S-1205.1

SENATE BILL 5805

State of Washington
66th Legislature
2019 Regular Session
BySenators Cleveland, Wellman, Randall, Billig, Nguyen, Pedersen, Saldaña, Carlyle, Kuderer, Wilson, C., Conway, Darneille, Hasegawa, Takko, Keiser, Frockt, Hunt, Mullet, Rolfes, McCoy, Salomon, Van De Wege, Das, Liias, Hobbs, Palumbo, and Dhingra
AN ACT Relating to making state law consistent with selected federal consumer protections in the patient protection and affordable care act; amending RCW 48.43.005, 48.20.028, 48.21.045, 48.44.022, 48.44.023, 48.46.064, 48.46.066, 48.43.012, 48.21.270, 48.44.380, 48.46.460, 48.43.715, and 48.43.0122; adding new sections to chapter 48.43 RCW; repealing RCW 48.43.015, 48.43.017, 48.43.018, 48.43.025, 48.20.025, 48.44.017, and 48.46.062; and prescribing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
PART I
DEFINITIONS
Sec. 1. RCW 48.43.005 and 2016 c 65 s 2 are each amended to read as follows:
Unless otherwise specifically provided, the definitions in this section apply throughout this chapter.
(1) "Adjusted community rate" means the rating method used to establish the premium for health plans adjusted to reflect actuarially demonstrated differences in utilization or cost attributable to geographic region, age, family size, and use of wellness activities.
(2) "Adverse benefit determination" means a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit, including a denial, reduction, termination, or failure to provide or make payment that is based on a determination of an enrollee's or applicant's eligibility to participate in a plan, and including, with respect to group health plans, a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit resulting from the application of any utilization review, as well as a failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary or appropriate.
(3) "Applicant" means a person who applies for enrollment in an individual health plan as the subscriber or an enrollee, or the dependent or spouse of a subscriber or enrollee.
(4) "Basic health plan" means the plan described under chapter 70.47 RCW, as revised from time to time.
(5) "Basic health plan model plan" means a health plan as required in RCW 70.47.060(2)(e).
(6) "Basic health plan services" means that schedule of covered health services, including the description of how those benefits are to be administered, that are required to be delivered to an enrollee under the basic health plan, as revised from time to time.
(7) "Board" means the governing board of the Washington health benefit exchange established in chapter 43.71 RCW.
(8)(a) For grandfathered health benefit plans issued before January 1, 2014, and renewed thereafter, "catastrophic health plan" means:
(i) In the case of a contract, agreement, or policy covering a single enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, one thousand seven hundred fifty dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least three thousand five hundred dollars, both amounts to be adjusted annually by the insurance commissioner; and
(ii) In the case of a contract, agreement, or policy covering more than one enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, three thousand five hundred dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least six thousand dollars, both amounts to be adjusted annually by the insurance commissioner.
(b) In July 2008, and in each July thereafter, the insurance commissioner shall adjust the minimum deductible and out-of-pocket expense required for a plan to qualify as a catastrophic plan to reflect the percentage change in the consumer price index for medical care for a preceding twelve months, as determined by the United States department of labor. For a plan year beginning in 2014, the out-of-pocket limits must be adjusted as specified in section 1302(c)(1) of P.L. 111-148 of 2010, as amended. The adjusted amount shall apply on the following January 1st.
(c) For health benefit plans issued on or after January 1, 2014, "catastrophic health plan" means:
(i) A health benefit plan that meets the definition of catastrophic plan set forth in section 1302(e) of P.L. 111-148 of 2010, as amended; or
(ii) A health benefit plan offered outside the exchange marketplace that requires a calendar year deductible or out-of-pocket expenses under the plan, other than for premiums, for covered benefits, that meets or exceeds the commissioner's annual adjustment under (b) of this subsection.
(9) "Certification" means a determination by a review organization that an admission, extension of stay, or other health care service or procedure has been reviewed and, based on the information provided, meets the clinical requirements for medical necessity, appropriateness, level of care, or effectiveness under the auspices of the applicable health benefit plan.
(10) "Concurrent review" means utilization review conducted during a patient's hospital stay or course of treatment.
(11) "Covered person" or "enrollee" means a person covered by a health plan including an enrollee, subscriber, policyholder, beneficiary of a group plan, or individual covered by any other health plan.
(12) "Dependent" means, at a minimum, the enrollee's legal spouse and dependent children who qualify for coverage under the enrollee's health benefit plan.
(13) "Emergency medical condition" means a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in a condition (a) placing the health of the individual, or with respect to a pregnant woman, the health of the woman or her unborn child, in serious jeopardy, (b) serious impairment to bodily functions, or (c) serious dysfunction of any bodily organ or part.
(14) "Emergency services" means a medical screening examination, as required under section 1867 of the social security act (42 U.S.C. 1395dd), that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate that emergency medical condition, and further medical examination and treatment, to the extent they are within the capabilities of the staff and facilities available at the hospital, as are required under section 1867 of the social security act (42 U.S.C. 1395dd) to stabilize the patient. Stabilize, with respect to an emergency medical condition, has the meaning given in section 1867(e)(3) of the social security act (42 U.S.C. 1395dd(e)(3)).
(15) "Employee" has the same meaning given to the term, as of January 1, 2008, under section 3(6) of the federal employee retirement income security act of 1974.
(16) "Enrollee point-of-service cost-sharing" means amounts paid to health carriers directly providing services, health care providers, or health care facilities by enrollees and may include copayments, coinsurance, or deductibles.
(17) "Exchange" means the Washington health benefit exchange established under chapter 43.71 RCW.
(18) "Final external review decision" means a determination by an independent review organization at the conclusion of an external review.
(19) "Final internal adverse benefit determination" means an adverse benefit determination that has been upheld by a health plan or carrier at the completion of the internal appeals process, or an adverse benefit determination with respect to which the internal appeals process has been exhausted under the exhaustion rules described in RCW 48.43.530 and 48.43.535.
(20) "Grandfathered health plan" means a group health plan or an individual health plan that under section 1251 of the patient protection and affordable care act, P.L. 111-148 (2010) and as amended by the health care and education reconciliation act, P.L. 111-152 (2010) is not subject to subtitles A or C of the act as amended.
