| State of Washington | 60th Legislature | 2007 Regular Session |
READ FIRST TIME 03/05/07.
AN ACT Relating to reforming the health care system in Washington state; amending RCW 48.43.005, 48.43.015, 48.43.025, 48.43.035, 48.21.047, 48.44.024, 48.46.068, and 48.43.028; adding new sections to chapter 48.43 RCW; adding a new chapter to Title 41 RCW; adding a new chapter to Title 49 RCW; creating new sections; repealing RCW 48.21.045, 48.44.023, 48.46.066, 70.47A.010, 70.47A.020, 70.47A.030, 70.47A.040, 70.47A.050, 70.47A.060, 70.47A.070, 70.47A.080, 70.47A.090, and 70.47A.900; and providing effective dates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 101
(1) The people of Washington have expressed strong concerns about
health care costs and access to needed health services. Even if
currently insured, they are not confident that they will continue to
have health insurance coverage in the future and feel that they are
getting less, but spending more.
(2) Many employers, especially small employers, struggle with the
cost of providing employer-sponsored health insurance coverage to their
employees, while others are unable to offer employer-sponsored health
insurance due to its high cost.
(3) Six hundred thousand Washingtonians are uninsured.
Three-quarters work or have a working family member; two-thirds have
incomes below two hundred percent of the federal poverty level; and
one-half are young adults age nineteen to thirty-four. Many are
low-wage workers who are not offered, or eligible for,
employer-sponsored coverage. Others struggle to pay their share of the
costs of employer-sponsored health insurance, while still others turn
down their employer's offer of coverage due to its costs. By failing
to make health insurance coverage affordable for low-wage workers and
self-employed people, health problems that could be treated in a
doctor's office are treated in the emergency room or hospital.
(4) The workforce in Washington state has undergone many changes in
the last three decades. Employment has shifted from manufacturing to
service-providing industries, a rising share of workers are employed by
small employers, and a growing number of people are self-employed,
temporary or contract workers, or work for multiple employers.
(5) Access to health insurance and other health care spending has
resulted in improved health for many Washingtonians. Yet, the
Washington state blue ribbon commission on health care costs and access
recently found that health purchasers and carriers should focus efforts
on receiving more value for each health care dollar spent in Washington
state through efforts such as paying for care that has proven value,
focusing on prevention and management of chronic disease, and providing
consumers incentives to use quality health care providers and systems.
NEW SECTION. Sec. 102
(1) Health insurance coverage is more affordable for employers,
employees, self-employed people, and other individuals;
(2) The process of choosing and purchasing health insurance
coverage is well-informed, clearer, and simpler;
(3) Prevention, chronic care management, wellness, and improved
quality of care are integral and valued parts of the health insurance
system; and
(4) As a result of these changes, more people in Washington state
have access to affordable health insurance coverage and health outcomes
in Washington state are improved.
NEW SECTION. Sec. 201 The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Administrator" means the administrator of the health care
authority as defined in RCW 41.05.011.
(2) "Authority" means the health care authority established in
chapter 41.05 RCW.
(3) "Basic health plan" means the program administered under
chapter 70.47 RCW.
(4) "Carrier" means a carrier as defined in RCW 48.43.005.
(5) "Commissioner" means the insurance commissioner established
under RCW 48.02.010.
(6) "Health plan" or "health benefit plan" means a health plan or
health benefit plan as defined in RCW 48.43.005.
(7) "Participating small employer plan" means a group health plan,
as defined in federal law, Sec. 706 of ERISA (29 U.S.C. Sec. 1167),
that is sponsored by a small employer and for which the plan sponsor
has entered into an agreement with the partnership, in accordance with
this act, for the partnership to offer and administer health insurance
benefits for enrollees in the plan.
(8) "Partnership" means the Washington health insurance partnership
established in sections 202 and 203 of this act.
(9) "Partnership board" and "board" means the board of the
Washington health insurance partnership established in section 204 of
this act.
(10) "Partnership participant" means a person who has been
determined by the Washington health insurance partnership to be, and
continues to be, an employee of a participating small employer plan for
purposes of obtaining coverage through the partnership, or a former
employee of a participating small employer plan who chooses to continue
receiving coverage through the partnership following separation from
employment.
(11) "Premium assistance payment" means a payment made to carriers
by the partnership as provided in section 205 of this act.
(12) "Small group" or "small employer" means a small group or small
employer as defined in RCW 48.43.005.
(13) "Successful bidder" means the entity that is chosen to operate
the Washington health insurance partnership as a result of the
procurement in sections 202 and 203 of this act.
NEW SECTION. Sec. 202
(2) It is the goal of the partnership to:
(a) Ensure that employees of small businesses and other individuals
can find affordable health plans;
(b) Provide a mechanism for small businesses to contribute to their
employees' coverage without the administrative burden of directly
shopping or contracting for a health plan;
(c) Ensure that individuals can access coverage as they change
and/or work in multiple jobs; and
(d) Provide a mechanism for low-income workers to obtain affordable
coverage through competition among carriers in the partnership, and
premium assistance payments as available.
(3) The health care authority shall submit a summary of the request
for proposal and the report required by subsection (4) of this section
to the governor and the appropriate committees of the senate and house
of representatives on or before January 1, 2008. If the legislature
does not take affirmative action to reject or modify the request for
proposal during the 2008 regular legislative session, the administrator
shall issue the request for proposal on April 1, 2008.
(4) The authority, in collaboration with the office of the
insurance commissioner and the partnership board, upon appointment,
shall analyze the following issues and provide a report and
recommendations to the appropriate committees of the senate and house
of representatives by January 1, 2008:
(a) The impact of applying small group health plan rating rules to
a market in which each employee chooses their health plan;
(b) Options that reduce uncertainty for carriers and provide for
efficient risk management of high-cost participants or small employer
plans through risk adjustment, reinsurance, or any other effective
mechanism; and
(c) Other issues identified by the partnership board as potential
barriers to a successful transition of the small group market to the
partnership.
