Sec. 1   RCW 48.43.005 and 2011 c 315 s 2 and 2011 c 314 s 3 are each reenacted and amended to read as follows:
     Unless otherwise specifically provided, the definitions in this section apply throughout this chapter.
     (1) "Adjusted community rate" means the rating method used to establish the premium for health plans adjusted to reflect actuarially demonstrated differences in utilization or cost attributable to geographic region, age, family size, and use of wellness activities.
     (2) "Adverse benefit determination" means a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit, including a denial, reduction, termination, or failure to provide or make payment that is based on a determination of an enrollee's or applicant's eligibility to participate in a plan, and including, with respect to group health plans, a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit resulting from the application of any utilization review, as well as a failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary or appropriate.
     (3) "Applicant" means a person who applies for enrollment in an individual health plan as the subscriber or an enrollee, or the dependent or spouse of a subscriber or enrollee.
     (4) "Basic health plan" means the plan described under chapter 70.47 RCW, as revised from time to time.
     (5) "Basic health plan model plan" means a health plan as required in RCW 70.47.060(2)(e).
     (6) "Basic health plan services" means that schedule of covered health services, including the description of how those benefits are to be administered, that are required to be delivered to an enrollee under the basic health plan, as revised from time to time.
     (7) "Board" means the governing board of the Washington health benefit exchange established in chapter 43.71 RCW.
     (8)(a) For grandfathered health benefit plans issued before January 1, 2014, and renewed thereafter, "catastrophic health plan" means:
     (((a))) (i) In the case of a contract, agreement, or policy covering a single enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, one thousand seven hundred fifty dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least three thousand five hundred dollars, both amounts to be adjusted annually by the insurance commissioner; and
     (((b))) (ii) In the case of a contract, agreement, or policy covering more than one enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, three thousand five hundred dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least six thousand dollars, both amounts to be adjusted annually by the insurance commissioner((; or
     (c) Any health benefit plan that provides benefits for hospital inpatient and outpatient services, professional and prescription drugs provided in conjunction with such hospital inpatient and outpatient services, and excludes or substantially limits outpatient physician services and those services usually provided in an office setting)).
     (b) In July 2008, and in each July thereafter, the insurance commissioner shall adjust the minimum deductible and out-of-pocket expense required for a plan to qualify as a catastrophic plan to reflect the percentage change in the consumer price index for medical care for a preceding twelve months, as determined by the United States department of labor. The adjusted amount shall apply on the following January 1st.
     (c) For health benefit plans issued on or after January 1, 2014, "catastrophic health plan" means:
     (i) A health benefit plan that meets the definition of catastrophic plan set forth in section 1302(e) of P.L. 111-148 of 2010, as amended; or
     (ii) A health benefit plan offered outside the exchange marketplace that requires a calendar year deductible or out-of-pocket expenses under the plan, other than for premiums, for covered benefits, that meets or exceeds the commissioner's annual adjustment under (b) of this subsection.
     (((8))) (9) "Certification" means a determination by a review organization that an admission, extension of stay, or other health care service or procedure has been reviewed and, based on the information provided, meets the clinical requirements for medical necessity, appropriateness, level of care, or effectiveness under the auspices of the applicable health benefit plan.
     (((9))) (10) "Concurrent review" means utilization review conducted during a patient's hospital stay or course of treatment.
     (((10))) (11) "Covered person" or "enrollee" means a person covered by a health plan including an enrollee, subscriber, policyholder, beneficiary of a group plan, or individual covered by any other health plan.
     (((11))) (12) "Dependent" means, at a minimum, the enrollee's legal spouse and dependent children who qualify for coverage under the enrollee's health benefit plan.
     (((12))) (13) "Emergency medical condition" means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition (a) placing the health of the individual, or with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy, (b) serious impairment to bodily functions, or (c) serious dysfunction of any bodily organ or part.
     (((13))) (14) "Emergency services" means a medical screening examination, as required under section 1867 of the social security act (42 U.S.C. 1395dd), that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate that emergency medical condition, and further medical examination and treatment, to the extent they are within the capabilities of the staff and facilities available at the hospital, as are required under section 1867 of the social security act (42 U.S.C. 1395dd) to stabilize the patient. Stabilize, with respect to an emergency medical condition, has the meaning given in section 1867(e)(3) of the social security act (42 U.S.C. 1395dd(e)(3)).
     (((14))) (15) "Employee" has the same meaning given to the term, as of January 1, 2008, under section 3(6) of the federal employee retirement income security act of 1974.
     (((15))) (16) "Enrollee point-of-service cost-sharing" means amounts paid to health carriers directly providing services, health care providers, or health care facilities by enrollees and may include copayments, coinsurance, or deductibles.
     (((16))) (17) "Exchange" means the Washington health benefit exchange established under chapter 43.71 RCW.
     (18) "Final external review decision" means a determination by an independent review organization at the conclusion of an external review.
     (((17))) (19) "Final internal adverse benefit determination" means an adverse benefit determination that has been upheld by a health plan or carrier at the completion of the internal appeals process, or an adverse benefit determination with respect to which the internal appeals process has been exhausted under the exhaustion rules described in RCW 48.43.530 and 48.43.535.
     (((18))) (20) "Grandfathered health plan" means a group health plan or an individual health plan that under section 1251 of the patient protection and affordable care act, P.L. 111-148 (2010) and as amended by the health care and education reconciliation act, P.L. 111-152 (2010) is not subject to subtitles A or C of the act as amended.
     (((19))) (21) "Grievance" means a written complaint submitted by or on behalf of a covered person regarding: (a) Denial of payment for medical services or nonprovision of medical services included in the covered person's health benefit plan, or (b) service delivery issues other than denial of payment for medical services or nonprovision of medical services, including dissatisfaction with medical care, waiting time for medical services, provider or staff attitude or demeanor, or dissatisfaction with service provided by the health carrier.
