HOUSE BILL REPORT
HB 2221
BYRepresentatives Braddock, Morris, Appelwick, D. Sommers, Winsley, Sprenkle, R. Fisher, Spanel, Prentice, Kremen, Anderson, Day and Vekich
Creating a department of health.
House Committe on Health Care
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (7)
Signed by Representatives Braddock, Chair; Day, Vice Chair; Cantwell, Morris, Prentice, Sprenkle and Vekich.
Minority Report: Do not pass. (3)
Signed by Representatives Brooks, Ranking Republican Member; Chandler and Wolfe.
House Staff:Bill Hagens (786-7131)
AS REPORTED BY COMMITTEE ON HEALTH CARE APRIL 6, 1989
BACKGROUND:
Like many states at the time of creation, Washington placed its health administration responsibilities in a Board of Health. This body, with a part time membership of five physicians, was the only state agency officially responsible for the health of the citizens. The original purpose of the board was to respond to emergent short term problems, e.g., epidemics, with specific remedies. As the board evolved along with a greater need for public health oversight, new on-going responsibilities emerged, e.g., inspection of ships for communicable diseases; safety of milk; food sanitation; oyster bed inspections; and the collection of vital statistics. Along with this growth, came the need for local cooperation to enforce the state health regulations. To meet this need, the Legislature provided for the establishment of local boards of health, which eventually created local health departments.
The progressive expansion of the state's population and the public health sector required a more continuous supervision and management at the state level. Because of its part time nature, the Board of Health was no longer an effective means for administrating the increasingly complex public health system. To meet these new needs, a Department of Health was created in 1921. The board maintained certain rule making authority, while the new department assumed general administrative authority.
The Department of Health continued its independent existence until 1970, when it was enveloped, along with several other state departments, into the Department of Social and Health Services (DSHS)--the state's umbrella human services agency. DSHS was part of a national phenomenon meant to create a "comprehensive" and "integrated" human service system. Between 1969 and 1974, 26 states established umbrella agencies. However, since then, most of those state umbrella agencies, like Washington's, have been in an almost perpetual state of reorganization in the areas of: administration, service delivery, decentralization, scope of services, etc. Perennial complaints are that umbrella agencies are too big to be responsive to client needs, and that individual programs have lacked visibility and accountability because they are "buried" within the bureaucracy.
The Hospital Commission was created in 1973. During its first 11 years, the commission's primary responsibilities were to ensure that hospital rates were reasonably related to costs and that costs were reasonably related to services provided. Cost containment, however, was principally the responsibility of the hospitals themselves. Many of the statutory changes made when the commission was reauthorized in 1984 were designed to strengthen its cost containment orientation. The amendments expanded the commission's composition, required the gathering of discharge data, required the setting of annual hospital revenue targets, and allowed payers to negotiate discounts from approved rates in recognition of the potential benefits of increased competition within the industry. In 1988, the Legislative Budget Committee (LBC) conducted a sunset review of the Hospital Commission. It concluded that the current rate setting approach has not been effective in controlling costs. It recommended that alternative ways to control hospital costs be developed. Unless the Legislature acts to re-authorize the commission in some form, it will terminate on June 30, 1989.
Presently, the certificate of need process (CON) regulates the construction or establishment of new health care facilities, substantial changes in health services, changes in bed capacity, acquisitions of major medical equipment, and capital expenditures of health care facilities in excess of $1,111,000. Types of facilities subject to CON include: hospitals; psychiatric hospitals; nursing homes; kidney disease treatment facilities; ambulatory surgical facilities; home health care; hospices, and certain rehabilitation facilities. Since its creation in 1974, the CON process has been generally criticized by certain segments of the health care industry as ineffective at controlling costs, burdensome, and costly.
Changes in the demand for health care services, in the reimbursement policies of public and private payers, as well as changes in economic conditions, threaten access to affordable basic health care services to rural citizens. The Washington Rural Health Care Commission was authorized by the Legislature to identify current problems associated with assuring continued access to health care in rural areas and to make recommendations for changes in state policy.
The commission identified many factors that inhibit needed changes in the delivery of rural health care services. They include outdated or rural-inappropriate regulatory laws, aging and inefficient health care facilities, an absence or ineffective local planning and coordination of services and a lack of state health policy objectives.
The commission recommended that a partnership be established between the state and rural communities where the state provides general health policy direction and rural communities take an active role in reorganizing the delivery of health care services. Access to maternity care (prenatal, delivery, and postpartum) has become increasingly difficult for low-income women. Of the 70,000 births in Washington State during 1988, approximately 9,000 were delivered without consistent maternity care. Washington State has a higher rate of infant mortality than the national average.