NEW SECTION. Sec. 203
(1) The appropriate qualifications for operation of the Washington
health insurance partnership;
(2) Key functions of the partnership, including but not limited to:
(a) Offering choice among any small group health plan approved by
the commissioner under Title 48 RCW. The choice of health plans shall
include one or more limited health care service plans for dental care
services to be offered by limited health care service contractors under
RCW 48.44.035;
(b) Establishing enrollment procedures, including publicizing the
existence of the partnership and disseminating information on
enrollment, and establishing rules related to minimum participation of
employees in small groups purchasing health insurance through the
partnership;
(c) Establishing and administering procedures for the election of
coverage by partnership participants during open enrollment periods and
outside of open enrollment periods upon the occurrence of any
qualifying event specified in the federal health insurance portability
and accountability act of 1996 or applicable state law;
(d) Establishing and managing a system for the partnership to be
designated as the sponsor or administrator of a participating small
employer plan and to undertake the obligations required of a plan
administrator under federal law. The small employer shall determine
the criteria for eligibility and enrollment in his or her plan and the
terms and amounts of the employer's contributions to that plan.
Neither the employer nor the partnership shall limit an employee's
choice of coverage from among all the health plans offered;
(e) Establishing and managing a system of collecting and
transmitting to the applicable carriers all premium payments or
contributions made by or on behalf of partnership participants,
including employer contributions, automatic payroll deductions for
partnership participants enrolled in small employer plans, premium
assistance payments under section 205 of this act, and contributions
from philanthropies;
(f) Establishing and managing a system for determining eligibility
for premium assistance payments and remitting premium assistance
payments to the carriers, as provided in section 205 of this act;
(g) Assessing the need for mechanisms to spread health risk widely
to support health plan premiums that are more affordable, and
establishing opportunities to reward carriers and consumers whose
behavior is consistent with quality, efficiency, and evidence-based
best practices;
(h) Establishing a mechanism for payment of commissions when a
small group is enrolled in the partnership by a health insurance broker
or solicitor licensed under chapter 48.17 RCW or by an association or
member-governed group;
(i) Establishing a mechanism to apply a surcharge to all health
benefit plans, which shall be used only to pay for administrative and
operational expenses of the partnership. The surcharge must be applied
uniformly to all health benefit plans offered through the partnership
and must be included in the premium for each health plan. As part of
the premium, the surcharge shall be subject to the premium tax under
RCW 48.14.020. Surcharges may not be used to pay any premium
assistance payments under this chapter; and
(j) Entering into interdepartmental agreements with the health care
authority, the office of the insurance commissioner, the department of
social and health services, and any other state agencies necessary to
implement this chapter; and
(3) An expectation that the successful bidder will begin offering
health benefit plans under this act on July 1, 2009, following an open
enrollment period that begins on April 1, 2009. With approval of the
board established in section 204 of this act, the authority shall
notify the apparently successful bidder no later than October 1, 2008.
NEW SECTION. Sec. 204 (1) The Washington health insurance
partnership board is hereby established. The function of the board is
to:
(a) Provide consultation regarding, and approve:
(i) The request for proposal issued under sections 202 and 203 of
this act;
(ii) The choice of the successful bidder to the request for
proposal issued under sections 202 and 203 of this act;
(iii) The health plan designs eligible for premium assistance
payments under section 205 of this act;
(iv) Policies for operation of the partnership developed by the
successful bidder;
(b) Conduct analyses and provide recommendations as requested by
the legislature and the governor, with the assistance of the successful
bidder, and staff from the health care authority and the office of the
insurance commissioner.
(2) The board shall be composed of twelve members appointed by the
governor as follows:
(a) A member in good standing of the American academy of actuaries;
(b) Two representatives of small businesses;
(c) Two employee health plan benefits specialists;
(d) Two representatives of health care consumers;
(e) A physician licensed in good standing under chapter 18.57 RCW;
(f) A health insurance broker licensed in good standing under
chapter 48.17 RCW;
(g) The assistant secretary of the department of social and health
services, health recovery services administration;
(h) The commissioner; and
(i) The administrator.
(3) The governor shall appoint the initial members of the board to
staggered terms not to exceed four years. Initial appointments shall
be made on or before June 1, 2007. Members appointed thereafter shall
serve two-year terms. Members of the board shall be compensated in
accordance with RCW 43.03.250 and shall be reimbursed for their travel
expenses while on official business in accordance with RCW 43.03.050
and 43.03.060. The board shall prescribe rules for the conduct of its
business. The board shall choose a chair and a vice-chair from among
its members. Meetings of the board shall be at the call of the chair.
(4) The board may establish technical advisory committees or seek
the advice of technical experts when necessary to execute the powers
and duties included in this section.
(5) The board and employees of the board shall not be civilly or
criminally liable and shall not have any penalty or cause of action of
any nature arise against them for any action taken or not taken,
including any discretionary decision or failure to make a discretionary
decision, when the action or inaction is done in good faith and in the
performance of the powers and duties under this chapter. Nothing in
this section prohibits legal actions against the board to enforce the
board's statutory or contractual duties or obligations.
NEW SECTION. Sec. 205
(2) In consultation with and upon approval by the partnership
board, the authority shall designate health plans that qualify for
premium assistance payments. At least four health plans shall be
chosen, with multiple deductible and point-of-service cost-sharing
options. The health plans shall range from catastrophic to
comprehensive coverage. One health plan shall include services and
cost-sharing comparable to those offered through the basic health plan
under chapter 70.47 RCW, as of January 1, 2007. Designated health
plans must include innovative components that will maximize the quality
of care provided and result in improved health outcomes. These
components include, but are not limited to:
(a) Preventive care;
(b) Wellness incentives, such as personal health assessments with
health coaching, and smoking cessation benefits;
(c) Limited cost-sharing for preventive services, medications to
manage chronic illness, and chronic care management visits;
(d) Payment for chronic care services, such as increased
reimbursement for primary care visits, reimbursement for care
coordination services, and coverage of group visits, telephone
consultation, and nutrition education that enable patients to learn the
skills needed to manage their chronic illness;
(e) Provider network development and payment policies related to
quality of care, such as tiered networks, payment for performance in
areas such as use of evidence-based protocols, delivery of preventive
and chronic care management services, and quality and outcomes
reporting.