(21) "Grievance" means a written complaint submitted by or on behalf of a covered person regarding 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.
(22) "Health care facility" or "facility" means hospices licensed under chapter 70.127 RCW, hospitals licensed under chapter 70.41 RCW, rural health care facilities as defined in RCW 70.175.020, psychiatric hospitals licensed under chapter 71.12 RCW, nursing homes licensed under chapter 18.51 RCW, community mental health centers licensed under chapter 71.05 or 71.24 RCW, kidney disease treatment centers licensed under chapter 70.41 RCW, ambulatory diagnostic, treatment, or surgical facilities licensed under chapter 70.41 RCW, drug and alcohol treatment facilities licensed under chapter 70.96A RCW, and home health agencies licensed under chapter 70.127 RCW, and includes such facilities if owned and operated by a political subdivision or instrumentality of the state and such other facilities as required by federal law and implementing regulations.
(23) "Health care provider" or "provider" means:
(a) A person regulated under Title 18 or chapter 70.127 RCW, to practice health or health-related services or otherwise practicing health care services in this state consistent with state law; or
(b) An employee or agent of a person described in (a) of this subsection, acting in the course and scope of his or her employment.
(24) "Health care service" means that service offered or provided by health care facilities and health care providers relating to the prevention, cure, or treatment of illness, injury, or disease.
(25) "Health carrier" or "carrier" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, a health care service contractor as defined in RCW 48.44.010, or a health maintenance organization as defined in RCW 48.46.020, and includes "issuers" as that term is used in the patient protection and affordable care act (P.L. 111-148).
(26) "Health plan" or "health benefit plan" means any policy, contract, or agreement offered by a health carrier to provide, arrange, reimburse, or pay for health care services except the following:
(a) Long-term care insurance governed by chapter 48.84 or 48.83 RCW;
(b) Medicare supplemental health insurance governed by chapter 48.66 RCW;
(c) Coverage supplemental to the coverage provided under chapter 55, Title 10, United States Code;
(d) Limited health care services offered by limited health care service contractors in accordance with RCW 48.44.035;
(e) Disability income;
(f) Coverage incidental to a property/casualty liability insurance policy such as automobile personal injury protection coverage and homeowner guest medical;
(g) Workers' compensation coverage;
(h) Accident only coverage;
(i) Specified disease or illness-triggered fixed payment insurance, hospital confinement fixed payment insurance, or other fixed payment insurance offered as an independent, noncoordinated benefit;
(j) Employer-sponsored self-funded health plans;
(k) Dental only and vision only coverage;
(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; and
(m) Civilian health and medical program for the veterans affairs administration (CHAMPVA).
(27) "Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan.
(28) "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.
(29) "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.
(30) "Preexisting condition" means any medical condition, illness, or injury that existed any time prior to the effective date of coverage.
(31) "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.
(32) "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.
(33) "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.
(34) "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.
(35) "Standard health questionnaire" means the standard health questionnaire designated under chapter 48.41 RCW.
(36) "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.
(37) "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.
(38) "Essential health benefit categories" means:
(a) Ambulatory patient services;
(b) Emergency services;
(c) Hospitalization;
(d) Maternity and newborn care;
(e) Mental health and substance use disorder services, including behavioral health treatment;
(f) Prescription drugs;
(g) Rehabilitative and habilitative services;
(h) Laboratory services;
(i) Preventive and wellness services and chronic disease management; and
(j) Pediatric services, including oral and vision care.
PART II
MODIFIED COMMUNITY RATING
NEW SECTION.  Sec. 2. A new section is added to chapter 48.43 RCW to read as follows:
(1) The premium rate charged by a health carrier for nongrandfathered health plans offered in the individual or small group market may vary with respect to the particular plan involved only by:
(a) Whether the plan covers an individual or family;
(b) Rating area established under subsection (2) of this section;
(c) Age, except the rate may not vary by more than three to one for adults; and
(d) Tobacco use, except the rate may not vary by more than one and one-half to one.
(2) The commissioner shall establish by rule:
(a) Rating areas for purposes of subsection (1)(b) of this section; and
(b) Permissible age bands for purposes of subsection (1)(c) of this section.
(3) With respect to family coverage, the rating variations permitted under subsection (1)(d) of this section must be applied based on the portion of the premium that is attributable to each family member covered under the plan.
(4) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
Sec. 3. RCW 48.20.028 and 2006 c 100 s 1 are each amended to read as follows:
(1) Premiums for health benefit plans for individuals shall be calculated using the adjusted community rating method that spreads financial risk across the carrier's entire individual product population, except the individual product population covered under RCW 48.20.029. All such rates shall conform to the following:
(a) The insurer shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age;
(iv) Tenure discounts; and
(v) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments which shall begin with age twenty and end with age sixty-five. Individuals under the age of twenty shall be treated as those age twenty.
(c) The insurer shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs not to exceed twenty percent.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the family composition;
(ii) Changes to the health benefit plan requested by the individual; or
(iii) Changes in government requirements affecting the health benefit plan.
(g) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.
(2) Adjusted community rates established under this section shall pool the medical experience of all individuals purchasing coverage, except individuals purchasing coverage under RCW 48.20.029, and shall not be required to be pooled with the medical experience of health benefit plans offered to small employers under RCW 48.21.045.
(3) As used in this section, "health benefit plan," "adjusted community rate," and "wellness activities" mean the same as defined in RCW 48.43.005.
(4) This section shall not apply to premiums for health benefit plans covered under RCW 48.20.029.
(5) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
Sec. 4. RCW 48.21.045 and 2010 c 292 s 7 are each amended to read as follows:
(1)(a) An insurer offering any health benefit plan to a small employer, either directly or through an association or member-governed group formed specifically for the purpose of purchasing health care, may offer and actively market to the small employer a health benefit plan featuring a limited schedule of covered health care services. Nothing in this subsection shall preclude an insurer from offering, or a small employer from purchasing, other health benefit plans that may have more comprehensive benefits than those included in the product offered under this subsection. An insurer offering a health benefit plan under this subsection shall clearly disclose all covered benefits to the small employer in a brochure filed with the commissioner.
