BILL REQ. #:  H-4906.2 

READ FIRST TIME 02/03/10.   

     AN ACT Relating to establishing an interstate compact for the sale and issue of health benefit plans; adding a new chapter to Title 48 RCW; and providing an expiration date.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that national reform of our health care delivery and coverage system is progressing and will soon restructure health care coverage throughout the states. The legislature further finds that the substantial revisions contemplated at the federal level will require several years of preparation before full implementation, leaving many of the uninsured without access to affordable coverage for several more years. The legislature recognizes that, during this time, unique solutions must be developed by Washington state to expand coverage to the uninsured and provide more affordable options to those struggling to purchase coverage. Therefore, it is the legislature's intent to expand flexibility provided in current law to increase the availability of affordable health care coverage options for the citizens of the state.
     (2) Under the terms and conditions of this chapter, the state of Washington seeks to join with other states to establish a compact governing the sale of private health benefit plans approved as to form and rate by member admitted states in the state that are members of the compact. The legislature designates the insurance commissioner for the state of Washington to serve as the representative of this state for the compact. The purposes of the compact under this chapter are, through the means of joint and cooperative action among the compacting states:
     (a) To promote and protect the interest of consumers of health benefit plans in the small group market;
     (b) To develop uniform standards for insurance products covered under the compact;
     (c) To establish an agreed method of confirming that health benefit plans issued in the state of Washington qualify under the requirements of Title 48 RCW or the requirements of one or more of the compacting states;
     (d) To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the compact; and
     (e) To perform these and other related functions, consistent with the state regulation of the business of insurance and health benefit plans or policies.
     (3) The legislature intends to establish a mechanism permitting one or more qualified health plans to be offered in participating states subject to the laws and regulations of the state in which the plan was written or issued, provided that the issuer of any qualified health plan is subject to the market conduct, unfair trade practices, network adequacy, and consumer protection standards, including addressing disputes as to the performance of the contract, of the state in which the purchaser resides.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Bylaws" means bylaws established by the compact's governing body for its governance or for directing or controlling the governing body's actions or conduct.
     (2) "Commissioner" means the chief regulatory official of a state who has authority to regulate the health benefit market and the companies doing business in that market, including but not limited to the state's insurance commissioner, superintendent, director, or administrator.
     (3) "Compact" means the compact set forth in this chapter.
     (4) "Compacting state" means any state which has enacted the compact and which has not withdrawn or been terminated from the compact.
     (5) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an alien insurer, its state of entry.
     (6) "Insurer" means any entity licensed by a state to issue contracts of insurance or health benefit plan or policy for any of the lines of insurance covered by the compact.
     (7) "Member" means the person chosen by a compact state as its representative to the governing body or their designee.
     (8) "Operating procedure" means procedures adopted by the governing body implementing a rule, uniform standard, or a provision of the compact.
     (9) "Qualifying plan" means a private health benefit plan or policy offered and issued in a compacting state to that state's residents that complies with its state of origin's requirements as to rate and form, and has been approved by that state's insurance regulator to be offered and issued. It includes the form of a policy or contract, including any application, endorsement, or related form that is attached to and made part of the policy or contract, and any evidence of coverage or certificate that the insurer issues. A qualifying plan may not be a plan offered to supplement medicare coverage.
     (10) "Rule" means a statement of general or particular applicability and future effect adopted by the governing body, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the governing body, that has the force and effect of law in the compacting states.
     (11) "State" means any state, district, or territory of the United States of America.
     (12) "State of origin" means the compacting state in which an insurer is admitted or licensed under the insurance laws of that state.

NEW SECTION.  Sec. 3   (1) The compacting states hereby create and establish a joint public body known as the interstate health insurance compact. The compact is established as a body corporate and politic, and an instrumentality of the compacting states, and is solely responsible for its liabilities except as otherwise specifically provided in the compact agreement.
     (2) Venue is proper and judicial proceedings by or against the compact must be brought in the state of Washington.
     (3) The compacting states agree that the state of Washington is the primary member for purposes of establishing the principal office of the compact and administering the compact's activities.
     (4) The governing body of the compact shall be the commissioners of the member states or their designees. Each compacting state may use state insurance department staff to support the work of the compact. The state of Washington is the primary member for purposes of organizing and administering the compact, responding to states seeking membership in the compact and leading meetings of the compact.