(3) In consultation with and upon approval by the partnership
board, the authority shall design a schedule of premium assistance
payments that is based upon gross family income, giving appropriate
consideration to family size and the ages of all family members. The
benchmark plan for purposes of designing the premium assistance payment
schedule shall be the benefit design comparable to the basic health
plan designated under subsection (2) of this section.
For employees of participating small employer plans, the premium
assistance schedule shall be applied to the employee premium obligation
remaining after employer premium contributions, so that employees
benefit financially from their employer's contribution to the cost of
their coverage through the partnership. Any surcharge included in the
premium under section 203 of this act shall be included when
determining the appropriate level of premium assistance payments.
(4) A financial sponsor may, with the prior approval of the
administrator, pay the premium or any other amount on behalf of a
partnership participant, by arrangement with the participant and
through a mechanism acceptable to the administrator and the
partnership.
(5) Beginning January 1, 2009, the successful bidder shall accept
applications for premium assistance from partnership participants who
have family income up to two hundred percent of the federal poverty
level, as determined annually by the federal department of health and
human services, on behalf of themselves, their spouses, and their
dependent children.
(6) The successful bidder shall remit premium assistance payments
in an amount determined under subsection (3) of this section to the
carrier offering the health plan in which the partnership participant
has chosen to enroll. If, however, the partnership participant has
chosen to enroll in a high deductible health plan, any difference
between the amount of premium assistance that the participant would
receive and the applicable premium rate for the high deductible health
plan shall be deposited into a health savings account for the benefit
of that participant.
NEW SECTION. Sec. 206 Enrollment in the partnership premium
assistance program is not an entitlement and shall not result in
expenditures that exceed the amount that has been appropriated for the
program in the operating budget. If it appears that continued
enrollment will result in expenditures exceeding the appropriated level
for a particular fiscal year, the successful bidder may freeze new
enrollment in the program and establish a waiting list of eligible
employees who shall receive subsidies only when sufficient funds are
available.
NEW SECTION. Sec. 207
NEW SECTION. Sec. 208
NEW SECTION. Sec. 209
(1) The operation and administration of the partnership, including
surveys and reports of health benefit plans available to partnership
participants and on the experience of the plans. The experience of the
plans shall include data on enrollees in the partnership, the number of
carriers offering coverage through the partnership, the health plans
offered through the partnership, the operation and administration of
the partnership premium assistance program, complaints data,
partnership expenses, whether and how the partnership met its goals,
and other information deemed pertinent by the authority; and
(2) Any significant observations regarding utilization and adoption
of the partnership.
NEW SECTION. Sec. 210
(1) The risks and benefits of additional markets participating in
the partnership:
(a) The report shall examine the following markets:
(i) Association health plans;
(ii) Individual health insurance market;
(iii) Washington state health insurance pool under chapter 48.41
RCW;
(iv) Basic health plan, under chapter 70.47 RCW;
(v) Public employees' benefits board enrollees under chapter 41.05
RCW; and
(vi) Public school employees; and
(b) The report shall examine at least the following issues:
(i) The impact of these markets participating in the partnership,
with respect to the utilization of services and cost of health plans
offered through the partnership;
(ii) Whether any distinction should be made in participation
between active and retired employees enrolled in public employees'
benefits board plans, giving consideration to the implicit subsidy that
nonmedicare-eligible retirees currently benefit from by being pooled
with active employees, and how medicare-eligible retirees would be
affected;
(iii) The impact of applying the insurance regulations in section
302 of this act, RCW 48.43.015, 48.43.025, and 48.43.035, on access to
health services and the cost of coverage for these markets; and
(iv) If the board recommends the inclusion of additional markets,
how the composition of the board should be modified to reflect the
participation of these markets.
(2) The risks and benefits of establishing a requirement that
residents of the state of Washington age eighteen and over obtain and
maintain affordable creditable coverage, as defined in the federal
health insurance portability and accountability act of 1996 (42 U.S.C.
Sec. 300gg(c)). The report shall address the question of how a
requirement that residents maintain coverage could be enforced in the
state of Washington.
NEW SECTION. Sec. 211
Sec. 301 RCW 48.43.005 and 2006 c 25 s 16 are each amended to
read as follows:
Unless otherwise specifically provided, the definitions in this
section apply throughout this chapter.
(1) "Adjusted community rate" means the rating method used to
establish the premium for health plans adjusted to reflect actuarially
demonstrated differences in utilization or cost attributable to
geographic region, age, family size, and use of wellness activities.
(2) "Basic health plan" means the plan described under chapter
70.47 RCW, as revised from time to time.
(3) "Basic health plan model plan" means a health plan as required
in RCW 70.47.060(2)(e).
(4) "Basic health plan services" means that schedule of covered
health services, including the description of how those benefits are to
be administered, that are required to be delivered to an enrollee under
the basic health plan, as revised from time to time.
(5) "Catastrophic health plan" means:
(a) In the case of a contract, agreement, or policy covering a
single enrollee, a health benefit plan requiring a calendar year
deductible of, at a minimum, one thousand five hundred dollars and an
annual out-of-pocket expense required to be paid under the plan (other
than for premiums) for covered benefits of at least three thousand
dollars; and
(b) In the case of a contract, agreement, or policy covering more
than one enrollee, a health benefit plan requiring a calendar year
deductible of, at a minimum, three thousand dollars and an annual out-of-pocket expense required to be paid under the plan (other than for
premiums) for covered benefits of at least five thousand five hundred
dollars; or
(c) Any health benefit plan that provides benefits for hospital
inpatient and outpatient services, professional and prescription drugs
provided in conjunction with such hospital inpatient and outpatient
services, and excludes or substantially limits outpatient physician
services and those services usually provided in an office setting.
(6) "Certification" means a determination by a review organization
that an admission, extension of stay, or other health care service or
procedure has been reviewed and, based on the information provided,
meets the clinical requirements for medical necessity, appropriateness,
level of care, or effectiveness under the auspices of the applicable
health benefit plan.
(7) "Concurrent review" means utilization review conducted during
a patient's hospital stay or course of treatment.
(8) "Covered person" or "enrollee" means a person covered by a
health plan including an enrollee, subscriber, policyholder,
beneficiary of a group plan, or individual covered by any other health
plan.
(9) "Dependent" means, at a minimum, the enrollee's legal spouse
and unmarried dependent children who qualify for coverage under the
enrollee's health benefit plan.
