BILL REQ. #:  Z-1162.1 

Read first time 01/21/2004.   Referred to Committee on Health Care.

     AN ACT Relating to stabilizing the cost of health insurance; amending RCW 41.05.011, 48.41.200, 48.41.060, and 70.47.060; adding new sections to chapter 41.05 RCW; adding a new section to chapter 74.09 RCW; and creating new sections.

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

NEW SECTION.  Sec. 101   (1) The legislature recognizes that our current system of covering high-risk, high-cost patients for health insurance is creating a fragile health insurance market and increasing premiums.
     (2) It is the intent of the legislature to stabilize the health insurance market and provide coverage for uninsured individuals by broadly sharing the risk of high-cost patients throughout the health insurance market.

Sec. 102   RCW 41.05.011 and 2001 c 165 s 2 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.
     (1) "Administrator" means the administrator of the authority.
     (2) "State purchased health care" or "health care" means medical and health care, pharmaceuticals, and medical equipment purchased with state and federal funds by the department of social and health services, the department of health, the basic health plan, the state health care authority, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.
     (3) "Authority" means the Washington state health care authority.
     (4) "Insuring entity" means an insurer as defined in chapter 48.01 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW.
     (5) "Flexible benefit plan" means a benefit plan that allows employees to choose the level of health care coverage provided and the amount of employee contributions from among a range of choices offered by the authority.
     (6) "Employee" includes all full-time and career seasonal employees of the state, whether or not covered by civil service; elected and appointed officials of the executive branch of government, including full-time members of boards, commissions, or committees; and includes any or all part-time and temporary employees under the terms and conditions established under this chapter by the authority; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature or of the legislative authority of any county, city, or town who are elected to office after February 20, 1970. "Employee" also includes: (a) Employees of a county, municipality, or other political subdivision of the state if the legislative authority of the county, municipality, or other political subdivision of the state seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.04.205; (b) employees of employee organizations representing state civil service employees, at the option of each such employee organization, and, effective October 1, 1995, employees of employee organizations currently pooled with employees of school districts for the purpose of purchasing insurance benefits, at the option of each such employee organization; and (c) employees of a school district if the authority agrees to provide any of the school districts' insurance programs by contract with the authority as provided in RCW 28A.400.350.
     (7) "Board" means the public employees' benefits board established under RCW 41.05.055.
     (8) "Retired or disabled school employee" means:
     (a) Persons who separated from employment with a school district or educational service district and are receiving a retirement allowance under chapter 41.32 or 41.40 RCW as of September 30, 1993;
     (b) Persons who separate from employment with a school district or educational service district on or after October 1, 1993, and immediately upon separation receive a retirement allowance under chapter 41.32, 41.35, or 41.40 RCW;
     (c) Persons who separate from employment with a school district or educational service district due to a total and permanent disability, and are eligible to receive a deferred retirement allowance under chapter 41.32, 41.35, or 41.40 RCW.
     (9) "Benefits contribution plan" means a premium only contribution plan, a medical flexible spending arrangement, or a cafeteria plan whereby state and public employees may agree to a contribution to benefit costs which will allow the employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (10) "Salary" means a state employee's monthly salary or wages.
     (11) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the benefits contribution plan.
     (12) "Plan year" means the time period established by the authority.
     (13) "Separated employees" means persons who separate from employment with an employer as defined in:
     (a) RCW 41.32.010(11) on or after July 1, 1996; or
     (b) RCW 41.35.010 on or after September 1, 2000; or
     (c) RCW 41.40.010 on or after March 1, 2002;
and who are at least age fifty-five and have at least ten years of service under the teachers' retirement system plan 3 as defined in RCW 41.32.010(40), the Washington school employees' retirement system plan 3 as defined in RCW 41.35.010, or the public employees' retirement system plan 3 as defined in RCW 41.40.010.
     (14) "Emergency service personnel killed in the line of duty" means law enforcement officers and fire fighters as defined in RCW 41.26.030, and reserve officers and fire fighters as defined in RCW 41.24.010 who die as a result of injuries sustained in the course of employment as determined consistent with Title 51 RCW by the department of labor and industries.
     (15) "Pool" means the health insurance market stabilization pool created in this act.
     (16) "Members" includes those health carriers as defined in RCW 48.43.005. It also means self-funded plans that voluntarily agree to participate in the pool.
     (17) "Covered person" has the same meaning as defined in RCW 48.43.005, or an individual in a self-funded plan that has voluntarily agreed to participate in the pool.
     (18) "Participating enrollee" means a covered person who becomes insured by the health insurance market stabilization pool when his or her cost of health care services exceeds twenty-five thousand dollars annually. A participating enrollee must continue to be a covered person.
     (19) "Cost of health care services" means the cost of allowed health care services provided under a health plan. For the purposes of this section, the terms "health care services" and "health plan" have the same meaning as defined in RCW 48.43.005.
     (20) "Health plan" or "health benefit plan" have the same meaning as defined in RCW 48.43.005.
     (21) "Self-funded plan" means a self-funded health plan or health benefit plan that has voluntarily agreed to participate in the pool.
     (22) "Care management services" means the utilization management, case management, disease management services, or other types of structured administrative approaches to manage the quality or cost-effectiveness of health care services.
     (23) "Premium" has the same meaning as provided in RCW 48.43.005.
     (24) "Premium assistance enrollee" means an individual or an individual plus the individual's spouse and dependent children: (a) Who is not eligible for medicare; (b) who is not confined or residing in a government-operated institution, unless he or she meets eligibility criteria adopted by the administrator; (c) whose gross family income at the time of enrollment does not exceed two hundred percent of the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services; (d) who resides within the state of Washington; (e) who meets the definition of eligible employee as defined in RCW 48.43.005; and (f) who qualifies for and chooses to participate in the small employer-sponsored health insurance premium assistance option under section 109 of this act.
     (25) "Small employer" has the same meaning as defined in RCW 48.43.005.