NEW SECTION.  Sec. 4   The compact has the following powers:
     (1) To adopt rules that have the force and effect of law and are binding in the compacting states to the extent and in the manner provided in the compact;
     (2) To exercise its rule-making authority and establish reasonable standards for the sale and issue of qualifying plans in member states;
     (3) To adopt operating procedures that are binding in the compacting states to the extent and in the manner provided in the compact;
     (4) To bring and prosecute legal proceedings or actions in its name as the compact. The standing of any state insurance department to sue or be sued under applicable law is not affected;
     (5) To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence;
     (6) To establish and maintain offices;
     (7) To borrow, accept, or contract for services of personnel, including but not limited to employees of a compacting state;
     (8) To advise compacting states on issues relating to insurers domiciled or doing business in noncompacting jurisdictions, consistent with the purposes of the compact;
     (9) To provide and receive information from, and to cooperate with law enforcement agencies and the national association of insurance commissioners; and
     (10) To perform such other functions as may be necessary or appropriate to achieve the purposes of the compact consistent with the state regulation of the business of insurance and health benefit plans.

NEW SECTION.  Sec. 5   (1) Each compacting state must have and be limited to one member who is the official responsible for regulating the business of insurance in that state. If health benefit plans and the health benefit market are not regulated by the same official charged with regulating the business of insurance, the member may be the official responsible for regulating the health benefit market in that state. Each member must be qualified to serve in that capacity under the applicable law of the compacting state. Each compacting state continues to determine the election or appointment and qualification of its own member.
     (2) Each compact member is entitled to one vote and shall have an opportunity to participate in the governance of the compact in accordance with the bylaws.
     (3) The compact must establish and adopt bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and to exercise the powers, of the compact, including but not limited to:
     (a) Establishing the fiscal year of the compact;
     (b) Providing reasonable procedures for holding meetings;
     (c) Organizing or establishing committees to accomplish the work of the compact necessary to carry out its purpose; and
(d) Providing a mechanism for winding up the operation of the compact or transferring its activities as required by federal law or a vote of the members.
     (4) The primary member of the compact is responsible for managing the affairs of the compact in a manner consistent with the bylaws and purposes of the compact, including but not limited to planning, implementing, and coordinating communications and activities with other state, federal, and local government organizations, in order to advance the goals of the compact.
     (5) Compact members and their staff, employees, and representatives are immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error, or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of compact employment, duties, or responsibilities, unless such damage, loss, injury, or liability was caused by the intention or willful and wanton misconduct of that person.
     (6) Each compacting state shall defend, indemnify, and hold harmless its compact member or his or her staff, employees, or representative in any civil action seeking to impose liability arising out of any actual or alleged act, error, or omission that occurred within the scope of carrying out the activities, duties, or responsibilities of the compact. The duty to indemnify and hold harmless does not apply if the actual or alleged act, error, or omission resulted from the intentional or willful and wanton misconduct of that person.

NEW SECTION.  Sec. 6   The compact must meet at least once during each calendar year. Additional meetings must be held as set forth in the bylaws.

NEW SECTION.  Sec. 7   Any state is eligible to become a compacting state if approved by the primary member of the compact. The compact becomes effective and binding upon legislative enactment of the compact into law by two compacting states, and the approval of the primary member of the compact. Amendments to the compact terms and conditions, governance, or purpose, as set forth in this chapter, must be approved by the legislature of each compacting state.

NEW SECTION.  Sec. 8   (1) Once effective, the compact continues in force and remains binding upon each compacting state. However, a compacting state may withdraw from the compact by enacting a statute specifically repealing the statute that enacted the compact into law.
     (2) The commissioner of the withdrawing state must immediately notify the primary member, in writing, upon the introduction of legislation repealing the compact in the withdrawing state.
     (3) The primary member must notify the other compacting states of the introduction of such legislation within ten days after its receipt of notice.
     (4) The withdrawing state is responsible for all obligations, duties, and liabilities incurred through the effective date of withdrawal, and the performance of obligations to consumers or the compact extending beyond the effective date of withdrawal, unless they have been released or relinquished by mutual agreement of the compact and the withdrawing state. At the time of withdrawal, the withdrawing state must provide notice to all admitted insurers offering qualifying plans in compacting states of its intent to withdraw. Upon the effective date of withdrawal, qualifying plans may no longer be offered or issued in compacting states unless the insurer has otherwise obtained approval as to rate and form from those compacting states under the laws of each compacting state.
     (5) The primary member may terminate a compacting state's membership if the state does not conform to the requirements of the compact regarding the provision of information to the primary member, does not responsively assist other compacting states in enforcement or consumer protection activity related to insurers admitted in the compacting state, or if the compacting state fails to attend required meetings of the compact or does not follow the bylaws of the compact.
     (6) The compact dissolves upon the date of the withdrawal or default of the compacting state that reduces membership in the compact to one compacting state.