(b) A health benefit plan offered under this subsection shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.21.130, 48.21.140, 48.21.141, 48.21.142, 48.21.144, 48.21.146, 48.21.160 through 48.21.197, 48.21.200, 48.21.220, 48.21.225, 48.21.230, 48.21.235, 48.21.244, 48.21.250, 48.21.300, 48.21.310, or 48.21.320.
(2) Nothing in this section shall prohibit an insurer from offering, or a purchaser from seeking, health benefit plans with benefits in excess of the health benefit plan offered under subsection (1) of this section. All forms, policies, and contracts shall be submitted for approval to the commissioner, and the rates of any plan offered under this section shall be reasonable in relation to the benefits thereto.
(3) Premium rates for health benefit plans for small employers as defined in this section shall be subject to the following provisions:
(a) The insurer shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age; and
(iv) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments, which shall begin with age twenty and end with age sixty-five. Employees under the age of twenty shall be treated as those age twenty.
(c) The insurer shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection (3).
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs. Up to a twenty percent variance may be allowed for small employers that develop and implement a wellness program or activities that directly improve employee wellness. Employers shall document program activities with the carrier and may, after three years of implementation, request a reduction in premiums based on improved employee health and wellness. While carriers may review the employer's claim history when making a determination regarding whether the employer's wellness program has improved employee health, the carrier may not use maternity or prevention services claims to deny the employer's request. Carriers may consider issues such as improved productivity or a reduction in absenteeism due to illness if submitted by the employer for consideration. Interested employers may also work with the carrier to develop a wellness program and a means to track improved employee health.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the enrollment of the small employer;
(ii) Changes to the family composition of the employee;
(iii) Changes to the health benefit plan requested by the small employer; or
(iv) Changes in government requirements affecting the health benefit plan.
(g) On the census date, as defined in RCW 48.21.047, rating factors shall produce premiums for identical groups that differ only by the amounts attributable to plan design, and differences in census date between new and renewal groups, with the exception of discounts for health improvement programs.
(h) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. A carrier may develop its rates based on claims costs due to network provider reimbursement schedules or type of network. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(i) Adjusted community rates established under this section shall pool the medical experience of all small groups purchasing coverage, including the small group participants in the health insurance partnership established in RCW 70.47A.030. However, annual rate adjustments for each small group health benefit plan may vary by up to plus or minus four percentage points from the overall adjustment of a carrier's entire small group pool, such overall adjustment to be approved by the commissioner, upon a showing by the carrier, certified by a member of the American academy of actuaries that: (i) The variation is a result of deductible leverage, benefit design, or provider network characteristics; and (ii) for a rate renewal period, the projected weighted average of all small group benefit plans will have a revenue neutral effect on the carrier's small group pool. Variations of greater than four percentage points are subject to review by the commissioner, and must be approved or denied within sixty days of submittal. A variation that is not denied within sixty days shall be deemed approved. The commissioner must provide to the carrier a detailed actuarial justification for any denial within thirty days of the denial.
(j) For health benefit plans purchased through the health insurance partnership established in chapter 70.47A RCW:
(i) Any surcharge established pursuant to RCW 70.47A.030(2)(e) shall be applied only to health benefit plans purchased through the health insurance partnership; and
(ii) Risk adjustment or reinsurance mechanisms may be used by the health insurance partnership program to redistribute funds to carriers participating in the health insurance partnership based on differences in risk attributable to individual choice of health plans or other factors unique to health insurance partnership participation. Use of such mechanisms shall be limited to the partnership program and will not affect small group health plans offered outside the partnership.
(k) If the rate developed under this section varies the adjusted community rate for the factors listed in (a) of this subsection, the date for determining those factors must be no more than ninety days prior to the effective date of the health benefit plan.
(4) Nothing in this section shall restrict the right of employees to collectively bargain for insurance providing benefits in excess of those provided herein.
(5)(a) Except as provided in this subsection and subsection (3)(g) of this section, requirements used by an insurer in determining whether to provide coverage to a small employer shall be applied uniformly among all small employers applying for coverage or receiving coverage from the carrier.
(b) An insurer shall not require a minimum participation level greater than:
(i) One hundred percent of eligible employees working for groups with three or less employees; and
(ii) Seventy-five percent of eligible employees working for groups with more than three employees.
(c) In applying minimum participation requirements with respect to a small employer, a small employer shall not consider employees or dependents who have similar existing coverage in determining whether the applicable percentage of participation is met.
(d) An insurer may not increase any requirement for minimum employee participation or modify any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.
(e) Minimum participation requirements and employer premium contribution requirements adopted by the health insurance partnership board under RCW 70.47A.110 shall apply only to the employers and employees who purchase health benefit plans through the health insurance partnership.
(6) An insurer must offer coverage to all eligible employees of a small employer and their dependents. An insurer may not offer coverage to only certain individuals or dependents in a small employer group or to only part of the group. An insurer may not modify a health plan with respect to a small employer or any eligible employee or dependent, through riders, endorsements or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions, or services otherwise covered by the plan.
(7) As used in this section, "health benefit plan," "small employer," "adjusted community rate," and "wellness activities" mean the same as defined in RCW 48.43.005.
(8) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
Sec. 5. RCW 48.44.022 and 2006 c 100 s 3 are each amended to read as follows:
(1) Except for health benefit plans covered under RCW 48.44.021, premium rates for health benefit plans for individuals shall be subject to the following provisions:
(a) The health care service contractor shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age;
(iv) Tenure discounts; and
(v) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments which shall begin with age twenty and end with age sixty-five. Individuals under the age of twenty shall be treated as those age twenty.
(c) The health care service contractor shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the family composition;
(ii) Changes to the health benefit plan requested by the individual; or
(iii) Changes in government requirements affecting the health benefit plan.
(g) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.
(2) Adjusted community rates established under this section shall pool the medical experience of all individuals purchasing coverage, except individuals purchasing coverage under RCW 48.44.021, and shall not be required to be pooled with the medical experience of health benefit plans offered to small employers under RCW 48.44.023.
(3) As used in this section and RCW 48.44.023 "health benefit plan," "small employer," "adjusted community rates," and "wellness activities" mean the same as defined in RCW 48.43.005.
