BILL REQ. #: Z-0936.2
| State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 01/13/12. Referred to Committee on Financial Institutions, Housing & Insurance.
AN ACT Relating to insurers and insurance products; amending RCW 4.28.080, 48.05.440, 48.06.040, 48.17.010, 48.38.010, 48.38.020, 48.38.050, 48.43.310, 48.85.010, 48.85.020, 48.125.050, 48.17.380, 43.70.235, 48.20.435, 48.43.018, 48.44.215, 48.46.325, 48.43.530, 48.43.535, 48.46.030, 48.46.040, 48.41.110, and 48.43.510; reenacting and amending RCW 48.43.005 and 48.46.020; and repealing RCW 48.19.450.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 4.28.080 and 2011 c 47 s 1 are each amended to read as
follows:
Service made in the modes provided in this section is personal
service. The summons shall be served by delivering a copy thereof, as
follows:
(1) If the action is against any county in this state, to the
county auditor or, during normal office hours, to the deputy auditor,
or in the case of a charter county, summons may be served upon the
agent, if any, designated by the legislative authority.
(2) If against any town or incorporated city in the state, to the
mayor, city manager, or, during normal office hours, to the mayor's or
city manager's designated agent or the city clerk thereof.
(3) If against a school or fire district, to the superintendent or
commissioner thereof or by leaving the same in his or her office with
an assistant superintendent, deputy commissioner, or business manager
during normal business hours.
(4) If against a railroad corporation, to any station, freight,
ticket or other agent thereof within this state.
(5) If against a corporation owning or operating sleeping cars, or
hotel cars, to any person having charge of any of its cars or any agent
found within the state.
(6) If against a domestic insurance company, to any agent
authorized by such company to solicit insurance within this state.
(7)(a) If against an ((unauthorized)) authorized foreign or alien
insurance company, as provided in RCW 48.05.200.
(b) If against an unauthorized insurer, as provided in RCW
48.05.215 and 48.15.150.
(c) If against a reciprocal insurer, as provided in RCW 48.10.170.
(d) If against a nonresident surplus line broker, as provided in
RCW 48.15.073.
(e) If against a nonresident insurance producer or title insurance
agent, as provided in RCW 48.17.173.
(f) If against a nonresident adjuster, as provided in RCW
48.17.380.
(g) If against a fraternal benefit society, as provided in RCW
48.36A.350.
(h) If against a nonresident reinsurance intermediary, as provided
in RCW 48.94.010.
(i) If against a nonresident life settlement provider, as provided
in RCW 48.102.011.
(j) If against a nonresident life settlement broker, as provided in
RCW 48.102.021.
(k) If against a service contract provider, as provided in RCW
48.110.030.
(l) If against a protection product guarantee provider, as provided
in RCW 48.110.055.
(m) If against a discount plan organization, as provided in RCW
48.155.020.
(8) If against a company or corporation doing any express business,
to any agent authorized by said company or corporation to receive and
deliver express matters and collect pay therefor within this state.
(9) If against a company or corporation other than those designated
in subsections (1) through (8) of this section, to the president or
other head of the company or corporation, the registered agent,
secretary, cashier or managing agent thereof or to the secretary,
stenographer or office assistant of the president or other head of the
company or corporation, registered agent, secretary, cashier or
managing agent.
(10) If against a foreign corporation or nonresident joint stock
company, partnership or association doing business within this state,
to any agent, cashier or secretary thereof.
(11) If against a minor under the age of fourteen years, to such
minor personally, and also to his or her father, mother, guardian, or
if there be none within this state, then to any person having the care
or control of such minor, or with whom he or she resides, or in whose
service he or she is employed, if such there be.
(12) If against any person for whom a guardian has been appointed
for any cause, then to such guardian.
(13) If against a foreign or alien steamship company or steamship
charterer, to any agent authorized by such company or charterer to
solicit cargo or passengers for transportation to or from ports in the
state of Washington.
(14) If against a self-insurance program regulated by chapter 48.62
RCW, as provided in chapter 48.62 RCW.
(15) In all other cases, to the defendant personally, or by leaving
a copy of the summons at the house of his or her usual abode with some
person of suitable age and discretion then resident therein.
(16) In lieu of service under subsection (15) of this section,
where the person cannot with reasonable diligence be served as
described, the summons may be served as provided in this subsection,
and shall be deemed complete on the tenth day after the required
mailing: By leaving a copy at his or her usual mailing address with a
person of suitable age and discretion who is a resident, proprietor, or
agent thereof, and by thereafter mailing a copy by first-class mail,
postage prepaid, to the person to be served at his or her usual mailing
address. For the purposes of this subsection, "usual mailing address"
does not include a United States postal service post office box or the
person's place of employment.
Sec. 2 RCW 48.05.440 and 2006 c 25 s 6 are each amended to read
as follows:
(1) "Company action level event" means any of the following events:
(a) The filing of an RBC report by an insurer indicating that:
(i) The insurer's total adjusted capital is greater than or equal
to its regulatory action level RBC, but less than its company action
level RBC;
(ii) If a life and disability insurer, the insurer has total
adjusted capital that is greater than or equal to its company action
level RBC, but less than the product of its authorized control level
RBC and ((2.5)) 3 and has a negative trend; or
(iii) If a property and casualty insurer, the insurer has total
adjusted capital that is greater than or equal to its company action
level RBC but less than the product of its authorized control level RBC
and 3.0 and met the trend test determined in accordance with the trend
test calculation included in the RBC instructions;
(b) The notification by the commissioner to the insurer of an
adjusted RBC report that indicates an event in (a) of this subsection,
provided the insurer does not challenge the adjusted RBC report under
RCW 48.05.460; or
(c) If, under RCW 48.05.460, an insurer challenges an adjusted RBC
report that indicates an event in (a) of this subsection, the
notification by the commissioner to the insurer that the commissioner
has, after a hearing, rejected the insurer's challenge.
(2) In the event of a company action level event, the insurer shall
prepare and submit to the commissioner an RBC plan that:
(a) Identifies the conditions that contribute to the company action
level event;
(b) Contains proposals of corrective actions that the insurer
intends to take and would be expected to result in the elimination of
the company action level event;
(c) Provides projections of the insurer's financial results in the
current year and at least the four succeeding years, both in the
absence of proposed corrective actions and giving effect to the
proposed corrective actions, including projections of statutory
operating income, net income, capital, and surplus. The projections
for both new and renewal business might include separate projections
for each major line of business and separately identify each
significant income, expense, and benefit component;
(d) Identifies the key assumptions impacting the insurer's
projections and the sensitivity of the projections to the assumptions;
and
(e) Identifies the quality of, and problems associated with, the
insurer's business, including but not limited to its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance, if any, in each case.
(3) The RBC plan shall be submitted:
(a) Within forty-five days of the company action level event; or
(b) If the insurer challenges an adjusted RBC report under RCW
48.05.460, within forty-five days after notification to the insurer
that the commissioner has, after a hearing, rejected the insurer's
challenge.
(4) Within sixty days after the submission by an insurer of an RBC
plan to the commissioner, the commissioner shall notify the insurer
whether the RBC plan may be implemented or is, in the judgment of the
commissioner, unsatisfactory. If the commissioner determines the RBC
plan is unsatisfactory, the notification to the insurer shall set forth
the reasons for the determination, and may set forth proposed revisions
that will render the RBC plan satisfactory. Upon notification from the
commissioner, the insurer shall prepare a revised RBC plan, that may
incorporate by reference any revisions proposed by the commissioner,
and shall submit the revised RBC plan to the commissioner:
(a) Within forty-five days after the notification from the
commissioner; or
(b) If the insurer challenges the notification from the
commissioner under RCW 48.05.460, within forty-five days after a
notification to the insurer that the commissioner has, after a hearing,
rejected the insurer's challenge.
(5) In the event of a notification by the commissioner to an
insurer that the insurer's RBC plan or revised RBC plan is
unsatisfactory, the commissioner may, subject to the insurer's rights
to a hearing under RCW 48.05.460, specify in the notification that the
notification constitutes a regulatory action level event.
(6) Every domestic insurer that files an RBC plan or revised RBC
plan with the commissioner shall file a copy of the RBC plan or revised
RBC plan with the insurance commissioner in any state in which the
insurer is authorized to do business if:
(a) The state has an RBC provision substantially similar to RCW
48.05.465(1); and
(b) The insurance commissioner of that state has notified the
insurer of its request for the filing in writing, in which case the
insurer shall file a copy of the RBC plan or revised RBC plan in that
state no later than the later of:
(i) Fifteen days after the receipt of notice to file a copy of its
RBC plan or revised plan with the state; or
(ii) The date on which the RBC plan or revised RBC plan is filed
under subsections (3) and (4) of this section.
Sec. 3 RCW 48.06.040 and 2002 c 227 s 1 are each amended to read
as follows:
To apply for a solicitation permit the person shall:
(1) File with the commissioner a request showing:
(a) Name, type, and purpose of insurer, corporation, or syndicate
proposed to be formed;
(b) ((Names, addresses, fingerprints for submission to the
Washington state patrol, the federal bureau of investigation, and any
governmental agency or entity authorized to receive this information
for a state and national criminal history background check, and
business records of each person associated or to be associated in the
formation of the proposed insurer, corporation, or syndicate))
Biographical reports on forms prescribed by the national association of
insurance commissioners evidencing the general trustworthiness and
competence of each individual who is serving or who will serve as an
officer, director, trustee, employee, or fiduciary of the insurer,
corporation, or syndicate to be formed;
(c) Third-party verification reports from a vendor authorized by
the national association of insurance commissioners to perform a state,
national, and international background history check of any person who
exercises control over the financial dealings and operations of the
insurer, corporation, or syndicate;
(((c))) (d) Full disclosure of the terms of all understandings and
agreements existing or proposed among persons so associated relative to
the proposed insurer, corporation, or syndicate, or the formation
thereof;
(((d))) (e) The plan according to which solicitations are to be
made; and
(((e))) (f) Additional information as the commissioner may
reasonably require.
(2) File with the commissioner:
(a) Original and copies in triplicate of proposed articles of
incorporation, or syndicate agreement; or, if the proposed insurer is
a reciprocal, original and duplicate of the proposed subscribers'
agreement and attorney-in-fact agreement;
(b) Original and duplicate copy of any proposed bylaws;
(c) Copy of any security proposed to be issued and copy of
application or subscription agreement for that security;
(d) Copy of any insurance contract proposed to be offered and copy
of application for that contract;
(e) Copy of any prospectus, advertising, or literature proposed to
be used; and
(f) Copy of proposed form of any escrow agreement required.