(10) "Eligible employee" means an employee who works on a full-time
basis with a normal work week of thirty or more hours. The term
includes a self-employed individual, including a sole proprietor, a
partner of a partnership, and may include an independent contractor, if
the self-employed individual, sole proprietor, partner, or independent
contractor is included as an employee under a health benefit plan of a
small employer, but does not work less than thirty hours per week and
derives at least seventy-five percent of his or her income from a trade
or business through which he or she has attempted to earn taxable
income and for which he or she has filed the appropriate internal
revenue service form. Persons covered under a health benefit plan
pursuant to the consolidated omnibus budget reconciliation act of 1986
shall not be considered eligible employees for purposes of minimum
participation requirements of chapter 265, Laws of 1995.
(11) "Emergency medical condition" means the emergent and acute
onset of a symptom or symptoms, including severe pain, that would lead
a prudent layperson acting reasonably to believe that a health
condition exists that requires immediate medical attention, if failure
to provide medical attention would result in serious impairment to
bodily functions or serious dysfunction of a bodily organ or part, or
would place the person's health in serious jeopardy.
(12) "Emergency services" means otherwise covered health care
services medically necessary to evaluate and treat an emergency medical
condition, provided in a hospital emergency department.
(13) "Enrollee point-of-service cost-sharing" means amounts paid to
health carriers directly providing services, health care providers, or
health care facilities by enrollees and may include copayments,
coinsurance, or deductibles.
(14) "Grievance" means a written complaint submitted by or on
behalf of a covered person regarding: (a) Denial of payment for
medical services or nonprovision of medical services included in the
covered person's health benefit plan, or (b) service delivery issues
other than denial of payment for medical services or nonprovision of
medical services, including dissatisfaction with medical care, waiting
time for medical services, provider or staff attitude or demeanor, or
dissatisfaction with service provided by the health carrier.
(15) "Health care facility" or "facility" means hospices licensed
under chapter 70.127 RCW, hospitals licensed under chapter 70.41 RCW,
rural health care facilities as defined in RCW 70.175.020, psychiatric
hospitals licensed under chapter 71.12 RCW, nursing homes licensed
under chapter 18.51 RCW, community mental health centers licensed under
chapter 71.05 or 71.24 RCW, kidney disease treatment centers licensed
under chapter 70.41 RCW, ambulatory diagnostic, treatment, or surgical
facilities licensed under chapter 70.41 RCW, drug and alcohol treatment
facilities licensed under chapter 70.96A RCW, and home health agencies
licensed under chapter 70.127 RCW, and includes such facilities if
owned and operated by a political subdivision or instrumentality of the
state and such other facilities as required by federal law and
implementing regulations.
(16) "Health care provider" or "provider" means:
(a) A person regulated under Title 18 or chapter 70.127 RCW, to
practice health or health-related services or otherwise practicing
health care services in this state consistent with state law; or
(b) An employee or agent of a person described in (a) of this
subsection, acting in the course and scope of his or her employment.
(17) "Health care service" means that service offered or provided
by health care facilities and health care providers relating to the
prevention, cure, or treatment of illness, injury, or disease.
(18) "Health carrier" or "carrier" means a disability insurer
regulated under chapter 48.20 or 48.21 RCW, a health care service
contractor as defined in RCW 48.44.010, or a health maintenance
organization as defined in RCW 48.46.020.
(19) "Health plan" or "health benefit plan" means any policy,
contract, or agreement offered by a health carrier to provide, arrange,
reimburse, or pay for health care services except the following:
(a) Long-term care insurance governed by chapter 48.84 RCW;
(b) Medicare supplemental health insurance governed by chapter
48.66 RCW;
(c) Coverage supplemental to the coverage provided under chapter
55, Title 10, United States Code;
(d) Limited health care services offered by limited health care
service contractors in accordance with RCW 48.44.035;
(e) Disability income;
(f) Coverage incidental to a property/casualty liability insurance
policy such as automobile personal injury protection coverage and
homeowner guest medical;
(g) Workers' compensation coverage;
(h) Accident only coverage;
(i) Specified disease and hospital confinement indemnity when
marketed solely as a supplement to a health plan;
(j) Employer-sponsored self-funded health plans;
(k) Dental only and vision only coverage; and
(l) Plans deemed by the insurance commissioner to have a short-term
limited purpose or duration, or to be a student-only plan that is
guaranteed renewable while the covered person is enrolled as a regular
full-time undergraduate or graduate student at an accredited higher
education institution, after a written request for such classification
by the carrier and subsequent written approval by the insurance
commissioner.
(20) "Material modification" means a change in the actuarial value
of the health plan as modified of more than five percent but less than
fifteen percent.
(21) "Participating small employer plan" means a group health plan,
as defined in federal law, Sec. 706 of ERISA (29 U.S.C. Sec. 1186),
that is sponsored by a small employer and for which the plan sponsor
has entered into an agreement with the partnership, in accordance with
the provisions of section 203 of this act, for the partnership to offer
and administer health insurance benefits for enrollees in the plan.
(22) "Partnership" means the Washington health insurance
partnership established in sections 202 and 203 of this act.
(23) "Partnership participant" means a person who has been
determined by the partnership to be, and continues to be, an employee
of a participating small employer plan for purposes of obtaining
coverage through the partnership or a former employee of a
participating small employer plan who chooses to continue receiving
coverage through the partnership following separation from employment.
(24) "Preexisting condition" means any medical condition, illness,
or injury that existed any time prior to the effective date of
coverage.
(((22))) (25) "Premium" means all sums charged, received, or
deposited by a health carrier as consideration for a health plan or the
continuance of a health plan. Any assessment or any "membership,"
"policy," "contract," "service," or similar fee or charge made by a
health carrier in consideration for a health plan is deemed part of the
premium. "Premium" shall not include amounts paid as enrollee point-of-service cost-sharing.
(((23))) (26) "Review organization" means a disability insurer
regulated under chapter 48.20 or 48.21 RCW, health care service
contractor as defined in RCW 48.44.010, or health maintenance
organization as defined in RCW 48.46.020, and entities affiliated with,
under contract with, or acting on behalf of a health carrier to perform
a utilization review.
