AN ACT Relating to health insurance coverage access for those persons otherwise uninsurable; and adding a new chapter to Title 48 RCW.

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

NEW SECTION. Sec. 1. This chapter shall be known and may be cited as the "Washington state health insurance coverage access act".

NEW SECTION. Sec. 2. It is the purpose and intent of the legislature to provide access to health insurance coverage to all residents of Washington who are denied adequate health insurance for any reason from any insurer. It is the intent of the legislature that adequate levels of health insurance coverage be made available to residents of Washington who are otherwise considered uninsurable or who are underinsured. It is the intent of the Washington state comprehensive health coverage access act to provide a mechanism to insure the availability of comprehensive health insurance to persons unable to obtain such insurance coverage on either an individual or group basis directly under any health plan.

NEW SECTION. Sec. 3. As used in this chapter, the following terms have the meaning indicated, unless the context requires otherwise:

(1) "Pool" means the Washington state health insurance pool as created in section 4 of this act.

(2) "Board" means the board of directors of the pool.

(3) "Commissioner" means the insurance commissioner.

(4) "Health insurance" means any hospital and medical expense incurred policy, nonprofit health care service plan contract, and health maintenance organization subscriber contracts. The term does not include short term, accident, fixed indemnity, disability income contracts, limited benefit or credit insurance, coverage issued as a supplement to liability insurance, insurance arising out of the worker's compensation or similar law, automobile medical payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(5) "Insured" means any individual resident of this state who is eligible to receive benefits from any insurer, or other health care plan.

(6) "Insurer" means any insurance company authorized to transact accident and sickness insurance business in this state, any hospital and medical insurance corporation, and any health maintenance organization.

(7) "Medicare" means coverage under both part A and B of Title XVIII of the Social Security Act, (42 U.S.C. Sec. 1395 et seq., as amended).

(8) "Health care facility" has the same meaning as in RCW 70.37.020.

(9) "Health maintenance organization" or "HMO" means an organization as defined in RCW 48.46.020(1).

(10) "Health care provider" means any physician, institution, or health care professional, who is licensed in Washington state and entitled to reimbursement for health care services.

(11) "Health care services" means any services or products included in the furnishing to any individual of medical care, or hospitalization, or incidental to the furnishing of such care or hospitalization, as well as the furnishing to any person of any other services or products for the purpose of preventing, alleviating, curing, or healing human illness or injury.

(12) "Plan of operation" means the pool, including articles, by-laws, and operating rules, adopted by the board pursuant to section 5 of this act.

(13) "Health plan" means any arrangement by which persons, including dependents or spouses, covered or making application to be covered under this pool, have access to hospital and medical benefits or reimbursement including group or individual insurance or subscriber contracts; coverage through health maintenance organizations, preferred provider organization, or other alternate delivery systems; coverage under prepayment, group practice, or individual practice plans; coverage under uninsured arrangements of group or group-type contracts including employer self-insured, cost-plus, or other benefit methodologies not involving insurance or not subject to Washington state premium taxes; coverage under group-type contracts which are not available to the general public and can be obtained only because of connection with a particular organization or group; and coverage by medicare or other governmental benefits. This term includes coverage through "health insurance" as defined under this section, and specifically excludes those types of programs excluded under the definition of "health insurance" in subsection (4) of this section.

(14) "Substantially equivalent health plan" means a "health plan" as defined in subsection (13) of this section which, in the judgment of the board of directors or the administrator, under authority delegated by the board, offers persons including dependents or spouses covered or making application to be covered by this pool an overall level of benefits deemed approximately equivalent to the minimum benefits available under this pool.

NEW SECTION. Sec. 4. (1) There is hereby created a nonprofit entity to be known as the Washington state health insurance pool. All insurers issuing health insurance in this state and providing health plan benefits in this state on or after the effective date of this section shall be members of the pool.

(2) The commissioner shall, within ninety days after the effective date of this section, give notice to all insurers of the time and place for the initial organizational meetings of the pool. The commissioner shall select the initial members of the board of directors, which shall consist of not less than five, nor more than nine members. The board shall at all times, to the extent possible, include at least one representative of a domestic insurance company licensed to transact health insurance, one representative of a domestic nonprofit health care service plan, one representative of a health maintenance organization, one member from the general public who is not associated with the medical profession, a hospital, or an insurer, and one member to represent a group considered to be "uninsurable."

(3) The original members of the board of directors shall be appointed for intervals of one to three years. Thereafter, all board members shall be appointed by the commissioner for a term of three years. Board members shall receive no compensation, but shall be reimbursed for all travel expenses as provided in RCW 43.03.050 and 43.03.060.