NEW SECTION.  Sec. 103   (1) To stabilize the health insurance market and reduce health insurance premiums the health insurance market stabilization pool is created. Effective July 1, 2005:
     (a) All health carriers become members of the pool and self-funded plans may voluntarily agree to become members of the pool;
     (b) The pool will pay seventy-five percent of the cost of health care services used by a participating enrollee;
     (c) A member whose covered person becomes a participating enrollee must pay twenty-five percent of the cost of health care services used by that participating enrollee coordinated with any enrollee cost-sharing amounts;
     (d) A participating enrollee's health plan or self-funded plan remains intact when he or she becomes a participating enrollee;
     (e) The participating enrollee's health plan or self-funded plan determines the health care services used by the participating enrollee and the cost of those health care services, including any cost-sharing by the participating enrollee; and
     (f) When the administrator determines that it is necessary for the quality and cost-effectiveness of the health care services used by participating enrollees, the administrator must contract for care management services for the pool.
     (2) The health insurance market stabilization pool account is created in the custody of the state treasurer. All receipts from remittances collected under section 104 of this act must be deposited in the account. Expenditures from the account may be used only for the purposes of this section, including the appropriate payment of health care services provided to participating enrollees and the associated administrative expenses of providing the pool. Only the administrator or the administrator'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.
     (3) To implement the pool, the administrator may:
     (a) Enter into agreements with an authorized insurer as provided in RCW 48.05.030 to provide reinsurance for the cost of health care services for participating enrollees; and
     (b) Enter into agreements with a reinsurance broker, other insurance broker, or consultant to assist in selecting an authorized insurer as provided in RCW 48.05.030 for the pool.
     (4) The administrator shall provide a report to the legislature by January 1, 2005, on the implementation activities of the pool. The report must contain a brief action plan for completing the implementation of the pool by July 1, 2005.