(3) Deposit with the commissioner the fees required by law to be
paid for the application including fees associated with the state and
national criminal history background check, for filing of the articles
of incorporation of an insurer, for filing the subscribers' agreement
and attorney-in-fact agreement if the proposed insurer is a reciprocal,
for the solicitation permit, if granted, and for filing articles of
incorporation with the secretary of state.
Sec. 4 RCW 48.17.010 and 2010 c 67 s 2 are each amended to read
as follows:
The definitions in this section apply throughout this title unless
the context clearly requires otherwise.
(1) "Adjuster" means any person who, for compensation as an
independent contractor or as an employee of an independent contractor,
or for fee or commission, investigates or reports to the adjuster's
principal relative to claims arising under insurance contracts, on
behalf solely of either the insurer or the insured. An attorney-at-law
who adjusts insurance losses from time to time incidental to the
practice of his or her profession or an adjuster of marine losses is
not deemed to be an "adjuster" for the purpose of this chapter. A
salaried employee of an insurer or of a managing general agent is not
deemed to be an "adjuster" for the purpose of this chapter, except when
acting as a crop adjuster.
(a) "Independent adjuster" means an adjuster representing the
interests of the insurer.
(b) "Public adjuster" means an adjuster employed by and
representing solely the financial interests of the insured named in the
policy.
(c) "Crop adjuster" means an adjuster, including (i) an independent
adjuster, (ii) a public adjuster, and (iii) an employee of an insurer
or managing general agent, who acts as an adjuster for claims arising
under crop insurance. A salaried employee of an insurer or of a
managing general agent who is certified by a crop adjuster program
approved by the risk management agency of the United States department
of agriculture is not a "crop adjuster" for the purposes of this
chapter. Proof of certification must be provided to the commissioner
upon request.
(2) "Business entity" means a corporation, association,
partnership, limited liability company, limited liability partnership,
or other legal entity.
(3) "Crop insurance" means insurance coverage for damage to crops
from unfavorable weather conditions, fire or lightning, flood, hail,
insect infestation, disease, or other yield-reducing conditions or
perils provided by the private insurance market, or multiple peril crop
insurance reinsured by the federal crop insurance corporation,
including but not limited to revenue insurance.
(4) "Home state" means the District of Columbia and any state or
territory of the United States or province of Canada in which an
insurance producer or adjuster maintains the insurance producer's or
adjuster's principal place of residence or principal place of business,
and is licensed to act as an insurance producer or adjuster.
(5) "Insurance education provider" means any insurer, health care
service contractor, health maintenance organization, professional
association, educational institution created by Washington statutes, or
vocational school licensed under Title 28C RCW, or independent
contractor to which the commissioner has granted authority to conduct
and certify completion of a course satisfying the insurance education
requirements of RCW 48.17.150.
(6) "Insurance producer" means a person required to be licensed
under the laws of this state to sell, solicit, or negotiate insurance.
"Insurance producer" does not include title insurance agents as defined
in subsection (16) of this section or surplus line brokers licensed
under chapter 48.15 RCW.
(7) "Insurer" has the same meaning as in RCW 48.01.050, and
includes a health care service contractor as defined in RCW 48.44.010
and a health maintenance organization as defined in RCW 48.46.020.
(8) "License" means a document issued by the commissioner
authorizing a person to act as an insurance producer or title insurance
agent for the lines of authority specified in the document. The
license itself does not create any authority, actual, apparent, or
inherent, in the holder to represent or commit to an insurer.
(9) "Limited line credit insurance" includes credit life, credit
disability, credit property, credit unemployment, involuntary
unemployment, mortgage life, mortgage guaranty, mortgage disability,
automobile dealer gap insurance, and any other form of insurance
offered in connection with an extension of credit that is limited to
partially or wholly extinguishing the credit obligation that the
commissioner determines should be designated a form of limited line
credit insurance.
(10) "NAIC" means national association of insurance commissioners.
(11) "Negotiate" means the act of conferring directly with, or
offering advice directly to, a purchaser or prospective purchaser of a
particular contract of insurance concerning any of the substantive
benefits, terms, or conditions of the contract, provided that the
person engaged in that act either sells insurance or obtains insurance
from insurers for purchasers.
(12) "Person" means an individual or a business entity.
(13) "Sell" means to exchange a contract of insurance by any means,
for money or its equivalent, on behalf of an insurer.
(14) "Solicit" means attempting to sell insurance or asking or
urging a person to apply for a particular kind of insurance from a
particular insurer.
(15) "Terminate" means the cancellation of the relationship between
an insurance producer and the insurer or the termination of an
insurance producer's authority to transact insurance.
(16) "Title insurance agent" means a business entity licensed under
the laws of this state and appointed by an authorized title insurance
company to sell, solicit, or negotiate insurance on behalf of the title
insurance company.
(17) "Uniform application" means the current version of the NAIC
uniform application for individual insurance producers for resident and
nonresident insurance producer licensing.
(18) "Uniform business entity application" means the current
version of the NAIC uniform application for business entity insurance
license or registration for resident and nonresident business entities.
Sec. 5 RCW 48.38.010 and 2010 c 27 s 2 are each amended to read
as follows:
The commissioner may grant a certificate of exemption to any
insurer or educational, religious, charitable, or scientific
institution conducting a charitable gift annuity business:
(1) Which is organized and operated exclusively as, or for the
purpose of aiding, an educational, religious, charitable, or scientific
institution which is organized as a nonprofit organization without
profit to any person, firm, partnership, association, corporation, or
other entity;
(2) Which possesses a current tax exempt status under the laws of
the United States;
(3) Which serves such purpose by issuing charitable gift annuity
contracts only for the benefit of such educational, religious,
charitable, or scientific institution;
(4) Which appoints the insurance commissioner as its true and
lawful attorney upon whom may be served lawful process in any action,
suit, or proceeding in any court, which appointment is irrevocable,
binds the insurer or institution or any successor in interest, remains
in effect as long as there is in force in this state any contract made
or issued by the insurer or institution, or any obligation arising
therefrom, and must be processed in accordance with RCW ((48.05.210))
48.05.200;
(5) Which is fully and legally organized and qualified to do
business and has been actively doing business under the laws of the
state of its domicile for a period of at least three years prior to its
application for a certificate of exemption;
(6) Which has and maintains minimum unrestricted net assets of five
hundred thousand dollars. "Unrestricted net assets" means the excess
of total assets over total liabilities that are neither permanently
restricted nor temporarily restricted by donor-imposed stipulations;
(7) Which files with the insurance commissioner its application for
a certificate of exemption showing:
(a) Its name, location, and organization date;
(b) The kinds of charitable annuities it proposes to offer;
(c) A statement of the financial condition, management, and affairs
of the organization and any affiliate thereof, as that term is defined
in RCW 48.31B.005, on a form satisfactory to, or furnished by the
insurance commissioner;
(d) Other documents, stipulations, or information as the insurance
commissioner may reasonably require to evidence compliance with the
provisions of this chapter;
(8) Which subjects itself and any affiliate thereof, as that term
is defined in RCW 48.31B.005, to periodic examinations conducted under
chapter 48.03 RCW as may be deemed necessary by the insurance
commissioner;
(9) Which files with the insurance commissioner for the
commissioner's advance approval a copy of any policy or contract form
to be offered or issued to residents of this state. The grounds for
disapproval of the policy or contract form are set forth in RCW
48.18.110; and
(10) Which:
(a) Files with the insurance commissioner annually, within sixty
days of the end of its fiscal year a report of its current financial
condition, management, and affairs, on a form and in a manner
prescribed by the commissioner, as well as such other financial
material as may be requested, including the annual statement or other
such financial materials as may be requested relating to any affiliate,
as that term is defined in RCW 48.31B.005;
(b) Attaches to the report of its current financial condition the
statement of a qualified actuary setting forth the actuary's opinion
relating to annuity reserves and other actuarial items for the fiscal
year covered by the report. "Qualified actuary" as used in this
subsection means a member in good standing of the American academy of
actuaries or a person who has otherwise demonstrated actuarial
competence to the satisfaction of the insurance regulatory official of
the domiciliary state; and
(c) On or before March 1st of each year, pays an annual filing fee
of twenty-five dollars plus five dollars for each charitable gift
annuity contract written for residents of this state during its fiscal
year ending on or before December 31st of the previous calendar year.
Sec. 6 RCW 48.38.020 and 2002 c 295 s 1 are each amended to read
as follows:
(1) Upon granting to such insurer or institution under RCW
48.38.010 a certificate of exemption to conduct a charitable gift
annuity business, the insurance commissioner shall require it to
establish and maintain a separate reserve fund adequate to meet the
future payments under its charitable gift annuity contracts.
(2) The assets of the separate reserve fund:
(a) Shall be held legally and physically segregated from the other
assets of the certificate of exemption holder;
(b) Shall be invested in the same manner that persons of reasonable
prudence, discretion, and intelligence exercise in the management of a
like enterprise, not in regard to speculating but in regard to the
permanent disposition of their funds, considering the probable income
as well as the probable safety of their capital. Investments shall be
of sufficient value, liquidity, and diversity to assure the insurer or
institution's ability to meet its outstanding obligations; and
(c) Shall not be liable for any debts of the insurer or institution
holding a certificate of exemption under this chapter, other than those
incurred pursuant to the issuance of charitable gift annuities.
(3) The amount of the separate reserve fund shall be:
(a) For contracts issued prior to July 1, 1998, not less than an
amount computed in accordance with the standard of valuation based on
the 1971 individual annuity mortality table with six percent interest
for single premium immediate annuity contracts and four percent
interest for all other individual annuity contracts;
(b) For contracts issued on or after July 1, 1998, in an amount not
less than the aggregate reserves calculated according to the standards
set forth in RCW 48.74.030 for other annuities with no cash settlement
options;
(c) Plus a surplus of ten percent of the combined amounts under (a)
and (b) of this subsection.
(4) The general assets of the insurer or institution holding a
certificate of exemption under this chapter shall be liable for the
payment of annuities to the extent that the separate reserve fund is
inadequate.