     (((20))) (22) "Health care facility" or "facility" means hospices licensed under chapter 70.127 RCW, hospitals licensed under chapter 70.41 RCW, rural health care facilities as defined in RCW 70.175.020, psychiatric hospitals licensed under chapter 71.12 RCW, nursing homes licensed under chapter 18.51 RCW, community mental health centers licensed under chapter 71.05 or 71.24 RCW, kidney disease treatment centers licensed under chapter 70.41 RCW, ambulatory diagnostic, treatment, or surgical facilities licensed under chapter 70.41 RCW, drug and alcohol treatment facilities licensed under chapter 70.96A RCW, and home health agencies licensed under chapter 70.127 RCW, and includes such facilities if owned and operated by a political subdivision or instrumentality of the state and such other facilities as required by federal law and implementing regulations.
     (((21))) (23) "Health care provider" or "provider" means:
     (a) A person regulated under Title 18 or chapter 70.127 RCW, to practice health or health-related services or otherwise practicing health care services in this state consistent with state law; or
     (b) An employee or agent of a person described in (a) of this subsection, acting in the course and scope of his or her employment.
     (((22))) (24) "Health care service" means that service offered or provided by health care facilities and health care providers relating to the prevention, cure, or treatment of illness, injury, or disease.
     (((23))) (25) "Health carrier" or "carrier" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, a health care service contractor as defined in RCW 48.44.010, or a health maintenance organization as defined in RCW 48.46.020, and includes "issuers" as that term is used in the patient protection and affordable care act (P.L. 111-148).
     (((24))) (26) "Health plan" or "health benefit plan" means any policy, contract, or agreement offered by a health carrier to provide, arrange, reimburse, or pay for health care services except the following:
     (a) Long-term care insurance governed by chapter 48.84 or 48.83 RCW;
     (b) Medicare supplemental health insurance governed by chapter 48.66 RCW;
     (c) Coverage supplemental to the coverage provided under chapter 55, Title 10, United States Code;
     (d) Limited health care services offered by limited health care service contractors in accordance with RCW 48.44.035;
     (e) Disability income;
     (f) Coverage incidental to a property/casualty liability insurance policy such as automobile personal injury protection coverage and homeowner guest medical;
     (g) Workers' compensation coverage;
     (h) Accident only coverage;
     (i) Specified disease or illness-triggered fixed payment insurance, hospital confinement fixed payment insurance, or other fixed payment insurance offered as an independent, noncoordinated benefit;
     (j) Employer-sponsored self-funded health plans;
     (k) Dental only and vision only coverage; and
     (l) Plans deemed by the insurance commissioner to have a short-term limited purpose or duration, or to be a student-only plan that is guaranteed renewable while the covered person is enrolled as a regular full-time undergraduate or graduate student at an accredited higher education institution, after a written request for such classification by the carrier and subsequent written approval by the insurance commissioner.
     (((25))) (27) "Material modification" means a change in the actuarial value of the health plan as modified of more than five percent but less than fifteen percent.
     (((26))) (28) "Open enrollment" means a period of time as defined in rule to be held at the same time each year, during which applicants may enroll in a carrier's individual health benefit plan without being subject to health screening or otherwise required to provide evidence of insurability as a condition for enrollment.
     (((27))) (29) "Preexisting condition" means any medical condition, illness, or injury that existed any time prior to the effective date of coverage.
     (((28))) (30) "Premium" means all sums charged, received, or deposited by a health carrier as consideration for a health plan or the continuance of a health plan. Any assessment or any "membership," "policy," "contract," "service," or similar fee or charge made by a health carrier in consideration for a health plan is deemed part of the premium. "Premium" shall not include amounts paid as enrollee point-of-service cost-sharing.
     (((29))) (31) "Review organization" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, health care service contractor as defined in RCW 48.44.010, or health maintenance organization as defined in RCW 48.46.020, and entities affiliated with, under contract with, or acting on behalf of a health carrier to perform a utilization review.
     (((30))) (32) "Small employer" or "small group" means any person, firm, corporation, partnership, association, political subdivision, sole proprietor, or self-employed individual that is actively engaged in business that employed an average of at least one but no more than fifty employees, during the previous calendar year and employed at least one employee on the first day of the plan year, is not formed primarily for purposes of buying health insurance, and in which a bona fide employer-employee relationship exists. In determining the number of employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of taxation by this state, shall be considered an employer. Subsequent to the issuance of a health plan to a small employer and for the purpose of determining eligibility, the size of a small employer shall be determined annually. Except as otherwise specifically provided, a small employer shall continue to be considered a small employer until the plan anniversary following the date the small employer no longer meets the requirements of this definition. A self-employed individual or sole proprietor who is covered as a group of one must also: (a) Have been employed by the same small employer or small group for at least twelve months prior to application for small group coverage, and (b) verify that he or she derived at least seventy-five percent of his or her income from a trade or business through which the individual or sole proprietor has attempted to earn taxable income and for which he or she has filed the appropriate internal revenue service form 1040, schedule C or F, for the previous taxable year, except a self-employed individual or sole proprietor in an agricultural trade or business, must have derived at least fifty-one percent of his or her income from the trade or business through which the individual or sole proprietor has attempted to earn taxable income and for which he or she has filed the appropriate internal revenue service form 1040, for the previous taxable year.
     (((31))) (33) "Special enrollment" means a defined period of time of not less than thirty-one days, triggered by a specific qualifying event experienced by the applicant, during which applicants may enroll in the carrier's individual health benefit plan without being subject to health screening or otherwise required to provide evidence of insurability as a condition for enrollment.
     (((32))) (34) "Standard health questionnaire" means the standard health questionnaire designated under chapter 48.41 RCW.
     (((33))) (35) "Utilization review" means the prospective, concurrent, or retrospective assessment of the necessity and appropriateness of the allocation of health care resources and services of a provider or facility, given or proposed to be given to an enrollee or group of enrollees.
     (((34))) (36) "Wellness activity" means an explicit program of an activity consistent with department of health guidelines, 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 for the purpose of improving enrollee health status and reducing health service costs.

