AN ACT Relating to health care; amending RCW 82.08.020 and 7.04.010; adding a new section to chapter 50.20 RCW; adding a new section to chapter 74.08 RCW; adding a new section to chapter 74.09 RCW; adding new sections to chapter 43.131 RCW; adding a new chapter to Title 70 RCW; creating new sections; making appropriations; and declaring an emergency.

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

NEW SECTION. Sec. 1. This act shall be known and may be cited as the health care access and cost containment act of 1986.

NEW SECTION. Sec. 2. The legislature finds that:

(1) A significant percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of necessary 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 results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and all purchasers of health care, including the state; and

(3) The use of managed health care systems, as defined in section 3 of this act, has significant potential to reduce the growth of health care costs incurred by the people of this state, and low-income pregnant women are an especially vulnerable population, along with their children, who need greater access to managed health care.

The purpose of this act is to promote access to affordable basic health care, particularly for persons who lack coverage. To that end, this act establishes a pilot project using managed health care systems and subsidized payments for basic health care in selected areas of the state, requires expanded use of managed health care in the medical assistance programs of the department of social and health services, and strengthens some judicial mechanisms to help contain health care costs without depriving negligence victims of appropriate compensation.

NEW SECTION. Sec. 3. As used in this chapter:

(1) "Washington basic health project" or "project" means the system of enrollment and payment on a prepaid capitated basis for basic health care services, administered by the board through participating managed health care systems, created by this chapter.

(2) "Board" means the Washington basic health project board created under section 5 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, on a prepaid capitated basis to a defined patient population by enrollment in the project and in the managed health care system.

(4) "Enrollee" means an individual, or an individual plus the individual's spouse and/or dependent children, all under the age of sixty-five, who resides in a project area, whose gross family income at the time of enrollment does not exceed twice the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services, 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, at the time of enrollment, does not have access to employer-sponsored health care coverage.

(5) "Subsidy" means the difference between the amount of periodic payment the board makes, from funds appropriated from the basic health project trust account, to a managed health care system on behalf of an enrollee and the amount the board determines to be the enrollee's responsibility under section 9(2) of this act.

(6) "Project area" means one of not more than twelve distinct geographical areas within the state selected by the board as a demonstration site for the Washington basic health project. To the extent possible, the board shall select at least one project area in each congressional district of the state, define project areas coterminously with individual or adjacent cities, counties, or hospital districts, and take into special consideration any formal requests received from local governments or health care providers for selection of particular project areas.

NEW SECTION. Sec. 4. The basic health project trust account is hereby established in the state treasury. All revenue received under RCW 82.08.020(2) shall be deposited in the basic health project trust account. Disbursements from the account shall be made pursuant to appropriation and upon warrants drawn by the Washington basic health project board. 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 project and payment of costs of administering the project. The earnings on any surplus balances in the basic health project trust account shall be credited to the account, notwithstanding RCW 43.84.090. After January 1, 1987, the legislature shall not appropriate for an ensuing fiscal period amounts exceeding ninety percent of the revenues anticipated to accrue to the account during the fiscal period.

NEW SECTION. Sec. 5. There is created the Washington basic health project board, which shall be a separate and independent board of the state. For efficiencies in operation and consultation, the offices of the board may be colocated with those of the hospital commission. The board shall be composed of five members appointed by the governor. The governor shall select one member to serve as chairman. Not more than one member may have any fiduciary obligation to any health care provider or facility or any material financial interest in the provision of health care services.

Members of the board shall serve for four-year terms. However, 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 may 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.

NEW SECTION. Sec. 6. 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 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 board may, consistent with the procedural requirements of chapter 42.30 RCW, meet in executive session with representatives of prospective or participating managed health care systems to discuss matters of a proprietary or sensitive nature.

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. 7. 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, medical director, and up to three other employees shall be exempt from the civil service law, chapter 41.06 RCW.