Low birth weight deliveries (5.5 lbs or 2500 grams) are the major factor in infant death and illness. Adequate maternity care is an effective tool in reducing low birth weight deliveries. It is estimated that for every $1 spent on prenatal care, over $3 are saved in medical costs during the first year of an infant's life.
In addition to adequate medical care, availability of support services is an important factor in having healthy babies. These support services include the following: education; nutrition counseling; transportation; child care; and other services. Recent changes to federal Medicaid law permit a state to expand its federally matched program for low-income pregnant women and their children. A state is now able to extend Medicaid coverage to pregnant women, and children under the age of one, whose income is below 185 percent of the federal poverty level (FPL), and children up to age eight below 100 percent FPL.
SUMMARY:
SUBSTITUTE BILL: A Department of Health (DOH) is created to provide leadership in assuring the quality of health care, protect the general population's health and develop state health policies.
The Governor shall appoint a Secretary of Health with the consent of the Senate.
The Secretary of Health shall appoint a State Health Officer who shall have a masters degree in public health or equivalent training or experience.
The new department merges the health professional licensure functions of the Department of Licensing (DOL) and the traditional public health functions, the mandated health benefit review, the certificate of need program, new health professional credentialing review, and health planning functions of the Department of Social and Health Services.
Traditional public health functions transferred from DSHS include: Environmental health protection programs including radiation, drinking water, toxic substances, on-site sewage, recreational water contact facilities, food service sanitation, and shellfish;
Personal health protection programs including immunizations, tuberculosis, sexually transmitted diseases, AIDS, diabetes control, primary health care, hypertension, kidney disease, regional genetic services, newborn metabolic screening, sentinel birth defects, communicable disease epidemiology, and chronic disease epidemiology;
Certificate of Need; which is limited to tertiary health care, need facilities; and transfer of beds;
The public health laboratory;
Public health support services, including vital records, health data, and health education and information; Selected health facilities licensure authority including hospitals, maternity homes, boarding homes, abortion facility approval, emergency medical services, transient accommodations, home health and hospice care, and private establishments.
Parent and Child Health Services programs are transferred from DSHS to DOH effective January 1, 1991.
The Board of Health is transferred to the Department of Health, designated as the primary entity for state health policy development and required to produce a biennial state health report which sets forth the state's health priorities. Mechanisms for public involvement are authorized through local health departments and ad hoc advisory groups. Two staff in addition to an executive director and a secretary must be employed by the Board of Health.
The Board of Health is authorized to recommend means for obtaining citizen and professional involvement in all health policy formulation and other matters regarding the Department of Health's duties.
The department is designated as the primary agency to collect data related to illness and injury prevention, health promotion, and the quality of health care.
Safeguards against improper use of data are established. The department must develop a state research agenda as part of the biennial state health report. Research and other studies may be undertaken only in accordance with the research agenda and procedures established for study approval and funding. The secretary must use study results as appropriate to improve health quality.
An Office of Health Consumer Assistance is established and must include a hotline.
A study of present statutes and programs to assure quality in health care professional practices must be completed by the department.
The Secretary of Health and each professional licensure board may develop memorandum of understanding regarding their respective responsibilities which must be set in rule.
Funeral directors and embalmers regulation is retained within the Department of Licensing, and DOL must recommend legislation by 1990 to eliminate any statutory barriers to this retention.
Funds and employees for DSHS public health functions, DSHS health planning, DOL health professions licensure functions, and the Board of Pharmacy are transferred to the Department of Health.
The State Health Coordinating Council, regional health planning councils and related health planning duties as authorized under Chapter 70.38 RCW are abolished.
A three full-time member Washington Health Commission is created to replace the Washington Hospital Commission. Members shall be appointed by the Governor, confirmed by the Senate, and shall serve at the pleasure of the Governor. No two members may belong to the same political party.
Administrative responsibilities are transferred to the DOH, but the new commission shall have independent authority over hospital costs. As a vehicle to control hospital costs, rate setting for individual hospitals is replaced with a "maximum allowable rate of increase" or "MARI." MARI is the percentage of rate increase allowed over an established base. Once computed, if a hospital's rates stay below the MARI level, no individual review will occur. MARI is established through the following formula:
The Formula:
NHIPI
MARI = ------------------------------ + Cc
1 - [(Me x .25) + (Md x .5)]
Where:
NHIPI= Change in the Medicare Market Basket Index
Me= Portion of medicare reimbursement to total net revenue
Md= Portion of Medicaid reimbursement to total net revenue
Cc= Portion of charity care charges to total net revenue
Fiscal Year 1988 is established as the base year for the 1990 review.