Sec. 2   RCW 43.71.010 and 2011 c 317 s 2 are each amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. Terms and phrases used in this chapter that are not defined in this section must be defined as consistent with implementation of a state health benefit exchange pursuant to the affordable care act.
     (1) "Affordable care act" means the federal patient protection and affordable care act, P.L. 111-148, as amended by the federal health care and education reconciliation act of 2010, P.L. 111-152, or federal regulations or guidance issued under the affordable care act.
     (2) "Authority" means the Washington state health care authority, established under chapter 41.05 RCW.
     (3) "Board" means the governing board established in RCW 43.71.020.
     (4) "Commissioner" means the insurance commissioner, established in Title 48 RCW.
     (5) "Exchange" means the Washington health benefit exchange established in RCW 43.71.020.
     (6) "Self-sustaining" means capable of operating without direct state tax subsidy. Self-sustaining sources include but are not limited to federal grants, federal premium tax subsidies and credits, charges to participating insurance carriers, and premiums paid by participating enrollees.

Sec. 3   RCW 43.71.020 and 2011 c 317 s 3 are each amended to read as follows:
     (1) The Washington health benefit exchange is established and constitutes a self-sustaining public-private partnership separate and distinct from the state, exercising functions delineated in chapter 317, Laws of 2011. The exchange shall be known as the evergreen health marketplace. By January 1, 2014, the exchange shall operate consistent with the affordable care act subject to statutory authorization. The exchange shall have a governing board consisting of persons with expertise in the Washington health care system and private and public health care coverage. The initial membership of the board shall be appointed as follows:
     (a) By October 1, 2011, each of the two largest caucuses in both the house of representatives and the senate shall submit to the governor a list of five nominees who are not legislators or employees of the state or its political subdivisions, with no caucus submitting the same nominee.
     (i) The nominations from the largest caucus in the house of representatives must include at least one employee benefit specialist;
     (ii) The nominations from the second largest caucus in the house of representatives must include at least one health economist or actuary;
     (iii) The nominations from the largest caucus in the senate must include at least one representative of health consumer advocates;
     (iv) The nominations from the second largest caucus in the senate must include at least one representative of small business;
     (v) The remaining nominees must have demonstrated and acknowledged expertise in at least one of the following areas: Individual health care coverage, small employer health care coverage, health benefits plan administration, health care finance and economics, actuarial science, or administering a public or private health care delivery system.
     (b) By December 15, 2011, the governor shall appoint two members from each list submitted by the caucuses under (a) of this subsection. The appointments made under this subsection (1)(b) must include at least one employee benefits specialist, one health economist or actuary, one representative of small business, and one representative of health consumer advocates. The remaining four members must have a demonstrated and acknowledged expertise in at least one of the following areas: Individual health care coverage, small employer health care coverage, health benefits plan administration, health care finance and economics, actuarial science, or administering a public or private health care delivery system.
     (c) By December 15, 2011, the governor shall appoint a ninth member to serve as chair. The chair may not be an employee of the state or its political subdivisions. The chair shall serve as a nonvoting member except in the case of a tie.
     (d) The following members shall serve as nonvoting, ex officio members of the board:
     (i) The insurance commissioner or his or her designee; and
     (ii) The administrator of the health care authority, or his or her designee.
     (2) Initial members of the board shall serve staggered terms not to exceed four years. Members appointed thereafter shall serve two-year terms.
     (3) A member of the board whose term has expired or who otherwise leaves the board shall be replaced by gubernatorial appointment. When the person leaving was nominated by one of the caucuses of the house of representatives or the senate, his or her replacement shall be appointed from a list of five nominees submitted by that caucus within thirty days after the person leaves. If the member to be replaced is the chair, the governor shall appoint a new chair within thirty days after the vacancy occurs. A person appointed to replace a member who leaves the board prior to the expiration of his or her term shall serve only the duration of the unexpired term. Members of the board may be reappointed to multiple terms.
     (4) No board member may be appointed if his or her participation in the decisions of the board could benefit his or her own financial interests or the financial interests of an entity he or she represents. A board member who develops such a conflict of interest shall resign or be removed from the board.
     (5) Members of the board must be reimbursed for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060. The board shall prescribe rules for the conduct of its business. Meetings of the board are at the call of the chair.
     (6) The exchange and the board are subject only to the provisions of chapter 42.30 RCW, the open public meetings act, and chapter 42.56 RCW, the public records act, and not to any other law or regulation generally applicable to state agencies. Consistent with the open public meetings act, the board may hold executive sessions to consider proprietary or confidential nonpublished information.
     (7)(a) The board shall establish an advisory committee to allow for the views of the health care industry and other stakeholders to be heard in the operation of the health benefit exchange.
     (b) The board may establish technical advisory committees or seek the advice of technical experts when necessary to execute the powers and duties included in chapter 317, Laws of 2011.
     (8) Members of the board are not civilly or criminally liable and may not have any penalty or cause of action of any nature arise against them for any action taken or not taken, including any discretionary decision or failure to make a discretionary decision, when the action or inaction is done in good faith and in the performance of the powers and duties under chapter 317, Laws of 2011. Nothing in this section prohibits legal actions against the board to enforce the board's statutory or contractual duties or obligations.
     (9) In recognition of the government-to-government relationship between the state of Washington and the federally recognized tribes in the state of Washington, the board shall consult with the American Indian health commission.
     (10) The board must establish rules or policies that permit city and county governments, Indian tribes, tribal organizations, urban Indian organizations, private foundations, and other entities to pay premiums on behalf of qualified individuals.