NEW SECTION.  Sec. 9   (1) The compact does not prevent the enforcement of any state law of a compacting state that does not conflict with a rule or operating procedure or bylaw of the compact.
     (2) All lawful actions of the compact including all rules and operating procedures adopted by the compact are binding on the compacting states.
     (3) In the event any provision of the compact exceeds the constitutional limits imposed on the legislature of any compacting state, the obligations, duties, powers, or jurisdiction sought to be conferred by that provision upon the commission is ineffective as to that compacting state and those obligations, duties, powers, or jurisdiction remains the compacting state and shall be exercised by the agency thereof to which those obligations, duties, powers, or jurisdiction are delegated by law in effect at the time the compact becomes effective.
     (4) Insurers offering qualifying plans must comply with and are subject to the laws of the compacting state in which the purchaser resides relating to:
     (a) Market conduct;
     (b) Unfair trade practices;
     (c) Network adequacy;
     (d) Consumer protection standards and unfair trade practices;
     (e) Grievance and appeals; and
     (f) Fraud.
     (5) Insurers must clearly notify applicants and purchasers that the policy may not be subject to all the laws and regulations of the state in which the purchaser resides.

NEW SECTION.  Sec. 10   (1) Insurers may offer and issue qualifying plans in compacting states if:
     (a) The insurer is licensed and in good standing in its state of origin. Qualifying plans must be approved for offer and issue by the insurer's state of origin prior to being offered and issued in a compacting state;
     (b) The qualifying plan is approved as to form by one of the compacting states;
     (c) The insurer's rating schedule for the qualifying plan is approved by its state of origin;
     (d) The insurer reports to the primary member the amount of premium sold in each compacting state and provides such other data as the primary member requires by rule;
     (e) The insurer complies with the requirements of the compact and of this chapter.
     (2) If a state of origin determines that a qualifying plan is not in compliance for any reason, the state of origin must notify other compact members of the plan's change in status. The insurer must immediately cease offering and issuing the qualifying plan until the state of origin has confirmed to the insurer and to compact members in writing that the qualifying plan is again in compliance.

NEW SECTION.  Sec. 11   Insurers offering and issuing qualifying plans must file with each compacting state and provide applicants resident in the compacting state with a written disclosure containing a side-by-side comparison that explains the differences between each qualifying plan's requirements, conditions, and benefits compared to the requirements for health benefit plans for that compacting state, including but not limited to:
     (1) Claim payment;
     (2) Coinsurance, copayment, and deductibles;
     (3) Preexisting condition limitation;
     (4) Mandated benefits;
     (5) Guaranteed issue;
     (6) Use of discretionary clauses;
     (7) Out-of-pocket and lifetime limits;
     (8) Method of calculating rates or premium; and
     (9) Health underwriting practices.

NEW SECTION.  Sec. 12   (1) Insurers offering or issuing qualifying plans in the state of Washington must comply with chapter 48.41 RCW to the extent required by the commissioner. Insurers offering and issuing qualifying plans in Washington are subject to the terms and conditions of chapter 48.41 RCW and must participate in the pool as set forth in RCW 48.41.090.
     (2) The commissioner of each compacting state shall adopt rules to implement and administer this section.

NEW SECTION.  Sec. 13   Each qualifying policy issued in the state of Washington must prominently display the legal name of the issuing insurer, its business address, its web site, its telephone number, and any other information necessary to assist Washington residents in contacting the issuer or its administrator.

NEW SECTION.  Sec. 14   (1) Insurers offering qualifying plans in Washington are member insurers of the Washington life and disability insurance guaranty association as established in RCW 48.32A.055, and are subject to the requirements of chapter 48.32A RCW for their covered enrollees or members who are Washington state residents.
     (2) States of origin must provide notice to other compact states whenever the member or his or her staff comes into possession of any data or information relative to an insurer offering qualifying plans indicating that such insurer is in or is approaching a condition of impaired assets, imminent insolvency, or insolvency. If the state of origin takes any formal action against an insurer offering qualifying plans, the member must notify the other compact states of the action and require the insurer to cease offering or issuing qualifying plans.

NEW SECTION.  Sec. 15   Insurers offering and issuing qualifying plans in compacting states must comply with the regulatory assessment and premium tax payment requirements of each compacting state as if they were admitted insurers in each compact state.

NEW SECTION.  Sec. 16   The commissioner may adopt rules to implement and administer this chapter.

NEW SECTION.  Sec. 17   A state may not enter into an agreement with the commissioner under this chapter unless the state enacts a law after the effective date of this act that specifically authorizes the state to enter into such agreements through the compact structure set forth in this chapter.

NEW SECTION.  Sec. 18   Sections 1 through 17 of this act constitute a new chapter in Title 48 RCW.

NEW SECTION.  Sec. 19   This act expires January 1, 2015.