(4) The board shall submit to the commissioner a plan of operation for the pool and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the pool.

The commissioner shall, after notice and hearing, approve the plan of operation provided the plan is determined to assure the fair, reasonable, and equitable administration of the pool, and provides for the sharing of pool losses on an equitable, proportionate basis among the members of the pool. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under this chapter must be made available. If the board fails to submit a plan of operation within one hundred eighty days after the appointment of the board of directors, or any time thereafter fails to submit acceptable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such rules as are necessary or advisable to effectuate the provisions of this chapter. The rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the board and approved by the commissioner.

NEW SECTION. Sec. 5. The plan of operation submitted by the board to the commissioner shall:

(1) Establish procedures for the handling and accounting of assets and moneys of the pool;

(2) Establish regular times and places for a meeting of the board of directors;

(3) Establish procedures for records to be kept of all financial transactions and for an annual fiscal reporting to the commissioner;

(4) Contain additional provisions necessary and proper for the execution of the powers and duties of the pool;

(5) Establish procedures for the collection of assessments from all members to provide for claims paid under the plan and for administrative expenses incurred or estimated to be incurred during the period for which the assessment is made;

(6) Establish the amount of assessment pursuant to section 6 of this act, which shall occur annually at the end of each calendar year, and which shall be due and payable within thirty days of the receipt of the assessment notice;

(7) Select an administrator in accordance with section 8 of this act; and

(8) Develop and implement a program to publicize the existence of the plan, the eligibility requirements and procedures for enrollment, and to maintain public awareness of the plan.

NEW SECTION. Sec. 6. The board shall have the general powers and authority granted under the laws of this state to insurance companies licensed to transact the kinds of insurance defined under this title. In addition thereto, the board may:

(1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter including the authority, with the approval of the commissioner, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;

(2) Sue or be sued, including taking any legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool;

(3) Establish appropriate rates, rate schedules, rate adjustments, expense allowances, agent referral fees, claim reserve formulas and any other actuarial functions appropriate to the operation of the pool. Rates shall not be unreasonable in relation to the coverage provided, the risk experience, and expenses of providing the coverage. Rates and rate schedules may be adjusted for appropriate risk factors such as age and area variation in claim costs and shall take into consideration appropriate risk factors in accordance with established actuarial underwriting practices;

(4) Assess members of the pool in accordance with the provisions of this chapter, and to make advance interim assessments as may be reasonable and necessary for the organizational or interim operating expenses. Any interim expenses will be credited as offsets against any regular assessments due following the close of the calendar year;

(5) Issue policies of insurance in accordance with the requirements of this chapter;

(6) Appoint appropriate legal, actuarial and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool; and

(7) Conduct periodic audits to assure the general accuracy of the financial data submitted to the pool, and the board shall cause the pool to have an annual audit of its operations by an independent certified public accountant.

NEW SECTION. Sec. 7. The pool shall be subject to examination by the commissioner as provided under chapter 48.03 RCW. The board of directors shall submit, not later than March 1st of each year, a financial report for the preceding calendar year in a form approved by the commissioner. The board of directors shall further report to the appropriate standing committees of each house of the legislature by March 1st of each year.

NEW SECTION. Sec. 8. All policy forms issued by the pool shall conform in substance to prototype forms developed by the pool, and shall in all other respects conform to the requirements of this chapter, and shall be filed with and approved by the commissioner before they are issued. The pool shall not issue a pool policy to any individual who, on the effective date of the coverage applied for, already has or would have coverage substantially equivalent to a pool policy as an insured or covered dependent, or who would be eligible for such coverage if he elected to obtain it at a lesser premium rate. Coverage under a pool policy is in excess of, and shall not duplicate, coverage under any other form of health insurance.

NEW SECTION. Sec. 9. (1) Following the close of each calendar year, the pool administrator shall determine the net premium (premiums less administrative expense allowances), the pool expenses, administrative incurred losses for the year, taking into account investment income and other appropriate gains and losses. Each insurer's assessment shall be determined by multiplying the total cost of pool operation by a fraction, the numerator of which equals that insurer's premium and subscriber contract charges for health insurance written in the state during the preceding calendar year, and the denominator of which equals the total of all premiums and subscriber contract charges written in the state.

(2) If assessments exceed actual losses and administrative expenses of the pool, the excess shall be held at interest and used by the board to offset future losses or to reduce pool premiums. As used in this subsection, "future losses" includes reserves for incurred but not reported claims.