NEW SECTION.  Sec. 104   (1) Beginning July 1, 2005, a member must pay an annual remittance to the pool equal to a portion of seventy-five percent of the annual cost of health care services and administration for all participating enrollees.
     (2) The administrator must determine a member's remittance based upon the member's enrollment of covered persons for a twelve-month period selected by the administrator.
     (3) A member must pay its remittance on a periodic schedule to be determined by the administrator.
     (4) The total remittance for all members may not exceed twelve percent of the annual premium of covered persons not in a self-funded plan, plus the cost of health care services of covered persons in a self-funded plan for a twelve-month period selected by the administrator.
     (5) To assist in determining the remittances, members must submit annually, by a date selected by the administrator, the number of covered persons where the cost of health care services exceeds twenty-five thousand dollars and the total cost of health care services for these covered persons. The number of covered persons and the total cost of health care services must be calculated for a twelve-month period to be specified by the administrator.

NEW SECTION.  Sec. 105   (1) Beginning July 1, 2005, a member that is not a self-funded plan must pay an initial annual remittance to the Washington state health insurance pool premium assistance account created in section 201 of this act, equal to 0.24 percent of that member's annual premium.
     (2) A member that is a self-funded plan will pay an initial annual remittance to the Washington state health insurance pool premium assistance account created in section 201 of this act, equal to 0.24 percent of that member's payments for health care services as agreed upon by the member and the office of the insurance commissioner.
     (3) The administrator shall publish all subsequent annual remittances at least thirty days before the effective date and base the remittances upon:
     (a) A percentage of the annual premium for a member that is not a self-funded health plan or a percentage of the annual payments for health care services for a member that is a self-funded plan;
     (b) The amount needed to provide premium assistance to a projection of annual high risk pool premium assistance enrollees not to exceed two thousand enrollees; and
     (c) A public hearing held by the administrator at least one hundred eighty days before the effective date of an annual remittance.
     (4) A member must pay its remittance on a periodic schedule as determined by the administrator.

NEW SECTION.  Sec. 106   (1) Beginning July 1, 2005, a member that is not a self-funded plan will pay an initial annual remittance to the small employer-sponsored health insurance premium assistance account, created in section 108 of this act, equal to 0.49 percent of that member's annual premium.
     (2) A member that is a self-funded plan will pay an initial annual remittance to the small employer-sponsored health insurance premium assistance account created in section 108 of this act, equal to 0.49 percent of that member's payments for health care services as agreed upon by the member and the office of the insurance commissioner.
     (3) The administrator shall publish all subsequent annual remittances at least thirty days before the effective date and base the remittances upon:
     (a) A percentage of the annual premium for a member that is not a self-funded health plan or a percentage of the annual payments for health care services for a member that is a self-funded plan;
     (b) The amount needed to provide premium assistance to a projection of annual high risk pool premium assistance enrollees not to exceed twenty thousand enrollees; and
     (c) A public hearing held by the administrator at least one hundred eighty days before the effective date of an annual remittance.
     (4) A member must pay its remittance on a periodic schedule as determined by the administrator.

NEW SECTION.  Sec. 107   The administrator may adopt rules consistent with sections 103 through 109 and 201 of this act to carry out the purposes of this act. The rules may include but are not limited to:
     (1) Establishing and collecting remittances;
     (2) Clarifying the eligibility of members;
     (3) Establishing operating procedures with members to pay for a participating enrollee's health care services; and
     (4) Clarifying the eligibility of participating enrollees.

NEW SECTION.  Sec. 108   The small employer-sponsored health insurance premium assistance account is created in the custody of the state treasurer. All receipts from remittances collected under section 106 of this act must be deposited in the account. Expenditures from the account may be used only for the purposes of providing premium assistance, and the payment of costs of administering the collection and verification of income for the determination of premium assistance, as provided in section 109 of this act. Only the administrator or the administrator'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.