Rural hospitals, as defined, are exempt from MARI. However, these facilities will still have to comply with data collection requirements.
Hospitals are allowed to "bank" up to three percentage points for further use, such as purchases of new equipment or construction of new facilities. Increases above MARI are permitted upon review and approval by the commission.
Penalties shall be assessed against a hospital when non-approved rates exceed MARI as follows: for the first occurrence in five years; reduction of the budget for the following year up to 5 percent; any excess of 5 percent would be deposited in the health care access account, as created by HB 1378. (If the account is not created, the amount would be deposited in the general fund.) For the second occurrence in five years; a reduction up to 2 percent and the amount in excess of 2 percent would be deposited in the account. For the third occurrence in five years the total excess would be deposited in the account and a moratorium on certificate of need for that hospital would be imposed. If it is determined that the excess was willfully generated, revocation of the hospital license and a fine of up to $20,000 may be imposed.
Throughout the penalty phase the offending hospital is allowed a full modicum of due process rights.
Protection against discrimination is established by limiting the range of discounts permitted within any class of purchaser.
Classes of purchasers are defined as: (1) purchasers of medical assistance hospital services; (2) purchasers of Medicaid hospital services; and (3) purchasers of non-Medicare and non-medical assistance hospital services. No hospital may charge one purchaser more than 110 percent of the rate charged another purchaser in the same class for the same service. The difference allowed is associated with an increased efficiency of operation. The commission may propose modifications in this difference, if deemed appropriate. Existing negotiated rates are exempt from these provisions.
Requirements are established to prohibit hospitals from adopting an admissions practice that would deny persons without coverage access to hospital care. A sliding fee schedule is established that would include care without charge for persons with a income less than 100 percent of the federal poverty level. Hospitals that do not comply with these requirements may be denied access to the Washington Health Care Facilities Authority's bonding privilege, the certificate of need process, and participation in the Medicaid program.
Penalties are prescribed for non-MARI violations to include possible criminal charges of a gross misdemeanor and civil fines of up to $1,000 per violation.
The Washington Health Commission is scheduled for sunset review in 1993.
The rural health system delivery project is created in the Department of Health. The project provides technical assistance and limited financial assistance to six rural participant communities and technical assistance to another six participant communities. Participants are required to evaluate local health care needs, determine appropriate health care objectives and design strategies to assure continued access to affordable basic health care services. Communities may contract with consultants to help with specialized needs such as recruitment of primary care physicians, conversion of the local hospital to an alternative health care facility, and improved coordination of service delivery among existing local health care providers.
Any funding for the program is dependent on the eventual passage of both this measure and the operating budget for the next biennium.
The department in consultation with representatives from rural health care providers, purchasers, consumers and others is to develop rules for an alternative health care facility licensure model. Rules must allow for maximum local flexibility in providing services which permit cost-efficient delivery of services, better coordination of existing services and the optimal use of existing facilities. The alternative health care facility is not to be considered a hospital for determining building occupancy purposes.
The department is to negotiate with the federal government to seek Medicare approval for the facility so that government reimbursement for services provided can be authorized. Periodic reports on the progress of rule making and negotiations are to be made to the standing House and Senate committees on health care.
The health professional loan repayment program is established and designed to meet federal guidelines for matching funds. The Higher Education Coordinating Board is directed to implement the program. Student loan repayment is available to physicians, physician assistants, nurses and dentists who serve in a federally designated health professional shortage areas. The maximum amount available is up to $15,000 for five years and payments begin upon service in a shortage area.
Participants must serve at least three years in a shortage area or face repaying twice the amount paid on their behalf. The board is granted authority to modify penalty provisions for participants who terminate before three years when extraordinary circumstances exist. Participants must agree not to discriminate against Medicaid or Medicare patients and must accept Medicaid assignment. Payments to participants cease after five years or when the participant terminates service in a shortage area. Any funding for the program is left to the eventual passage of both this measure and the operating budget for the next biennium.
The Higher Education Coordinating Board, in consultation with the State Board of Community Colleges, the Superintendent of Public Instruction and training programs in medicine and nursing, is directed to develop a plan for providing students in nursing and medical training programs with rural training opportunities.
The board shall inventory current rural-based clinical experience opportunities, identify areas where opportunities do not exist, identify public and private funding for sources and make recommendations on how to improve clinical experience opportunities. The board shall report to the standing Senate and House health care committees by December 1, 1989 with its recommendations.