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 technical or other advisory committees as it deems necessary. The board shall appoint a standing technical advisory committee that is representative of health care professionals, health care providers, and those directly involved in the purchase, provision, or delivery of health care services, including consumers and those knowledgeable of the ethical issues involved with health care public policy. Individuals appointed to any technical or advisory committee shall serve without compensation for their services as members, but may be reimbursed for their expenses in the same manner as members of the board.

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. 8. The board may promulgate and adopt, under chapter 34.04 RCW, rules consistent with this chapter to carry out the purposes of this chapter.

NEW SECTION. Sec. 9. The board has 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 project shall be entitled to receive in return for periodic payments to the board. The schedule of services shall emphasize preventive and primary health care, shall include all services necessary for prenatal, postnatal, and well-child care, and shall include a separate schedule of basic health care services for children, eighteen years of age and younger, for those enrollees who choose to secure basic coverage through the project only for their dependent children. In designing and revising the schedule of services, the board shall consider the guidelines for assessing health services under the mandated benefits act of 1984, RCW 48.42.080.

(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 vary according to enrollee family income. The structure shall be designed so as to include payment amounts for enrollment of children without requiring enrollment of their parents. In each project area, the board shall not enroll such numbers of enrollees who qualify for subsidies as might reasonably be expected to result in an overexpenditure of appropriations for such purposes in the area. Whenever the board finds that there is danger of such an overexpenditure, the board shall close project enrollment in the area until the board finds the danger no longer exists. Payments to the board by the department of social and health services on behalf of any person eligible for medical coverage under chapter 74.09 RCW, subject to section 16 of this act, shall not be less than the payments the board makes to managed health care systems for coverage of those persons.

(3) To select not more than twelve project areas in the state as sites for the project. In selecting the areas, the board shall take into account the need for geographic, demographic, and economic diversity among project sites, the actual and potential availability of managed health care systems in different parts of the state, levels and rates of unemployment in possible project areas, and the need to assess the financial ability of the project to provide basic health care coverage to a population reasonably representative of the portion of the state's population that lacks basic health care coverage.

(4) 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 project. The board shall endeavor to assure that covered basic health care services are available through the project from among a selection of participating managed health care systems in at least some project areas. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the board shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the project areas.

(5) To receive periodic payments from enrollees, deposit the payments in the basic health project operating 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.

(6) To accept applications from individuals residing in project areas, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health project, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and at least annually thereafter, or at the request of any enrollee, eligibility due to current gross family income for sliding scale payments that will be the responsibility of the enrollee. An enrollee who remains current in making periodic sliding-scale payments, as determined by the board under subsection (2) of this section, and whose gross family income has risen above twice the federal poverty level, may continue enrollment unless and until the enrollee's gross family income has remained above two and one-half times the poverty level for twelve consecutive months, by making payment at the maximum rate established in the sliding fee schedule. No subsidy shall be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to section 15 of this act, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW.

(7) To require that prospective enrollees who may be eligible for medical coverage under chapter 74.09 RCW apply for such coverage.

(8) 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. Although the schedule of covered basic health care services will be the same for similar enrollees, the periodic per capita or per family payments to participating managed health care systems may vary among the systems. In negotiating payment levels with participating systems, the board shall consider the characteristics of the populations served by the respective systems, economic circumstances of the project area, and other factors the board finds relevant.

(9) 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 in order to provide adequate information for evaluation, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter. In requiring reports from participating managed health care systems, including data on services rendered enrollees, the board shall endeavor to minimize costs, both to the managed health care systems and to the board. The board shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the hospital commission, to minimize duplication of effort.

(10) To initiate, at the option of the board, a matching grant program, in up to three project areas, to demonstrate the potential that better coordination of all local primary health care resources in the provision of necessary care to low-income residents who are unlikely or unable to enroll in the project can be more cost-effective. The board may award grants to local governments that sponsor consortia of health care providers, including at least one hospital in each area. Any grant proposal must meet minimum standards set by the board, including requirements for coordination of care by local providers and for coordination of local funding sources, which may include in-kind charity care provided by hospitals and physicians as well as public or private funds and sliding-scale payments from individuals served. Any grants awarded under this subsection shall be made from funds appropriated for such purpose from the Washington basic health project trust account, may be extended for up to three years, and shall be on the basis of one dollar from the board for every four dollars of local or private funds expended in the demonstration program.

