, and nutrition education;
     (d) Utilization review procedures including, but not limited to a cost-efficient method for prior authorization of services, hospital inpatient length of stay review, requirements for use of outpatient surgeries and second opinions for surgeries, review of invoices or claims submitted by service providers, and performance audit of providers;
     (e) Effective coordination of benefits;
     (f) Minimum standards for insuring entities; and
     (g) Minimum scope and content of public employee benefit plans to be offered to enrollees participating in the employee health benefit plans. To maintain the comprehensive nature of employee health care benefits, employee eligibility criteria related to the number of hours worked and the benefits provided to employees shall be substantially equivalent to the state employees' health benefits plan and eligibility criteria in effect on January 1, 1993. Nothing in this subsection (2)(g) shall prohibit changes or increases in employee point-of-service payments or employee premium payments for benefits.
     (3) The board shall design benefits and determine the terms and conditions of employee participation and coverage, including establishment of eligibility criteria. The same terms and conditions of participation and coverage, including eligibility criteria, shall apply to state employees and to school district employees and educational service district employees.
     (4) The board may authorize premium contributions for an employee and the employee's dependents in a manner that encourages the use of cost-efficient managed health care systems. The board shall require participating school district and educational service district employees to pay the same employee premiums by plan and family size as state employees pay.
     (5)(a) The board shall design and offer a plan of health care coverage that has the following components:
     (i) Services covered may be more limited in scope than those contained in subsection (2) of this section;
     (ii) A high deductible plan that is constructed in a manner so that enrollees are responsible for meeting the deductible limit using a health reimbursement account described in (b) of this subsection. The employee may not be required to pay for clinical preventive services as recommended by the United States public health service. Employee out-of-pocket expenses required to be paid under the plan for cost sharing and deductibles may not exceed two thousand dollars per person, or three thousand dollars per family;
     (iii) Payment methodologies for network providers may include but are not limited to resource-based relative value fee schedules, capitation payments, diagnostic-related group fee schedules, and other similar strategies, including risk-sharing arrangements; and
     (iv) Other appropriate care management and cost-containment measures determined appropriate by the administrator, including but not limited to care coordination, provider network limitations, preadmission certification, wellness incentives, and utilization review.
     (b) State contributions and automatic payroll deductions for the plan of health care coverage created under this subsection (5) must be made into the Washington smart health account created in section 3 of this act for the use of the employee in meeting the deductible limit, but only services covered by their health carrier count toward the annual deductible. Any balance remaining in the Washington smart health account at the end of the fiscal year carries forward to purchase future health care services.
     (c) The board shall determine the feasibility of offering a debit or a point-of-service payment system by which enrollees may pay for health care costs.
     (6) Employees shall choose participation in one of the health care benefit plans developed by the board and may be permitted to waive coverage under terms and conditions established by the board.
     (((6))) (7) The board shall review plans proposed by insuring entities that desire to offer property insurance and/or accident and casualty insurance to state employees through payroll deduction. The board may approve any such plan for payroll deduction by insuring entities holding a valid certificate of authority in the state of Washington and which the board determines to be in the best interests of employees and the state. The board shall promulgate rules setting forth criteria by which it shall evaluate the plans.
     (((7))) (8) Before January 1, 1998, the public employees' benefits board shall make available one or more fully insured long-term care insurance plans that comply with the requirements of chapter 48.84 RCW. Such programs shall be made available to eligible employees, retired employees, and retired school employees as well as eligible dependents which, for the purpose of this section, includes the parents of the employee or retiree and the parents of the spouse of the employee or retiree. Employees of local governments and employees of political subdivisions not otherwise enrolled in the public employees' benefits board sponsored medical programs may enroll under terms and conditions established by the administrator, if it does not jeopardize the financial viability of the public employees' benefits board's long-term care offering.
     (a) Participation of eligible employees or retired employees and retired school employees in any long-term care insurance plan made available by the public employees' benefits board is voluntary and shall not be subject to binding arbitration under chapter 41.56 RCW. Participation is subject to reasonable underwriting guidelines and eligibility rules established by the public employees' benefits board and the health care authority.
     (b) The employee, retired employee, and retired school employee are solely responsible for the payment of the premium rates developed by the health care authority. The health care authority is authorized to charge a reasonable administrative fee in addition to the premium charged by the long-term care insurer, which shall include the health care authority's cost of administration, marketing, and consumer education materials prepared by the health care authority and the office of the insurance commissioner.
     (c) To the extent administratively possible, the state shall establish an automatic payroll or pension deduction system for the payment of the long-term care insurance premiums.
     (d) The public employees' benefits board and the health care authority shall establish a technical advisory committee to provide advice in the development of the benefit design and establishment of underwriting guidelines and eligibility rules. The committee shall also advise the board and authority on effective and cost-effective ways to market and distribute the long-term care product. The technical advisory committee shall be comprised, at a minimum, of representatives of the office of the insurance commissioner, providers of long-term care services, licensed insurance agents with expertise in long-term care insurance, employees, retired employees, retired school employees, and other interested parties determined to be appropriate by the board.
     (e) The health care authority shall offer employees, retired employees, and retired school employees the option of purchasing long-term care insurance through licensed agents or brokers appointed by the long-term care insurer. The authority, in consultation with the public employees' benefits board, shall establish marketing procedures and may consider all premium components as a part of the contract negotiations with the long-term care insurer.
     (f) In developing the long-term care insurance benefit designs, the public employees' benefits board shall include an alternative plan of care benefit, including adult day services, as approved by the office of the insurance commissioner.
     (g) The health care authority, with the cooperation of the office of the insurance commissioner, shall develop a consumer education program for the eligible employees, retired employees, and retired school employees designed to provide education on the potential need for long-term care, methods of financing long-term care, and the availability of long-term care insurance products including the products offered by the board.
     (h) By December 1998, the health care authority, in consultation with the public employees' benefits board, shall submit a report to the appropriate committees of the legislature, including an analysis of the marketing and distribution of the long-term care insurance provided under this section.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.05 RCW to read as follows:
     The Washington smart health account is created in the custody of the state treasurer. All receipts from state contributions and employees' automatic payroll deductions for the plan of health care created in RCW 41.05.065(5) must be deposited into the account. Expenditures from the account may be used only for the plan of health care created in RCW 41.05.065(5). Only the authority or the authority's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.