AN ACT Relating to the Washington basic health plan; amending RCW 82.24.020, 82.24.070, and 82.02.030; reenacting and amending RCW 82.24.260; adding a new section to chapter 50.20 RCW; adding a new section to chapter 74.08 RCW; adding a new section to chapter 82.24 RCW; adding a new section to chapter 70.39 RCW; adding a new section to chapter 82.04 RCW; adding a new chapter to Title 70 RCW; creating a new section; repealing RCW 28A.47.440 and 82.24.025; making appropriations; providing effective dates; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that:

(1) A substantial percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of basic health care services;

(2) This lack of basic health care coverage is detrimental to the health of the individuals lacking coverage and to the public welfare, and often results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and/or the state;

(3) The use of managed health care systems, as defined in section 2 of this act, has significant potential to reduce the growth of health care costs incurred by the people of this state; and

(4) As declared in RCW 70.39.010, health care is a right of the people and one of the primary purposes for which governments are established.

The purpose of this chapter is to establish a program providing affordable basic health care to low-income persons through the use of managed health care systems. The legislature intends that the program be designed and operated in a fiscally prudent manner within the funds available to the basic health plan account established in this chapter, and that the program emphasize primary and preventive health care services while also covering necessary hospitalization.

NEW SECTION. Sec. 2. As used in this chapter:

(1) "Washington basic health plan" or "plan" means the system of enrollment and payment for basic health care services, administered by the board through managed health care systems, created by this chapter.

(2) "Board" means the Washington basic health plan board created under section 3 of this act.

(3) "Managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the board and rendered by duly licensed providers, to a defined patient population by enrollment in the plan and in the managed health care system.

(4) "Enrollee" means an individual, or an individual plus the individual's spouse and dependent children, all under the age of sixty-five, who resides in the state, whose gross family income does not exceed twice the federal nonfarm poverty level as adjusted for family size and determined annually by the federal office of management and budget, who chooses to obtain basic health care coverage from a particular managed health care system in return for periodic payments to the board, and who is not eligible for federally matched medical coverage under chapter 74.09 RCW.

NEW SECTION. Sec. 3. The basic health plan trust account is hereby established in the general fund. All revenues received under sections 15, 16, and 17 of this act shall be deposited in the basic health plan trust account. Disbursements from the account shall be made pursuant to appropriation and upon warrants drawn by the Washington basic health plan board created in section 4 of this act. Moneys in the account shall be used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of enrollees in the plan and payment of costs of administering the plan.

NEW SECTION. Sec. 4. There is hereby created a Washington basic health plan board, which shall be a separate and independent board of the state. The board shall be composed of five members appointed by the governor, as follows:

(1) One member representing hospitals, as defined in RCW 70.41.020;

(2) One member, representing physicians or other individual health care professionals licensed under Title 18 RCW, who is actively engaged in rendering health care services through a managed health care system;

(3) Three members representing consumers of health care, one of whom shall be designated by the governor to serve as chairman.

Members of the board shall serve for four-year terms: PROVIDED, That of the members initially appointed after the effective date of this act, two shall be appointed to four-year terms, one to a three-year term, one to a two-year term, and one to a one-year term. Appointments shall require senate confirmation. No member of the board shall serve for more than two consecutive terms. A vacancy shall be filled by appointment for the remainder of the unexpired term and the initial appointments and vacancies shall not require senate confirmation until the legislature next convenes.

Members of the board representing consumers shall not have any fiduciary obligation to any health care provider or facility or any material financial interest in the provision of health care services.

NEW SECTION. Sec. 5. Meetings of the board shall be held as frequently as its duties require. The board shall keep minutes of its meetings and adopt procedures for the governing of its meetings, minutes, and transactions. Three members of the board shall constitute a quorum, but a vacancy on the board shall not impair its power to act. No action of the board shall be effective unless three members concur therein.

The members of the board shall be compensated in accordance with RCW 43.03.250 and shall be reimbursed for their travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 6. The board shall employ a full-time executive director, who shall be the chief administrative officer of the board and shall be subject to its direction. The executive director and up to ... other employees shall be exempt from the civil service law, chapter 41.06 RCW. The state actuary shall provide actuarial services to the board as necessary.