(((24))) (27) "Small employer" or "small group" means any person,
firm, corporation, partnership, association, political subdivision,
sole proprietor, or self-employed individual that is actively engaged
in business that, on at least fifty percent of its working days during
the preceding calendar quarter, employed at least two but no more than
fifty eligible employees, with a normal work week of thirty or more
hours, the majority of whom were employed within this state, and is not
formed primarily for purposes of buying health insurance and in which
a bona fide employer-employee relationship exists. In determining the
number of eligible employees, companies that are affiliated companies,
or that are eligible to file a combined tax return for purposes of
taxation by this state, shall be considered an employer. Subsequent to
the issuance of a health plan to a small employer and for the purpose
of determining eligibility, the size of a small employer shall be
determined annually. Except as otherwise specifically provided, a
small employer shall continue to be considered a small employer until
the plan anniversary following the date the small employer no longer
meets the requirements of this definition. A self-employed individual
or sole proprietor must derive at least seventy-five percent of his or
her income from a trade or business through which the individual or
sole proprietor has attempted to earn taxable income and for which he
or she has filed the appropriate internal revenue service form 1040,
schedule C or F, for the previous taxable year except for a self-employed individual or sole proprietor in an agricultural trade or
business, who must derive at least fifty-one percent of his or her
income from the trade or business through which the individual or sole
proprietor has attempted to earn taxable income and for which he or she
has filed the appropriate internal revenue service form 1040, for the
previous taxable year. A self-employed individual or sole proprietor
who is covered as a group of one on the day prior to June 10, 2004,
shall also be considered a "small employer" to the extent that
individual or group of one is entitled to have his or her coverage
renewed as provided in RCW 48.43.035(6).
(((25))) (28) "Utilization review" means the prospective,
concurrent, or retrospective assessment of the necessity and
appropriateness of the allocation of health care resources and services
of a provider or facility, given or proposed to be given to an enrollee
or group of enrollees.
(((26))) (29) "Wellness activity" means an explicit program of an
activity consistent with department of health guidelines, such as,
smoking cessation, injury and accident prevention, reduction of alcohol
misuse, appropriate weight reduction, exercise, automobile and
motorcycle safety, blood cholesterol reduction, and nutrition education
for the purpose of improving enrollee health status and reducing health
service costs.
NEW SECTION. Sec. 302
(1)(a) A carrier offering any health benefit plan through the
partnership, or through an association or member-governed group formed
specifically for the purpose of purchasing health care, may offer and
actively market a health benefit plan featuring a limited schedule of
covered health care services. Nothing in this subsection precludes a
carrier from offering other health benefit plans that may have more
comprehensive benefits than those included in the health benefit plan
offered under this subsection. A carrier offering a health benefit
plan under this subsection shall clearly disclose all covered benefits
to the small employer in a brochure filed with the commissioner.
(b) A health benefit plan offered under this subsection shall
provide coverage for hospital expenses and services rendered by a
physician licensed under chapter 18.57 or 18.71 RCW but is not subject
to the requirements of:
(i) For disability insurers, RCW 48.21.130, 48.21.140, 48.21.141,
48.21.142, 48.21.144, 48.21.146, 48.21.160 through 48.21.197,
48.21.200, 48.21.220, 48.21.225, 48.21.230, 48.21.235, 48.21.240,
48.21.244, 48.21.250, 48.21.300, 48.21.310, or 48.21.320;
(ii) For health care service contractors, RCW 48.44.225, 48.44.240,
48.44.245, 48.44.290, 48.44.300, 48.44.310, 48.44.320, 48.44.325,
48.44.330, 48.44.335, 48.44.340, 48.44.344, 48.44.360, 48.44.400,
48.44.440, 48.44.450, and 48.44.460; and
(iii) For health maintenance organizations, RCW 48.46.275,
48.46.280, 48.46.285, 48.46.290, 48.46.350, 48.46.355, 48.46.375,
48.46.440, 48.46.480, 48.46.510, 48.46.520, and 48.46.530.
(2) Nothing in this section prohibits a carrier from offering, or
a purchaser from seeking, health benefit plans with benefits in excess
of the health benefit plan offered under subsection (1) of this
section. All forms, policies, and contracts shall be submitted for
approval to the commissioner, and the rates of any plan offered under
this section shall be reasonable in relation to the benefits.
(3) The carrier shall develop its rates based on an adjusted
community rate and may only vary the adjusted community rate for:
(a) Geographic area;
(b) Family size;
(c) Age; and
(d) Wellness activities.
(4) Except as provided in subsection (11)(b) of this section, the
adjustment for age in subsection (3)(c) of this section may not use age
brackets smaller than five-year increments, which shall begin with age
twenty and end with age sixty-five. Participating individuals under
the age of twenty shall be treated as those age twenty.
(5) The carrier shall be permitted to develop separate rates for
individuals age sixty-five or older for coverage for which medicare is
the primary payer and coverage for which medicare is not the primary
payer. Both rates are subject to the requirements of this section.
(6) The permitted rates for any age group shall be no more than
three hundred seventy-five percent of the lowest rate for all age
groups.
(7) A discount for wellness activities is permitted to reflect
actuarially justified differences in utilization or cost attributed to
such programs.
(8) The rate charged for a health benefit plan offered under this
section may not be adjusted more frequently than annually except that
the premium may be changed to reflect changes in government
requirements affecting the health benefit plan.
(9) Rating factors shall produce premiums for identical partnership
participants that differ only by the amounts attributable to plan
design, with the exception of discounts for health improvement
programs.
(10) For the purposes of this section, a health benefit plan that
contains a restricted network provision shall not be considered similar
coverage to a health benefit plan that does not contain such a
provision, provided that the restrictions of benefits to network
providers result in substantial differences in claims costs. A carrier
may develop its rates based on claims costs due to network provider
reimbursement schedules or type of network. This subsection does not
restrict or enhance the portability of benefits as provided in RCW
48.43.015.