Sec. 4   RCW 43.71.030 and 2011 c 317 s 4 are each amended to read as follows:
     (1) The exchange may, consistent with the purposes of this chapter: (a) Sue and be sued in its own name; (b) make and execute agreements, contracts, and other instruments, with any public or private person or entity; (c) employ, contract with, or engage personnel; (d) pay administrative costs; ((and)) (e) aggregate or delegate the aggregation of funds that comprise the premium for a health plan; (f) accept grants, donations, loans of funds, and contributions in money, services, materials or otherwise, from the United States or any of its agencies, from the state of Washington and its agencies or from any other source, and use or expend those moneys, services, materials, or other contributions; and (g) complete other duties as may be necessary to comply with the requirements of section 1321 of P.L. 111-148 of 2010, as amended.
     (2) ((The powers and duties of the exchange and the board are limited to those necessary to apply for and administer grants, establish information technology infrastructure, and undertake additional administrative functions necessary to begin operation of the exchange by January 1, 2014. Any actions relating to substantive issues included in RCW 43.71.040 must be consistent with statutory direction on those issues.)) The exchange shall report its activities and status to the governor and the legislature as requested, and no less often than annually.
     (3) The exchange may charge and equitably apportion among participating carriers the administrative costs and expenses incurred consistent with the provisions of this chapter, and must develop the methodology to ensure the exchange is self-sustaining.
     (4) The exchange must prepare recommendations to the legislature on future opportunities to establish a regionally administered multistate exchange, as well as recommendations on the effective implementation of risk management methods including administration of reinsurance, risk corridors, and risk adjustment.
     (5) Any actions relating to substantive issues identified in this section must be consistent with statutory direction.
     (6) The employees of the exchange may participate in the public employees' retirement system under chapter 41.40 RCW and the public employees' benefits board under chapter 41.05 RCW.

Sec. 5   RCW 43.71.060 and 2011 c 317 s 7 are each amended to read as follows:
     (1) The health benefit exchange account is created in the custody of the state treasurer. All receipts from federal grants received under the affordable care act shall be deposited into the account. Expenditures from the account may be used only for purposes consistent with the grants. Until March 15, 2012, only the administrator of the health care authority, or his or her designee, may authorize expenditures from the account. ((Beginning March 15, 2012, only the board of the Washington health benefit exchange 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.
     (2) This section expires January 1, 2014.

NEW SECTION.  Sec. 6   A new section is added to chapter 48.43 RCW to read as follows:
     (1) For plan or policy years beginning January 1, 2014, a carrier must offer standardized individual or small group health benefit plans outside the exchange that meet the definition of silver and gold level plans in section 1302 of P.L. 111-148 of 2010, as amended, if the carrier offers an individual or small group plan outside the exchange that meets the bronze level definition in section 1302 of P.L. 111-148 of 2010, as amended.
     (2) A carrier offering a small group health benefit plan must offer the identical plan inside and outside the exchange.
     (3) A health benefit plan meeting the definition of a catastrophic plan as defined in RCW 48.43.005(8)(c)(i) may only be sold through the exchange.
     (4) The commissioner may exempt a carrier from the requirements regarding market participation for the offer or issue of a health benefit plan that would otherwise be disapproved under this section, based on a finding that the plan is necessary to meet the unique needs of a geographic area of the state, or for other reasons justified by the public health and welfare.
     (5) The commissioner, in consultation with the exchange and the health care authority, may adopt rules requiring a carrier to offer a plan that meets the definition of a bronze level plan outside the exchange if they offer a bronze level plan inside the exchange.
     (6) By December 1, 2016, the commissioner must complete a review of the impact of subsections (1) through (4) of this section on the health and viability of the markets inside and outside the exchange and submit the recommendations, in consultation with the exchange board, to the legislature on the need to maintain or sunset the market rules.
     (7) If the commissioner finds the consumers in the exchange do not have an adequate choice of health plan options among the actuarial value tiers specified in section 1302 of P.L. 111-148 of 2010, as amended, in the exchange, the commissioner in consultation with the exchange board, may authorize the offering of a public plan and pursue the opportunity for a waiver under section 1332 of P.L. 111-148 of 2010, as amended.

NEW SECTION.  Sec. 7   A new section is added to chapter 48.43 RCW to read as follows:
     All health plans, other than catastrophic health plans, offered outside of the exchange must conform to the bronze, silver, gold, or platinum actuarial value tiers specified in section 1302 of P.L. 111-148, as amended.