The board shall employ such other staff as are necessary to fulfill the responsibilities and duties of the board, such staff to be subject to the civil service law, chapter 41.06 RCW. In addition, the board may contract with third parties for services necessary to carry out its activities where this will promote economy, avoid duplication of effort, and make best use of available expertise. Any such contractor or consultant shall be prohibited from releasing, publishing, or otherwise using any information made available to it under its contractual responsibility without specific permission of the board. The board may call upon other agencies of the state to provide available information as necessary to assist the board in meeting its responsibilities under this chapter, which information shall be supplied as promptly as circumstances permit. The board may create committees from its membership, and may appoint such ad hoc advisory committees as it deems necessary.

The board may apply for and receive and accept grants, gifts, and other payments, including property and service, from any governmental or other public or private entity or person, and may make arrangements as to the use of these receipts, including the undertaking of special studies and other projects relating to health care costs and access to health care.

NEW SECTION. Sec. 7. The board may promulgate and adopt, under chapter 34.04 RCW, regulations consistent with this chapter to carry out the purposes of this chapter.

NEW SECTION. Sec. 8. The board shall have the following powers and duties:

(1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, and other services that may be necessary for basic health care, which enrollees in any participating managed health care system under the Washington basic health plan shall be entitled to receive in return for periodic payments to the board. The schedule of services shall emphasize preventive and primary health care, and shall include all services necessary for prenatal, postnatal, and well-child care. No professional service may be included in the schedule until legislation is enacted imposing a tax or other assessment, to be deposited in the basic health plan trust account, upon the class of providers or practitioners by whose members the service is to be performed.

(2) To design and implement a structure of periodic payments due from enrollees. The payment structure shall be based upon enrollee family size and shall include a sliding scale whereby payments shall vary according to enrollee family income.

(3) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan. The board shall endeavor to assure that covered basic health care services are available through the plan to prospective enrollees living in all areas of the state.

(4) To receive periodic payments from enrollees, deposit the payments in the basic health plan trust account, keep records of enrollee payments and status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.

(5) To accept applications from individuals, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, at application and at least annually thereafter, eligibility for plan enrollment on the basis of income and state residence.

(6) To require that prospective enrollees who may be eligible for federally matched medical assistance under chapter 74.09 RCW apply for such assistance.

(7) To determine, on a community rating basis, the amount of each periodic per capita or per family payment to a participating managed health care system in return for the provision of covered basic health care services to enrollees in the system.

(8) To monitor the provision of covered services to enrollees by participating managed health care systems in order to assure enrollee access to good quality basic health care, to require periodic reports on health care services rendered to enrollees, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter.

NEW SECTION. Sec. 9. On and after July 1, 1986, enrollees whose payments to the board are current shall be entitled to receive, without additional charge, covered basic health care services as defined by the board from the respective managed health care systems in which they are enrolled.

NEW SECTION. Sec. 10. Any enrollee whose payments to the board are delinquent may be dropped from enrollment status. The board shall make reasonable efforts to notify delinquent enrollees of their removal from the plan and shall provide for a hearing under chapters 34.04 and 34.12 RCW for any enrollee who contests the board's decision to drop the enrollee from the plan. Upon removal of an enrollee from the plan, the board shall promptly notify the managed health care system in which the enrollee has been enrolled, and shall not be responsible for payment for health care services provided to the enrollee (including, when applicable, members of the enrollee's family) after the date of notification. A managed health care system may contest the denial of payment for coverage of an enrollee through a hearing under chapters 34.04 and 34.12 RCW.

NEW SECTION. Sec. 11. Managed health care systems participating in the plan shall do so by contract with the board and, on and after July 1, 1986, shall provide, directly or by contract with other health care providers, covered basic health care services to each enrollee without charge to the enrollee or the board, as long as payments from the board on behalf of the enrollee are current. The board may receive and act upon complaints from enrollees regarding failure to provide covered services or efforts to obtain payment for covered services directly from enrollees, but nothing in this chapter empowers the board to impose any sanctions under Title 18 RCW or any other professional or facility licensing statute.

NEW SECTION. Sec. 12. The activities and operations of the Washington basic health plan under this chapter, including those of managed health care systems to the extent of their participation in the plan, shall be exempt from the provisions and requirements of Title 48 RCW.