(4) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
Sec. 6. RCW 48.44.023 and 2010 c 292 s 4 are each amended to read as follows:
(1)(a) A health care services contractor offering any health benefit plan to a small employer, either directly or through an association or member-governed group formed specifically for the purpose of purchasing health care, may offer and actively market to the small employer a health benefit plan featuring a limited schedule of covered health care services. Nothing in this subsection shall preclude a contractor from offering, or a small employer from purchasing, other health benefit plans that may have more comprehensive benefits than those included in the product offered under this subsection. A contractor offering a health benefit plan under this subsection shall clearly disclose all covered benefits to the small employer in a brochure filed with the commissioner.
(b) A health benefit plan offered under this subsection shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.44.225, 48.44.240, 48.44.245, 48.44.290, 48.44.300, 48.44.310, 48.44.320, 48.44.325, 48.44.330, 48.44.335, 48.44.344, 48.44.360, 48.44.400, 48.44.440, 48.44.450, and 48.44.460.
(2) Nothing in this section shall prohibit a health care service contractor from offering, or a purchaser from seeking, health benefit plans with benefits in excess of the health benefit plan offered under subsection (1) of this section. All forms, policies, and contracts shall be submitted for approval to the commissioner, and the rates of any plan offered under this section shall be reasonable in relation to the benefits thereto.
(3) Premium rates for health benefit plans for small employers as defined in this section shall be subject to the following provisions:
(a) The contractor shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age; and
(iv) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments, which shall begin with age twenty and end with age sixty-five. Employees under the age of twenty shall be treated as those age twenty.
(c) The contractor shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection (3).
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs. Up to a twenty percent variance may be allowed for small employers that develop and implement a wellness program or activities that directly improve employee wellness. Employers shall document program activities with the carrier and may, after three years of implementation, request a reduction in premiums based on improved employee health and wellness. While carriers may review the employer's claim history when making a determination regarding whether the employer's wellness program has improved employee health, the carrier may not use maternity or prevention services claims to deny the employer's request. Carriers may consider issues such as improved productivity or a reduction in absenteeism due to illness if submitted by the employer for consideration. Interested employers may also work with the carrier to develop a wellness program and a means to track improved employee health.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the enrollment of the small employer;
(ii) Changes to the family composition of the employee;
(iii) Changes to the health benefit plan requested by the small employer; or
(iv) Changes in government requirements affecting the health benefit plan.
(g) On the census date, as defined in RCW 48.44.010, rating factors shall produce premiums for identical groups that differ only by the amounts attributable to plan design, and differences in census date between new and renewal groups, with the exception of discounts for health improvement programs.
(h) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. A carrier may develop its rates based on claims costs due to network provider reimbursement schedules or type of network. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(i) Adjusted community rates established under this section shall pool the medical experience of all groups purchasing coverage, including the small group participants in the health insurance partnership established in RCW 70.47A.030.
(j) For health benefit plans purchased through the health insurance partnership established in chapter 70.47A RCW:
(i) Any surcharge established pursuant to RCW 70.47A.030(2)(e) shall be applied only to health benefit plans purchased through the health insurance partnership; and
(ii) Risk adjustment or reinsurance mechanisms may be used by the health insurance partnership program to redistribute funds to carriers participating in the health insurance partnership based on differences in risk attributable to individual choice of health plans or other factors unique to health insurance partnership participation. Use of such mechanisms shall be limited to the partnership program and will not affect small group health plans offered outside the partnership.
(k) If the rate developed under this section varies the adjusted community rate for the factors listed in (a) of this subsection, the date for determining those factors must be no more than ninety days prior to the effective date of the health benefit plan.
(4) Nothing in this section shall restrict the right of employees to collectively bargain for insurance providing benefits in excess of those provided herein.
(5)(a) Except as provided in this subsection and subsection (3)(g) of this section, requirements used by a contractor in determining whether to provide coverage to a small employer shall be applied uniformly among all small employers applying for coverage or receiving coverage from the carrier.
(b) A contractor shall not require a minimum participation level greater than:
(i) One hundred percent of eligible employees working for groups with three or less employees; and
(ii) Seventy-five percent of eligible employees working for groups with more than three employees.
(c) In applying minimum participation requirements with respect to a small employer, a small employer shall not consider employees or dependents who have similar existing coverage in determining whether the applicable percentage of participation is met.
(d) A contractor may not increase any requirement for minimum employee participation or modify any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.
(e) Minimum participation requirements and employer premium contribution requirements adopted by the health insurance partnership board under RCW 70.47A.110 shall apply only to the employers and employees who purchase health benefit plans through the health insurance partnership.
(6) A contractor must offer coverage to all eligible employees of a small employer and their dependents. A contractor may not offer coverage to only certain individuals or dependents in a small employer group or to only part of the group. A contractor may not modify a health plan with respect to a small employer or any eligible employee or dependent, through riders, endorsements or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions, or services otherwise covered by the plan.
(7) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
Sec. 7. RCW 48.46.064 and 2006 c 100 s 5 are each amended to read as follows:
(1) Except for health benefit plans covered under RCW 48.46.063, premium rates for health benefit plans for individuals shall be subject to the following provisions:
(a) The health maintenance organization shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age;
(iv) Tenure discounts; and
(v) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments which shall begin with age twenty and end with age sixty-five. Individuals under the age of twenty shall be treated as those age twenty.
(c) The health maintenance organization shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the family composition;
(ii) Changes to the health benefit plan requested by the individual; or
(iii) Changes in government requirements affecting the health benefit plan.
(g) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.
(2) Adjusted community rates established under this section shall pool the medical experience of all individuals purchasing coverage, except individuals purchasing coverage under RCW 48.46.063, and shall not be required to be pooled with the medical experience of health benefit plans offered to small employers under RCW 48.46.066.
(3) As used in this section and RCW 48.46.066, "health benefit plan," "adjusted community rate," "small employer," and "wellness activities" mean the same as defined in RCW 48.43.005.
(4) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
Sec. 8. RCW 48.46.066 and 2010 c 292 s 6 are each amended to read as follows:
(1)(a) A health maintenance organization offering any health benefit plan to a small employer, either directly or through an association or member-governed group formed specifically for the purpose of purchasing health care, may offer and actively market to the small employer a health benefit plan featuring a limited schedule of covered health care services. Nothing in this subsection shall preclude a health maintenance organization from offering, or a small employer from purchasing, other health benefit plans that may have more comprehensive benefits than those included in the product offered under this subsection. A health maintenance organization offering a health benefit plan under this subsection shall clearly disclose all the covered benefits to the small employer in a brochure filed with the commissioner.