(11) To monitor the access that state residents have to adequate and necessary health care services, determine the extent of any unmet needs for such services or lack of access that may exist from time to time, and make such reports and recommendations to the legislature as it deems appropriate.

NEW SECTION. Sec. 10. The benefits available under the project shall be subject to RCW 48.21.200 and shall be excess to the benefits payable under the terms of any insurance policy issued to or on the behalf of an enrollee that provides payments toward medical expenses without a determination of liability for the injury.

NEW SECTION. Sec. 11. In each project area, on and after a date set by the board for the area, but in no case before March 31, 1987, enrollees whose payments to the board are current are entitled to receive covered basic health care services as defined by the board from the respective managed health care systems in which they are enrolled. The board shall not at any time maintain enrollment of more than thirty thousand enrollees who are eligible for subsidies. The board shall closely monitor growth patterns so as not to exceed that consistent with the orderly development of the project as a whole and in each project area.

NEW SECTION. Sec. 12. Any enrollee whose payments to the board are delinquent or who moves his or her residence out of a project area may be dropped from enrollment status. The board shall make reasonable efforts to notify delinquent enrollees of their removal from the project 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 project. Upon removal of an enrollee from the project, 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, if 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. 13. Managed health care systems participating in the project shall do so by contract with the board and shall provide, directly or by contract with other health care providers, covered basic health care services to each enrollee as long as payments from the board on behalf of the enrollee are current. Subject to board approval and with full disclosure to enrollees and prospective enrollees, a managed health care system may impose nominal copayments upon enrollees as an incentive for proper utilization of services. A participating managed health care system may offer, but not require acceptance of, additional health care benefits or services not included in the schedule of covered services under the project, that will be the sole responsibility of the enrollee. Any action by or on behalf of any enrollee based on a claim of professional negligence shall, at the option of the enrollee, be submitted for arbitration under chapter 7.04 RCW. The board may receive and act upon complaints from enrollees regarding failure to provide covered services or efforts to obtain payment, other than copayments authorized under this section, 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.

The project shall allow, at least annually, an opportunity for enrollees to transfer their enrollments among participating managed health care systems serving their respective project areas. The board shall establish a period of at least twenty days in a given year when this opportunity is afforded enrollees, and in those areas served by more than one participating managed health care systems the board shall endeavor to establish a uniform period for such opportunity.

Prior to negotiating with any managed health care system, the board shall determine, on an actuarially sound basis, the reasonable cost of providing the schedule of basic health care services, expressed in terms of upper and lower limits, and recognizing variations in the cost of providing the services through the various systems and in different project areas. In negotiating with managed health care systems for participation in the project, the board shall adopt a uniform procedure that includes at least the following:

(1) The board shall issue a request for proposals, including standards regarding the quality of services to be provided; financial integrity of the responding systems; and responsiveness to the unmet health care needs of the local communities or populations that may be served;

(2) The board shall then review responsive proposals and may negotiate with respondents to the extent necessary to refine any proposals;

(3) The board may then select one or more systems to provide the covered services within a project area; and

(4) The board may adopt a policy that gives preference, in one or more project areas, to systems substantially supported by public revenues or involving public agencies.

NEW SECTION. Sec. 14. Enrollees of any participating managed health care system may, if offered, execute an agreement on behalf of themselves and/or any dependents enrolled in the project to arbitrate any dispute, controversy, or issue arising out of health care or treatment rendered by or through the managed health care system. The agreement to arbitrate shall provide that its execution is not a prerequisite to enrollment in the project or the provision of any services and shall provide that the enrollee may revoke the agreement within sixty days after execution by notifying the managed health care system in writing.

The agreement shall contain the following provision in at least nine-point boldface type immediately above the space for signature of the parties:

"This agreement to arbitrate is not a prerequisite to enrollment or the provision of any services and may be revoked by the enrollee within sixty days after execution by notification in writing."

Participating managed health care systems that use arbitration agreements shall furnish to the enrollee at the time of enrollment a copy of an information brochure, prepared and approved by the board, which clearly outlines the arbitration process as an alternative dispute resolution process to that of a court and/or jury trial.

NEW SECTION. Sec. 15. The board shall submit to the 1987 session of the legislature the design plan for a schedule of basic health care services as outlined in section 9 of this act, including appropriate co-payments and/or deductibles, and the schedule of periodic payments that will be the responsibility of any enrollee. For this project to remain in effect it must be approved by the legislature by June 30, 1987, and the level of benefits and periodic payments cannot be changed without legislative approval.

NEW SECTION. Sec. 16. The department of social and health services shall make periodic payments to the project on behalf of any enrollee who is a recipient of medical assistance or medical care services under chapter 74.09 RCW, at the maximum rate established in the sliding fee scale, for the services covered by the project, and no premium may be charged to such an enrollee. With respect to enrollees eligible for medical assistance under RCW 74.09.510, the periodic amount payable to the project shall not be greater than the amount with respect to which full federal financial participation is available under Title XIX of the federal social security act. Any enrollee on whose behalf the department of social and health services makes payments to the project under this section and chapter 74.09 RCW may continue as an enrollee, making periodic payments based on the enrollee's own income as determined under the sliding scale, after eligibility for coverage under chapter 74.09 RCW has ended. Nothing in this section affects the right of any person eligible for coverage under chapter 74.09 RCW to receive the services offered to other persons under that chapter but not included in the schedule of basic health care services covered by the project. The board and the department of social and health services shall cooperatively adopt procedures to facilitate the transition of project enrollees and payments on their behalf between the project and the programs established under chapter 74.09 RCW.

NEW SECTION. Sec. 17. In addition to the powers and duties specified in sections 7 and 9 of this act, the board has the power to enter into contracts for the following functions and services:

(1) With public or private agencies, to assist the board in its duties to design or revise the schedule of covered basic health care services, and/or to monitor or evaluate the performance of participating managed health care systems.

(2) With public or private agencies, to provide technical or professional assistance to health care providers, particularly public or private nonprofit organizations and providers serving rural areas, who show serious intent and apparent capability to participate in the project as managed health care systems.

(3) With health care service contractors registered under RCW 48.44.015 and doing business in the state, for marketing and administrative services in connection with participation of managed health care systems, enrollment of enrollees, billing and collection services to the board, and other administrative functions ordinarily performed by health care service contractors, other than insurance. Any activities of a health care service contractor pursuant to a contract with the board under this section shall be exempt from the provisions and requirements of Title 48 RCW.

(4) With any public hospital district established under chapter 70.44 RCW or with any county or city, to administer the project as the board's agent with respect to enrollees residing and managed health care systems serving a project area within the boundaries of the district, county, or city: PROVIDED, That the district, county, or city shares with the board, on a dollar for dollar matching basis, the cost of payments to participating managed health care systems for coverage of enrollees residing within the boundaries of the district, county, or city less the amounts payable by enrollees to the district, county, or city as agent for the board. However, if the unemployment rate of a participating county exceeds by twenty percent or more the state average as determined by the employment security department, the board may increase the level of its contribution to not more than two dollars for each local dollar.

(5) With any community health center or other public or private nonprofit health care provider participating in a managed health care system under the project and demonstrating financial need, to furnish direct financial assistance in meeting the start-up costs of providing covered basic health care services under the project, for a period not exceeding one year after the managed health care system commences coverage of enrollees.

NEW SECTION. Sec. 18. The activities and operations of the Washington basic health project under this chapter, including those of managed health care systems to the extent of their participation in the project, are exempt from the provisions and requirements of Title 48 RCW.

NEW SECTION. Sec. 19. The legislature reserves the right to amend or repeal all or any part of this chapter at any time and there shall be no vested private right of any kind against such amendment or repeal. All the rights, privileges, or immunities conferred by this chapter or any acts done pursuant thereto shall exist subject to the power of the legislature to amend or repeal this chapter at any time.

NEW SECTION. Sec. 20. 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 who resides in a project area of the availability of basic health care coverage to qualified enrollees in the Washington basic health project under chapter 70.__ RCW (sections 3 through 19 of this act), unless the Washington basic health project board has notified the commissioner of a closure of enrollment in the area. The commissioner shall maintain a supply of Washington basic health project enrollment application forms, which shall be provided in reasonably necessary quantities by the board, in each appropriate employment service office for the use of persons wishing to apply for enrollment in the Washington basic health project.

NEW SECTION. Sec. 21. A new section is added to chapter 74.08 RCW to read as follows:

The department shall notify in writing any applicant for public assistance who resides in a project area and is under sixty-five years of age of the availability of basic health care coverage to qualified enrollees in the Washington basic health project under chapter 70.__ RCW (sections 3 through 19 of this act), unless the Washington basic health project board has notified the department of a closure of enrollment in the area. The department shall maintain a supply of Washington basic health project enrollment application forms, which shall be provided in reasonably necessary quantities by the board, in each appropriate community service office for the use of persons wishing to apply for enrollment in the Washington basic health project.

Sec. 22. Section 1, chapter 32, Laws of 1985 and RCW 82.08.020 are each amended to read as follows:

(1) There is levied and there shall be collected a tax on each retail sale in this state equal to six and five-tenths percent of the selling price.

(2) An additional tax is imposed, effective January 1, 1987, through June 30, 1992, equal to one-twentieth of one percent. The moneys collected under this subsection shall be deposited in the basic health project trust account of the state treasury.

(3) The tax imposed under this chapter shall apply to successive retail sales of the same property.

((~~(3)~~)) (4) The rates provided in this section ((~~applies~~)) apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

NEW SECTION. Sec. 23. The Washington basic health project board shall be appointed and commence operations as promptly as practicable after the effective date of this act. Not later than December 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 9 of this act;

(2) A descriptive listing of managed health care systems expected to participate in the Washington basic health project, along with an identification of prospective project areas;

(3) The approximate amount of funds estimated to be on deposit in the basic health project trust account as of March 31 and June 30, 1987;

(4) An estimate of the number of enrollees whose basic health care coverage under this chapter can be expected to be financed during the 1987-88 and 1988-1989 state fiscal years by combining revenue received under RCW 82.08.020(2) with payments from the enrollees;

(5) A description of the sliding fee schedule for periodic enrollee payments adopted by the board under section 9 of this act;

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

(7) A draft of the brochure on arbitration that may be used under section 14 of this act by participating managed health care systems; and

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

Not later than January 1, 1988, the board shall submit to the legislature a further progress report, updating its 1986 report, and covering the same items provided for therein, with projections based upon implementation of the project to date. Further, the report shall include a description of the performance of the first managed health care systems included as eligible providers as provided in section 11 of this act. The board shall submit an annual report to the legislature by January 1 of each year thereafter.

NEW SECTION. Sec. 24. Sections 3 through 19 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 25. There is appropriated from the general fund to the basic health project trust account, for the biennium ending June 30, 1987, the sum of one million 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 revenue accruing to the basic health project trust account under RCW 82.08.020(2).

There is appropriated from the basic health project trust account of the state treasury to the Washington basic health project board, for the biennium ending June 30, 1987, the sum of five million dollars, or as much thereof as shall be necessary, not exceeding funds deposited in the account, to carry out the purposes of chapter 70.__ RCW (sections 3 through 19 of this act).

NEW SECTION. Sec. 26. A new section is added to chapter 43.131 RCW to read as follows:

The Washington basic health project board and its powers and duties shall be terminated on June 30, 1991, as provided in section 27 of this act.

NEW SECTION. Sec. 27. A new section is added to chapter 43.131 RCW to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 1992:

(1) Section 3 of this act and RCW 70.__.___;

(2) Section 4 of this act and RCW 70.__.___;

(3) Section 5 of this act and RCW 70.__.___;

(4) Section 6 of this act and RCW 70.__.___;

(5) Section 7 of this act and RCW 70.__.___;

(6) Section 8 of this act and RCW 70.__.___;

(7) Section 9 of this act and RCW 70.__.___;

(8) Section 10 of this act and RCW 70.__.___;

(9) Section 11 of this act and RCW 70.__.___;

(10) Section 12 of this act and RCW 70.__.___;

(11) Section 13 of this act and RCW 70.__.___;

(12) Section 14 of this act and RCW 70.__.___;

(13) Section 15 of this act and RCW 70.__.___;

(14) Section 16 of this act and RCW 70.__.___;

(15) Section 17 of this act and RCW 70.__.___;

(16) Section 18 of this act and RCW 70.__.___;

(17) Section 19 of this act and RCW 70.__.___;

(18) Section 20 of this act and RCW 50.20.___; and

(19) Section 21 of this act and RCW 74.08.___.

NEW SECTION. Sec. 28. A new section is added to chapter 74.09 RCW to read as follows:

The department of social and health services shall enter into contracts with managed health care systems, as defined in section 3(3) of this act, for the provision of services to recipients of aid to families with dependent children on a prepaid capitated basis in at least two areas of the state. One area shall be on the eastern side and one on the western side of the Cascade mountains. The contracts will require enrollment and coverage of all recipients of aid to families with dependent children living in the selected areas, involving at least five thousand recipients in each area. The department may contract with more than one managed health care system to provide services in an area, affording recipients a choice among systems. No contract under this section may take effect unless and until the department has obtained necessary approval from the federal department of health and human services to provide federal matching funds for services provided under the contract. The requirements of this section apply to areas and recipients in addition to those already enrolled in managed health care systems or covered by contracts with managed health care systems as of July 1, 1986. The department shall report to the legislature not later than January 1, 1987, on progress towards implementation of the requirements of this section, but shall not delay implementation on account of this reporting requirement. The department shall enter into contracts with managed health care systems, covering recipients in additional areas of the state, with a goal of enrollment of a substantial number of all recipients of aid to families with dependent children and at least ten thousand recipients of general assistance and supplemental security income, all subject to necessary federal waivers, by July 1, 1991.

Sec. 29. Section 1, chapter 138, Laws of 1943 as amended by section 1, chapter 209, Laws of 1947 and RCW 7.04.010 are each amended to read as follows:

Two or more parties may agree in writing to submit to arbitration, in conformity with the provisions of this chapter, any controversy which may be the subject of an action existing between them at the time of the agreement to submit, or they may include in a written agreement a provision to settle by arbitration any controversy thereafter arising between them out of or in relation to such agreement. Any contract providing prepaid health care services may include an agreement to settle by arbitration any controversy thereafter arising between the consumer and a health care provider with respect to personal injury or wrongful death.

Such agreement shall be valid, enforceable and irrevocable save upon such grounds as exist in law or equity for the revocation of any agreement.

The provisions of this chapter shall not apply to any arbitration agreement between employers and employees or between employers and associations of employees, and as to any such agreement the parties thereto may provide for any method and procedure for the settlement of existing or future disputes and controversies, and such procedure shall be valid, enforceable and irrevocable save upon such grounds as exist in law or equity for the revocation of any agreement.

NEW SECTION. Sec. 30. An impartial and thorough review of past and current practices in dealing with the costs of charity care rendered by health care providers, both institutional and individual, is necessary in view of the increasing use of prospective payment systems by major purchasers of health care. The governor, in consultation with officials in appropriate state agencies such as the department of social and health services, the hospital commission, the basic health project board, and others, as well as the officers of any organizations of health care providers and the major insurers or purchasers of health care in the state, shall initiate such a review that includes recommendations of possible solutions for legislative consideration. Up to fifty thousand dollars of the funds appropriated to the basic health project by section 25 of this act may be expended, upon certification by the director of financial management, in connection with the review, including consultant services that might be required. A report to the legislature shall be submitted by December 1, 1986.

NEW SECTION. Sec. 31. 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. 32. 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 immediately.