SENATE BILL REPORT

SB 6418

BYSenators Barr, Warnke, West, Wojahn, Patterson, Rinehart, Smitherman, Newhouse, Owen, Smith, Amondson, Bauer, DeJarnatt, Williams, Talmadge, Hansen, Conner, Madsen and Kreidler; by request of Governor

Expanding rural health care opportunities.

Senate Committee on Health & Long-Term Care

Senate Hearing Date(s):January 25, 1990; February 1, 1990

Majority Report:  That Substitute Senate Bill No. 6418 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.

      Signed by Senators West, Chairman; Smith, Vice Chairman; Amondson, Johnson, Kreidler, Niemi, Wojahn.

Senate Staff:Scott Plack (786-7409)

                  February 1, 1990

Senate Committee on Ways & Means

Senate Hearing Date(s):February 5, 1990; February 6, 1990

Majority Report:  That Second Substitute Senate Bill No. 6418 be substituted therefor, and the second substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Niemi, Saling, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Randy Hodgins (786-7715)

                  February 7, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 6, 1990

BACKGROUND:

The presence of health care providers in rural communities is essential to assure continued access to basic health care services for rural citizens.  A number of factors appear to affect the continued availability of rural community-based health care services. 

Studies have shown that rural communities are experiencing a loss of health care dollars where consumers leave the rural community to seek basic health care services in urban areas.  It is believed that if these dollars are retained in the community, locally based services could be preserved.  Some rural communities have responded by forming local preferred provider insurance arrangements where local providers contract with businesses and others to provide health care services to the local population.  These arrangements have been formed by rural communities with the belief that they are exempt from state regulation under the federal ERISA Act provisions.  The state Insurance Commissioner has recently indicated that such arrangements are not exempt and the commissioner has begun to regulate them under existing insurance laws.  There is concern that existing insurance regulations are not sensitive to the unique characteristics of the arrangements and may force their discontinuation.

Washington is currently experiencing a physician and maternity care provider shortage in some rural areas of the state.  Studies have demonstrated that physicians who originate from rural areas, or who have exposure to rural areas during their medical training are more strongly committed to maintain a practice in a rural community.  Attracting individuals into the medical profession could help address the rural physician shortage.

In the smaller rural communities of the state, basic health care services are provided by a few health care providers.  Should a provider leave the community or need time away from practice to attend to personal matters or to fulfill continuing education requirements, the community could be left without basic health care services.  A corps of providers willing to travel to these communities and provide temporary medical care services could help maintain the availability of basic health care services.

SUMMARY:

A new chapter in insurance law is created for the purpose of regulating rural health care services arrangements.  They are defined to include any arrangement which is established or maintained for the purpose of providing health insurance in a rural community.  Rural communities may begin forming these arrangements under the new law starting on January 1, 1991 by making application to the Insurance Commissioner. 

At least 51 percent of the board of directors of a rural health care service arrangement must be elected by the adult consumers of the health services.  They must have a minimum of five employers, provide benefits to no fewer than 200 individuals and have annual gross premiums of less than $200,000.  The arrangements will be regulated similar to health service contractors except that reserve requirements will be modified.  The reserves must equal the greater of 25 percent of aggregate contributions made in the current year or 25 percent of total claims paid in the preceding year.

The Department of Health is directed to establish the health professional temporary substitute resource pool.  A state registry will be compiled to identify physicians, physician assistants and advanced registered nurse practitioners willing to provide medical care services on a short-term basis in rural communities.  The pool will provide medical care coverage to communities with health professional shortages or where the local health professionals need time away from practice to attend educational programs or for personal matters.

Participating health care professionals will receive reimbursement for travel and lodging costs, medical malpractice insurance coverage through a department purchased plan or through reimbursement for malpractice insurance premium costs, and back-up support from area physicians and hospitals.  Rural communities are responsible for any salary costs.  Health professionals may serve continuously in a community for a maximum of 90 days unless extended by the department.  The department may require participating communities to agree to participate in recruitment programs or other programs designed to reorganize health care services.

The rural physician and midwife scholarship program is established within the Department of Health.  The program provides scholarships of up to $15,000 per year for five years for medical students declaring an intent to serve as a family practice physician or general practice physician (osteopathic physician) in rural areas.  For medical students, scholarships are available for an amount of up to $4,000 per year for three years if the student declares an intent to serve as a certified or licensed midwife in a midwifery shortage area.  The department will define physician and midwifery shortage areas.  In awarding scholarships, preference is given to prospective medical scholarship applicants who are willing to serve in rural physician shortage areas and for those individuals nominated by sponsoring rural communities.

Participants in the scholarship program must serve in a rural area or midwifery shortage area for at least three years or face repayment of portions of the scholarship plus a penalty equal to 50 percent of the total amount paid for on their behalf.  Rural communities may serve as sponsoring communities and recommend prospective medical students to receive scholarships.  The department may require financial participation from sponsoring communities in physician non-shortage areas.  The department may provide technical assistance to rural communities to recruit individuals to apply for the scholarship program.  The Dean of the School of Medicine is directed to establish a policy to designate admission openings for prospective medical students eligible for the scholarship program.

The department is directed to develop a plan for increasing rural training opportunities for students in medicine.  They are also directed to develop a statewide plan to address access to midwifery services.  A review of the scholarship program is to be conducted by the department by September 1, 1995 for the purpose of recommending whether the program should be continued.

EFFECT OF PROPOSED SUBSTITUTE:

The regulation of rural health care arrangements is deleted.

The Higher Education Coordinating Board shall administer the physician and midwife scholarship program.  The length of service requirement for the scholarship program is extended from three to five years.  The penalty for leaving the program before completing the service requirement is increased from 50 percent to 200 percent of amounts paid on behalf of the participant.  The Governor may transfer the program to another appropriate agency.  The University of Washington Medical School shall grant admission preference to participants in the scholarship program.

The department may develop a rural health plan and approve hospitals to be designated as essential access community hospitals so that they may access federal program dollars and increase their Medicare reimbursement.

The University of Washington shall absorb costs of its consultation responsibilities in the act.

EFFECT OF PROPOSED SECOND SUBSTITUTE:

The emergency clause is deleted and the bill is made contingent upon funding in the state budget.

Appropriation:    $200,000 in the Governor's budget

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: HEALTH & LONG-TERM CARE:  Jean Roberts, Mark Reed Hospital (pro); John Klacik, Higher Education Coordinating Board (pro); Kathy Carr, Midwives Association of WA State (pro); JoAnne Myers, Seattle Midwifery School (pro); Greg Vigdor, WA State Hospital Association (pro); Edmon W. Myers, Lake Chelan Community Hospital (pro); Keith Baldwin, Inland Health Care (pro); Jeff Eucker, GVI Corp. (pro); Steven Meltzer, WA Rural Health Association (pro); Bill Bakamus, U of W

Senate Committee - Testified: WAYS & MEANS:  Len Eddinger, Washington State Medical Association