(b) A health benefit plan offered under this subsection shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.46.275, 48.46.280, 48.46.285, 48.46.350, 48.46.355, 48.46.375, 48.46.440, 48.46.480, 48.46.510, 48.46.520, and 48.46.530.
(2) Nothing in this section shall prohibit a health maintenance organization from offering, or a purchaser from seeking, health benefit plans with benefits in excess of the health benefit plan offered under subsection (1) of this section. All forms, policies, and contracts shall be submitted for approval to the commissioner, and the rates of any plan offered under this section shall be reasonable in relation to the benefits thereto.
(3) Premium rates for health benefit plans for small employers as defined in this section shall be subject to the following provisions:
(a) The health maintenance organization shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:
(i) Geographic area;
(ii) Family size;
(iii) Age; and
(iv) Wellness activities.
(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments, which shall begin with age twenty and end with age sixty-five. Employees under the age of twenty shall be treated as those age twenty.
(c) The health maintenance organization shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection (3).
(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.
(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs. Up to a twenty percent variance may be allowed for small employers that develop and implement a wellness program or activities that directly improve employee wellness. Employers shall document program activities with the carrier and may, after three years of implementation, request a reduction in premiums based on improved employee health and wellness. While carriers may review the employer's claim history when making a determination regarding whether the employer's wellness program has improved employee health, the carrier may not use maternity or prevention services claims to deny the employer's request. Carriers may consider issues such as improved productivity or a reduction in absenteeism due to illness if submitted by the employer for consideration. Interested employers may also work with the carrier to develop a wellness program and a means to track improved employee health.
(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:
(i) Changes to the enrollment of the small employer;
(ii) Changes to the family composition of the employee;
(iii) Changes to the health benefit plan requested by the small employer; or
(iv) Changes in government requirements affecting the health benefit plan.
(g) On the census date, as defined in RCW 48.46.020, rating factors shall produce premiums for identical groups that differ only by the amounts attributable to plan design, and differences in census date between new and renewal groups, with the exception of discounts for health improvement programs.
(h) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. A carrier may develop its rates based on claims costs due to network provider reimbursement schedules or type of network. ((This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.))
(i) Adjusted community rates established under this section shall pool the medical experience of all groups purchasing coverage, including the small group participants in the health insurance partnership established in RCW 70.47A.030. However, annual rate adjustments for each small group health benefit plan may vary by up to plus or minus four percentage points from the overall adjustment of a carrier's entire small group pool, such overall adjustment to be approved by the commissioner, upon a showing by the carrier, certified by a member of the American academy of actuaries that: (i) The variation is a result of deductible leverage, benefit design, or provider network characteristics; and (ii) for a rate renewal period, the projected weighted average of all small group benefit plans will have a revenue neutral effect on the carrier's small group pool. Variations of greater than four percentage points are subject to review by the commissioner, and must be approved or denied within sixty days of submittal. A variation that is not denied within sixty days shall be deemed approved. The commissioner must provide to the carrier a detailed actuarial justification for any denial within thirty days of the denial.
(j) For health benefit plans purchased through the health insurance partnership established in chapter 70.47A RCW:
(i) Any surcharge established pursuant to RCW 70.47A.030(2)(e) shall be applied only to health benefit plans purchased through the health insurance partnership; and
(ii) Risk adjustment or reinsurance mechanisms may be used by the health insurance partnership program to redistribute funds to carriers participating in the health insurance partnership based on differences in risk attributable to individual choice of health plans or other factors unique to health insurance partnership participation. Use of such mechanisms shall be limited to the partnership program and will not affect small group health plans offered outside the partnership.
(k) If the rate developed under this section varies the adjusted community rate for the factors listed in (a) of this subsection, the date for determining those factors must be no more than ninety days prior to the effective date of the health benefit plan.
(4) Nothing in this section shall restrict the right of employees to collectively bargain for insurance providing benefits in excess of those provided herein.
(5)(a) Except as provided in this subsection and subsection (3)(g) of this section, requirements used by a health maintenance organization in determining whether to provide coverage to a small employer shall be applied uniformly among all small employers applying for coverage or receiving coverage from the carrier.
(b) A health maintenance organization shall not require a minimum participation level greater than:
(i) One hundred percent of eligible employees working for groups with three or less employees; and
(ii) Seventy-five percent of eligible employees working for groups with more than three employees.
(c) In applying minimum participation requirements with respect to a small employer, a small employer shall not consider employees or dependents who have similar existing coverage in determining whether the applicable percentage of participation is met.
(d) A health maintenance organization may not increase any requirement for minimum employee participation or modify any requirement for minimum employer contribution applicable to a small employer at any time after the small employer has been accepted for coverage.
(e) Minimum participation requirements and employer premium contribution requirements adopted by the health insurance partnership board under RCW 70.47A.110 shall apply only to the employers and employees who purchase health benefit plans through the health insurance partnership.
(6) A health maintenance organization must offer coverage to all eligible employees of a small employer and their dependents. A health maintenance organization may not offer coverage to only certain individuals or dependents in a small employer group or to only part of the group. A health maintenance organization may not modify a health plan with respect to a small employer or any eligible employee or dependent, through riders, endorsements or otherwise, to restrict or exclude coverage or benefits for specific diseases, medical conditions, or services otherwise covered by the plan.
(7) This section applies only to grandfathered health plans as defined in RCW 48.43.005.
PART III
GUARANTEED ISSUE AND ELIGIBILITY
Sec. 9. RCW 48.43.012 and 2011 c 315 s 3 are each amended to read as follows:
(1) No carrier may reject an individual for an individual or group health benefit plan based upon preexisting conditions of the individual ((except as provided in RCW 48.43.018)).
(2) No carrier may deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions ((except as provided in this section))including, but not limited to, preexisting condition exclusions or waiting periods.