NEW SECTION.  Sec. 109   (1) Beginning July 1, 2005, the administrator may accept applications to become premium assistance enrollees from individuals whose current small employer has not offered health insurance within the last six months, on behalf of themselves and their spouses and dependent children, for assistance in paying premiums to health plans, and to determine, upon application and on a reasonable schedule defined by the authority, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premium assistance as provided under RCW 70.47.060. The administrator may also determine the minimum premium contribution to be paid by small employers participating in the small employer-sponsored health insurance premium assistance option on behalf of premium assistance enrollees. The administrator may use funds from the small employer-sponsored health insurance premium assistance account, created in section 108 of this act, for payment of small employer-sponsored health insurance premiums on behalf of premium assistance enrollees when:
     (a) The cost of paying the premium assistance enrollee's employer-sponsored health insurance premium obligation would be less than the subsidy that would be paid if the individual, or the individual plus his or her spouse and dependent children, were to enroll in a participating managed care system;
     (b) The premium assistance enrollee agrees to provide verification of continued enrollment in his or her small employer's employer-sponsored health insurance plan on a semiannual basis, or to notify the administrator whenever his or her enrollment status changes, whichever is earlier. Verification or notification may be made directly by the employee, or through their employer or the carrier providing the small employer health insurance product.
     (2) The administrator may, in consultation with the office of the insurance commissioner, adopt standards for minimum thresholds of small employer-sponsored health insurance coverage under this section. The office of the insurance commissioner is responsible for certifying small employer health insurance products that meet any standards that might be developed under this section.
     (3) The administrator, in consultation with small employers, carriers, and the office of the insurance commissioner, shall determine the most efficient method for payment of premium assistance, with a goal of minimizing the administrative burden on small employers.
     (4) Funds received by a family as part of participation in the adoption support program authorized under RCW 26.33.320 and 74.13.100 through 74.13.145 may not be counted toward a family's current gross family income for the purposes of this act. No premium assistance may be paid to premium assistance enrollees whose current gross family income exceeds twice the federal poverty level or, subject to RCW 70.47.110, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW.

NEW SECTION.  Sec. 110   A new section is added to chapter 74.09 RCW to read as follows:
     (1) The department shall make every effort to maximize opportunities to blend public and private funds through subsidization of small employer-sponsored health insurance premiums on behalf of individuals eligible for medical assistance and children eligible for the state children's health insurance program when such subsidization is cost-effective for the state. In developing policies under this section, the department shall consult with the health care authority and, to the extent allowed by federal law, develop policies that are consistent with those policies developed by the health care authority under section 109 of this act so that entire families have the opportunity to enroll in the same small employer-sponsored health insurance plan.
     (2) If a federal waiver is necessary to achieve consistency with health care authority policies under section 109 of this act, the department shall notify the relevant fiscal and policy committees of the legislature on or before September 1, 2004. The notification must include recommendations regarding federal waiver options that would provide the flexibility needed to optimize the use of medical assistance and state children's health insurance program funds to subsidize small employer-sponsored health insurance premiums on behalf of low-income families.

NEW SECTION.  Sec. 201   The Washington state health insurance pool premium assistance account is created in the custody of the state treasurer. All receipts from remittances collected under section 105 of this act must be deposited in the account. Expenditures from the account may be used only for the purposes of providing and administering premium assistance under RCW 48.41.200(3)(a)(iv). Only the administrator or the administrator'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.

Sec. 202   RCW 48.41.200 and 2000 c 79 s 17 are each amended to read as follows:
     (1) The pool shall determine the standard risk rate by calculating the average individual standard rate charged for coverage comparable to pool coverage by the five largest members, measured in terms of individual market enrollment, offering such coverages in the state. In the event five members do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage in the individual market.
     (2) Subject to subsection (3) of this section, maximum rates for pool coverage shall be as follows:
     (a) Maximum rates for a pool indemnity health plan shall be one hundred fifty percent of the rate calculated under subsection (1) of this section;
     (b) Maximum rates for a pool care management plan shall be one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and
     (c) Maximum rates for a person eligible for pool coverage pursuant to RCW 48.41.100(1)(a) who was enrolled at any time during the sixty-three day period immediately prior to the date of application for pool coverage in a group health benefit plan or an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005, where such coverage was continuous for at least eighteen months, shall be:
     (i) For a pool indemnity health plan, one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and
     (ii) For a pool care management plan, one hundred ten percent of the rate calculated under subsection (1) of this section.
     (3)(a) Subject to (b) and (c) of this subsection:
     (i) The rate for any person aged fifty to sixty-four whose current gross family income is less than two hundred fifty-one percent of the federal poverty level and not receiving premium assistance as provided in (a)(iv) of this subsection, shall be reduced by thirty percent from what it would otherwise be;
     (ii) The rate for any person aged fifty to sixty-four whose current gross family income is more than two hundred fifty but less than three hundred one percent of the federal poverty level shall be reduced by fifteen percent from what it would otherwise be;
     (iii) The rate for any person who has been enrolled in the pool for more than thirty-six months shall be reduced by five percent from what it would otherwise be;
     (iv) Beginning July 1, 2005, the rate for any person whose gross family income does not exceed two hundred percent of the federal poverty level must be subsidized by receiving premium assistance from the Washington state health insurance pool premium assistance account as provided in section 201 of this act. The amount of premium assistance must be calculated using the same percentage of subsidy available to subsidized enrollees of the Washington basic health plan under RCW 70.47.060.
     (b) In no event shall the rate for any person, except those persons receiving premium assistance as provided in (a)(iv) of this subsection, be less than one hundred ten percent of the rate calculated under subsection (1) of this section.
     (c) Rate reductions under (a)(i) and (ii) of this subsection shall be available only to the extent that funds are specifically appropriated for this purpose in the omnibus appropriations act.