The Department of Health, in consultation with the State Board of Pharmacy, the Higher Education Coordinating Board, and representatives of rural health care providers and others, is directed to investigate the feasibility of the use of limited cross-credentialed health professionals in rural areas of the state.
The department will investigate the need, public safety implications and training and experience requirements of developing a program of cross-credentialing of individuals with multiple skills for practice in rural areas. The Department shall make recommendations on the need for changes in current state credentialing laws to the standing House and Senate health care committees by December 1, 1990.
The Higher Education Coordinating Board, in consultation with the State Board for Community College Education, the Superintendent of Public Instruction, the State Board of Nursing, the State Board of Practical Nursing and representatives from nurse training programs and others, is directed to develop a plan providing for geographic availability of training and education programs, curriculum standards, procedures to facilitate transfer or granting of credit and the use of evaluation processes to maximize opportunities for receiving credit for knowledge and clinical skills. The plan is to be implemented in institutions of higher education by January 1, 1992. It is to be submitted to the standing Senate and House health care committees as required by December 1, 1990, with a progress report due by December 1, 1989.
DSHS is required to establish a maternity care access program with the following features: providing maternity care to low income women, and health care to their children to the extent made possible by federal law and having in place, by December 1, 1989, a system that expedites the medical assistance eligibility process for pregnant women. This shall include a short and simplified application form, and the capability of determining eligibility within 15 days of application.
DSHS is required to study the desirability and feasibility of implementing the presumptive eligibility provisions for pregnant women, recently made possible by federal Medicaid law.
DSHS is required to establish a case management program for women who are at risk of having difficulty in the pregnancy. Treatment for pregnant women who are substance abusive is provided through funding included in the Omnibus Drug Act (HB 1793). Maternity care provider reimbursement levels are established at appropriate levels, consistent with available funds.
Areas of the state where the lack of access to maternity care is at a crisis proportion are designated as distressed areas. DSHS, in cooperation with the affected counties and a variety of community interests, shall develop an alternative service plan to alleviate the shortage. Criteria for designating a county or group of counties as a distressed area is provided in the act. If necessary to ensure maternity care access, DSHS may contract with or directly employ health practitioners to provide maternity care. In the latter case, DSHS may pay a related portion of the practitioner's liability insurance.
To the extent federal matching funds are available, the Department of Health shall develop a health education loan repayment program to assist maternity care providers who agree to practice in underserved areas.
DSHS is required to contract with an independent non-profit entity to evaluate the maternity care access program and report to the legislature by December 1, 1990.
SUBSTITUTE BILL COMPARED TO ORIGINAL: Principles set forth in the bill are made advisory.
Language is added to clarify the department's ability to assess the effectiveness of health care and collect health related data.
The requirement that the Office of Financial Management (OFM) study the transfer of the Parent and Child Health program is deleted. The program will be transferred effective January 1, 1991. However, OFM may recommend a delay in the transfer.
Language is modified to clarify that the Health Commission role is limited to hospital cost containment.
The requirement that the Secretary of Health support rural health administration is deleted.
Fiscal Note: Requested April 5, 1989.
House Committee ‑ Testified For: Evan Iverson, Senior Lobby; Maurice Click, Hospital Commission; Fred Mills, AARP; George Schneider, Washington State Medical Association (with concerns); Len Eddinger, Washington State Medical Association (with concerns); Mary Selecky, Local Public Health Officials; Dr. Bud Nicola, Local Public Health Officials; Kevin Varness, Local Public Health Officials; Yvonne Spies, Planned Parenthood Affiliates of Washington (with concerns); Don Williams, Washington Board of Pharmacy; Dan Rubin, State health Coordinating Council; Jeff Nero, State Hospital Association and Bob Crittenden, Governor's Office.
House Committee - Testified Against: Mel Sorenson, Washington Physicians Services and Monitored Marketplace Coalition.
House Committee - Testimony For: This legislation is crucial for establishing a Department of Health that will adequately address the concerns in access to health care offered by the state. This bill will also provide the necessary maternity care services for women and children who are currently unable to receive such services. In addition, this bill will enable rural areas of our state to implement policy that will address the health care issues particular to rural areas. Finally, this bill will create the Washington Health Commission, a much needed regulatory commission that will effectively monitor and regulate hospital rates which will in turn contain cost.
House Committee - Testimony Against: The various pieces of legislation contained in this bill are far too important to be taken up as one bill. Furthermore, the rural health care package should be taken up outside the parameters of this bill. Hospital rate setting does not work.