(11)(a) Except to the extent provided otherwise in (b) of this
subsection, adjusted community rates established under this section
shall pool the medical experience of all of a carrier's enrollees
purchasing coverage through the partnership. However, annual rate
adjustments for each partnership plan may vary by up to plus or minus
four percentage points from the overall adjustment of a carrier's
entire partnership pool, such overall adjustment to be approved by the
commissioner, upon a showing by the carrier, certified by a member of
the American academy of actuaries that: (i) The variation is a result
of deductible leverage, benefit design, or provider network
characteristics; and (ii) for a rate renewal period, the projected
weighted average of all partnership health benefit plans will have a
revenue neutral effect on the carrier's partnership pool. Variations
of greater than four percentage points are subject to review by the
commissioner, and must be approved or denied within sixty days of
submittal. A variation that is not denied within sixty days shall be
deemed approved. The commissioner must provide to the carrier a
detailed actuarial justification for any denial within thirty days of
the denial.
(b) Carriers may treat persons under age thirty as a separate
experience pool for purposes of establishing rates for health plans
offered through the partnership. If the carrier chooses to create a
separate experience pool for persons under age thirty, that experience
pool is not subject to subsections (4) and (6) of this section.
Individuals under age twenty must be rated as one age category.
Adjustments for age for persons age twenty up to age thirty may not use
age brackets smaller than five-year increments.
(12) Nothing in this section restricts the right of employees to
collectively bargain for insurance providing benefits in excess of
those provided in this section.
(13) A carrier must offer coverage to all partnership participants
and their dependents. A carrier may not offer coverage to only certain
partnership participants. A carrier may not modify a health plan with
respect to a partnership participant or dependent, through riders,
endorsements, or otherwise, to restrict or exclude coverage or benefits
for specific diseases, medical conditions, or services otherwise
covered by the plan.
Sec. 303 RCW 48.43.015 and 2004 c 192 s 5 are each amended to
read as follows:
(1) For a health benefit plan offered to a group or through the
partnership established in sections 202 and 203 of this act, every
health carrier shall reduce any preexisting condition exclusion,
limitation, or waiting period in the group health plan in accordance
with the provisions of section 2701 of the federal health insurance
portability and accountability act of 1996 (42 U.S.C. Sec. 300gg).
(2) For a health benefit plan offered to a group other than a small
group:
(a) If the individual applicant's immediately preceding health plan
coverage terminated during the period beginning ninety days and ending
sixty-four days before the date of application for the new plan and
such coverage was similar and continuous for at least three months,
then the carrier shall not impose a waiting period for coverage of
preexisting conditions under the new health plan.
(b) If the individual applicant's immediately preceding health plan
coverage terminated during the period beginning ninety days and ending
sixty-four days before the date of application for the new plan and
such coverage was similar and continuous for less than three months,
then the carrier shall credit the time covered under the immediately
preceding health plan toward any preexisting condition waiting period
under the new health plan.
(c) For the purposes of this subsection, a preceding health plan
includes an employer-provided self-funded health plan, the basic health
plan's offering to health coverage tax credit eligible enrollees as
established by chapter 192, Laws of 2004, and plans of the Washington
state health insurance pool.
(3) For a health benefit plan offered ((to a small group)) through
the partnership established in sections 202 and 203 of this act:
(a) If the individual applicant's immediately preceding health plan
coverage terminated during the period beginning ninety days and ending
sixty-four days before the date of application for the new plan and
such coverage was similar and continuous for at least nine months, then
the carrier shall not impose a waiting period for coverage of
preexisting conditions under the new health plan.
(b) If the individual applicant's immediately preceding health plan
coverage terminated during the period beginning ninety days and ending
sixty-four days before the date of application for the new plan and
such coverage was similar and continuous for less than nine months,
then the carrier shall credit the time covered under the immediately
preceding health plan toward any preexisting condition waiting period
under the new health plan.
(c) For the purpose of this subsection, a preceding health plan
includes an employer-provided self-funded health plan, the basic health
plan's offering to health coverage tax credit eligible enrollees as
established by chapter 192, Laws of 2004, and plans of the Washington
state health insurance pool.
(4) For a health benefit plan offered to an individual, other than
an individual to whom subsection (5) of this section applies, every
health carrier shall credit any preexisting condition waiting period in
that plan for a person who was enrolled at any time during the sixty-three day period immediately preceding the date of application for the
new health plan in a group health benefit plan or an individual health
benefit plan, other than a catastrophic health plan, and (a) the
benefits under the previous plan provide equivalent or greater overall
benefit coverage than that provided in the health benefit plan the
individual seeks to purchase; or (b) the person is seeking an
individual health benefit plan due to his or her change of residence
from one geographic area in Washington state to another geographic area
in Washington state where his or her current health plan is not
offered, if application for coverage is made within ninety days of
relocation; or (c) the person is seeking an individual health benefit
plan: (i) Because a health care provider with whom he or she has an
established care relationship and from whom he or she has received
treatment within the past twelve months is no longer part of the
carrier's provider network under his or her existing Washington
individual health benefit plan; and (ii) his or her health care
provider is part of another carrier's provider network; and (iii)
application for a health benefit plan under that carrier's provider
network individual coverage is made within ninety days of his or her
provider leaving the previous carrier's provider network. The carrier
must credit the period of coverage the person was continuously covered
under the immediately preceding health plan toward the waiting period
of the new health plan. For the purposes of this subsection (4), a
preceding health plan includes an employer-provided self-funded health
plan, the basic health plan's offering to health coverage tax credit
eligible enrollees as established by chapter 192, Laws of 2004, and
plans of the Washington state health insurance pool.
(5) Every health carrier shall waive any preexisting condition
waiting period in its individual plans for a person who is an eligible
individual as defined in section 2741(b) of the federal health
insurance portability and accountability act of 1996 (42 U.S.C. Sec.
300gg-41(b)).
(6) Subject to the provisions of subsections (1) through (5) of
this section, nothing contained in this section requires a health
carrier to amend a health plan to provide new benefits in its existing
health plans. In addition, nothing in this section requires a carrier
to waive benefit limitations not related to an individual or group's
preexisting conditions or health history.