Sec. 203   RCW 48.41.060 and 2000 c 79 s 9 are each amended to read as follows:
     (1) The board shall have the general powers and authority granted under the laws of this state to insurance companies, health care service contractors, and health maintenance organizations, licensed or registered to offer or provide the kinds of health coverage defined under this title. In addition thereto, the board shall:
     (a) Designate or establish the standard health questionnaire to be used under RCW 48.41.100 and 48.43.018, including the form and content of the standard health questionnaire and the method of its application. The questionnaire must provide for an objective evaluation of an individual's health status by assigning a discreet measure, such as a system of point scoring to each individual. The questionnaire must not contain any questions related to pregnancy, and pregnancy shall not be a basis for coverage by the pool. The questionnaire shall be designed such that it is reasonably expected to identify the eight percent of persons who are the most costly to treat who are under individual coverage in health benefit plans, as defined in RCW 48.43.005, in Washington state or are covered by the pool, if applied to all such persons;
     (b) Obtain from a member of the American academy of actuaries, who is independent of the board, a certification that the standard health questionnaire meets the requirements of (a) of this subsection;
     (c) Approve the standard health questionnaire and any modifications needed to comply with this chapter. The standard health questionnaire shall be submitted to an actuary for certification, modified as necessary, and approved at least every eighteen months. The designation and approval of the standard health questionnaire by the board shall not be subject to review and approval by the commissioner. The standard health questionnaire or any modification thereto shall not be used until ninety days after public notice of the approval of the questionnaire or any modification thereto, except that the initial standard health questionnaire approved for use by the board after March 23, 2000, may be used immediately following public notice of such approval;
     (d) Establish appropriate rates, rate schedules, rate adjustments, expense allowances, claim reserve formulas and any other actuarial functions appropriate to the operation of the pool. Rates shall not be unreasonable in relation to the coverage provided, the risk experience, and expenses of providing the coverage. Rates and rate schedules may be adjusted for appropriate risk factors such as age and area variation in claim costs and shall take into consideration appropriate risk factors in accordance with established actuarial underwriting practices consistent with Washington state individual plan rating requirements under RCW 48.44.022 and 48.46.064;
     (e) Assess members of the pool in accordance with the provisions of this chapter, and make advance interim assessments as may be reasonable and necessary for the organizational or interim operating expenses. Any interim assessments will be credited as offsets against any regular assessments due following the close of the year;
     (f) Issue policies of health coverage in accordance with the requirements of this chapter;
     (g) Establish procedures for the administration of the premium discount provided under RCW 48.41.200(3)(a)(iii);
     (h) Contract with the Washington state health care authority for the administration of the premium discounts provided under RCW 48.41.200(3)(a) (i) ((and)), (ii), and (iv);
     (i) Set a reasonable fee to be paid to an insurance agent licensed in Washington state for submitting an acceptable application for enrollment in the pool; and
     (j) Provide certification to the commissioner when assessments will exceed the threshold level established in RCW 48.41.037.
     (2) In addition thereto, the board may:
     (a) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter including the authority, with the approval of the commissioner, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;
     (b) Sue or be sued, including taking any legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool;
     (c) Appoint appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool; and
     (d) Conduct periodic audits to assure the general accuracy of the financial data submitted to the pool, and the board shall cause the pool to have an annual audit of its operations by an independent certified public accountant.
     (3) Nothing in this section shall be construed to require or authorize the adoption of rules under chapter 34.05 RCW.

