AN ACT Relating to medical assistance expenditures; amending RCW 74.09.055 and 74.09.700; adding a new section to chapter 74.09 RCW; creating new sections; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. A new section is added to chapter 74.09 RCW to read as follows:

(1) By July 1, 1990, and to the extent feasible, the department shall enter into selective contracting agreements with one or more suppliers to provide prescription drugs to residents of nursing homes who are receiving assistance under the programs defined in RCW 74.09.010. The department may also enter into selective contracting agreements to provide other medical supplies to such residents.

(2) By July 1, 1990, and to the extent feasible, the department shall enter into selective contracting agreements with one or more suppliers to provide wheelchairs to recipients of assistance under the programs defined in RCW 74.09.010. The department may also enter into selective contracting agreements to provide other durable medical equipment to such recipients. The department may join with other state agencies in entering into selective contracting agreements or volume purchasing arrangements as prescribed in this subsection. If reuse of the medical equipment is feasible, the state may retain ownership of the equipment.

(3) The department shall seek waivers of federal laws and regulations to the extent necessary to implement this section.

Sec. 2. Section 19, chapter 201, Laws of 1982 and RCW 74.09.055 are each amended to read as follows:

For recipients of assistance under the programs defined in RCW 74.09.010, the department:

(1) Is authorized to establish copayment, deductible, or coinsurance requirements ((for recipients of any medical programs defined in RCW 74.09.010 but shall not establish copayment, deductible or coinsurance requirements for legend drugs as defined in RCW 69.41.210, unless required by federal law)); and

(2) Shall establish copayment requirements by September 1, 1989, for prescription drugs. The copayments required under this subsection for both state and federal programs shall be set at the maximum rate allowed under federal law for the federal programs.

Sec. 3. Section 22, chapter 6, Laws of 1981 1st ex. sess. as last amended by section 4, chapter 5, Laws of 1985 and RCW 74.09.700 are each amended to read as follows:

(1) To the extent of available funds, medical care may be provided under the limited casualty program to persons not otherwise eligible for medical assistance or medical care services who are medically needy as defined in the social security Title XIX state plan and medical indigents in accordance with medical eligibility requirements established by the department. This includes residents of skilled nursing homes, intermediate care facilities, and intermediate care facilities for the mentally retarded who are aged, blind, or disabled as defined in Title XVI of the federal social security act and whose income exceeds three hundred percent of the federal supplement security income benefit level.

(2) Determination of the amount, scope, and duration of medical coverage under the limited casualty program shall be the responsibility of the department, subject to the following:

(a) Only inpatient hospital services; outpatient hospital and rural health clinic services; physicians' and clinic services; prescribed drugs, dentures, prosthetic devices, and eyeglasses; skilled nursing home services, intermediate care facility services, and intermediate care facility services for the mentally retarded; home health services; other laboratory and x-ray services; rehabilitative services; case management services; medically necessary transportation; and other services for which funds are specifically provided in the omnibus appropriations act shall be covered;

(b) Persons who are medically indigent and are not eligible for a federal aid program shall satisfy a deductible of ((~~not less than one hundred dollars nor more than~~)) five hundred fifty dollars in any twelve-month period. Pursuant to the medical care component of the consumer price index, on July 1, 1990, and annually thereafter, the department shall adjust the deductible to reflect inflation in medical costs occurring during the prior twelve months;

(c) Medical care services provided to the medically indigent and received no more than seven days prior to the date of application shall be retroactively certified and approved for payment on behalf of a person who was otherwise eligible at the time the medical services were furnished: PROVIDED, That eligible persons who fail to apply within the seven-day time period for medical reasons or other good cause may be retroactively certified and approved for payment.

(3) The department shall establish standards of assistance and resource and income exemptions. All nonexempt income and resources of limited casualty program recipients shall be applied against the cost of their medical care services. In addition, the department shall include a prohibition against the knowing and willful assignment of property or cash for the purpose of qualifying for assistance under RCW 74.09.532 through 74.09.536.

NEW SECTION. Sec. 4. During the biennium ending June 30, 1991, the department of social and health services, within administrative funds provided for such purposes, shall expand and extend its program of delivery of health care services through managed health care systems by the use of gatekeepers or primary care case managers in those communities where feasible and cost justified. The department shall seek waivers of federal laws and regulations to the extent necessary to implement this section.

NEW SECTION. Sec. 5. The department shall complete its study of alternative, cost-effective methods for purchasing outpatient hospital services for medical assistance recipients, including methods to reduce outpatient utilization. The department shall submit the study, together with its implementation plan for changes to the outpatient hospital reimbursement system, to the committees on health care of the senate and house of representatives, the house of representatives committee on appropriations, and the senate committee on ways and means by January 1, 1990.

NEW SECTION. Sec. 6. The department of social and health services shall conduct an evaluation study of the division of medical assistance second surgical opinion program and utilization review program. The study shall, at a minimum, develop options for modifying and/or expanding the programs in order to achieve additional cost savings in the medical assistance program in the 1989-91 biennium and future biennia. The department shall submit the study, together with its recommendations for changes in the second surgical opinion and utilization review programs, to the committees on health care of the senate and house of representatives, the house of representatives committee on appropriations, and the senate committee on ways and means by January 1, 1990.

NEW SECTION. Sec. 7. The department of social and health services shall expand and broaden its existing program to control patient overutilization of medical services and prescription drugs. The department may modify its criteria for reviewing recipients in order to increase the number of individuals subject to the requirements. Within administrative funds provided for such purpose, the department shall employ necessary staff to carry out the purpose of this section.

NEW SECTION. Sec. 8. The department of social and health services shall expand its existing medical care provider review program. The department shall review the services provided by all types of providers participating in the medical assistance program and shall intensify its sanction activities against those individual providers who are responsible for providing excessive, unnecessary, or inappropriate services to program recipients. Within administrative funds provided for such purpose, the department shall employ necessary staff to carry out the purpose of this section.

NEW SECTION. Sec. 9. 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. 10. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1989.