(5) ((For any failure on its part to establish and maintain the
separate reserve fund, the insurance commissioner shall revoke its
certificate of exemption.)) If an institution holding a certificate of exemption under
RCW 48.38.010 has purchased a single premium life annuity that pays the
entire amount stipulated in the gift annuity agreement or agreements
from an insurer (a) holding a certificate of authority under chapter
48.05 RCW, (b) licensed in the state in which the institution has its
principle office, and (c) licensed in the state in which the single
premium life annuity is issued, then in determining the minimum reserve
fund that must be maintained under this section, a deduction shall be
allowed from the minimum reserve fund in an amount not exceeding the
reserve fund amount required for the annuity or annuities for which the
single premium life annuity is purchased, subject to the following
conditions:
(6)
(i) The institution has filed with the commissioner a copy of the
single premium life annuity purchased and specifying which charitable
gift annuity or annuities are being insured; and
(ii) The institution has entered into a written agreement with the
annuitant and the insurer issuing the single premium life annuity
providing that if for any reason the institution is unable to continue
making the annuity payments required by its annuity agreements, the
annuitants shall receive payments directly from the insurer and the
insurer shall be credited with all of these direct payments in the
accounts between the insurer and the institution.
Sec. 7 RCW 48.38.050 and 1998 c 284 s 4 are each amended to read
as follows:
(1) The insurance commissioner may refuse to grant, or may revoke
or suspend, a certificate of exemption if the insurance commissioner
finds that the insurer or institution does not meet the requirements of
this chapter or if the insurance commissioner finds that the insurer or
institution has violated RCW 48.01.030 ((or)), any provisions of
chapter 48.30 RCW, or this chapter, and any applicable provisions of
Title 284 WAC, or is found by the insurance commissioner to be in such
condition that its further issuance of charitable gift annuities would
be hazardous to annuity contract holders and the people of this state.
(2) After hearing or with the consent of the insurer or institution
and in addition to or in lieu of the suspension, revocation, or refusal
to renew any certificate of exemption, the commissioner may levy a fine
upon the insurer or institution in an amount not more than ten thousand
dollars. The order levying such a fine shall specify the period within
which the fine shall be fully paid and which period shall not be less
than fifteen nor more than thirty days from the date of the order.
Upon failure to pay such a fine when due the commissioner ((shall)) may
revoke the certificate of exemption of the insurer or institution if
not already revoked, and the fine shall be recovered in a civil action
brought in behalf of the commissioner by the attorney general. Any
fine so collected shall be paid by the commissioner to the state
treasurer for the account of the general fund.
Sec. 8 RCW 48.43.310 and 1998 c 241 s 3 are each amended to read
as follows:
(1) "Company action level event" means any of the following events:
(a) The filing of an RBC report by a carrier which indicates that:
(i) The carrier's total adjusted capital is greater than or equal
to its regulatory action level RBC but less than its company action
level RBC; or
(ii) The carrier has total adjusted capital which is greater than
or equal to its company action level RBC but less than the product of
its authorized control level RBC and ((2.5)) 3 and has a negative
trend;
(b) The notification by the commissioner to the carrier of an
adjusted RBC report that indicates an event in (a) of this subsection,
provided the carrier does not challenge the adjusted RBC report under
RCW 48.43.330; or
(c) If, under RCW 48.43.330, a carrier challenges an adjusted RBC
report that indicates the event in (a) of this subsection, the
notification by the commissioner to the carrier that the commissioner
has, after a hearing, rejected the carrier's challenge.
(2) In the event of a company action level event, the carrier shall
prepare and submit to the commissioner an RBC plan that:
(a) Identifies the conditions that contribute to the company action
level event;
(b) Contains proposals of corrective actions that the carrier
intends to take and would be expected to result in the elimination of
the company action level event;
(c) Provides projections of the carrier's financial results in the
current year and at least the four succeeding years, both in the
absence of proposed corrective actions and giving effect to the
proposed corrective actions, including projections of statutory
operating income, net income, capital, surplus, capital and surplus,
and net worth. The projections for both new and renewal business might
include separate projections for each major line of business and
separately identify each significant income, expense, and benefit
component;
(d) Identifies the key assumptions impacting the carrier's
projections and the sensitivity of the projections to the assumptions;
and
(e) Identifies the quality of, and problems associated with, the
carrier's business, including but not limited to its assets,
anticipated business growth and associated surplus strain,
extraordinary exposure to risk, mix of business, and use of
reinsurance, if any, in each case.
(3) The RBC plan shall be submitted:
(a) Within forty-five days of the company action level event; or
(b) If the carrier challenges an adjusted RBC report under RCW
48.43.330, within forty-five days after notification to the carrier
that the commissioner has, after a hearing, rejected the carrier's
challenge.
(4) Within sixty days after the submission by a carrier of an RBC
plan to the commissioner, the commissioner shall notify the carrier
whether the RBC plan may be implemented or is, in the judgment of the
commissioner, unsatisfactory. If the commissioner determines the RBC
plan is unsatisfactory, the notification to the carrier shall set forth
the reasons for the determination, and may set forth proposed revisions
that will render the RBC plan satisfactory. Upon notification from the
commissioner, the carrier shall prepare a revised RBC plan, that may
incorporate by reference any revisions proposed by the commissioner,
and shall submit the revised RBC plan to the commissioner:
(a) Within forty-five days after the notification from the
commissioner; or
(b) If the carrier challenges the notification from the
commissioner under RCW 48.43.330, within forty-five days after a
notification to the carrier that the commissioner has, after a hearing,
rejected the carrier's challenge.
(5) In the event of a notification by the commissioner to a carrier
that the carrier's RBC plan or revised RBC plan is unsatisfactory, the
commissioner may, subject to the carrier's rights to a hearing under
RCW 48.43.330, specify in the notification that the notification
constitutes a regulatory action level event.
(6) Every domestic carrier that files an RBC plan or revised RBC
plan with the commissioner shall file a copy of the RBC plan or revised
RBC plan with the insurance commissioner in any state in which the
carrier is authorized to do business if:
(a) Such state has an RBC provision substantially similar to RCW
48.43.335(1); and
(b) The insurance commissioner of that state has notified the
carrier of its request for the filing in writing, in which case the
carrier shall file a copy of the RBC plan or revised RBC plan in that
state no later than the later of:
(i) Fifteen days after the receipt of notice to file a copy of its
RBC plan or revised plan with the state; or
(ii) The date on which the RBC plan or revised RBC plan is filed
under subsections (3) and (4) of this section.
Sec. 9 RCW 48.85.010 and 2008 c 145 s 21 are each amended to read
as follows:
The department of social and health services shall, in conjunction
with the office of the insurance commissioner, coordinate a long-term
care insurance program entitled the Washington long-term care
partnership, whereby private insurance and medicaid funds shall be used
to finance long-term care. For individuals purchasing a long-term care
insurance policy or contract governed by chapter 48.84 or 48.83 RCW and
meeting the criteria prescribed in this chapter, and any other terms as
specified by the office of the insurance commissioner and the
department of social and health services, this program shall allow for
the exclusion of some or all of the individual's assets in
determination of medicaid eligibility as approved by the ((federal
health care financing administration)) centers for medicare and
medicaid services.
Sec. 10 RCW 48.85.020 and 1995 1st sp.s. c 18 s 77 are each
amended to read as follows:
The department of social and health services shall seek approval
from the ((federal health care financing administration)) centers for
medicare and medicaid services to allow the protection of an
individual's assets as provided in this chapter. The department shall
adopt all rules necessary to implement the Washington long-term care
partnership program, which rules shall permit the exclusion of all or
some of an individual's assets in a manner specified by the department
in a determination of medicaid eligibility to the extent that private
long-term care insurance provides payment or benefits for services.
Sec. 11 RCW 48.125.050 and 2004 c 260 s 7 are each amended to
read as follows:
A self-funded multiple employer welfare arrangement must apply for
a certificate of authority on a form prescribed by the commissioner and
must submit the application, together with the following documents, to
the commissioner:
(1) A copy of all articles, bylaws, agreements, trusts, or other
documents or instruments describing the rights and obligations of the
employers, employees, and beneficiaries of the arrangement;
(2) A copy of the summary plan description or summary plan
descriptions of the arrangement, including those filed or required to
be filed with the United States department of labor, together with any
amendments to the description;
(3) Evidence of coverage of or letters of intent to participate
executed by at least twenty employers providing allowable benefits to
at least seventy-five employees;
(4) A copy of the arrangement's most recent year's financial
statements that must include, at a minimum, a balance sheet, an income
statement, a statement of changes in financial position, and an
actuarial opinion signed by a qualified actuary stating that the unpaid
claim liability of the arrangement satisfies the standards under this
title;
(5) Proof that the arrangement maintains or will maintain fidelity
bonds required by the United States department of labor under the
employee retirement income security act of 1974, 29 U.S.C. Sec. 1001 et
seq.;
(6) A copy of any excess of loss insurance coverage policies
maintained or proposed to be maintained by the arrangement;
(7) Biographical reports on forms prescribed by the national
association of insurance commissioners evidencing the general
trustworthiness and competence of each individual who is serving or who
will serve as an officer, director, trustee, employee, or fiduciary of
the arrangement;
(8) ((Fingerprint cards and current fees payable to the Washington
state patrol)) Third-party verification reports from a vendor
authorized by the national association of insurance commissioners to
perform a state ((and)), national, and international criminal
background history ((background)) check of any person who exercises
control over the financial dealings and operations of the self-funded
multiple employer welfare arrangement, including collection of employer
contributions, investment of assets, payment of claims, rate setting,
and claims adjudication. The ((fingerprints)) third-party verification
reports and any additional information ((may)) must be submitted to
((the federal bureau of investigation and any results of the check must
be returned to)) the office of the insurance commissioner. The results
may be disseminated to any governmental agency or entity authorized to
receive them; and
(9) A statement executed by a representative of the arrangement
certifying, to the best knowledge and belief of the representative,
that:
(a) The arrangement is in compliance with RCW 48.125.030;
(b) The arrangement is in compliance with the requirements of the
employee retirement income security act of 1974, 29 U.S.C. Sec. 1001 et
seq., or a statement of any requirements with which the arrangement is
not in compliance and a statement of proposed corrective actions; and
(c) The arrangement is in compliance with RCW 48.125.060 and
48.125.070.
Sec. 12 RCW 48.17.380 and 2011 c 47 s 10 are each amended to read
as follows:
(1) Application for a license to be an adjuster must be made to the
commissioner upon forms furnished by the commissioner.
(a) As a part of or in connection with the application, ((an
individual)) each resident applicant, and nonresident applicant
designating Washington as the applicant's home state must furnish
information concerning his or her identity, including fingerprints for
submission to the Washington state patrol, the federal bureau of
investigation, and any governmental agency or entity authorized to
receive this information for a state and national criminal history
background check, personal history, experience, business record,
purposes, and other pertinent facts, as the commissioner may reasonably
require. If, in the process of verifying fingerprints, business
records, or other information, the commissioner's office incurs fees or
charges from another governmental agency or from a business firm, the
amount of the fees or charges must be paid to the commissioner's office
by the applicant.