NEW SECTION.  Sec. 8   A new section is added to chapter 43.71 RCW to read as follows:
     (1) The board shall certify a plan as a qualified health plan to be offered through the exchange if the plan is determined by the:
     (a) Insurance commissioner to meet the requirements of Title 48 RCW and rules adopted by the commissioner pursuant to chapter 34.05 RCW;
     (b) Board to meet the requirements of the affordable care act for certification as a qualified health plan; and
     (c) Board to include tribal clinics and urban Indian clinics as essential community providers in the plan's provider network consistent with federal law. Integrated delivery systems may be exempt from the requirement to include all essential community providers in the provider network.
     (2) Consistent with section 1311 of P.L. 111-148 of 2010, as amended, the board shall allow stand-alone dental plans to offer coverage in the exchange.
     (3) Upon request by the board, a state agency shall provide information to the board for its use in determining if the requirements under subsection (1)(b) or (c) of this section have been met. Unless the agency and the board agree to a later date, the agency shall provide the information within sixty days of the request. The exchange shall reimburse the agency for the cost of compiling and providing the requested information within one hundred eighty days of its receipt.
     (4) A decision by the board denying a request to certify or recertify a plan as a qualified health plan may be appealed according to procedures adopted by the board.

NEW SECTION.  Sec. 9   A new section is added to chapter 43.71 RCW to read as follows:
     The board shall establish a rating system for qualified health plans to assist consumers in evaluating plan choices in the exchange. Rating factors established by the board must include, but are not limited to:
     (1) Affordability with respect to premiums, deductibles, and point-of-service cost-sharing;
     (2) Provider reimbursement methods that incentivize chronic care management and care coordination for enrollees with complex, high-cost, or multiple chronic conditions;
     (3) Promotion of appropriate primary care and preventive services utilization;
     (4) High standards for provider network adequacy, including robust provider participation intended to improve access to underserved populations through participation of essential community providers, family planning providers and pediatric providers; and
     (5) Consumer satisfaction ratings.

Sec. 10   RCW 48.42.010 and 1985 c 264 s 15 are each amended to read as follows:
     (1) Notwithstanding any other provision of law, and except as provided in this chapter, any person or other entity which provides coverage in this state for life insurance, annuities, loss of time, medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric expenses, whether the coverage is by direct payment, reimbursement, the providing of services, or otherwise, shall be subject to the authority of the state insurance commissioner, unless the person or other entity shows that while providing the services it is subject to the jurisdiction and regulation of another agency of this state, any subdivisions thereof, or the federal government.
     (2) "Another agency of this state, any subdivision thereof, or the federal government" does not include the Washington health benefit exchange under chapter 43.71 RCW or P.L. 111-148 of 2010, as amended.

Sec. 11   RCW 48.42.020 and 1983 c 36 s 2 are each amended to read as follows:
     (1) A person or entity may show that it is subject to the jurisdiction and regulation of another agency of this state, any subdivision thereof, or the federal government, by providing to the insurance commissioner the appropriate certificate, license, or other document issued by the other governmental agency which permits or qualifies it to provide the coverage as defined in RCW 48.42.010.
     (2) "Another agency of this state, any subdivision thereof, or the federal government" does not include the Washington health benefit exchange under chapter 43.71 RCW or P.L. 111-148 of 2010, as amended.

NEW SECTION.  Sec. 12   A new section is added to chapter 48.43 RCW to read as follows:
     Certification by the Washington health benefit exchange of a plan as a qualified health plan, or of a carrier as a qualified issuer, does not exempt the plan or carrier from any of the requirements of this title or rules adopted by the commissioner pursuant to chapter 34.05 RCW.

NEW SECTION.  Sec. 13   A new section is added to chapter 48.43 RCW to read as follows:
     (1) Consistent with federal law, the commissioner, in consultation with the board and the health care authority, shall, by rule, select a benchmark plan for purposes of establishing the essential health benefits in Washington state under P.L. 111-148 of 2010, as amended. The commissioner shall assure the selected plan addresses the programmatic requirements, as defined by the health care authority, of the medicaid program and, if established, the basic health plan. The commissioner shall make his or her selection from the following options:
     (a) The three largest small group plans in the state by enrollment; or
     (b) The largest health maintenance organization in the state's commercial market by enrollment.
     (2) If the selected benchmark plan does not include all of the ten benefit categories specified by section 1302 of P.L. 111-148 of 2010, as amended, the commissioner, in consultation with the board and the health care authority, shall, by rule, supplement the benchmark plan benefits as needed to meet the requirements of section 1302.
     (3) Once the commissioner selects a benchmark plan and any necessary supplements, and as required by the federal patient protection and affordable care act:
     (a) The commissioner shall adopt rules to apply the corresponding essential health benefits to any plan subject to this title; and
     (b) The health care authority shall adopt rules to apply the corresponding essential health benefits to the medicaid program and, if established, the federal basic health plan.
     (4) A health plan, other than a health plan offered through medicaid or the federal basic health plan, required to offer the essential health benefits under P.L. 111-148 of 2010, as amended, may not be offered in the state unless the commissioner finds that it is substantially equal to the benchmark plan.
     (5) The commissioner must evaluate plans offered at each actuarial value defined under section 1302 of P.L. 111-148 of 2010, as amended, and determine whether variation in prescription drug benefits, including cost sharing, both inside and outside the exchange individual and small group markets, results in adverse selection. If so, the commissioner may adopt rules pursuant to chapter 34.05 RCW to assure substantial equivalence of prescription drug benefits.
     (6) In finalizing the decision for the benchmark plan and essential health benefits, the commissioner must ensure a transparent, public process that involves sharing information and allows public comment and testimony.
     (7) Nothing in this act shall prohibit the offering of benefits for spiritual care services deductible under section 213(d) of the internal revenue code in plans inside or outside of the exchange.
     (8) Beginning December 15, 2012, and every year thereafter, the commissioner shall submit to the legislature a list of state-mandated health benefits, the enforcement of which will result in federally imposed costs to the state related to the plans sold through the exchange because the benefits are not included in the essential health benefits designated under federal law. The list must include the anticipated costs to the state of each state-mandated health benefit on the list. The commissioner may enforce a mandate on the list for the entire market only if funds are appropriated in an omnibus appropriations act specifically to pay for the identified costs. During any period of time such funds are not appropriated, the mandate must be suspended for the entire market and may not be enforced by the commissioner.