Sec. 304 RCW 48.43.025 and 2001 c 196 s 9 are each amended to
read as follows:
(1) For group health benefit plans for groups other than small
groups, no carrier may reject an individual for health plan coverage
based upon preexisting conditions of the individual and no carrier may
deny, exclude, or otherwise limit coverage for an individual's
preexisting health conditions; except that a carrier may impose a
three-month benefit waiting period for preexisting conditions for which
medical advice was given, or for which a health care provider
recommended or provided treatment within three months before the
effective date of coverage. Any preexisting condition waiting period
or limitation relating to pregnancy as a preexisting condition shall be
imposed only to the extent allowed in the federal health insurance
portability and accountability act of 1996.
(2) For group health benefit plans ((for small groups)) offered
through the partnership established in sections 202 and 203 of this
act, no carrier may reject an individual for health plan coverage based
upon preexisting conditions of the individual and no carrier may deny,
exclude, or otherwise limit coverage for an individual's preexisting
health conditions. Except that a carrier may impose a nine-month
benefit waiting period for preexisting conditions for which medical
advice was given, or for which a health care provider recommended or
provided treatment within six months before the effective date of
coverage. Any preexisting condition waiting period or limitation
relating to pregnancy as a preexisting condition shall be imposed only
to the extent allowed in the federal health insurance portability and
accountability act of 1996.
(3) No carrier may avoid the requirements of this section through
the creation of a new rate classification or the modification of an
existing rate classification. A new or changed rate classification
will be deemed an attempt to avoid the provisions of this section if
the new or changed classification would substantially discourage
applications for coverage from individuals or groups who are higher
than average health risks. These provisions apply only to individuals
who are Washington residents.
Sec. 305 RCW 48.43.035 and 2004 c 244 s 4 are each amended to
read as follows:
For group health benefit plans and for health benefit plans offered
through the partnership established in sections 202 and 203 of this
act, the following shall apply:
(1) All health carriers shall accept for enrollment any state
resident within the group to whom the plan is offered and within the
carrier's service area and provide or assure the provision of all
covered services regardless of age, sex, family structure, ethnicity,
race, health condition, geographic location, employment status,
socioeconomic status, other condition or situation, or the provisions
of RCW 49.60.174(2). The insurance commissioner may grant a temporary
exemption from this subsection, if, upon application by a health
carrier the commissioner finds that the clinical, financial, or
administrative capacity to serve existing enrollees will be impaired if
a health carrier is required to continue enrollment of additional
eligible individuals.
(2) Except as provided in subsection (5) of this section, all
health plans shall contain or incorporate by endorsement a guarantee of
the continuity of coverage of the plan. For the purposes of this
section, a plan is "renewed" when it is continued beyond the earliest
date upon which, at the carrier's sole option, the plan could have been
terminated for other than nonpayment of premium. The carrier may
consider the group's anniversary date as the renewal date for purposes
of complying with the provisions of this section.
(3) The guarantee of continuity of coverage required in health
plans shall not prevent a carrier from canceling or nonrenewing a
health plan for:
(a) Nonpayment of premium;
(b) Violation of published policies of the carrier approved by the
insurance commissioner;
(c) Covered persons entitled to become eligible for medicare
benefits by reason of age who fail to apply for a medicare supplement
plan or medicare cost, risk, or other plan offered by the carrier
pursuant to federal laws and regulations;
(d) Covered persons who fail to pay any deductible or copayment
amount owed to the carrier and not the provider of health care
services;
(e) Covered persons committing fraudulent acts as to the carrier;
(f) Covered persons who materially breach the health plan; or
(g) Change or implementation of federal or state laws that no
longer permit the continued offering of such coverage.
(4) The provisions of this section do not apply in the following
cases:
(a) A carrier has zero enrollment on a product;
(b) A carrier replaces a product and the replacement product is
provided to all covered persons within that class or line of business,
includes all of the services covered under the replaced product, and
does not significantly limit access to the kind of services covered
under the replaced product. The health plan may also allow
unrestricted conversion to a fully comparable product;
(c) No sooner than January 1, 2005, a carrier discontinues offering
a particular type of health benefit plan offered for groups of up to
two hundred if: (i) The carrier provides notice to each group of the
discontinuation at least ninety days prior to the date of the
discontinuation; (ii) the carrier offers to each group provided
coverage of this type the option to enroll, with regard to small
employer groups, in any other small employer group plan, or with regard
to groups of up to two hundred, in any other applicable group plan,
currently being offered by the carrier in the applicable group market;
and (iii) in exercising the option to discontinue coverage of this type
and in offering the option of coverage under (c)(ii) of this
subsection, the carrier acts uniformly without regard to any health
status-related factor of enrolled individuals or individuals who may
become eligible for this coverage;
(d) A carrier discontinues offering all health coverage in the
small group market or for groups of up to two hundred, or both markets,
in the state and discontinues coverage under all existing group health
benefit plans in the applicable market involved if: (i) The carrier
provides notice to the commissioner of its intent to discontinue
offering all such coverage in the state and its intent to discontinue
coverage under all such existing health benefit plans at least one
hundred eighty days prior to the date of the discontinuation of
coverage under all such existing health benefit plans; and (ii) the
carrier provides notice to each covered group of the intent to
discontinue the existing health benefit plan at least one hundred
eighty days prior to the date of discontinuation. In the case of
discontinuation under this subsection, the carrier may not issue any
group health coverage in this state in the applicable group market
involved for a five-year period beginning on the date of the
discontinuation of the last health benefit plan not so renewed. This
subsection (4) does not require a carrier to provide notice to the
commissioner of its intent to discontinue offering a health benefit
plan to new applicants when the carrier does not discontinue coverage
of existing enrollees under that health benefit plan; or
(e) A carrier is withdrawing from a service area or from a segment
of its service area because the carrier has demonstrated to the
insurance commissioner that the carrier's clinical, financial, or
administrative capacity to serve enrollees would be exceeded.
(5) The provisions of this section do not apply to health plans
deemed by the insurance commissioner to be unique or limited or have a
short-term purpose, after a written request for such classification by
the carrier and subsequent written approval by the insurance
commissioner.
(6) Notwithstanding any other provision of this section, the
guarantee of continuity of coverage applies to a group of one only if:
(a) The carrier continues to offer any other small employer group plan
in which the group of one was eligible to enroll on the day prior to
June 10, 2004; and (b) the person continues to qualify as a group of
one under the criteria in place on the day prior to June 10, 2004.