NEW SECTION. Sec. 13. A new section is added to chapter 50.20 RCW to read as follows:

The commissioner shall notify in writing any person filing a claim under this chapter of the availability of basic health care coverage to qualified enrollees in the Washington basic health plan under section 2 of this act. The commissioner shall maintain a supply of Washington basic health plan enrollment application forms, which shall be provided in reasonably necessary quantities by the Washington basic health plan board, in each employment service office for the use of persons wishing to apply for enrollment in the Washington basic health plan.

NEW SECTION. Sec. 14. A new section is added to chapter 74.08 RCW to read as follows:

The department shall notify in writing any person found ineligible for public assistance of the availability of basic health care coverage to qualified enrollees in the Washington basic health plan under section 2 of this act. The department shall maintain a supply of Washington basic health plan enrollment application forms, which shall be provided in reasonably necessary quantities by the Washington basic health plan board, in each community service office for the use of persons wishing to apply for enrollment in the Washington basic health plan.

NEW SECTION. Sec. 15. A new section is added to chapter 82.24 RCW to read as follows:

Effective October 1, 1985, there is hereby levied and there shall be collected by the department of revenue from the persons mentioned in and in the manner provided by this chapter, an excise tax upon the sale, use, consumption, handling, possession, or distribution of cigarettes in an amount equal to the rate of four mills per cigarette. The moneys collected under this section shall be deposited in the basic health plan trust account of the state general fund.

NEW SECTION. Sec. 16. A new section is added to chapter 70.39 RCW to read as follows:

Effective October 1, 1985, the commission shall assess against each hospital an annual charge equal to one percent of the hospital's gross annual operating costs, one-twelfth of which shall be payable each month to the department of revenue. All such payments shall be deposited in the basic health plan trust account of the general fund. The commission shall take into account, in establishing annual target amounts of state-wide hospital revenues under RCW 70.39.150(6), the duty of each hospital to pay the assessment.

NEW SECTION. Sec. 17. A new section is added to chapter 82.04 RCW to read as follows:

Effective October 1, 1985, there is levied and shall be collected from every person engaging in the practice of medicine and holding a license under chapter 18.71 RCW, for the act or privilege of engaging in business activities, as a part of the tax imposed by the provisions of RCW 82.04.290, an additional tax equal to the gross income of the medical practice multiplied by the rate of one percent. The department of revenue shall deposit the revenues collected under this section in the basic health plan trust account of the general fund.

NEW SECTION. Sec. 18. The Washington basic health plan board shall be appointed, hire an executive director, and commence operations as promptly as practicable after the effective date of this act. Not later than January 1, 1986, the board shall submit to the legislature a progress report including:

(1) The schedule of covered basic health care services adopted under section 8 of this act;

(2) A proposal for legislation imposing, effective July 1, 1986, a tax or other assessment upon any class of health care providers or practitioners whose services are included in the schedule of basic health care services adopted under section 8 of this act, designed to raise sufficient revenue to cover the anticipated cost to participating managed health care systems of the services of providers or practitioners within the class;

(3) A descriptive listing of managed health care systems expected to participate in the Washington basic health plan, along with an identification of geographical areas within the state where no managed health care system is expected to be participating in the plan by July 1, 1986;

(4) The approximate amount of funds estimated to be on deposit in the basic health plan trust account as of June 30, 1986;

(5) An estimate of the number of enrollees whose basic health care coverage under this chapter can be expected to be financed during the 1986-87 state fiscal year by combining revenues received under sections 15, 16, and 17 of this act with payments from the enrollees;

(6) A description of the sliding fee schedule for periodic enrollee payments adopted by the board under section 8 of this act;

(7) A recommendation as to the possible inclusion of recipients of medical assistance under RCW 74.09.500 and/or medical care services under RCW 74.09.035 as enrollees in the plan, on a voluntary basis, with periodic payments to be made by the department of social and health services at the maximum rate established in the sliding fee schedule for the services covered by the plan;

(8) Any proposals for statutory changes which the board deems necessary to implement the purposes of this chapter; and

(9) Any other information which the board deems appropriate.

NEW SECTION. Sec. 19. Sections 1 through 12 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 20. There is appropriated from the general fund to the basic health plan trust account, for the biennium ending June 30, 1987, the sum of .......... dollars, to carry out the purposes of this act. Such appropriation shall be repaid to the general fund as soon as practicable, but not later than June 30, 1987, from the revenues accruing to the basic health plan trust account under sections 15, 16, and 17 of this act. There is appropriated from the basic health plan trust account of the general fund to the Washington basic health plan board, for the biennium ending June 30, 1987, the sum of .......... dollars, or as much thereof as shall be necessary, not exceeding funds deposited in the account, to carry out the purposes of this act.