NEW SECTION.  Sec. 14   A new section is added to chapter 70.47 RCW to read as follows:
     (1) The director of the health care authority shall provide the necessary certifications to the secretary of the federal department of health and human services under section 1331 of P.L. 111-148 of 2010, as amended, for the purposes of Washington state's adoption of the federal basic health program option, unless, by July 1, 2013, the governor finds that:
     (a) Anticipated federal funding under section 1331 will be insufficient, absent any additional funding from the state, to provide at least the essential health benefits to eligible individuals under section 1331 during the period of calendar years 2014 through 2019:
     (i) At enrollee premium levels below the levels that would be applicable to persons with income between one hundred thirty-nine and two hundred percent of the federal poverty level through the Washington health benefits exchange;
     (ii) Using health plan payment rates that exceed 2012 medicaid rates and are sufficient to ensure access to care for enrollees and incentivize an adequate provider network, in conjunction with innovative payment methodologies and standard health plan performance measures that will create incentives for the use of effective cost containment and health care quality strategies; and
     (iii) Assuming reasonable basic health program administrative costs and the potential impact of federal basic health plan program funding reconciliation under section 1331(d) of the affordable care act; and
     (b) Sufficient funds are not available to support the design and development work necessary for the program to provide health coverage to enrollees beginning January 1, 2014.
     (2) Prior to making this finding, the director shall:
     (a) Actively consult with the board of the Washington health benefit exchange, the office of the insurance commissioner, consumer advocates, provider organizations, carriers, and other interested organizations;
     (b) Consider any available objective analysis specific to Washington state, by an independent nationally recognized consultant that has been actively engaged in analysis and economic modeling of the federal basic health program option for multiple states.
     (3) The director shall report any findings and supporting analysis made under this section to the relevant policy and fiscal committees of the legislature.
     (4) If implemented, the federal basic health program must be guided by the following principles:
     (a) Meeting the minimum state certification standards in section 1331 of the federal patient protection and affordable care act;
     (b) To the extent allowed by the federal department of health and human services, twelve-month continuous eligibility for the basic health program, and corresponding twelve-month continuous enrollment in standard health plans by enrollees; or, in lieu of twelve-month continuous eligibility, financing mechanisms that enable enrollees to remain with a plan for the entire plan year;
     (c) Achieving an appropriate balance between:
     (i) Premiums and cost-sharing minimized to increase the affordability of insurance coverage;
     (ii) Standard health plan contracting requirements that minimize plan and provider administrative costs, while holding standard health plans accountable for performance and enrollee health outcomes, and ensuring adequate enrollee notice and appeal rights; and
     (iii) Health plan payment rates that exceed 2012 medicaid rates for the same services and are sufficient to ensure access to care for enrollees and incentivize an adequate provider network, in conjunction with innovative payment methodologies and standard health plan performance measures that will create incentives for the use of effective cost containment and health care quality; and
     (d) Transparency in program administration, including active and ongoing consultation with basic health program enrollees and interested organizations.

NEW SECTION.  Sec. 15   A new section is added to chapter 48.43 RCW to read as follows:
     (1)(a) The commissioner is authorized to negotiate an agreement with the federal government to administer all or part of the risk management functions in P.L. 111-148 of 2010, as amended.
     (b) To achieve efficiencies and further timely state implementation of the federal patient protection and affordable care act in the state, the commissioner may develop the policy and rules for the reinsurance program, and may subcontract with the pool under chapter 48.41 RCW, or other qualified entity, to administer risk management functions.
     (2) The commissioner, in consultation with the board, shall adopt rules establishing the reinsurance program required by P.L. 111-148 of 2010, as amended. Consistent with federal law, the rules must, at a minimum, establish:
     (a) A mechanism to collect reinsurance contribution funds;
     (b) A reinsurance payment formula; and
     (c) A mechanism to disburse reinsurance payments.
     (3)(a) The rules must compensate carriers offering health plans in the exchange for the possibility of increased risk in the exchange and incentivize carrier participation in the exchange by making any or all of the following modifications to the reinsurance payment formula established by federal law:
     (i) Establishing a lower attachment point inside the exchange than outside the exchange;
     (ii) Establishing a higher reinsurance cap inside the exchange than outside the exchange or eliminating the reinsurance cap inside the exchange; or
     (iii) Establishing a higher coinsurance rate inside the exchange than outside the exchange.
     (b) The commissioner may adjust the rules adopted under this subsection (3) as needed to preserve a healthy market both inside and outside of the exchange.
     (c) The commissioner must identify by rule the data needed to support operation of the reinsurance program established under this section, the sources of the data, and other requirements related to its collection, validation, interpretation, and retention.