(3) ((For an individual health benefit plan originally issued on or after March 23, 2000, preexisting condition waiting periods imposed upon a person enrolling in an individual health benefit plan shall be no more than nine months for a preexisting condition 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 prior to the effective date of the plan. No carrier may impose a preexisting condition waiting period on an individual health benefit plan issued to 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)).
(4) Individual health benefit plan preexisting condition waiting periods shall not apply to prenatal care services.
)) No carrier may avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. A new or changed rate classification will be deemed an attempt to avoid the provisions of this section if the new or changed classification would substantially discourage applications for coverage from individuals who are higher than average health risks. These provisions apply only to individuals who are Washington residents.
(((6) For any person under age nineteen applying for coverage as allowed by RCW 48.43.0122(1) or enrolled in a health benefit plan subject to sections 1201 and 10103 of the patient protection and affordable care act (P.L. 111-148) that is not a grandfathered health plan in the individual market, a carrier must not impose a preexisting condition exclusion or waiting period or other limitations on benefits or enrollment due to a preexisting condition.))
(4) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
NEW SECTION.  Sec. 10. A new section is added to chapter 48.43 RCW to read as follows:
(1) A health carrier or health plan may not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of the plan or coverage based on any of the following health status-related factors in relation to the individual or a dependent of the individual:
(a) Health status;
(b) Medical condition, including both physical and mental illnesses;
(c) Claims experience;
(d) Receipt of health care;
(e) Medical history;
(f) Genetic information;
(g) Evidence of insurability, including conditions arising out of acts of domestic violence;
(h) Disability; or
(i) Any other health status-related factor determined appropriate by the commissioner.
(2) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
Sec. 11. RCW 48.21.270 and 2011 c 314 s 2 are each amended to read as follows:
(1) An insurer shall not require proof of insurability as a condition for issuance of the conversion policy.
(2) A conversion policy may not contain an exclusion for preexisting conditions for any applicant ((who is under age nineteen. For policies issued to those age nineteen and older, an exclusion for a preexisting condition is permitted only to the extent that a waiting period for a preexisting condition has not been satisfied under the group policy)).
(3) An insurer must offer at least three policy benefit plans that comply with the following:
(a) A major medical plan with a five thousand dollar deductible per person;
(b) A comprehensive medical plan with a five hundred dollar deductible per person; and
(c) A basic medical plan with a one thousand dollar deductible per person.
(4) The insurance commissioner may revise the deductible amounts in subsection (3) of this section from time to time to reflect changing health care costs.
(5) The insurance commissioner shall adopt rules to establish minimum benefit standards for conversion policies.
(6) The commissioner shall adopt rules to establish specific standards for conversion policy provisions. These rules may include but are not limited to:
(a) Terms of renewability;
(b) Nonduplication of coverage;
(c) Benefit limitations, exceptions, and reductions; and
(d) Definitions of terms.
Sec. 12. RCW 48.44.380 and 2011 c 314 s 7 are each amended to read as follows:
(1) A health care service contractor shall not require proof of insurability as a condition for issuance of the conversion contract.
(2) A conversion contract may not contain an exclusion for preexisting conditions for any applicant ((who is under age nineteen. For policies issued to those age nineteen and older, an exclusion for a preexisting condition is permitted only to the extent that a waiting period for a preexisting condition has not been satisfied under the group contract)).
(3) A health care service contractor must offer at least three contract benefit plans that comply with the following:
(a) A major medical plan with a five thousand dollar deductible per person;
(b) A comprehensive medical plan with a five hundred dollar deductible per person; and
(c) A basic medical plan with a one thousand dollar deductible per person.
(4) The insurance commissioner may revise the deductible amounts in subsection (3) of this section from time to time to reflect changing health care costs.
(5) The insurance commissioner shall adopt rules to establish minimum benefit standards for conversion contracts.
(6) The commissioner shall adopt rules to establish specific standards for conversion contract provisions. These rules may include but are not limited to:
(a) Terms of renewability;
(b) Nonduplication of coverage;
(c) Benefit limitations, exceptions, and reductions; and
(d) Definitions of terms.
Sec. 13. RCW 48.46.460 and 2011 c 314 s 9 are each amended to read as follows:
(1) A health maintenance organization must offer a conversion agreement for comprehensive health care services and shall not require proof of insurability as a condition for issuance of the conversion agreement.
(2) A conversion agreement may not contain an exclusion for preexisting conditions for an applicant ((who is under age nineteen. For policies issued to those age nineteen and older, an exclusion for a preexisting condition is permitted only to the extent that a waiting period for a preexisting condition has not been satisfied under the group agreement)).
(3) A conversion agreement need not provide benefits identical to those provided under the group agreement. The conversion agreement may contain provisions requiring the person covered by the conversion agreement to pay reasonable deductibles and copayments, except for preventive service benefits as defined in 45 C.F.R. 147.130 (2010), implementing sections 2701 through 2763, 2791, and 2792 of the public health service act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92), as amended.
(4) The insurance commissioner shall adopt rules to establish minimum benefit standards for conversion agreements.
(5) The commissioner shall adopt rules to establish specific standards for conversion agreement provisions. These rules may include but are not limited to:
(a) Terms of renewability;
(b) Nonduplication of coverage;
(c) Benefit limitations, exceptions, and reductions; and
(d) Definitions of terms.
NEW SECTION.  Sec. 14. The following acts or parts of acts are each repealed:
(1) RCW 48.43.015 (Health benefit plansPreexisting conditions) and 2012 c 64 s 2, 2004 c 192 s 5, 2001 c 196 s 7, 2000 c 80 s 3, 2000 c 79 s 20, & 1995 c 265 s 5;
(2) RCW 48.43.017 (Organ transplant benefit waiting periodsPrior creditable coverage) and 2009 c 82 s 2;
(3) RCW 48.43.018 (Requirement to complete the standard health questionnaireExemptionsResults) and 2012 c 211 s 16, 2012 c 64 s 1, 2010 c 277 s 1, & 2009 c 42 s 1; and
(4) RCW 48.43.025 (Group health benefit plansPreexisting conditions) and 2001 c 196 s 9, 2000 c 79 s 23, & 1995 c 265 s 6.
PART IV
PROHIBITING UNFAIR RESCISSIONS
NEW SECTION.  Sec. 15. A new section is added to chapter 48.43 RCW to read as follows:
(1) A health plan or health carrier offering group or individual coverage may not rescind such coverage with respect to an enrollee once the enrollee is covered under the plan or coverage involved, except that this section does not apply to a covered person who has performed an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact as prohibited by the terms of the plan or coverage. The plan or coverage may not be canceled except as permitted under RCW 48.43.035 or 48.43.038.
(2) The commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
PART V
ESSENTIAL HEALTH BENEFITS
Sec. 16. RCW 48.43.715 and 2013 c 325 s 1 are each amended to read as follows:
(1) ((Consistent with federal law,))The commissioner, in consultation with the board and the health care authority, shall, by rule, select the largest small group plan in the state by enrollment as the benchmark plan for the individual and small group market for purposes of establishing the essential health benefits in Washington state ((under P.L. 111-148 of 2010, as amended)).
(2) If the essential health benefits benchmark plan for the individual and small group market does not include all of the ten essential health benefits categories ((specified by section 1302 of P.L. 111-148, as amended)), the commissioner, in consultation with the board and the health care authority, shall, by rule, supplement the benchmark plan benefits as needed ((to meet the minimum requirements of section 1302)).
(3) ((A))All individual and small group health plans((required to offer))must cover the ten essential health benefits categories, other than a health plan offered through the federal basic health program, a grandfathered health plan, or medicaid((, under P.L. 111-148 of 2010, as amended,)). Such a health plan may not be offered in the state unless the commissioner finds that it is substantially equal to the benchmark plan. When making this determination, the commissioner:
(a) Must ensure that the plan covers the ten essential health benefits categories ((specified in section 1302 of P.L. 111-148 of 2010, as amended));
(b) May consider whether the health plan has a benefit design that would create a risk of biased selection based on health status and whether the health plan contains meaningful scope and level of benefits in each of the ten essential health benefits categories ((specified by section 1302 of P.L. 111-148 of 2010, as amended));
(c) Notwithstanding ((the foregoing))(a) and (b) of this subsection, for benefit years beginning January 1, 2015, ((and only to the extent permitted by federal law and guidance,)) must establish by rule the review and approval requirements and procedures for pediatric oral services when offered in stand-alone dental plans in the nongrandfathered individual and small group markets outside of the exchange; and
(d) ((Unless prohibited by federal law and guidance,))Must allow health carriers to also offer pediatric oral services within the health benefit plan in the nongrandfathered individual and small group markets outside of the exchange.
(4) Beginning December 15, 2012, and every year thereafter, the commissioner shall submit to the legislature a list of state-mandated health benefits, the enforcement of which will result in federally imposed costs to the state related to the plans sold through the exchange because the benefits are not included in the essential health benefits designated under federal law. The list must include the anticipated costs to the state of each state-mandated health benefit on the list and any statutory changes needed if funds are not appropriated to defray the state costs for the listed mandate. The commissioner may enforce a mandate on the list for the entire market only if funds are appropriated in an omnibus appropriations act specifically to pay the state portion of the identified costs.
PART VI
COST SHARING
NEW SECTION.  Sec. 17. A new section is added to chapter 48.43 RCW to read as follows:
(1) For plan years beginning in 2020, the cost sharing incurred under a health plan for the essential health benefits may not exceed the following amounts:
(a) For self-only coverage:
(i) The amount required under federal law for the calendar year; or
(ii) If there are no cost-sharing requirements under federal law, eight thousand two hundred dollars increased by the premium adjustment percentage for the calendar year.
(b) For coverage other than self-only coverage:
(i) The amount required under federal law for the calendar year; or
(ii) If there are no cost-sharing requirements under federal law, sixteen thousand four hundred dollars increased by the premium adjustment percentage for the calendar year.
(2) Regardless of whether an enrollee is covered by a self-only plan or a plan that is other than self-only, the enrollee's cost sharing for the essential health benefits may not exceed the self-only annual limitation on cost sharing.
(3) For purposes of this section, "the premium adjustment percentage for the calendar year" means the percentage, if any, by which the average per capita premium for health insurance in Washington for the preceding year, as estimated by the commissioner no later than April 1st of such preceding year, exceeds such average per capita premium for 2020 as determined by the commissioner.
(4) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
PART VII
OPEN ENROLLMENT PERIODS
Sec. 18. RCW 48.43.0122 and 2011 c 315 s 4 are each amended to read as follows:
(1) The commissioner shall adopt rules establishing and implementing requirements for the open enrollment periods and special enrollment periods that carriers must follow for individual health benefit plans ((and enrollment of persons under age nineteen)).
(2) The commissioner shall monitor the sale of individual health benefit plans and if a carrier refuses to sell guaranteed issue policies to persons ((under age nineteen)) in compliance with rules adopted by the commissioner pursuant to subsection (1) of this section, the commissioner may levy fines or suspend or revoke a certificate of authority as provided in chapter 48.05 RCW.
PART VIII
LIFETIME LIMITS
NEW SECTION.  Sec. 19. A new section is added to chapter 48.43 RCW to read as follows:
A health carrier may not impose annual or lifetime dollar limits on an essential health benefit, other than those permitted as reference-based limitations under rules adopted by the commissioner.
PART IX
MEDICAL LOSS RATIOS
NEW SECTION.  Sec. 20. A new section is added to chapter 48.43 RCW to read as follows:
(1) A health carrier offering an individual or group health plan shall, with respect to each plan year, submit to the commissioner a report concerning the ratio of the incurred loss or incurred claims plus the loss adjustment expense or change in contract reserves to earned premiums. The report must include the percentage of total premium revenue, after accounting for collections or receipts under the federal risk adjustment program, that the coverage expends:
(a) On reimbursement for clinical services provided to enrollees under the coverage;
(b) For activities that improve health care quality; and
(c) On all other nonclaims costs, including an explanation of the nature of the costs and excluding federal and state taxes and licensing or regulatory fees.
(2)(a) A health carrier offering an individual or group health plan shall, with respect to each plan year, provide an annual rebate to each enrollee under the health plan, on a pro rata basis, if the ratio of the amount of premium revenue expended by the carrier on costs described in subsection (1)(a) and (b) of this section to the total amount of premium revenue, excluding federal and state taxes and licensing or regulatory fees and after accounting for payments or receipts under the federal risk adjustment program, for the plan year is less than:
(i) Eighty-five percent for large group market health plans; or
(ii) Eighty percent for individual or small group market health plans.