Sec. 204   RCW 70.47.060 and 2001 c 196 s 13 are each amended to read as follows:
     The administrator has the following powers and duties:
     (1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, prescription drugs and medications, and other services that may be necessary for basic health care. In addition, the administrator may, to the extent that funds are available, offer as basic health plan services chemical dependency services, mental health services and organ transplant services; however, no one service or any combination of these three services shall increase the actuarial value of the basic health plan benefits by more than five percent excluding inflation, as determined by the office of financial management. All subsidized and nonsubsidized enrollees in any participating managed health care system under the Washington basic health plan shall be entitled to receive covered basic health care services in return for premium payments to the plan. The schedule of services shall emphasize proven preventive and primary health care and shall include all services necessary for prenatal, postnatal, and well-child care. However, with respect to coverage for subsidized enrollees who are eligible to receive prenatal and postnatal services through the medical assistance program under chapter 74.09 RCW, the administrator shall not contract for such services except to the extent that such services are necessary over not more than a one-month period in order to maintain continuity of care after diagnosis of pregnancy by the managed care provider. The schedule of services shall also include a separate schedule of basic health care services for children, eighteen years of age and younger, for those subsidized or nonsubsidized enrollees who choose to secure basic coverage through the plan only for their dependent children. In designing and revising the schedule of services, the administrator shall consider the guidelines for assessing health services under the mandated benefits act of 1984, RCW 48.47.030, and such other factors as the administrator deems appropriate.
     (2)(a) To design and implement a structure of periodic premiums due the administrator from subsidized enrollees that is based upon gross family income, giving appropriate consideration to family size and the ages of all family members. The enrollment of children shall not require the enrollment of their parent or parents who are eligible for the plan. The structure of periodic premiums shall be applied to subsidized enrollees entering the plan as individuals pursuant to subsection (9) of this section and to the share of the cost of the plan due from subsidized enrollees entering the plan as employees pursuant to subsection (10) of this section.
     (b) To determine the periodic premiums due the administrator from nonsubsidized enrollees. Premiums due from nonsubsidized enrollees shall be in an amount equal to the cost charged by the managed health care system provider to the state for the plan plus the administrative cost of providing the plan to those enrollees and the premium tax under RCW 48.14.0201.
     (c) An employer or other financial sponsor may, with the prior approval of the administrator, pay the premium, rate, or any other amount on behalf of a subsidized or nonsubsidized enrollee, by arrangement with the enrollee and through a mechanism acceptable to the administrator.
     (d) To develop, as an offering by every health carrier providing coverage identical to the basic health plan, as configured on January 1, 2001, a basic health plan model plan with uniformity in enrollee cost-sharing requirements.
     (3) To design and implement a structure of enrollee cost-sharing due a managed health care system from subsidized and nonsubsidized enrollees. The structure shall discourage inappropriate enrollee utilization of health care services, and may utilize copayments, deductibles, and other cost-sharing mechanisms, but shall not be so costly to enrollees as to constitute a barrier to appropriate utilization of necessary health care services.
     (4) To limit enrollment of persons who qualify for subsidies so as to prevent an overexpenditure of appropriations for such purposes. Whenever the administrator finds that there is danger of such an overexpenditure, the administrator shall close enrollment until the administrator finds the danger no longer exists.
     (5) To limit the payment of subsidies to subsidized enrollees, as defined in RCW 70.47.020. The level of subsidy provided to persons who qualify may be based on the lowest cost plans, as defined by the administrator.
     (6) To adopt a schedule for the orderly development of the delivery of services and availability of the plan to residents of the state, subject to the limitations contained in RCW 70.47.080 or any act appropriating funds for the plan.
     (7) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan for either subsidized enrollees, or nonsubsidized enrollees, or both. The administrator shall endeavor to assure that covered basic health care services are available to any enrollee of the plan from among a selection of two or more participating managed health care systems. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the administrator shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the several areas of the state. Contracts with participating managed health care systems shall ensure that basic health plan enrollees who become eligible for medical assistance may, at their option, continue to receive services from their existing providers within the managed health care system if such providers have entered into provider agreements with the department of social and health services.