Sec. 21. Section 82.24.020, chapter 15, Laws of 1961 as last amended by section 15, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.24.020 are each amended to read as follows:

(1) There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling, possession or distribution of all cigarettes, in an amount equal to the rate of ((~~eight~~)) eleven and one-half mills per cigarette.

(2) Wholesalers and retailers subject to the payment of this tax may, if they wish, absorb one-half mill per cigarette of the tax and not pass it on to purchasers without being in violation of this section or any other act relating to the sale or taxation of cigarettes.

(3) For purposes of this chapter ((~~and RCW 28A.47.440~~)), "possession" shall mean both (a) physical possession by the purchaser and, (b) when cigarettes are being transported to or held for the purchaser or his designee by a person other than the purchaser, constructive possession by the purchaser or his designee, which constructive possession shall be deemed to occur at the location of the cigarettes being so transported or held.

((~~(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section, RCW 82.24.025, and 28A.47.440.~~))

Sec. 22. Section 82.24.070, chapter 15, Laws of 1961 as last amended by section 14, chapter 299, Laws of 1971 ex. sess. and RCW 82.24.070 are each amended to read as follows:

Wholesalers and retailers subject to the provisions of this chapter shall be allowed compensation for their services in affixing the stamps herein required a sum equal to two percent of the first four mills of the value of the stamps purchased or affixed by them, one percent of the next one mill of the value of the stamps purchased or affixed by them, and one-half of one percent of the next one-half mill of the value of the stamps purchased or affixed by them.@p0

Sec. 23. Section 7, chapter 157, Laws of 1972 ex. sess. as last amended by section 217, chapter 3, Laws of 1983 and by section 3, chapter 189, Laws of 1983 and RCW 82.24.260 are each reenacted and amended to read as follows:

Any retailer who sells or otherwise disposes of any unstamped cigarettes other than (1) a federal instrumentality with respect to sales to authorized military personnel and (2) a federally recognized Indian tribal organization with respect to sales to enrolled members of the tribe shall collect from the buyer or transferee thereof the tax imposed on such buyer or transferee by ((~~RCW 82.24.020, 82.24.025, and 28A.47.440~~)) this chapter and remit the same to the department after deducting from the tax collected the compensation he would have been entitled to under the provisions of this chapter ((~~and RCW 28A.47.440~~)) if he had affixed stamps to the unstamped cigarettes. Such remittance shall be made at the same time and manner as remittances of the retail sales tax as required under chapters 82.08 and 82.32 RCW. In the event the retailer fails to collect the tax from the buyer or transferee, or fails to remit the same, the retailer shall be personally liable therefor, and shall be subject to the administrative provisions of RCW 82.24.230 with respect to the collection thereof by the department. The provisions of this section shall not relieve the buyer or possessor of unstamped cigarettes from personal liability for the tax imposed by ((~~RCW 82.24.020, 82.24.025, and 28A.47.440~~)) this chapter.

Nothing in this section shall relieve a wholesaler or a retailer from the requirements of affixing stamps pursuant to RCW 82.24.040 and 82.24.050.

Sec. 24. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 6, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.02.030 are each amended to read as follows:

(1) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), 66.24.210(2), 66.24.290(2), 82.04.2901, 82.16.020(2), 82.20.010(2), 82.26.020(2), 82.27.020(5), 82.29A.030(2), 82.44.020(5), and 82.45.060(2) shall be seven percent;

(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent; and

(3) ((~~The rate of the additional taxes under RCW 82.24.020(2) shall be fifteen percent; and~~

~~(4)~~)) The rate of the additional taxes under RCW 48.14.020(3) shall be four percent.

NEW SECTION. Sec. 25. The following acts or parts of acts are each repealed:

(1) Section 28A.47.440, chapter 223, Laws of 1969 ex. sess., section 1, chapter 70, Laws of 1971 ex. sess., section 1, chapter 157, Laws of 1972 ex. sess., section 2, chapter 189, Laws of 1983 and RCW 28A.47.440; and

(2) Section 2, chapter 59, Laws of 1979 ex. sess. and RCW 82.24.025.

NEW SECTION. Sec. 26. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 27. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1985.