NEW SECTION. Sec. 306
Sec. 307 RCW 48.21.047 and 2005 c 223 s 11 are each amended to
read as follows:
(1) An insurer may not offer any health benefit plan ((to any small
employer without complying with RCW 48.21.045(3))) through the
partnership established in sections 202 and 203 of this act without
complying with section 302 of this act.
(2) Employers purchasing health plans provided through associations
or through member-governed groups formed specifically for the purpose
of purchasing health care are not small employers and the plans are not
subject to ((RCW 48.21.045(3))) section 302(3) of this act.
(3) For purposes of this section, "health benefit plan," "health
plan," and "small employer" mean the same as defined in RCW 48.43.005.
Sec. 308 RCW 48.44.024 and 2003 c 248 s 15 are each amended to
read as follows:
(1) A health care service contractor may not offer any health
benefit plan ((to any small employer without complying with RCW
48.44.023(3))) through the partnership established in sections 202 and
203 of this act without complying with section 302 of this act.
(2) Employers purchasing health plans provided through associations
or through member-governed groups formed specifically for the purpose
of purchasing health care are not small employers and the plans are not
subject to ((RCW 48.44.023(3))) section 302(3) of this act.
(3) For purposes of this section, "health benefit plan," "health
plan," and "small employer" mean the same as defined in RCW 48.43.005.
Sec. 309 RCW 48.46.068 and 2003 c 248 s 16 are each amended to
read as follows:
(1) A health maintenance organization may not offer any health
benefit plan ((to any small employer without complying with RCW
48.46.066(3))) through the partnership established in sections 202 and
203 of this act without complying with section 302 of this act.
(2) Employers purchasing health plans provided through associations
or through member-governed groups formed specifically for the purpose
of purchasing health care are not small employers and are not subject
to ((RCW 48.46.066(3))) section 302(3) of this act.
(3) For purposes of this section, "health benefit plan," "health
plan," and "small employer" mean the same as defined in RCW 48.43.005.
Sec. 310 RCW 48.43.028 and 2001 c 196 s 10 are each amended to
read as follows:
To the extent required of the federal health insurance portability
and accountability act of 1996, the eligibility of an employer or group
to purchase a health benefit plan set forth in ((RCW 48.21.045(1)(b),
48.44.023(1)(b), and 48.46.066(1)(b))) section 302(1) of this act must
be extended to all small employers and small groups as defined in RCW
48.43.005.
NEW SECTION. Sec. 311
NEW SECTION. Sec. 401 The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Employee" means any individual employed by any employer.
(2) "Employer" means an employer as defined in RCW 49.46.010.
(3) "Partnership" means the entity established in sections 202 and
203 of this act.
NEW SECTION. Sec. 402 Beginning January 1, 2009, each employer
that has entered into an agreement with the partnership, in accordance
with this act, for the partnership to offer and administer health
insurance benefits for its employees shall:
(1) Adopt and maintain a cafeteria plan that satisfies 26 U.S.C.
Sec. 125 that provides a premium only plan option so that employees can
use salary deductions to pay health plan premiums. A copy of such
cafeteria plan shall be filed with the partnership; and
(2) Collect and transmit amounts designated as payroll deductions
by employees to the partnership for those employees purchasing coverage
through the partnership.
NEW SECTION. Sec. 403 The attorney general shall enforce
sections 401 and 402 of this act and has the authority to seek and
obtain injunctive relief in a court of appropriate jurisdiction.
NEW SECTION. Sec. 501 (1) The office of the insurance
commissioner shall contract for an independent study of health benefit
mandates, rating requirements, and insurance statutes and rules to
determine the impact on premiums and individuals' health if those
statutes or rules were amended or repealed.
(2) The office of the insurance commissioner shall submit an
interim report to the governor and appropriate committees of the
legislature by December 1, 2007, and a final report by December 1,
2008.
NEW SECTION. Sec. 601 (1) Sections 102 and 201 through 211 of
this act constitute a new chapter in Title
(2) Sections 302, 306, and 307 of this act are each added to
chapter 48.43 RCW.
(3) Sections 401 through 403 of this act constitute a new chapter
in Title 49 RCW.
NEW SECTION. Sec. 602 Part headings and captions used in this
act are not any part of the law.
NEW SECTION. Sec. 603 The following acts or parts of acts are
each repealed, effective January 1, 2009:
(1) RCW 48.21.045 (Health plan benefits for small employers--Coverage -- Exemption from statutory requirements -- Premium rates--Requirements for providing coverage for small employers -- Definitions)
and 2004 c 244 s 1, 1995 c 265 s 14, & 1990 c 187 s 2;
(2) RCW 48.44.023 (Health plan benefits for small employers--Coverage -- Exemption from statutory requirements -- Premium rates--Requirements for providing coverage for small employers) and 2004 c 244
s 7, 1995 c 265 s 16, & 1990 c 187 s 3;
(3) RCW 48.46.066 (Health plan benefits for small employers--Coverage -- Exemption from statutory requirements -- Premium rates--Requirements for providing coverage for small employers) and 2004 c 244
s 9, 1995 c 265 s 18, & 1990 c 187 s 4;
(4) RCW 70.47A.010 (Finding -- Intent) and 2006 c 255 s 1;
(5) RCW 70.47A.020 (Definitions) and 2006 c 255 s 2;
(6) RCW 70.47A.030 (Program established -- Administrator duties) and
2006 c 255 s 3;
(7) RCW 70.47A.040 (Premium subsidies -- Enrollment verification,
status changes -- Administrator duties -- Rules) and 2006 c 255 s 4;
(8) RCW 70.47A.050 (Enrollment to remain within appropriation) and
2006 c 255 s 5;
(9) RCW 70.47A.060 (Rules) and 2006 c 255 s 6;
(10) RCW 70.47A.070 (Reports) and 2006 c 255 s 7;
(11) RCW 70.47A.080 (Small employer health insurance partnership
program account) and 2006 c 255 s 8;
(12) RCW 70.47A.090 (State children's health insurance program--Federal waiver request) and 2006 c 255 s 9; and
(13) RCW 70.47A.900 (Captions not law -- 2006 c 255) and 2006 c 255
s 11.
NEW SECTION. Sec. 604 Sections 302 through 310 of this act take
effect January 1, 2009.