(3)(a) Each member's proportion of participation in the pool shall be determined annually by the board based upon annual statements and other reports deemed necessary by the board and filed by the member with it.

(b) Any deficit incurred by the pool shall be recouped by assessments apportioned under subsection (1) of this section pursuant to the formula set forth by the board among members.

(4) The board may abate or defer, in whole or in part, the assessment of a member if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. In the event that an assessment against a member is abated or deferred in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in subsection (1) of this section. The member receiving the abatement or deferment shall remain liable to the pool for the deficiency for four years.

(5) Members of the pool shall be allowed a credit in the amount of assessment paid to the association pool annually against any and all premium taxes otherwise due under RCW 48.14.020.

NEW SECTION. Sec. 10. (1) Any individual person, who is a resident of this state shall be eligible for coverage, except the following:

(a) Persons who have or who are eligible to have on the day of issue of coverage by the pool substantially equivalent coverage under health insurance or other health plan;

(b) Any person who is at the time of pool application eligible for health care benefits under the medicaid provisions of chapter 74.09 RCW;

(d) Any person on whose behalf the pool has paid out five hundred thousand dollars in benefits; and

(e) Inmates of public institutions and persons whose benefits are duplicated under public programs.

(2) Any person whose health insurance coverage is involuntarily terminated for any reason other than nonpayment of premium, and who is not eligible for conversion, or is not covered by substantially equivalent health plans, may apply for coverage under the plan. If the coverage is applied for within sixty days after the involuntary termination, and if premiums are paid for the entire coverage period, the effective date of the coverage shall be the date of termination of the previous coverage.

NEW SECTION. Sec. 11. The board shall select an administrator through a competitive bidding process to administer the pool.

(1) The board shall evaluate bids based upon criteria established by the board, which shall include:

(a) The administrator's proven ability to handle accident and health insurance;

(b) The efficiency of the administrator's claim-paying procedures;

(d) The administrator's ability to administer the pool in a cost-effective manner.

(2) The administrator shall serve for a period of three years subject to removal for cause. At least one year prior to the expiration of each three-year period of service by the administrator, the board shall invite all interested parties, including the current administrator, to submit bids to serve as the administrator for the succeeding three-year period. Selection of the administrator for this succeeding period shall be made at least six months prior to the end of the current three-year period.

(3)(a) The administrator shall perform all eligibility and administrative claim payment functions relating to the pool;

(b) The administrator shall establish a premium billing procedure for collection of premiums from insured persons. Billings shall be made on a periodic basis as determined by the board, which shall not be more frequent than a monthly billing;

(c) The administrator shall perform all necessary functions to assure timely payment of benefits to covered persons under the pool including:

(i) Making available information relating to the proper manner of submitting a claim for benefits to the pool, and distributing forms upon which submission shall be made; and

(ii) Evaluating the eligibility of each claim for payment by the pool;

(d) The administrator shall submit regular reports to the board regarding the operation of the pool. The frequency, content, and form of the report shall be as determined by the board;

(e) Following the close of each calendar year, the administrator shall determine net written and earned premiums, the expense of administration, and the paid and incurred losses for the year and report this information to the board and the commissioner on a form as prescribed by the commissioner;

(f) The administrator shall be paid as provided in the plan of operation for its expenses incurred in the performance of its services.

NEW SECTION. Sec. 12. (1) The administrator shall prepare a brochure outlining the benefits and exclusions of the pool benefit policy in easy to read language. After approval by the board of directors, such brochure shall be made reasonably available to participants or potential participants. The health insurance policy issued by the pool shall pay only usual and customary charges for medically necessary eligible health care services rendered or furnished for the diagnosis or treatment of illness or injury, which exceed the deductible and coinsurance amounts applicable under section 13 of this act and which are not otherwise limited or excluded. Eligible expenses are the charges for the health care services and items for which benefits are extended under the pool policy. Such benefits shall at minimum include, but not be limited to, the following services or related items:

(a) Hospital services, including charges for the most common semiprivate room, for the most common private room if semiprivate rooms do not exist in the health care facility, or for the private room if medically necessary, but limited to a total of one hundred eighty inpatient days in a calendar year, and limited to thirty days inpatient care for mental disorders per calendar year;

(b) Professional services including surgery for the treatment of injuries, illnesses, or conditions, other than mental or nervous, or dental, which are rendered by a health care provider, or at the direction of a health care provider, by a staff of registered or licensed practical nurses, or other health care providers;

(c) The first twenty outpatient professional visits for the diagnosis or treatment of one or more mental or nervous conditions or alcohol, drug, or chemical dependency or abuse services rendered during a calendar year by one or more physicians, or, at the direction of a physician, by other qualified licensed health care practitioners:

(d) Drugs and contraceptive devices requiring a prescription;

(e) Services of a skilled nursing facility for not more than one hundred days in a calendar year;

(f) Services of a home health agency up to two hundred seventy visits of service in a calendar year;

(g) Chemotherapy, radioisotope, radiation, and nuclear medicine therapy;

(h) Oxygen;

(i) Anesthesia services;

(j) Prostheses, other than dental;

(k) Durable medical equipment which has no personal use in the absence of the condition for which prescribed;

(l) Diagnostic x-rays and laboratory tests;

(m) Oral surgery limited to the following: Fractures of facial bones; excisions of mandibular joints, lesions of the mouth, lip, or tongue, tumors, or cysts; incision of accessory sinuses, mouth salivary glands or ducts; dislocations of the jaw; plastic reconstruction or repair of traumatic injuries occurring while covered under the pool; and excision of impacted wisdom teeth;

(n) Services of a physical therapist and services of a speech therapist;

(o) Professional ambulance service to the nearest health care facility qualified to treat the illness or injury; and

(p) Other medical equipment, services, or supplies required by physician's orders and necessary consistent with the diagnosis, treatment, and condition.

(2) The board shall have the authority to specify limitations and exclusions in addition to the minimum benefits required under subsection (1)(a) of this section. The exclusions and benefits shall be generally reflective and commensurate with those contained in health plans provided through a representative number of large employers across the state.

(3) This chapter does not prohibit the pool from issuing additional types of health insurance policies with different types of benefits, which, in the opinion of the board of directors, may be of benefit to the citizens of Washington.

(4) The board of directors may at its discretion design and employ cost containment measures and requirements such as, but not limited to, preadmission certification and concurrent inpatient review which may make the pool more cost-effective.

NEW SECTION. Sec. 13. (1) Subject to the limitation provided in subsection (3) of this section, a pool policy offered in accordance with this chapter shall impose a deductible. Deductibles of five hundred dollars and one thousand dollars on a per person per calendar year basis shall initially be offered. The board may authorize deductibles in other amounts. The deductible shall be applied to the first five hundred dollars, one thousand dollars, or other authorized amount of eligible expenses incurred by the covered person.

(2) Subject to the limitations provided in subsection (3) of this section, a mandatory coinsurance requirement shall be imposed at the rate of twenty percent of eligible expenses in excess of the mandatory deductible.

(3) The maximum aggregate out of pocket payments for eligible expenses by the insured in the form of deductibles and coinsurance shall not exceed in a policy year:

(a) One thousand five hundred dollars per individual, or two thousand five hundred dollars per family, per policy year for the five hundred dollar deductible plan;

(b) Two thousand five hundred dollars per individual, or three thousand five hundred dollars per family per policy year for the one thousand dollar deductible plan; or

(4) Eligible expenses incurred by a covered person in the last three months of a calendar year, and applied toward a deductible, shall also be applied toward the deductible amount in the next calendar year.

NEW SECTION. Sec. 14. (1) No person is eligible for a pool policy if that person, at the effective date of coverage, has or would have coverage under any insurance plan that has coverage substantially equivalent to a pool policy. Only residents of this state are eligible for a pool policy. Coverage under a pool policy is in excess of, and may not duplicate, coverage under any other form of health insurance.

(2) A person is eligible to apply for a pool policy only if that person has been rejected for similar health insurance coverage or is only offered health insurance coverage at a rate exceeding the pool rate.

(3) A pool policy shall provide that coverage of a dependent unmarried person terminates when the person becomes nineteen years of age or, if the person is enrolled full time in an accredited educational institution, terminates at twenty-five years of age. The policy shall also provide in substance that attainment of the limiting age does not operate to terminate coverage when the person is and continues to be both:

(a) Incapable of self-sustaining employment by reason of mental retardation or physical handicap; and

(b) Primarily dependent for support and maintenance upon the person in whose name the contract is issued.

Proof of such incapacity and dependency must be furnished to the carrier within one hundred twenty days of the person's attainment of the limiting age, and subsequently as may be required by the carrier, but not more frequently than annually after the two-year period following the person's attainment of the limiting age.

(4) A pool that provides coverage for a family member of the person in whose name the contract is issued shall, as to the family member's coverage, also provide that health insurance benefits applicable for children are payable with respect to a newlyborn child of the person in whose name the contract is issued from the moment of coverage of injury or illness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. If payment of a specific premium is required to provide coverage for the child, the contract may require that notification of the birth of a child and payment of the required premium must be furnished to the carrier within thirty-one days after the date of birth in order to have the coverage continued beyond the thirty-one day period.

(5) A pool policy may contain provisions under which coverage is excluded during a period of six months following the effective date of coverage as to a given covered individual for preexisting conditions, as long as:

(a) The condition manifested itself within a period of six months before the effective date of coverage in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, or treatment; or

(b) Medical advice or treatment was recommended or received within a period of six months before the effective date of coverage.

These preexisting condition exclusions shall be waived to the extent to which similar exclusions have been satisfied under any prior health insurance which was involuntarily terminated, if the application for pool coverage is made not later than thirty days following the involuntary termination. In that case, with payment of appropriate premium, coverage in the pool shall be effective from the date on which the prior coverage was terminated.

NEW SECTION. Sec. 15. The board shall establish a qualified medicare supplemental health coverage for eligible persons. The plan of health care coverage shall meet the minimum standard requirements for medicare supplemental coverage as provided under chapter 48.66 RCW. No benefits may be provided for expenses that are not medicare eligible expenses, except for prescription drugs. The board shall establish the scope of benefits for prescription drugs.

The board shall establish rates for the medicare supplemental plan that are reasonable in relation to the benefits provided, and the risk associated with persons eligible for the plan.

NEW SECTION. Sec. 16. (1) A pool policy offered under this chapter shall contain provisions under which the pool is obligated to renew the contract until the day on which the individual in whose name the contract is issued first becomes eligible for medicare coverage, except that in a family policy covering both husband and wife, the age of the younger spouse shall be used as the basis for meeting the durational requirement of this subsection.

(2) The pool may not change the rates for pool policies except on a class basis, with a clear disclosure in the policy of the pool's right to do so.

(3) A pool policy offered under this chapter shall provide that, upon the death of the individual in whose name the policy is issued, every other individual then covered under the contract may elect, within a period specified in the policy, to continue coverage under the same or a different policy until such time as the person would have ceased to be entitled to coverage had the individual in whose name the policy was issued lived.

NEW SECTION. Sec. 17. The commissioner shall adopt rules that:

(1) Provide for disclosure by the carrier of the availability of insurance coverage from the pool; and

(2) Implement this chapter.

NEW SECTION. Sec. 18. Commencing with the effective date of this section, every carrier, including health maintenance organizations, authorized to provide health care insurance or coverage for health care services in Washington, shall provide a notice and an application for coverage by the pool to any person who receives a rejection of coverage for health insurance or health care services, or a notice to any person who is informed that a rate for health insurance or coverage for health care services will exceed the rate for a pool policy, that the person is eligible to apply for health insurance provided by the pool. Application for the health insurance shall be on forms prescribed by the board and made available to the carriers.

NEW SECTION. Sec. 19. Neither the participation by insurers and members in the pool, the establishment of rates, forms, or procedures for coverages issued by the pool, nor any other joint or collective action required by this chapter shall be the basis of any legal action, civil or criminal liability or penalty against the pool or members of it either jointly or separately.

NEW SECTION. Sec. 20. Premiums charged for coverage may not be unreasonable in relation to the benefits provided, the risk experience, and the reasonable expenses provided in the coverage. Separate schedules of premium rates based upon age, sex, and geographical location may apply for individual risks.

The pool shall determine the standard risk rate by calculating the average individual standard rate charged by the five largest insurers offering coverages in the state comparable to the pool coverage. In the event five insurers do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage. Maximum rates for pool coverage shall be one hundred fifty percent of the rates established as applicable for individual standard risks. All rates and rate schedules shall be submitted to the commissioner for approval.

NEW SECTION. Sec. 21. It is the express intent of this chapter that the pool be the last payor of benefits whenever any other benefit is available.

(1) Benefits otherwise payable under pool coverage shall be reduced by all amounts paid or payable through any other health insurance, or health benefit plans, including but not limited to self-insured plans and by all hospital and medical expense benefits paid or payable under any worker's compensation coverage, automobile medical payment or liability insurance whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program.

(2) The administrator or the pool shall have a cause of action against an eligible person for the recovery of the amount of benefits paid which are not for covered expenses. Benefits due from the pool may be reduced or refused as a set-off against any amount recoverable under this subsection.

NEW SECTION. Sec. 22. The pool and the premiums collected by the pool shall be exempt from premium tax, supplemental corporate or income tax, or any combination of them or similar taxes on revenues or income that may be imposed by this state.

NEW SECTION. Sec. 23. 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. 24. Sections 1 through 23 of this act shall constitute a new chapter in Title 48 RCW.