BILL REQ. #:  S-0619.2 

Read first time 01/24/2005.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to improving the quality of health care through the use of clinical information technologies; amending RCW 41.05.011, 41.05.021, and 41.05.075; adding a new section to chapter 82.04 RCW; and adding a new section to chapter 74.09 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) Subject to the limits and provisions of this section, a credit is authorized against the tax otherwise due under this chapter for licensed physicians who are solo practitioners or in group practices with five or fewer practitioners and who acquire, develop, enhance, or implement clinical information technologies, as defined in RCW 41.05.011, that are certified by the health care authority to be consistent with recognized national standards related to:
     (a) Interoperability;
     (b) Security;
     (c) The protection of confidentiality, consistent with the regulations adopted under section 264(c) of the health insurance portability and accountability act (42 U.S.C. 1320d-2 note) and chapter 70.02 RCW; and
     (d) Other subjects determined appropriate by the health care authority.
     (2) The amount of the tax credit shall be equal to fifty percent of the amount spent to acquire, develop, enhance, or implement clinical information technologies up to a maximum tax credit of ten thousand dollars or the total amount of tax due for the calendar year, whichever is less.
     (3) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. These records must include the certification of the clinical information technology by the health care authority.
     (4) If at any time the department finds that a person is not eligible for the tax credit under this section, the amount of taxes for which a credit has been used is immediately due. The department shall assess interest, but not penalties, on the credited taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.
     (5) The credit under this section may be used against any tax due under this chapter, but in no case may a credit earned during one calendar year be carried over to be credited against taxes incurred in a subsequent calendar year. No refunds may be granted for credits under this section.
     (6) As used in this section, "clinical information technologies" means a computerized system that:
     (a) Maintains and provides access to patients' medical records in an electronic format;
     (b) Permits a qualified practitioner who wishes to enter an order for a medication, treatment, diagnostic procedure, or other intervention or service to enter such order via a computer that is linked to a data base capable of accessing the medical record of the patient who is intended to receive such medication, treatment, diagnostic procedure, or other intervention;
     (c) Incorporates error notification software so that a warning is generated by such system if an order is entered that is likely to lead to a significant adverse outcome for the patient;
     (d) Provides electronic alerts and reminders to improve compliance with best practices, promote regular screenings and other preventive practices, and facilitate diagnoses and treatments; and
     (e) Allows the secure electronic transmission of information to other health care providers.

Sec. 2   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) "Clinical information technologies" means a computerized system that:
     (a) Maintains and provides access to patients' medical records in an electronic format;
     (b) Permits a qualified practitioner who wishes to enter an order for a medication, treatment, diagnostic procedure, or other intervention or service to enter such order via a computer that is linked to a data base capable of accessing the medical record of the patient who is intended to receive such medication, treatment, diagnostic procedure, or other intervention;
     (c) Incorporates error notification software so that a warning is generated by such system if an order is entered that is likely to lead to a significant adverse outcome for the patient;
     (d) Provides electronic alerts and reminders to improve compliance with best practices, promote regular screenings and other preventive practices, and facilitate diagnoses and treatments; and
     (e) Allows the secure electronic transmission of information to other health care providers.

Sec. 3   RCW 41.05.021 and 2002 c 142 s 1 are each amended to read as follows:
     (1) The Washington state health care authority is created within the executive branch. The authority shall have an administrator appointed by the governor, with the consent of the senate. The administrator shall serve at the pleasure of the governor. The administrator may employ up to seven staff members, who shall be exempt from chapter 41.06 RCW, and any additional staff members as are necessary to administer this chapter. The administrator may delegate any power or duty vested in him or her by this chapter, including authority to make final decisions and enter final orders in hearings conducted under chapter 34.05 RCW. The primary duties of the authority shall be to: Administer state employees' insurance benefits and retired or disabled school employees' insurance benefits; administer the basic health plan pursuant to chapter 70.47 RCW; study state-purchased health care programs in order to maximize cost containment in these programs while ensuring access to quality health care; and implement state initiatives, joint purchasing strategies, and techniques for efficient administration that have potential application to all state-purchased health services. The authority's duties include, but are not limited to, the following:
     (a) To administer health care benefit programs for employees and retired or disabled school employees as specifically authorized in RCW 41.05.065 and in accordance with the methods described in RCW 41.05.075, 41.05.140, and other provisions of this chapter;
     (b) To analyze state-purchased health care programs and to explore options for cost containment and delivery alternatives for those programs that are consistent with the purposes of those programs, including, but not limited to:
     (i) Creation of economic incentives for the persons for whom the state purchases health care to appropriately utilize and purchase health care services, including the development of flexible benefit plans to offset increases in individual financial responsibility;
     (ii) Utilization of provider arrangements that encourage cost containment, including but not limited to prepaid delivery systems, utilization review, and prospective payment methods, and that ensure access to quality care, including assuring reasonable access to local providers, especially for employees residing in rural areas;
     (iii) Coordination of state agency efforts to purchase drugs effectively as provided in RCW 70.14.050;
     (iv) Development of recommendations and methods for purchasing medical equipment and supporting services on a volume discount basis; ((and))
     (v) Development of data systems to obtain utilization data from state-purchased health care programs in order to identify cost centers, utilization patterns, provider and hospital practice patterns, and procedure costs, utilizing the information obtained pursuant to RCW 41.05.031; and
     (vi) Coordination and collaboration with state health purchasing agencies to develop methods to implement financial incentives in contracts with insuring entities and providers that increase the adoption and use of clinical information technologies as defined in RCW 41.05.011 that contribute to improved health outcomes, better coordination of care, and decreased medical errors;
     (c) To analyze areas of public and private health care interaction;
     (d) To provide information and technical and administrative assistance to the board;
     (e) To review and approve or deny applications from counties, municipalities, and other political subdivisions of the state to provide state-sponsored insurance or self-insurance programs to their employees in accordance with the provisions of RCW 41.04.205, setting the premium contribution for approved groups as outlined in RCW 41.05.050;
     (f) To appoint a health care policy technical advisory committee as required by RCW 41.05.150;
     (g) To establish billing procedures and collect funds from school districts and educational service districts under RCW 28A.400.400 in a way that minimizes the administrative burden on districts;
     (h) To publish and distribute to nonparticipating school districts and educational service districts by October 1st of each year a description of health care benefit plans available through the authority and the estimated cost if school districts and educational service district employees were enrolled; ((and))
     (i) To promulgate and adopt rules consistent with this chapter as described in RCW 41.05.160; and
     (j) Certify as eligible for a tax credit under section 1 of this act clinical information technologies that are acquired, developed, enhanced, or implemented by licensed physicians and are consistent with recognized national standards related to:
     (i) Interoperability;
     (ii) Security;
     (iii) The protection of confidentiality, consistent with the regulations adopted under section 264(c) of the health insurance portability and accountability act (42 U.S.C. 1320d-2 note) and chapter 70.02 RCW; and
     (iv) Other subjects determined appropriate by the authority.
     (2) On and after January 1, 1996, the public employees' benefits board may implement strategies to promote managed competition among employee health benefit plans. Strategies may include but are not limited to:
     (a) Standardizing the benefit package;
     (b) Soliciting competitive bids for the benefit package;
     (c) Limiting the state's contribution to a percent of the lowest priced qualified plan within a geographical area;
     (d) Monitoring the impact of the approach under this subsection with regards to: Efficiencies in health service delivery, cost shifts to subscribers, access to and choice of managed care plans statewide, and quality of health services. The health care authority shall also advise on the value of administering a benchmark employer-managed plan to promote competition among managed care plans.