(b) A nonresident person holding an adjuster's license or
equivalent in a state other than Washington that is the applicant's
home state, or is designated as the applicant's home state, must comply
with the requirements of this section, with the exception of the
fingerprint requirement contained in (a) of this subsection.
(2) Any person willfully misrepresenting any fact required to be
disclosed in any application shall be liable to penalties as provided
by this code.
(3) The commissioner licenses as an adjuster only an individual or
business entity which has otherwise complied with this code and the
individual or responsible officer of the business entity has furnished
evidence satisfactory to the commissioner that the individual or
responsible officer of the business entity is qualified as follows:
(a) Is eighteen or more years of age;
(b) Is a bona fide resident of this state, or is a resident of a
state which will permit residents of this state to act as adjusters in
such other state;
(c) Is a trustworthy person;
(d) Has had experience or special education or training with
reference to the handling of loss claims under insurance contracts, of
sufficient duration and extent reasonably to make the individual or
responsible officer of the business entity competent to fulfill the
responsibilities of an adjuster;
(e) Has successfully passed any examination as required under this
chapter;
(f) If for a public adjuster's license, has filed the bond required
by RCW 48.17.430;
(g) If a nonresident business entity, has designated an individual
licensed adjuster responsible for the business entity's compliance with
the insurance laws and rules of this state.
(4) If an applicant's principal place of residence or principal
place of business is located in a state or province that does not have
laws governing adjusters substantially similar to those of this state,
the applicant may designate this state or another state or province in
which the applicant is licensed and acts as an adjuster to be the
applicant's home state for the purposes of this chapter.
(5) If the applicant designates this state or another state or
province as the applicant's home state, to be eligible for licensure in
this state, the applicant must have satisfied the requirements for
licensure as a resident adjuster under the laws of the applicant's
designated home state.
(6)(a) Each licensed nonresident adjuster, by application for and
issuance of a license, has appointed the commissioner as the adjuster's
attorney to receive service of legal process against the adjuster in
this state upon causes of action arising within this state. Service
upon the commissioner as attorney constitutes effective legal service
on the adjuster.
(b) The appointment of the commissioner as attorney is irrevocable,
binds any successor in interest or to the assets or liabilities of the
adjuster, and remains in effect for as long as there could be any cause
of action against the adjuster arising out of the adjuster's
transactions in this state. The service of process must be
accomplished and processed in the manner prescribed under RCW
48.02.200.
(((5))) (7) The commissioner may require any documents reasonably
necessary to verify the information contained in an application and
may, from time to time, require any licensed adjuster to produce the
information called for in an application for a license.
NEW SECTION. Sec. 13 RCW 48.19.450 (Casualty rate filing--Credit) and 1986 c 305 s 907 are each repealed.
Sec. 14 RCW 43.70.235 and 2005 c 54 s 1 are each amended to read
as follows:
(1) The department shall adopt rules providing a procedure and
criteria for certifying one or more organizations to perform
independent review of health care disputes described in RCW 48.43.535.
(2) The rules must require that the organization ensure:
(a) The confidentiality of medical records transmitted to an
independent review organization for use in independent reviews;
(b) That each health care provider, physician, or contract
specialist making review determinations for an independent review
organization is qualified. Physicians, other health care providers,
and, if applicable, contract specialists must be appropriately
licensed, certified, or registered as required in Washington state or
in at least one state with standards substantially comparable to
Washington state. Reviewers may be drawn from nationally recognized
centers of excellence, academic institutions, and recognized leading
practice sites. Expert medical reviewers should have substantial,
recent clinical experience dealing with the same or similar health
conditions. The organization must have demonstrated expertise and a
history of reviewing health care in terms of medical necessity,
appropriateness, and the application of other health plan coverage
provisions;
(c) That any physician, health care provider, or contract
specialist making a review determination in a specific review is free
of any actual or potential conflict of interest or bias. Neither the
expert reviewer, nor the independent review organization, nor any
officer, director, or management employee of the independent review
organization may have any material professional, familial, or financial
affiliation with any of the following: The health carrier;
professional associations of carriers and providers; the provider; the
provider's medical or practice group; the health facility at which the
service would be provided; the developer or manufacturer of a drug or
device under review; or the enrollee;
(d) The fairness of the procedures used by the independent review
organization in making the determinations;
(e) That each independent review organization make its
determination:
(i) Not later than the earlier of:
(A) The fifteenth day after the date the independent review
organization receives the information necessary to make the
determination; or
(B) The twentieth day after the date the independent review
organization receives the request that the determination be made. In
exceptional circumstances, when the independent review organization has
not obtained information necessary to make a determination, a
determination may be made by the twenty-fifth day after the date the
organization received the request for the determination; and
(ii) In ((cases of a condition that could seriously jeopardize the
enrollee's health or ability to regain maximum function, not later than
the earlier of:)) requests for expedited review under RCW 48.43.535(7)(a), as
expeditiously as possible but within not more than seventy-two hours
after the date the independent review organization receives the
((
(A)information necessary to make the determination; or))
request for expedited review;
(B) The eighth day after the date the independent review
organization receives the request that the determination be made
(f) That timely notice is provided to enrollees of the results of
the independent review, including the clinical basis for the
determination;
(g) That the independent review organization has a quality
assurance mechanism in place that ensures the timeliness and quality of
review and communication of determinations to enrollees and carriers,
and the qualifications, impartiality, and freedom from conflict of
interest of the organization, its staff, and expert reviewers; and
(h) That the independent review organization meets any other
reasonable requirements of the department directly related to the
functions the organization is to perform under this section and RCW
48.43.535, and related to assessing fees to carriers in a manner
consistent with the maximum fee schedule developed under this section.
(3) To be certified as an independent review organization under
this chapter, an organization must submit to the department an
application in the form required by the department. The application
must include:
(a) For an applicant that is publicly held, the name of each
stockholder or owner of more than five percent of any stock or options;
(b) The name of any holder of bonds or notes of the applicant that
exceed one hundred thousand dollars;
(c) The name and type of business of each corporation or other
organization that the applicant controls or is affiliated with and the
nature and extent of the affiliation or control;
(d) The name and a biographical sketch of each director, officer,
and executive of the applicant and any entity listed under (c) of this
subsection and a description of any relationship the named individual
has with:
(i) A carrier;
(ii) A utilization review agent;
(iii) A nonprofit or for-profit health corporation;
(iv) A health care provider;
(v) A drug or device manufacturer; or
(vi) A group representing any of the entities described by (d)(i)
through (v) of this subsection;
(e) The percentage of the applicant's revenues that are anticipated
to be derived from reviews conducted under RCW 48.43.535;
(f) A description of the areas of expertise of the health care
professionals and contract specialists making review determinations for
the applicant; and
(g) The procedures to be used by the independent review
organization in making review determinations regarding reviews
conducted under RCW 48.43.535.
(4) If at any time there is a material change in the information
included in the application under subsection (3) of this section, the
independent review organization shall submit updated information to the
department.
(5) An independent review organization may not be a subsidiary of,
or in any way owned or controlled by, a carrier or a trade or
professional association of health care providers or carriers.
(6) An independent review organization, and individuals acting on
its behalf, are immune from suit in a civil action when performing
functions under chapter 5, Laws of 2000. However, this immunity does
not apply to an act or omission made in bad faith or that involves
gross negligence.
(7) Independent review organizations must be free from interference
by state government in its functioning except as provided in subsection
(8) of this section.
(8) The rules adopted under this section shall include provisions
for terminating the certification of an independent review organization
for failure to comply with the requirements for certification. The
department may review the operation and performance of an independent
review organization in response to complaints or other concerns about
compliance. No later than January 1, 2006, the department shall
develop a reasonable maximum fee schedule that independent review
organizations shall use to assess carriers for conducting reviews
authorized under RCW 48.43.535.
(9) In adopting rules for this section, the department shall take
into consideration standards for independent review organizations
adopted by national accreditation organizations. The department may
accept national accreditation or certification by another state as
evidence that an organization satisfies some or all of the requirements
for certification by the department as an independent review
organization.
Sec. 15 RCW 48.20.435 and 2011 c 314 s 1 are each amended to read
as follows:
((Any)) (1) Each disability insurance contract that is not
grandfathered and that provides coverage for a subscriber's
((dependent)) child must offer the option of covering any ((dependent))
child under the age of twenty-six.
(2) Each grandfathered disability insurance contract that provides
coverage for a subscriber's child must offer the option of covering any
child under the age of twenty-six unless the child is eligible to
enroll in an eligible health plan sponsored by the child's employer or
the child's spouse's employer.
(3) As used in this section, "grandfathered" has the same meaning
as "grandfathered health plan" in RCW 48.43.005.
Sec. 16 RCW 48.43.018 and 2010 c 277 s 1 are each amended to read
as follows:
(1) Except as provided in (a) through (g) of this subsection, a
health carrier may require any person applying for an individual health
benefit plan and the health care authority shall require any person
applying for nonsubsidized enrollment in the basic health plan to
complete the standard health questionnaire designated under chapter
48.41 RCW.
(a) If a person is seeking an individual health benefit plan or
enrollment in the basic health plan as a nonsubsidized enrollee due to
his or her change of residence from one geographic area in Washington
state to another geographic area in Washington state where his or her
current health plan is not offered, completion of the standard health
questionnaire shall not be a condition of coverage if application for
coverage is made within ninety days of relocation.
(b) If a person is seeking an individual health benefit plan or
enrollment in the basic health plan as a nonsubsidized enrollee:
(i) Because a health care provider with whom he or she has an
established care relationship and from whom he or she has received
treatment within the past twelve months is no longer part of the
carrier's provider network under his or her existing Washington
individual health benefit plan; and
(ii) His or her health care provider is part of another carrier's
or a basic health plan managed care system's provider network; and
(iii) Application for a health benefit plan under that carrier's
provider network individual coverage or for basic health plan
nonsubsidized enrollment is made within ninety days of his or her
provider leaving the previous carrier's provider network; then
completion of the standard health questionnaire shall not be a
condition of coverage.
(c) If a person is seeking an individual health benefit plan or
enrollment in the basic health plan as a nonsubsidized enrollee due to
his or her having exhausted continuation coverage provided under 29
U.S.C. Sec. 1161 et seq., completion of the standard health
questionnaire shall not be a condition of coverage if application for
coverage is made within ninety days of exhaustion of continuation
coverage. A health carrier or the health care authority as
administrator of basic health plan nonsubsidized coverage shall accept
an application without a standard health questionnaire from a person
currently covered by such continuation coverage if application is made
within ninety days prior to the date the continuation coverage would be
exhausted and the effective date of the individual coverage applied for
is the date the continuation coverage would be exhausted, or within
ninety days thereafter.
(d) If a person is seeking an individual health benefit plan or
enrollment in the basic health plan as a nonsubsidized enrollee due to
a change in employment status that would qualify him or her to purchase
continuation coverage provided under 29 U.S.C. Sec. 1161 et seq., but
the person's employer is exempt under federal law from the requirement
to offer such coverage, completion of the standard health questionnaire
shall not be a condition of coverage if: (i) Application for coverage
is made within ninety days of a qualifying event as defined in 29
U.S.C. Sec. 1163; and (ii) the person had at least twenty-four months
of continuous group coverage immediately prior to the qualifying event.
A health carrier shall accept an application without a standard health
questionnaire from a person with at least twenty-four months of
continuous group coverage if application is made no more than ninety
days prior to the date of a qualifying event and the effective date of
the individual coverage applied for is the date of the qualifying
event, or within ninety days thereafter.
(e) If a person is seeking an individual health benefit plan, or
enrollment in the basic health plan as a nonsubsidized enrollee,
completion of the standard health questionnaire shall not be a
condition of coverage if: (i) The person had at least twenty-four
months of continuous basic health plan coverage under chapter 70.47 RCW
immediately prior to disenrollment; and (ii) application for coverage
is made within ninety days of disenrollment from the basic health plan.
A health carrier shall accept an application without a standard health
questionnaire from a person with at least twenty-four months of
continuous basic health plan coverage if application is made no more
than ninety days prior to the date of disenrollment and the effective
date of the individual coverage applied for is the date of
disenrollment, or within ninety days thereafter.
(f) If a person is seeking an individual health benefit plan due to
a change in employment status that would qualify him or her to purchase
continuation coverage provided under 29 U.S.C. Sec. 1161 et seq.,
completion of the standard health questionnaire is not a condition of
coverage if: (i) Application for coverage is made within ninety days
of a qualifying event as defined in 29 U.S.C. Sec. 1163; and (ii) the
person had at least twenty-four months of continuous group coverage
immediately prior to the qualifying event. A health carrier shall
accept an application without a standard health questionnaire from a
person with at least twenty-four months of continuous group coverage if
application is made no more than ninety days prior to the date of a
qualifying event and the effective date of the individual coverage
applied for is the date of the qualifying event, or within ninety days
thereafter.
(g) If a person is seeking an individual health benefit plan due to
their terminating continuation coverage under 29 U.S.C. Sec. 1161 et
seq., completion of the standard health questionnaire shall not be a
condition of coverage if: (i) Application for coverage is made within
ninety days of terminating the continuation coverage; and (ii) the
person had at least twenty-four months of continuous group coverage
immediately prior to the termination. A health carrier shall accept an
application without a standard health questionnaire from a person with
at least twenty-four months of continuous group coverage if application
is made no more than ninety days prior to the date of termination of
the continuation coverage and the effective date of the individual
coverage applied for is the date the continuation coverage is
terminated, or within ninety days thereafter.
(h) If a person is seeking an individual health benefit plan
because his or her employer, or former employer, discontinues group
coverage due to the closure of the business, completion of the standard
health questionnaire shall not be a condition of coverage if: (i)(A)
Application for coverage is made within ninety days of the employer
discontinuing group coverage due to closure of the business; and
(((ii))) (B) the person had at least twenty-four months of continuous
group coverage immediately prior to the termination. A health carrier
shall accept an application without a standard health questionnaire
from a person with at least twenty-four months of continuous group
coverage if application is made no more than ninety days prior to the
date of discontinuation of group coverage, and the effective date of
the individual coverage applied for is the date the group coverage is
discontinued, or within ninety days thereafter; or (ii) the person
seeking enrollment is under the age of nineteen.
(2) If, based upon the results of the standard health
questionnaire, the person qualifies for coverage under the Washington
state health insurance pool, the following shall apply:
(a) The carrier may decide not to accept the person's application
for enrollment in its individual health benefit plan and the health
care authority, as administrator of basic health plan nonsubsidized
coverage, shall not accept the person's application for enrollment as
a nonsubsidized enrollee; and
(b) Within fifteen business days of receipt of a completed
application, the carrier or the health care authority as administrator
of basic health plan nonsubsidized coverage shall provide written
notice of the decision not to accept the person's application for
enrollment to both the person and the administrator of the Washington
state health insurance pool. The notice to the person shall state that
the person is eligible for health insurance provided by the Washington
state health insurance pool, and shall include information about the
Washington state health insurance pool and an application for such
coverage. If the carrier or the health care authority as administrator
of basic health plan nonsubsidized coverage does not provide or
postmark such notice within fifteen business days, the application is
deemed approved.
(3) If the person applying for an individual health benefit plan:
(a) Does not qualify for coverage under the Washington state health
insurance pool based upon the results of the standard health
questionnaire; (b) does qualify for coverage under the Washington state
health insurance pool based upon the results of the standard health
questionnaire and the carrier elects to accept the person for
enrollment; or (c) is not required to complete the standard health
questionnaire designated under this chapter under subsection (1)(a) or
(b) of this section, the carrier or the health care authority as
administrator of basic health plan nonsubsidized coverage, whichever
entity administered the standard health questionnaire, shall accept the
person for enrollment if he or she resides within the carrier's or the
basic health plan's service area and provide or assure the provision of
all covered services regardless of age, sex, family structure,
ethnicity, race, health condition, geographic location, employment
status, socioeconomic status, other condition or situation, or the
provisions of RCW 49.60.174(2). The commissioner may grant a temporary
exemption from this subsection if, upon application by a health
carrier, the commissioner finds that the clinical, financial, or
administrative capacity to serve existing enrollees will be impaired if
a health carrier is required to continue enrollment of additional
eligible individuals.
Sec. 17 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) "Catastrophic health plan" means:
(a) 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) 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.
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.
(8) "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) "Concurrent review" means utilization review conducted during
a patient's hospital stay or course of treatment.
(10) "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) "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) "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) "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) "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) "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) "Final external review decision" means a determination by an
independent review organization at the conclusion of an external
review.
(17) "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) "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) "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) "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) "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) "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) "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) "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) "Individual market" means the market for health insurance
coverage offered to individuals other than in connection with a group
health plan.
(26) "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))) (27) "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))) (28) "Preexisting condition" means any medical condition,
illness, or injury that existed any time prior to the effective date of
coverage.
(((28))) (29) "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))) (30) "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))) (31) "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))) (32) "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))) (33) "Standard health questionnaire" means the standard
health questionnaire designated under chapter 48.41 RCW.
(((33))) (34) "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))) (35) "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. 18 RCW 48.44.215 and 2011 c 314 s 6 are each amended to read
as follows:
(1) ((Any)) Each individual health care service plan contract that
is not grandfathered and that provides coverage for a subscriber's
((dependent)) child must offer the option of covering any ((dependent))
child under the age of twenty-six.
(2) ((Any)) Each group health care service plan contract that is
not grandfathered and that provides coverage for a participating
member's ((dependent)) child must offer each participating member the
option of covering any ((dependent)) child under the age of twenty-six.
(3) Each grandfathered health care service plan that provides
coverage for a subscriber's child must offer the option of covering any
child under the age of twenty-six unless the child is eligible to
enroll in an eligible health plan sponsored by the child's employer or
the child's spouse's employer.
(4) As used in this section, "grandfathered" has the same meaning
as "grandfathered health plan" in RCW 48.43.005.
Sec. 19 RCW 48.46.325 and 2011 c 314 s 8 are each amended to read
as follows:
(1) ((Any)) Each individual health maintenance agreement that is
not grandfathered and that provides coverage for a subscriber's
((dependent)) child must offer the option of covering any ((dependent))
child under the age of twenty-six.
(2) ((Any)) Each group health maintenance agreement that is not
grandfathered and that provides coverage for a participating member's
((dependent)) child must offer each participating member the option of
covering any ((dependent)) child under the age of twenty-six.
(3) Each grandfathered individual or group health maintenance
agreement that provides coverage for a subscriber's child must offer
the option of covering any child under the age of twenty-six, unless
that child is eligible to enroll in an eligible health plan sponsored
by the child's employer or the child's spouse's employer.
(4) As used in this section, "grandfathered" has the same meaning
as "grandfathered health plan" in RCW 48.43.005.
Sec. 20 RCW 48.43.530 and 2011 c 314 s 4 are each amended to read
as follows:
(1) Each carrier ((that offers a)) and health plan must have ((a))
fully operational, comprehensive grievance ((process that complies))
and appeal processes, and for plans that are not grandfathered, fully
operational, comprehensive, and effective grievance and review of
adverse benefit determination processes that comply with the
requirements of this section and any rules adopted by the commissioner
to implement this section. For the purposes of this section, the
commissioner ((shall)) must consider applicable grievance and appeal or
review of adverse benefit determination process standards adopted by
national managed care accreditation organizations and state agencies
that purchase managed health care services, and for health plans that
are not grandfathered health plans as approved by the United States
department of health and human services or the United States department
of labor. In the case of coverage offered in connection with a group
health plan, if either the carrier or the health plan complies with the
requirements of this section and RCW 48.43.535, then the obligation to
comply is satisfied for both the carrier and the plan with respect to
the health insurance coverage.
(2) Each carrier and health plan must process as a ((complaint))
grievance an enrollee's expression of dissatisfaction about customer
service or the quality or availability of a health service. Each
carrier must implement procedures for registering and responding to
oral and written ((complaints)) grievances in a timely and thorough
manner.
(3) Each carrier and health plan must provide written notice to an
enrollee or the enrollee's designated representative, and the
enrollee's provider, of its decision to deny, modify, reduce, or
terminate payment, coverage, authorization, or provision of health care
services or benefits, including the admission to or continued stay in
a health care facility.