     (8) To receive periodic premiums from or on behalf of subsidized and nonsubsidized enrollees, deposit them in the basic health plan operating account, keep records of enrollee status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.
     (9) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan as subsidized or nonsubsidized enrollees, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and on a reasonable schedule defined by the authority, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. Funds received by a family as part of participation in the adoption support program authorized under RCW 26.33.320 and 74.13.100 through 74.13.145 shall not be counted toward a family's current gross family income for the purposes of this chapter. When an enrollee fails to report income or income changes accurately, the administrator shall have the authority either to bill the enrollee for the amounts overpaid by the state or to impose civil penalties of up to two hundred percent of the amount of subsidy overpaid due to the enrollee incorrectly reporting income. The administrator shall adopt rules to define the appropriate application of these sanctions and the processes to implement the sanctions provided in this subsection, within available resources. No subsidy may be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to RCW 70.47.110, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW. If a number of enrollees drop their enrollment for no apparent good cause, the administrator may establish appropriate rules or requirements that are applicable to such individuals before they will be allowed to reenroll in the plan.
     (10) To accept applications from business owners on behalf of themselves and their employees, spouses, and dependent children, as subsidized or nonsubsidized enrollees, who reside in an area served by the plan. The administrator may require all or the substantial majority of the eligible employees of such businesses to enroll in the plan and establish those procedures necessary to facilitate the orderly enrollment of groups in the plan and into a managed health care system. The administrator may require that a business owner pay at least an amount equal to what the employee pays after the state pays its portion of the subsidized premium cost of the plan on behalf of each employee enrolled in the plan. Enrollment is limited to those not eligible for medicare who wish to enroll in the plan and choose to obtain the basic health care coverage and services from a managed care system participating in the plan. The administrator shall adjust the amount determined to be due on behalf of or from all such enrollees whenever the amount negotiated by the administrator with the participating managed health care system or systems is modified or the administrative cost of providing the plan to such enrollees changes.
     (11) To determine the rate to be paid to each participating managed health care system in return for the provision of covered basic health care services to enrollees in the system. Although the schedule of covered basic health care services will be the same or actuarially equivalent for similar enrollees, the rates negotiated with participating managed health care systems may vary among the systems. In negotiating rates with participating systems, the administrator shall consider the characteristics of the populations served by the respective systems, economic circumstances of the local area, the need to conserve the resources of the basic health plan trust account, and other factors the administrator finds relevant.
     (12) To monitor the provision of covered services to enrollees by participating managed health care systems in order to assure enrollee access to good quality basic health care, to require periodic data reports concerning the utilization of health care services rendered to enrollees in order to provide adequate information for evaluation, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter. In requiring reports from participating managed health care systems, including data on services rendered enrollees, the administrator shall endeavor to minimize costs, both to the managed health care systems and to the plan. The administrator shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the department of health, to minimize duplication of effort.
     (13) To evaluate the effects this chapter has on private employer-based health care coverage and to take appropriate measures consistent with state and federal statutes that will discourage the reduction of such coverage in the state.
     (14) To develop a program of proven preventive health measures and to integrate it into the plan wherever possible and consistent with this chapter.
     (15) To provide, consistent with available funding, assistance for rural residents, underserved populations, and persons of color.
     (16) In consultation with appropriate state and local government agencies, to establish criteria defining eligibility for persons confined or residing in government-operated institutions.
     (17) To administer the premium discounts provided under RCW 48.41.200(3)(a) (i) ((and)), (ii), and (iv) pursuant to a contract with the Washington state health insurance pool.

NEW SECTION.  Sec. 301   Sections 103 through 109 and 201 of this act are each added to chapter 41.05 RCW.

NEW SECTION.  Sec. 302   Part headings used in this act are not any part of the law.