Sec. 4   RCW 41.05.075 and 2002 c 142 s 4 are each amended to read as follows:
     (1) The administrator shall provide benefit plans designed by the board through a contract or contracts with insuring entities, through self-funding, self-insurance, or other methods of providing insurance coverage authorized by RCW 41.05.140.
     (2) The administrator shall establish a contract bidding process that:
     (a) Encourages competition among insuring entities;
     (b) Maintains an equitable relationship between premiums charged for similar benefits and between risk pools including premiums charged for retired state and school district employees under the separate risk pools established by RCW 41.05.022 and 41.05.080 such that insuring entities may not avoid risk when establishing the premium rates for retirees eligible for medicare;
     (c) Is timely to the state budgetary process; and
     (d) Sets conditions for awarding contracts to any insuring entity.
     (3) The administrator shall establish a requirement for review of utilization and financial data from participating insuring entities on a quarterly basis.
     (4) The administrator shall centralize the enrollment files for all employee and retired or disabled school employee health plans offered under chapter 41.05 RCW and develop enrollment demographics on a plan-specific basis.
     (5) All claims data shall be the property of the state. The administrator may require of any insuring entity that submits a bid to contract for coverage all information deemed necessary including subscriber or member demographic and claims data necessary for risk assessment and adjustment calculations in order to fulfill the administrator's duties as set forth in this chapter.
     (6) All contracts with insuring entities for the provision of health care benefits shall provide that the beneficiaries of such benefit plans may use on an equal participation basis the services of practitioners licensed pursuant to chapters 18.22, 18.25, 18.32, 18.53, 18.57, 18.71, 18.74, 18.83, and 18.79 RCW, as it applies to registered nurses and advanced registered nurse practitioners. However, nothing in this subsection may preclude the administrator from establishing appropriate utilization controls approved pursuant to RCW 41.05.065(2) (a), (b), and (d).
     (7) The administrator shall increase reimbursement in contracts with insuring entities and providers who adopt and use clinical information technologies as defined in RCW 41.05.011 that contribute to improved health outcomes, better coordination of care, and decreased medical errors. To be eligible for increased reimbursements, the clinical information technology used by the provider must be consistent with recognized national standards related to (a) interoperability; (b) security; (c) the protection of confidentiality, consistent with the regulations adopted under section 264(c) of the health insurance portability and accountability act (42 U.S.C. 1320d-2 note) and chapter 70.02 RCW; and (d) other subjects determined appropriate by the administrator. The amount of the increase in reimbursement shall be equal to five percent of the amount of the reimbursement.

NEW SECTION.  Sec. 5   A new section is added to chapter 74.09 RCW to read as follows:
     The secretary shall increase reimbursement in contracts with insuring entities and providers who adopt and use clinical information technologies as defined in RCW 41.05.011 that contribute to improved health outcomes, better coordination of care, and decreased medical errors. To be eligible for increased reimbursements, the clinical information technology used by the provider must be consistent with recognized national standards related to (1) interoperability; (2) security; (3) the protection of confidentiality, consistent with the regulations adopted under section 264(c) of the health insurance portability and accountability act (42 U.S.C. 1320d-2 note) and chapter 70.02 RCW; and (4) other subjects determined appropriate by the administrator. The amount of the increase in reimbursement shall be equal to five percent of the amount of the reimbursement.