(4) ((Each carrier must process as an appeal an enrollee's written
or oral request that the carrier reconsider: (a) Its resolution of a
complaint made by an enrollee; or (b) its decision to deny, modify,
reduce, or terminate payment, coverage, authorization, or provision of
health care services or benefits, including the admission to, or
continued stay in, a health care facility. A carrier must not require
that an enrollee file a complaint prior to seeking appeal of a decision
under (b) of this subsection.)) An enrollee's written or oral request
that a carrier reconsider its decision to deny, modify, reduce, or
terminate payment, coverage, authorization, or provision of health care
services or benefits, including the admission to, or continued stay in,
a health care facility must be processed as follows:
(a) When the request is made under a grandfathered health plan,
the plan and the carrier must process it as an appeal;
(b) When the request is made under a health plan that is not
grandfathered, the plan and the carrier must process it as a review of
an adverse benefit determination; and
(c) Neither a carrier nor a health plan, whether grandfathered or
not, may require that an enrollee file a complaint or grievance prior
to seeking appeal of a decision or review of an adverse benefit
determination under this subsection.
(5) To process an appeal, each plan that is not grandfathered and
each carrier offering that plan must:
(a) Provide written notice to the enrollee when the appeal is
received;
(b) Assist the enrollee with the appeal process;
(c) Make its decision regarding the appeal within thirty days of
the date the appeal is received. An appeal must be expedited if the
enrollee's provider or the carrier's medical director reasonably
determines that following the appeal process response timelines could
seriously jeopardize the enrollee's life, health, or ability to regain
maximum function. The decision regarding an expedited appeal must be
made within seventy-two hours of the date the appeal is received;
(d) Cooperate with a representative authorized in writing by the
enrollee;
(e) Consider information submitted by the enrollee;
(f) Investigate and resolve the appeal; and
(g) Provide written notice of its resolution of the appeal to the
enrollee and, with the permission of the enrollee, to the enrollee's
providers. The written notice must explain the carrier's and health
plan's decision and the supporting coverage or clinical reasons and the
enrollee's right to request independent review of the carrier's
decision under RCW 48.43.535.
(6) Written notice required by subsection (3) of this section must
explain:
(a) The carrier's and health plan's decision and the supporting
coverage or clinical reasons; and
(b) The carrier's and grandfathered plan's appeal or for plans that
are not grandfathered, adverse benefit determination review process,
including information, as appropriate, about how to exercise the
enrollee's rights to obtain a second opinion, and how to continue
receiving services as provided in this section.
(7) When an enrollee requests that the carrier or health plan
reconsider its decision to modify, reduce, or terminate an otherwise
covered health service that an enrollee is receiving through the health
plan and the carrier's or health plan's decision is based upon a
finding that the health service, or level of health service, is no
longer medically necessary or appropriate, the carrier and health plan
must continue to provide that health service until the appeal, or for
health plans that are not grandfathered, the review of an adverse
benefit determination, is resolved. If the resolution of the appeal,
review of an adverse benefit determination, or any review sought by the
enrollee under RCW 48.43.535 affirms the carrier's or health plan's
decision, the enrollee may be responsible for the cost of this
continued health service.
(8) Each carrier and health plan must provide a clear explanation
of the grievance and appeal, or for plans that are not grandfathered,
the process for review of an adverse benefit determination process upon
request, upon enrollment to new enrollees, and annually to enrollees
and subcontractors.
(9) Each carrier and health plan must ensure that ((the)) each
grievance, appeal, and for plans that are not grandfathered, grievance
and review of adverse benefit determinations, process is accessible to
enrollees who are limited English speakers, who have literacy problems,
or who have physical or mental disabilities that impede their ability
to file a grievance, appeal or review of an adverse benefit
determination.
(10)(a) Each plan that is not grandfathered and the carrier that
offers it must: Track each appeal until final resolution; maintain,
and make accessible to the commissioner for a period of three years, a
log of all appeals; and identify and evaluate trends in appeals.
(b) Each grandfathered plan and the carrier that offers it must:
Track each review of an adverse benefit determination until final
resolution; maintain and make accessible to the commissioner, for a
period of six years, a log of all such determinations; and identify and
evaluate trends in requests for and resolution of review of adverse
benefit determinations.
(11) In complying with this section, plans that are not
grandfathered and the carriers offering them must treat a rescission of
coverage, whether or not the rescission has an adverse effect on any
particular benefit at that time, and any decision to deny coverage in
an initial eligibility determination as an adverse benefit
determination.
Sec. 21 RCW 48.43.535 and 2011 c 314 s 5 are each amended to read
as follows:
(1) There is a need for a process for the fair consideration of
disputes relating to decisions by carriers that offer a health plan to
deny, modify, reduce, or terminate coverage of or payment for health
care services for an enrollee. For purposes of this section, "carrier"
also applies to a health plan if the health plan administers the appeal
process directly or through a third party.
(2) An enrollee may seek review by a certified independent review
organization of a carrier's decision to deny, modify, reduce, or
terminate coverage of or payment for a health care service, after
exhausting the carrier's grievance process and receiving a decision
that is unfavorable to the enrollee, or after the carrier has exceeded
the timelines for grievances provided in RCW 48.43.530, without good
cause and without reaching a decision.
(3) The commissioner must establish and use a rotational registry
system for the assignment of a certified independent review
organization to each dispute. The system should be flexible enough to
ensure that an independent review organization has the expertise
necessary to review the particular medical condition or service at
issue in the dispute, and that any approved independent review
organization does not have a conflict of interest that will influence
its independence.
(4) Carriers must provide to the appropriate certified independent
review organization, not later than the third business day after the
date the carrier receives a request for review, a copy of:
(a) Any medical records of the enrollee that are relevant to the
review;
(b) Any documents used by the carrier in making the determination
to be reviewed by the certified independent review organization;
(c) Any documentation and written information submitted to the
carrier in support of the appeal; and
(d) A list of each physician or health care provider who has
provided care to the enrollee and who may have medical records relevant
to the appeal. Health information or other confidential or proprietary
information in the custody of a carrier may be provided to an
independent review organization, subject to rules adopted by the
commissioner.
(5) Enrollees must be provided with at least five business days to
submit to the independent review organization in writing additional
information that the independent review organization must consider when
conducting the external review. The independent review organization
must forward any additional information submitted by an enrollee to the
plan or carrier within one business day of receipt by the independent
review organization.
(6) The medical reviewers from a certified independent review
organization will make determinations regarding the medical necessity
or appropriateness of, and the application of health plan coverage
provisions to, health care services for an enrollee. The medical
reviewers' determinations must be based upon their expert medical
judgment, after consideration of relevant medical, scientific, and
cost-effectiveness evidence, and medical standards of practice in the
state of Washington. Except as provided in this subsection, the
certified independent review organization must ensure that
determinations are consistent with the scope of covered benefits as
outlined in the medical coverage agreement. Medical reviewers may
override the health plan's medical necessity or appropriateness
standards if the standards are determined upon review to be
unreasonable or inconsistent with sound, evidence-based medical
practice.
(7) Once a request for an independent review determination has been
made, the independent review organization must proceed to a final
determination, unless requested otherwise by both the carrier and the
enrollee or the enrollee's representative.
(a) An enrollee or carrier may request an expedited external review
if the adverse benefit determination or internal adverse benefit
determination concerns an admission, availability of care, continued
stay, or health care service for which the claimant received emergency
services but has not been discharged from a facility; or involves a
medical condition for which the standard external review time frame
((of forty-five days)) would seriously jeopardize the life or health of
the enrollee or jeopardize the enrollee's ability to regain maximum
function. The independent review organization must make its decision
to uphold or reverse the adverse benefit determination or final
internal adverse benefit determination and notify the enrollee and the
carrier or health plan of the determination as expeditiously as
possible but within not more than seventy-two hours after the receipt
of the request for expedited external review. If the notice is not in
writing, the independent review organization must provide written
confirmation of the decision within forty-eight hours after the date of
the notice of the decision.
(b) For claims involving experimental or investigational
treatments, the ((internal)) independent review organization must
ensure that adequate clinical and scientific experience and protocols
are taken into account as part of the external review process.
(8) Carriers must timely implement the certified independent review
organization's determination, and must pay the certified independent
review organization's charges.
(9) When an enrollee requests independent review of a dispute under
this section, and the dispute involves a carrier's decision to modify,
reduce, or terminate an otherwise covered health service that an
enrollee is receiving at the time the request for review is submitted
and the carrier's decision is based upon a finding that the health
service, or level of health service, is no longer medically necessary
or appropriate, the carrier must continue to provide the health service
if requested by the enrollee until a determination is made under this
section. If the determination affirms the carrier's decision, the
enrollee may be responsible for the cost of the continued health
service.
(10) Each certified independent review organization must maintain
written records and make them available upon request to the
commissioner.
(11) A certified independent review organization may notify the
office of the insurance commissioner if, based upon its review of
disputes under this section, it finds a pattern of substandard or
egregious conduct by a carrier.
(12)(a) The commissioner shall adopt rules to implement this
section after considering relevant standards adopted by national
managed care accreditation organizations and the national association
of insurance commissioners.
(b) This section is not intended to supplant any existing authority
of the office of the insurance commissioner under this title to oversee
and enforce carrier compliance with applicable statutes and rules.
Sec. 22 RCW 48.46.020 and 2010 c 292 s 5 are each reenacted and
amended to read as follows:
As used in this chapter, the terms defined in this section shall
have the meanings indicated unless the context indicates otherwise.
(1) "Carrier" means a health maintenance organization, an insurer,
a health care services contractor, or other entity responsible for the
payment of benefits or provision of services under a group or
individual agreement.
(2) "Census date" means the date upon which a health maintenance
organization offering coverage to a small employer must base rate
calculations. For a small employer applying for a health benefit plan
through a health maintenance organization other than its current health
maintenance organization, the census date is the date that final group
composition is received by the health maintenance organization. For a
small employer that is renewing its health benefit plan through its
existing health maintenance organization, the census date is ninety
days prior to the effective date of the renewal.
(3) "Commissioner" means the insurance commissioner.
(4) "Comprehensive health care services" means basic consultative,
diagnostic, and therapeutic services rendered by licensed health
professionals together with emergency and preventive care, inpatient
hospital, outpatient and physician care, at a minimum, and any
additional health care services offered by the health maintenance
organization.
(5) "Consumer" means any member, subscriber, enrollee, beneficiary,
or other person entitled to health care services under terms of a
health maintenance agreement, but not including health professionals,
employees of health maintenance organizations, partners, or
shareholders of stock corporations licensed as health maintenance
organizations.
(6) "Copayment" means an amount specified in a subscriber agreement
which is an obligation of an enrolled participant for a specific
service which is not fully prepaid.
(7) "Deductible" means the amount an enrolled participant is
responsible to pay out-of-pocket before the health maintenance
organization begins to pay the costs associated with treatment.
(8) "Department" means the state department of social and health
services.
(9) "Enrolled participant" means a person who or group of persons
which has entered into a contractual arrangement or on whose behalf a
contractual arrangement has been entered into with a health maintenance
organization to receive health care services.