NEW SECTION.  Sec. 16   A new section is added to chapter 48.41 RCW to read as follows:
     (1) The board shall evaluate the populations that may need ongoing access to the pool coverage paying particular attention to those that may be excluded from coverage in 2014, such as those with end-stage renal disease or HIV/AIDS, or those not eligible for coverage under the exchange, and submit recommendations to the legislature by December 1, 2012.
     (2) The board shall evaluate the eligibility and submit recommendations regarding any modifications to the pool eligibility that might allow new enrollees after January 1, 2014, including modifications to the standard health questionnaire or other eligibility screening tool that could be used for the pool.
     (3) The board shall complete an analysis of the pool assessments in relation to the assessments for the reinsurance program and forward recommendations to the legislature with suggested changes for the assessment or any credits that may be considered for the reinsurance program.

NEW SECTION.  Sec. 17   A new section is added to chapter 48.41 RCW to read as follows:
     (1) The pool is authorized to contract with the commissioner to administer risk management functions, consistent with P.L. 111-148 of 2010, as amended. The pool may conduct preoperational and planning activities related to these programs, including defining and implementing an appropriate legal structure or structures to administer and coordinate these programs.
     (2) The pool may collect payments for the transitional reinsurance program under section 1341 of P.L. 111-148 of 2010, as amended. The assessment may be increased to cover the administrative costs of operation of the reinsurance program including reimbursement of the reasonable costs incurred by the pool for preoperational activities undertaken pursuant to this section.
     (3) The pool shall report on these activities to the appropriate committees of the senate and house of representatives by December 15, 2012, and December 15, 2013.

NEW SECTION.  Sec. 18   A new section is added to chapter 41.04 RCW to read as follows:
     Except for chapters 41.05 and 41.40 RCW, this title does not apply to any position in or employee of the Washington health benefit exchange under chapter 43.71 RCW.

NEW SECTION.  Sec. 19   A new section is added to chapter 43.01 RCW to read as follows:
     This chapter does not apply to any position in or employee of the Washington health benefit exchange under chapter 43.71 RCW.

NEW SECTION.  Sec. 20   A new section is added to chapter 43.03 RCW to read as follows:
     This chapter does not apply to any position in or employee of the Washington health benefit exchange under chapter 43.71 RCW.

Sec. 21   RCW 41.05.011 and 2011 1st sp.s. c 15 s 54 are each reenacted and amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Authority" means the Washington state health care authority.
     (2) "Board" means the public employees' benefits board established under RCW 41.05.055.
     (3) "Dependent care assistance program" means a benefit plan whereby state and public employees may pay for certain employment related dependent care with pretax dollars as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 129 or other sections of the internal revenue code.
     (4) "Director" means the director of the authority.
     (5) "Emergency service personnel killed in the line of duty" means law enforcement officers and firefighters as defined in RCW 41.26.030, members of the Washington state patrol retirement fund as defined in RCW 43.43.120, and reserve officers and firefighters 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.
     (6) "Employee" includes all 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; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature. Pursuant to contractual agreement with the authority, "employee" may also include: (a) Employees of a county, municipality, or other political subdivision of the state and members of the legislative authority of any county, city, or town who are elected to office after February 20, 1970, 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 and 41.05.021(1)(g); (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; (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; ((and)) (d) employees of a tribal government, if the governing body of the tribal government seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.05.021(1) (f) and (g); and (e) employees of the Washington health benefit exchange if the governing board of the exchange established in RCW 43.71.020 seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.05.021(1) (g) and (n). "Employee" does not include: Adult family homeowners; unpaid volunteers; patients of state hospitals; inmates; employees of the Washington state convention and trade center as provided in RCW 41.05.110; students of institutions of higher education as determined by their institution; and any others not expressly defined as employees under this chapter or by the authority under this chapter.
     (7) "Employer" means the state of Washington.
     (8) "Employing agency" means a division, department, or separate agency of state government, including an institution of higher education; a county, municipality, school district, educational service district, or other political subdivision; and a tribal government covered by this chapter.
     (9) "Faculty" means an academic employee of an institution of higher education whose workload is not defined by work hours but whose appointment, workload, and duties directly serve the institution's academic mission, as determined under the authority of its enabling statutes, its governing body, and any applicable collective bargaining agreement.
     (10) "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.
     (11) "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.
     (12) "Medical flexible spending arrangement" means a benefit plan whereby state and public employees may reduce their salary before taxes to pay for medical expenses not reimbursed by insurance as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (13) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the salary reduction plan.
     (14) "Plan year" means the time period established by the authority.
     (15) "Premium payment plan" means a benefit plan whereby state and public employees may pay their share of group health plan premiums with pretax dollars as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (16) "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.
     (17) "Salary" means a state employee's monthly salary or wages.
     (18) "Salary reduction plan" means a benefit plan whereby state and public employees may agree to a reduction of salary on a pretax basis to participate in the dependent care assistance program, medical flexible spending arrangement, or premium payment plan offered pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (19) "Seasonal employee" means an employee hired to work during a recurring, annual season with a duration of three months or more, and anticipated to return each season to perform similar work.
     (20) "Separated employees" means persons who separate from employment with an employer as defined in:
     (a) RCW 41.32.010(17) 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(33), 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.
     (21) "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.
     (22) "Tribal government" means an Indian tribal government as defined in section 3(32) of the employee retirement income security act of 1974, as amended, or an agency or instrumentality of the tribal government, that has government offices principally located in this state.