(b) The determination made under this subsection must be based on the averages of the premiums expended on the costs and total premium revenue for each of the previous three years for the plan.
(3) The total amount of the rebate required under this section must be in an amount equal to the product of:
(a) The amount by which the percentage required under subsection (2)(a)(i) or (ii) of this section exceeds the ratio calculated under subsection (2)(a) of this section; and
(b) The total amount of premium revenue, excluding federal and state taxes and licensing or regulatory fees and after accounting for payments or receipts under the federal risk adjustment program, for the plan year.
(4) The commissioner may, by rule, increase the percentages required under subsection (2)(a)(i) and (ii) of this section. When determining the percentages, the commissioner must seek to ensure adequate participation by health carriers, competition in the health insurance market in the state, and value for consumers so that premiums are used for clinical services and quality improvements.
(5) When enforcing this section, the commissioner shall use definitions established by the national association of insurance commissioners to implement 42 U.S.C. Sec. 300gg-18 as it existed on the effective date of this section. The commissioner shall, by rule, adopt changes to the definitions based on changes made by the national association of insurance commissioners.
(6) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
NEW SECTION.  Sec. 21. The following acts or parts of acts are each repealed:
(1) RCW 48.20.025 (Schedule of rates for individual health benefit plansLoss ratioDefinitions) and 2011 c 314 s 10, 2008 c 303 s 4, 2003 c 248 s 8, 2001 c 196 s 1, & 2000 c 79 s 3;
(2) RCW 48.44.017 (Schedule of rates for individual contractsLoss ratioDefinitions) and 2011 c 314 s 11, 2008 c 303 s 5, 2001 c 196 s 11, & 2000 c 79 s 29; and
(3) RCW 48.46.062 (Schedule of rates for individual agreementsLoss ratioDefinitions) and 2011 c 314 s 12, 2008 c 303 s 6, 2001 c 196 s 12, & 2000 c 79 s 32.
PART X
EXPLANATION OF COVERAGE
NEW SECTION.  Sec. 22. A new section is added to chapter 48.43 RCW to read as follows:
(1) The commissioner shall develop standards for use by a health carrier offering individual or group coverage, in compiling and providing to applicants and enrollees a summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan. In developing the standards, the commissioner must use the standards developed under 42 U.S.C. Sec. 300gg-15 in use on the effective date of this section.
(2) The standards must provide for the following:
(a) The standards must ensure that the summary of benefits and coverage is presented in a uniform format that does not exceed four pages in length and does not include print smaller than twelve-point font.
(b) The standards must ensure that the summary is presented in a culturally and linguistically appropriate manner and utilizes terminology understandable by the average plan enrollee.
(c) The standards must ensure that the summary of benefits and coverage includes:
(i) Uniform definitions of standard insurance and medical terms, consistent with the standard definitions developed under this section, so that consumers may compare health insurance coverage and understand the terms of coverage, or exceptions to such coverage;
(ii) A description of the coverage, including cost sharing for:
(A) The essential health benefits; and
(B) Other benefits identified by the commissioner;
(iii) The exceptions, reductions, and limitations on coverage;
(iv) The cost-sharing provisions, including deductible, coinsurance, and copayment obligations;
(v) The renewability and continuation of coverage provisions;
(vi) A coverage facts label that includes examples to illustrate common benefits scenarios, including pregnancy and serious or chronic medical conditions and related cost sharing. The scenarios must be based on recognized clinical practice guidelines;
(vii) A statement of whether the plan:
(A) Provides minimum essential coverage under 26 U.S.C. Sec. 5000A(f); and
(B) Ensures that the plan share of the total allowed costs of benefits provided under the plan is no less than sixty percent of the costs;
(viii) A statement that the outline is a summary of the policy or certificate and that the coverage document itself should be consulted to determine the governing contractual provisions; and
(ix) A contact number for the consumer to call with additional questions and a web site where a copy of the actual individual coverage policy or group certificate of coverage may be reviewed and obtained.
(3) The commissioner shall periodically review and update the standards developed under this section.
(4) A health carrier must provide a summary of benefits and coverage explanation to:
(a) An applicant at the time of application;
(b) An enrollee prior to the time of enrollment or reenrollment, as applicable; and
(c) A policyholder or certificate holder at the time of issuance of the policy or delivery of the certificate.
(5) A health carrier may provide the summary of benefits and coverage either in paper or electronically.
(6) If a health carrier makes any material modification in any of the terms of the plan that is not reflected in the most recently provided summary of benefits and coverage, the carrier shall provide notice of the modification to enrollees no later than sixty days prior to the date on which the modification will become effective.
(7) A health carrier that fails to provide the information required under this section is subject to a fine of no more than one thousand dollars for each failure. A failure with respect to each enrollee constitutes a separate offense for purposes of this subsection.
(8) The commissioner shall, by rule, provide for the development of standards for the definitions of terms used in health insurance coverage, including the following:
(a) Insurance-related terms, including premium; deductible; coinsurance; copayment; out-of-pocket limit; preferred provider; nonpreferred provider; out-of-network copayments; usual, customary, and reasonable fees; excluded services; grievance; appeals; and any other terms the commissioner determines are important to define so that consumers may compare health insurance coverage and understand the terms of their coverage; and
(b) Medical terms, including hospitalization, hospital outpatient care, emergency room care, physician services, prescription drug coverage, durable medical equipment, home health care, skilled nursing care, rehabilitation services, hospice services, emergency medical transportation, and any other terms the commissioner determines are important to define so that consumers may compare the medical benefits offered by health insurance and understand the extent of those medical benefits or exceptions to those benefits.
(9) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
PART XI
WAITING PERIODS FOR GROUP COVERAGE
NEW SECTION.  Sec. 23. A new section is added to chapter 48.43 RCW to read as follows:
(1) A group health plan and a health carrier offering group health coverage may not apply any waiting period that exceeds ninety days.
(2) Unless preempted by federal law, the commissioner shall adopt any rules necessary to implement this section, consistent with federal rules and guidance in effect on January 1, 2017, implementing the patient protection and affordable care act.
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