(10) "Fully subordinated debt" means those debts that meet the
requirements of RCW 48.46.235(3) and are recorded as equity.
(11) "Group practice" means a partnership, association,
corporation, or other group of health professionals:
(a) The members of which may be individual health professionals,
clinics, or both individuals and clinics who engage in the coordinated
practice of their profession; and
(b) The members of which are compensated by a prearranged salary,
or by capitation payment or drawing account that is based on the number
of enrolled participants.
(12) "Health maintenance agreement" means an agreement for services
between a health maintenance organization which is registered pursuant
to the provisions of this chapter and enrolled participants of such
organization which provides enrolled participants with comprehensive
health services rendered to enrolled participants by health
professionals, groups, facilities, and other personnel associated with
the health maintenance organization.
(13) "Health maintenance organization" means any organization
receiving a certificate of registration by the commissioner under this
chapter which provides comprehensive health care services to enrolled
participants of such organization on a group practice per capita
prepayment basis or on a prepaid individual practice plan, except for
an enrolled participant's responsibility for copayments and/or
deductibles, either directly or through contractual or other
arrangements with other institutions, entities, or persons, and which
qualifies as a health maintenance organization pursuant to RCW
48.46.030 and 48.46.040.
(14) "Health professionals" means health care practitioners who are
regulated by the state of Washington.
(15) "Individual practice health care plan" means an association of
health professionals in private practice who associate for the purpose
of providing prepaid comprehensive health care services on a fee-for-service or capitation basis.
(16) "Insolvent" or "insolvency" means that the organization has
been declared insolvent and is placed under an order of liquidation by
a court of competent jurisdiction.
(17) "Meaningful ((grievance)) appeal procedure" and "meaningful
adverse determination review procedure" means a procedure for
investigation of consumer ((grievances)) appeals and adverse review
determinations in a timely manner aimed at mutual agreement for
settlement according to procedures approved by the commissioner, and
which may include arbitration procedures.
(18) "Meaningful role in policy making" means a procedure approved
by the commissioner which provides consumers or elected representatives
of consumers a means of submitting the views and recommendations of
such consumers to the governing board of such organization coupled with
reasonable assurance that the board will give regard to such views and
recommendations.
(19) "Net worth" means the excess of total admitted assets as
defined in RCW 48.12.010 over total liabilities but the liabilities
shall not include fully subordinated debt.
(20) "Participating provider" means a provider as defined in
subsection (21) of this section who contracts with the health
maintenance organization or with its contractor or subcontractor and
has agreed to provide health care services to enrolled participants
with an expectation of receiving payment, other than copayment or
deductible, directly or indirectly, from the health maintenance
organization.
(21) "Provider" means any health professional, hospital, or other
institution, organization, or person that furnishes any health care
services and is licensed or otherwise authorized to furnish such
services.
(22) "Replacement coverage" means the benefits provided by a
succeeding carrier.
(23) "Uncovered expenditures" means the costs to the health
maintenance organization of health care services that are the
obligation of the health maintenance organization for which an enrolled
participant would also be liable in the event of the health maintenance
organization's insolvency and for which no alternative arrangements
have been made as provided herein. The term does not include
expenditures for covered services when a provider has agreed not to
bill the enrolled participant even though the provider is not paid by
the health maintenance organization, or for services that are
guaranteed, insured, or assumed by a person or organization other than
the health maintenance organization.
Sec. 23 RCW 48.46.030 and 1990 c 119 s 2 are each amended to read
as follows:
Any corporation, cooperative group, partnership, individual,
association, or groups of health professionals licensed by the state of
Washington, public hospital district, or public institutions of higher
education shall be entitled to a certificate of registration from the
insurance commissioner as a health maintenance organization if it:
(1) Provides comprehensive health care services to enrolled
participants on a group practice per capita prepayment basis or on a
prepaid individual practice plan and provides such health services
either directly or through arrangements with institutions, entities,
and persons which its enrolled population might reasonably require as
determined by the health maintenance organization in order to be
maintained in good health; and
(2) Is governed by a board elected by enrolled participants, or
otherwise provides its enrolled participants with a meaningful role in
policy making procedures of such organization, as defined in RCW
48.46.020(((7))) (18), and 48.46.070; and
(3) Affords enrolled participants with a meaningful ((grievance))
appeal procedure aimed at settlement of disputes between such persons
and such health maintenance organization, as defined in RCW
48.46.020(((8))) (17) and 48.46.100; and
(4) Provides enrolled participants, or makes available for
inspection at least annually, financial statements pertaining to health
maintenance agreements, disclosing income and expenses, assets and
liabilities, and the bases for proposed rate adjustments for health
maintenance agreements relating to its activity as a health maintenance
organization; and
(5) Demonstrates to the satisfaction of the commissioner that its
facilities and personnel are reasonably adequate to provide
comprehensive health care services to enrolled participants and that it
is financially capable of providing such members with, or has made
adequate contractual arrangements through insurance or otherwise to
provide such members with, such health services; and
(6) Substantially complies with administrative rules and
regulations of the commissioner for purposes of this chapter; and
(7) Submits an application for a certificate of registration which
shall be verified by an officer or authorized representative of the
applicant, being in form as the commissioner prescribes, and setting
forth:
(a) A copy of the basic organizational document, if any, of the
applicant, such as the articles of incorporation, articles of
association, partnership agreement, trust agreement, or other
applicable documents, and all amendments thereto;
(b) A copy of the bylaws, rules and regulations, or similar
documents, if any, which regulate the conduct of the internal affairs
of the applicant, and all amendments thereto;
(c) A list of the names, addresses, members of the board of
directors, board of trustees, executive committee, or other governing
board or committee and the principal officers, partners, or members;
(d) A full and complete disclosure of any financial interests held
by any officer, or director in any provider associated with the
applicant or any provider of the applicant;
(e) A description of the health maintenance organization, its
facilities and its personnel, and the applicant's most recent financial
statement showing such organization's assets, liabilities, income, and
other sources of financial support;
(f) A description of the geographic areas and the population groups
to be served and the size and composition of the anticipated enrollee
population;
(g) A copy of each type of health maintenance agreement to be
issued to enrolled participants;
(h) A schedule of all proposed rates of reimbursement to
contracting health care facilities or providers, if any, and a schedule
of the proposed charges for enrollee coverage for health care services,
accompanied by data relevant to the formulation of such schedules;
(i) A description of the proposed method and schedule for
soliciting enrollment in the applicant health maintenance organization
and the basis of compensation for such solicitation services;
(j) A copy of the solicitation document to be distributed to all
prospective enrolled participants in connection with any solicitation;
(k) A financial projection which sets forth the anticipated results
during the initial two years of operation of such organization,
accompanied by a summary of the assumptions and relevant data upon
which the projection is based. The projection should include the
projected expenses, enrollment trends, income, enrollee utilization
patterns, and sources of working capital;
(l) ((A detailed description of the enrollee complaint system as
provided by RCW 48.46.100;)) A detailed description of the procedures and programs to be
implemented to assure that the health care services delivered to
enrolled participants will be of professional quality;
(m)
(((n))) (m) A detailed description of procedures to be implemented
to meet the requirements to protect against insolvency in RCW
48.46.245;
(((o))) (n) Documentation that the health maintenance organization
has an initial net worth of one million dollars and shall thereafter
maintain the minimum net worth required under RCW 48.46.235; and
(((p))) (o) Such other information as the commissioner shall
require by rule or regulation which is reasonably necessary to carry
out the provisions of this section.
A health maintenance organization shall, unless otherwise provided
for in this chapter, file a notice describing any modification of any
of the information required by subsection (7) of this section. Such
notice shall be filed with the commissioner.
Sec. 24 RCW 48.46.040 and 2009 c 549 s 7150 are each amended to
read as follows:
The commissioner shall issue a certificate of registration to the
applicant within sixty days of such filing unless he or she notifies
the applicant within such time that such application is not complete
and the reasons therefor; or that he or she is not satisfied that:
(1) The basic organizational document of the applicant permits the
applicant to conduct business as a health maintenance organization;
(2) The organization has demonstrated the intent and ability to
assure that comprehensive health care services will be provided in a
manner to assure both their availability and accessibility;
(3) The organization is financially responsible and may be
reasonably expected to meet its obligations to its enrolled
participants. In making this determination, the commissioner shall
consider among other relevant factors:
(a) Any agreements with an insurer, a medical or hospital service
bureau, a government agency or any other organization paying or
insuring payment for health care services;
(b) ((Any agreements with providers for the provision of health
care services;)) Any arrangements for liability and malpractice insurance
coverage; and
(c)
(((d))) (c) Adequate procedures to be implemented to meet the
protection against insolvency requirements in RCW 48.46.245;
(4) The procedures for offering health care services and offering
or terminating contracts with enrolled participants are reasonable and
equitable in comparison with prevailing health insurance subscription
practices and health maintenance organization enrollment procedures;
and, that
(5) Procedures have been established to:
(a) Monitor the quality of care provided by such organization,
including, as a minimum, procedures for internal peer review;
(b) ((Resolve complaints and grievances initiated by enrolled
participants in accordance with RCW 48.46.010 and 48.46.100;)) Offer enrolled participants an opportunity to participate in
matters of policy and operation in accordance with RCW 48.46.020((
(c)(7)))
(18) and 48.46.070.
No person to whom a certificate of registration has not been
issued, except a health maintenance organization certified by the
secretary of the department of health and human services, pursuant to
Public Law 93-222 or its successor, shall use the words "health
maintenance organization" or the initials "HMO" in its name, contracts,
or literature. Persons who are contracting with, operating in
association with, recruiting enrolled participants for, or otherwise
authorized by a health maintenance organization possessing a
certificate of registration to act on its behalf may use the terms
"health maintenance organization" or "HMO" for the limited purpose of
denoting or explaining their relationship to such health maintenance
organization.
The department of health, at the request of the insurance
commissioner, shall inspect and review the facilities of every
applicant health maintenance organization to determine that such
facilities are reasonably adequate to provide the health care services
offered in their contracts. If the commissioner has information to
indicate that such facilities fail to continue to be adequate to
provide the health care services offered, the department of health,
upon request of the insurance commissioner, shall reinspect and review
the facilities and report to the insurance commissioner as to their
adequacy or inadequacy.
Sec. 25 RCW 48.41.110 and 2011 c 315 s 6 are each amended to read
as follows:
(1) The pool shall offer one or more care management plans of
coverage. Such plans may, but are not required to, include point of
service features that permit participants to receive in-network
benefits or out-of-network benefits subject to differential cost
shares. The pool may incorporate managed care features into existing
plans.
(2) The administrator shall prepare a brochure outlining the
benefits and exclusions of pool policies in plain language. After
approval by the board, such brochure shall be made reasonably available
to participants or potential participants.
(3) The health insurance policies issued by the pool shall pay only
reasonable amounts for medically necessary eligible health care
services rendered or furnished for the diagnosis or treatment of
covered illnesses, injuries, and conditions. Eligible expenses are the
reasonable amounts for the health care services and items for which
benefits are extended under a pool policy.
(4) The pool shall offer at least two policies, one of which will
be a comprehensive policy that must comply with RCW 48.41.120 and must
at a minimum include the following services or related items:
(a) Hospital services, including charges for the most common
semiprivate room, for the most common private room if semiprivate rooms
do not exist in the health care facility, or for the private room if
medically necessary, including no less than a total of one hundred
eighty inpatient days in a calendar year, and no less than thirty days
inpatient care for alcohol, drug, or chemical dependency or abuse per
calendar year;
(b) Professional services including surgery for the treatment of
injuries, illnesses, or conditions, other than dental, which are
rendered by a health care provider, or at the direction of a health
care provider, by a staff of registered or licensed practical nurses,
or other health care providers;
(c) No less than twenty outpatient professional visits for the
diagnosis or treatment of alcohol, drug, or chemical dependency or
abuse rendered during a calendar year by a state-certified chemical
dependency program approved under chapter 70.96A RCW, or by one or more
physicians, psychologists, or community mental health professionals,
or, at the direction of a physician, by other qualified licensed health
care practitioners;
(d) Drugs and contraceptive devices requiring a prescription;
(e) Services of a skilled nursing facility, excluding custodial and
convalescent care, for not less than one hundred days in a calendar
year as prescribed by a physician;
(f) Services of a home health agency;
(g) Chemotherapy, radioisotope, radiation, and nuclear medicine
therapy;
(h) Oxygen;
(i) Anesthesia services;
(j) Prostheses, other than dental;
(k) Durable medical equipment which has no personal use in the
absence of the condition for which prescribed;
(l) Diagnostic x-rays and laboratory tests;
(m) Oral surgery including at least the following: Fractures of
facial bones; excisions of mandibular joints, lesions of the mouth,
lip, or tongue, tumors, or cysts excluding treatment for
temporomandibular joints; incision of accessory sinuses, mouth salivary
glands or ducts; dislocations of the jaw; plastic reconstruction or
repair of traumatic injuries occurring while covered under the pool;
and excision of impacted wisdom teeth;
(n) Maternity care services;
(o) Services of a physical therapist and services of a speech
therapist;
(p) Hospice services;
(q) Professional ambulance service to the nearest health care
facility qualified to treat the illness or injury;
(r) Mental health services pursuant to RCW 48.41.220; and
(s) Other medical equipment, services, or supplies required by
physician's orders and medically necessary and consistent with the
diagnosis, treatment, and condition.
(5) The board shall design and employ cost containment measures and
requirements such as, but not limited to, care coordination, provider
network limitations, preadmission certification, and concurrent
inpatient review which may make the pool more cost-effective.
(6) The pool benefit policy may contain benefit limitations,
exceptions, and cost shares such as copayments, coinsurance, and
deductibles that are consistent with managed care products, except that
differential cost shares may be adopted by the board for nonnetwork
providers under point of service plans. No limitation, exception, or
reduction may be used that would exclude coverage for any disease,
illness, or injury.
(7)(a) The pool may not reject an individual for health plan
coverage based upon preexisting conditions of the individual or deny,
exclude, or otherwise limit coverage for an individual's preexisting
health conditions; except that it shall impose a six-month benefit
waiting period for preexisting conditions for which medical advice was
given, for which a health care provider recommended or provided
treatment, or for which a prudent layperson would have sought advice or
treatment, within six months before the effective date of coverage.
The preexisting condition waiting period shall not apply to prenatal
care services or benefits for outpatient prescription drugs. The pool
may not avoid the requirements of this section through the creation of
a new rate classification or the modification of an existing rate
classification. Credit against the waiting period shall be as provided
in subsection (8) of this section.
(b) The pool shall not impose any preexisting condition waiting
period for any person under the age of nineteen.
(8)(a) Except as provided in (b) of this subsection, the pool shall
credit any preexisting condition waiting period in its plans for a
person who was enrolled at any time during the sixty-three day period
immediately preceding the date of application for the new pool plan.
For the person previously enrolled in a group health benefit plan, the
pool must credit the aggregate of all periods of preceding coverage not
separated by more than sixty-three days toward the waiting period of
the new health plan. For the person previously enrolled in an
individual health benefit plan other than a catastrophic health plan,
the pool must credit the period of coverage the person was continuously
covered under the immediately preceding health plan toward the waiting
period of the new health plan. For the purposes of this subsection, a
preceding health plan includes an employer-provided self-funded health
plan.
(b) The pool shall waive any preexisting condition waiting period
for a person who is an eligible individual as defined in section
2741(b) of the federal health insurance portability and accountability
act of 1996 (42 U.S.C. 300gg-41(b)).
(9) If an application is made for the pool policy as a result of
rejection by a carrier, then the date of application to the carrier,
rather than to the pool, should govern for purposes of determining
preexisting condition credit.
(10) The pool shall contract with organizations that provide care
management that has been demonstrated to be effective and shall
encourage enrollees who are eligible for care management services to
participate. The pool may encourage the use of shared decision making
and certified decision aids for preference-sensitive care areas.
Sec. 26 RCW 48.43.510 and 2009 c 304 s 1 are each amended to read
as follows:
(1) A carrier that offers a health plan may not offer to sell a
health plan to an enrollee or to any group representative, agent,
employer, or enrollee representative without first offering to provide,
and providing upon request, the following information before purchase
or selection:
(a) A listing of covered benefits, including prescription drug
benefits, if any, a copy of the current formulary, if any is used,
definitions of terms such as generic versus brand name, and policies
regarding coverage of drugs, such as how they become approved or taken
off the formulary, and how consumers may be involved in decisions about
benefits;
(b) A listing of exclusions, reductions, and limitations to covered
benefits, and any definition of medical necessity or other coverage
criteria upon which they may be based;
(c) A statement of the carrier's policies for protecting the
confidentiality of health information;
(d) A statement of the cost of premiums and any enrollee cost-sharing requirements;
(e) A summary explanation of the carrier's review of adverse
benefit determinations and grievance processes;
(f) A statement regarding the availability of a point-of-service
option, if any, and how the option operates; and
(g) A convenient means of obtaining lists of participating primary
care and specialty care providers, including disclosure of network
arrangements that restrict access to providers within any plan network.
The offer to provide the information referenced in this subsection (1)
must be clearly and prominently displayed on any information provided
to any prospective enrollee or to any prospective group representative,
agent, employer, or enrollee representative.
(2) Upon the request of any person, including a current enrollee,
prospective enrollee, or the insurance commissioner, a carrier must
provide written information regarding any health care plan it offers,
that includes the following written information:
(a) Any documents, instruments, or other information referred to in
the medical coverage agreement;
(b) A full description of the procedures to be followed by an
enrollee for consulting a provider other than the primary care provider
and whether the enrollee's primary care provider, the carrier's medical
director, or another entity must authorize the referral;
(c) Procedures, if any, that an enrollee must first follow for
obtaining prior authorization for health care services;
(d) A written description of any reimbursement or payment
arrangements, including, but not limited to, capitation provisions,
fee-for-service provisions, and health care delivery efficiency
provisions, between a carrier and a provider or network;
(e) Descriptions and justifications for provider compensation
programs, including any incentives or penalties that are intended to
encourage providers to withhold services or minimize or avoid referrals
to specialists;
(f) An annual accounting of all payments made by the carrier which
have been counted against any payment limitations, visit limitations,
or other overall limitations on a person's coverage under a plan;
(g) A copy of the carrier's review of adverse benefit
determinations grievance process for claim or service denial and its
grievance process for dissatisfaction with care; and
(h) Accreditation status with one or more national managed care
accreditation organizations, and whether the carrier tracks its health
care effectiveness performance using the health employer data
information set (HEDIS), whether it publicly reports its HEDIS data,
and how interested persons can access its HEDIS data.
(3) Each carrier shall provide to all enrollees and prospective
enrollees a list of available disclosure items.
(4) Nothing in this section requires a carrier or a health care
provider to divulge proprietary information to an enrollee, including
the specific contractual terms and conditions between a carrier and a
provider.
(5) No carrier may advertise or market any health plan to the
public as a plan that covers services that help prevent illness or
promote the health of enrollees unless it:
(a) Provides all clinical preventive health services provided by
the basic health plan, authorized by chapter 70.47 RCW;
(b) Monitors and reports annually to enrollees on standardized
measures of health care and satisfaction of all enrollees in the health
plan. The state department of health shall recommend appropriate
standardized measures for this purpose, after consideration of national
standardized measurement systems adopted by national managed care
accreditation organizations and state agencies that purchase managed
health care services; and
(c) Makes available upon request to enrollees its integrated plan
to identify and manage the most prevalent diseases within its enrolled
population, including cancer, heart disease, and stroke.
(6) No carrier may preclude or discourage its providers from
informing an enrollee of the care he or she requires, including various
treatment options, and whether in the providers' view such care is
consistent with the plan's health coverage criteria, or otherwise
covered by the enrollee's medical coverage agreement with the carrier.
No carrier may prohibit, discourage, or penalize a provider otherwise
practicing in compliance with the law from advocating on behalf of an
enrollee with a carrier. Nothing in this section shall be construed to
authorize a provider to bind a carrier to pay for any service.
(7) No carrier may preclude or discourage enrollees or those paying
for their coverage from discussing the comparative merits of different
carriers with their providers. This prohibition specifically includes
prohibiting or limiting providers participating in those discussions
even if critical of a carrier.
(8) Each carrier must communicate enrollee information required in
chapter 5, Laws of 2000 by means that ensure that a substantial portion
of the enrollee population can make use of the information. Carriers
may implement alternative, efficient methods of communication to ensure
enrollees have access to information including, but not limited to, web
site alerts, postcard mailings, and electronic communication in lieu of
printed materials.
(9) The commissioner may adopt rules to implement this section. In
developing rules to implement this section, the commissioner shall
consider relevant standards adopted by national managed care
accreditation organizations and state agencies that purchase managed
health care services, as well as opportunities to reduce administrative
costs included in health plans.