Sec. 22   RCW 41.05.021 and 2011 1st sp.s. c 15 s 56 are each amended to read as follows:
     (1) The Washington state health care authority is created within the executive branch. The authority shall have a director appointed by the governor, with the consent of the senate. The director shall serve at the pleasure of the governor. The director may employ a deputy director, and such assistant directors and special assistants as may be needed to administer the authority, who shall be exempt from chapter 41.06 RCW, and any additional staff members as are necessary to administer this chapter. The director may delegate any power or duty vested in him or her by law, 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; administer the children's health program pursuant to chapter 74.09 RCW; study state-purchased health care programs in order to maximize cost containment in these programs while ensuring access to quality health care; implement state initiatives, joint purchasing strategies, and techniques for efficient administration that have potential application to all state-purchased health services; and administer grants that further the mission and goals of the authority. 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;
     (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) In collaboration with other state agencies that administer state purchased health care programs, private health care purchasers, health care facilities, providers, and carriers:
     (A) Use evidence-based medicine principles to develop common performance measures and implement financial incentives in contracts with insuring entities, health care facilities, and providers that:
     (I) Reward improvements in health outcomes for individuals with chronic diseases, increased utilization of appropriate preventive health services, and reductions in medical errors; and
     (II) Increase, through appropriate incentives to insuring entities, health care facilities, and providers, the adoption and use of information technology that contributes to improved health outcomes, better coordination of care, and decreased medical errors;
     (B) Through state health purchasing, reimbursement, or pilot strategies, promote and increase the adoption of health information technology systems, including electronic medical records, by hospitals as defined in RCW 70.41.020(4), integrated delivery systems, and providers that:
     (I) Facilitate diagnosis or treatment;
     (II) Reduce unnecessary duplication of medical tests;
     (III) Promote efficient electronic physician order entry;
     (IV) Increase access to health information for consumers and their providers; and
     (V) Improve health outcomes;
     (C) Coordinate a strategy for the adoption of health information technology systems using the final health information technology report and recommendations developed under chapter 261, Laws of 2005;
     (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 and (g) of this subsection, setting the premium contribution for approved groups as outlined in RCW 41.05.050;
     (f) To review and approve or deny the application when the governing body of a tribal government applies to transfer their employees to an insurance or self-insurance program administered under this chapter. In the event of an employee transfer pursuant to this subsection (1)(f), members of the governing body are eligible to be included in such a transfer if the members are authorized by the tribal government to participate in the insurance program being transferred from and subject to payment by the members of all costs of insurance for the members. The authority shall: (i) Establish the conditions for participation; (ii) have the sole right to reject the application; and (iii) set the premium contribution for approved groups as outlined in RCW 41.05.050. Approval of the application by the authority transfers the employees and dependents involved to the insurance, self-insurance, or health care program approved by the authority;
     (g) To ensure the continued status of the employee insurance or self-insurance programs administered under this chapter as a governmental plan under section 3(32) of the employee retirement income security act of 1974, as amended, the authority shall limit the participation of employees of a county, municipal, school district, educational service district, or other political subdivision, the Washington health benefit exchange, or a tribal government, including providing for the participation of those employees whose services are substantially all in the performance of essential governmental functions, but not in the performance of commercial activities;
     (h) To establish billing procedures and collect funds from school districts in a way that minimizes the administrative burden on districts;
     (i) 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;
     (j) To apply for, receive, and accept grants, gifts, and other payments, including property and service, from any governmental or other public or private entity or person, and make arrangements as to the use of these receipts to implement initiatives and strategies developed under this section;
     (k) To issue, distribute, and administer grants that further the mission and goals of the authority;
     (l) To adopt rules consistent with this chapter as described in RCW 41.05.160 including, but not limited to:
     (i) Setting forth the criteria established by the board under RCW 41.05.065 for determining whether an employee is eligible for benefits;
     (ii) Establishing an appeal process in accordance with chapter 34.05 RCW by which an employee may appeal an eligibility determination;
     (iii) Establishing a process to assure that the eligibility determinations of an employing agency comply with the criteria under this chapter, including the imposition of penalties as may be authorized by the board;
     (m)(i) To administer the medical services programs established under chapter 74.09 RCW as the designated single state agency for purposes of Title XIX of the federal social security act;
     (ii) To administer the state children's health insurance program under chapter 74.09 RCW for purposes of Title XXI of the federal social security act;
     (iii) To enter into agreements with the department of social and health services for administration of medical care services programs under Titles XIX and XXI of the social security act. The agreements shall establish the division of responsibilities between the authority and the department with respect to mental health, chemical dependency, and long-term care services, including services for persons with developmental disabilities. The agreements shall be revised as necessary, to comply with the final implementation plan adopted under section 116, chapter 15, Laws of 2011 1st sp. sess.;
     (iv) To adopt rules to carry out the purposes of chapter 74.09 RCW;
     (v) To appoint such advisory committees or councils as may be required by any federal statute or regulation as a condition to the receipt of federal funds by the authority. The director may appoint statewide committees or councils in the following subject areas: (A) Health facilities; (B) children and youth services; (C) blind services; (D) medical and health care; (E) drug abuse and alcoholism; (F) rehabilitative services; and (G) such other subject matters as are or come within the authority's responsibilities. The statewide councils shall have representation from both major political parties and shall have substantial consumer representation. Such committees or councils shall be constituted as required by federal law or as the director in his or her discretion may determine. The members of the committees or councils shall hold office for three years except in the case of a vacancy, in which event appointment shall be only for the remainder of the unexpired term for which the vacancy occurs. No member shall serve more than two consecutive terms. Members of such state advisory committees or councils may be paid their travel expenses in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended;
     (n) To review and approve or deny the application from the governing board of the Washington health benefit exchange to provide state-sponsored insurance or self-insurance programs to employees of the exchange. The authority shall (i) establish the conditions for participation; (ii) have the sole right to reject an application; and (iii) set the premium contribution for approved groups as outlined in RCW 41.05.050.
     (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.

NEW SECTION.  Sec. 23   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 24   Section 4 of this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately."