AN ACT Relating to state employees' health care insurance; amending RCW 41.05.025 and 41.05.010; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that, due to certain apparent ambiguities in state law, emerging health care service delivery systems being made available to public employees through contracts with the state employees' insurance board have operated in some situations to discriminatorily restrict an employee's access to the type of health care services he or she prefers to receive. Mindful of the need to assure health care quality while containing health care costs through such fair and responsible means as peer utilization review, the legislature hereby reaffirms the right of public employees to freely choose the type of health care services they prefer to utilize from among those provided by licensed primary health care practitioners and to receive those services on an equal access basis as provided under this chapter.

Sec. 2. Section 2, chapter 136, Laws of 1977 ex. sess. as last amended by section 68, chapter 287, Laws of 1984 and RCW 41.05.025 are each amended to read as follows:

(1) There is hereby created a state employees' insurance board to be composed of the members of the present board holding office on the day prior to July 1, 1977, which such members shall serve until the expiration of the period of time of the term for which they were appointed and until their successors are appointed and qualified. Thereafter the board shall be composed as follows: The governor or the governor's designee; one administrative officer representing all of higher education to be appointed by the governor; two higher education faculty members to be appointed by the governor; the director of the department of personnel who shall act as trustee; one representative of an employee association certified as an exclusive representative of at least one bargaining unit of classified employees and one representative of an employee union certified as exclusive representative of at least one bargaining unit of classified employees, both to be appointed by the governor; one person who is retired and is covered by a program under the jurisdiction of the board, to be appointed by the governor; one member of the senate who shall be appointed by the president of the senate; and one member of the house of representatives who shall be appointed by the speaker of the house. The terms of office of the administrative officer representing higher education, the two higher education faculty members, the representative of an employee association, the retired person, and the representative of an employee union shall be for four years: PROVIDED, That the first term of one faculty member and one employee association or union representative member shall be for three years. Meetings of the board shall be at the call of the director of personnel. The board shall prescribe rules for the conduct of its business and shall elect a chairman and vice chairman annually. Members of the board shall be compensated in accordance with RCW 43.03.240 and shall be paid for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060, and legislative members shall receive allowances provided for in RCW 44.04.120.

(2) The board shall study all matters connected with the providing of adequate health care coverage, life insurance, liability insurance, accidental death and dismemberment insurance, and disability income insurance or any one of, or a combination of, the enumerated types of insurance and health care plans for employees and their dependents on the best basis possible with relation both to the welfare of the employees and to the state: PROVIDED, That liability insurance shall not be made available to dependents. The board shall design benefits, devise specifications, analyze carrier responses to advertisements for bids, determine the terms and conditions of employee participation and coverage, and decide on the award of contracts which shall be signed by the trustee on behalf of the board: PROVIDED, That all contracts for insurance, health care plans, including panel medicine plans, or protection applying to employees covered by RCW 28B.10.660 and chapters 41.04 and 41.05 RCW shall provide that the beneficiaries of such insurance, health care plans, or protection may utilize on an equal participation basis the services of practitioners licensed pursuant to chapters 18.22, 18.25, 18.32, 18.53, 18.57, 18.71, 18.74, 18.83, and 18.88 RCW. As used in this subsection, the term "equal participation basis" is a standard the board shall use to assure that all such beneficiaries will have the freedom to choose, and the right to receive, the type of health care services they prefer from among those provided by licensed health care practitioners, limited only by those restrictions on access to that preferred choice which are:

(a) The same as those placed on any of the choices assured herein;

(b) Applied only after a beneficiary has already gained access to his or her preferred choice of primary health care services; and

(c) The result of peer review: PROVIDED FURTHER, That the boards of trustees and boards of regents of the several institutions of higher education shall retain sole authority to provide liability insurance as provided in RCW 28B.10.660. The board shall from time to time review and amend such plans. Contracts for all plans shall be rebid and awarded at least every five years.

(3) The board shall develop and provide as a part of the employee insurance benefit program an employee health care benefit plan which may be provided through a contract or contracts with regularly constituted insurance carriers or health care service contractors as defined in chapter 48.44 RCW, and a plan to be provided under subsection (2) of this section by a panel medicine plan in its service area only when approved by the board. The board shall require panel medicine plans to inform all beneficiaries of their freedom to choose, and right to receive, the type of health care services they prefer as provided under subsection (2) of this section. The board may but shall not be required to pay more for health benefits under a panel medicine plan than it would otherwise be required to pay for health benefits by a contract with a regularly constituted insurance carrier or health care service contractor in effect at the time the panel medicine plan is included in the employee health care benefit plan. Except for panel medicine plans, the board may but is not required to contract with more than one insurance carrier or health care service contractor to provide similar benefits: PROVIDED, That employees may choose participation in only one of the health care benefit plans sponsored by the board. Active employees, as defined in RCW 41.05.010(2), eligible for medicare benefits shall have the option of continuing participation in health care programs on the same basis as all other employees or participation in medicare supplemental programs as may be developed by the board. These health care benefit plans shall provide coverage for all officials and employees and their dependents without premium or subscription cost to the individual employees and officials, unless the board approves a panel medicine plan at a subscription rate in excess of the premium of the regularly constituted insurance carrier or health care service contractor, in which circumstances an employee contribution may be authorized at an amount equal to such excess. Rates for self pay segments of state employee groups will be developed from the experience of the entire group. Such self pay rates will be established based on a separate rate for the employee, the spouse, and children.

(4) The board shall review plans proposed by insurance carriers who desire to offer property insurance and/or accident and casualty insurance to state employees through payroll deduction. The board may approve any such plan for payroll deduction by carriers holding a valid certificate of authority in the state of Washington and which the board determines to be in the best interests of employees and the state. The board shall promulgate rules setting forth criteria by which it shall evaluate the plans.

Sec. 3. Section 1, chapter 39, Laws of 1970 ex. sess. as last amended by section 90, chapter 3, Laws of 1983 and RCW 41.05.010 are each amended to read as follows:

Unless the context clearly indicates otherwise, words used in this chapter have the following meaning:

(1) "Board" means the state employees' insurance board established under the provisions of RCW 41.05.025.

(2) "Employee" shall include all full time and career seasonal employees of the state, a county, a municipality, or other political subdivision of the state, whether or not covered by civil service; elected and appointed officials of the executive branch of government, including full time members of boards, commissions, or committees; and shall include any or all part time and temporary employees under the terms and conditions established by the board; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature or of the legislative authority of any county, city, or town who are elected to office after February 20, 1970.

(3) "Panel medicine plan" means a health care plan which can be offered by a health care service contractor which itself furnishes the health care service contracted for by means of a group practice prepaid medical care plan, and also includes a health maintenance organization holding a valid certificate of registration under chapter 48.46 RCW.

(4) "Trustee" shall mean the director of personnel.

(5) "Peer review" means an evaluation, based on generally accepted professional health care standards, by a peer review committee of the appropriateness, quality, utilization, and cost of health care services provided to a patient.

(6) "Generally accepted professional health care standards" means, for the purpose of peer review, those standards of care, skill, and treatment which are recognized as being acceptable under similar conditions and circumstances by a reasonably prudent health care practitioner who is licensed under the same chapter as the provider being reviewed.

(7) "Peer review committee" means a committee of individuals consisting of licensed health care practitioners and at least one consumer, none of whom may be in a direct fiduciary relationship with the practitioner, insurer, or patient whose case is being reviewed.

(8) "Patient" means a beneficiary who receives health care services from a licensed health care practitioner, which services are within the authorized scope of practice of the practitioner's license.