BILL REQ. #:  S-1111.2 

Read first time 01/29/2007.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to the Washington state health insurance pool; amending RCW 48.41.110, 48.41.160, 48.41.200, 48.41.037, 48.41.100, and 48.41.190; creating a new section; and making an appropriation.

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

NEW SECTION.  Sec. 1   The legislature finds that the Washington state health insurance pool is a critically important insurance option for people in this state and must reflect health care provisions based on the best available evidence and be financially sustainable over time. The laws governing the Washington state health insurance pool have been read to preclude the program from modifying contracts, and yet coverage needs and options change with time. Everyone in this state benefits when the Washington state health insurance pool is more affordable and higher performing. Changes are needed to the Washington state health insurance pool to increase affordability, offer quality and cost-effective benefits, and enhance the governance and operation of the pool.

Sec. 2   RCW 48.41.110 and 2001 c 196 s 4 are each amended to read as follows:
     (1) The pool shall offer one or more care management plans of coverage. Such plans may, but are not required to, include point of service features that permit participants to receive in-network benefits or out-of-network benefits subject to differential cost shares. ((Covered persons enrolled in the pool on January 1, 2001, may continue coverage under the pool plan in which they are enrolled on that date. However,)) The pool may incorporate managed care features and requirements to participate in chronic care and disease management and evidence-based protocols into ((such)) existing plans.
     (2) The administrator shall prepare a brochure outlining the benefits and exclusions of ((the)) pool ((policy)) policies in plain language. After approval by the board, such brochure shall be made reasonably available to participants or potential participants.
     (3) The health insurance ((policy)) policies issued by the pool shall pay only reasonable amounts for medically necessary eligible health care services rendered or furnished for the diagnosis or treatment of covered illnesses, injuries, and conditions ((which are not otherwise limited or excluded)). Eligible expenses are the reasonable amounts for the health care services and items for which benefits are extended under ((the)) a pool policy. ((Such benefits shall at minimum include, but not be limited to, the following services or related items:))
     (4) The pool shall offer at least one policy which at a minimum includes, but is not limited to, the following services or related items:
     (a) Hospital services, including charges for the most common semiprivate room, for the most common private room if semiprivate rooms do not exist in the health care facility, or for the private room if medically necessary, but limited to a total of one hundred eighty inpatient days in a calendar year, and limited to thirty days inpatient care for mental and nervous conditions, or alcohol, drug, or chemical dependency or abuse per calendar year;
     (b) Professional services including surgery for the treatment of injuries, illnesses, or conditions, other than dental, which are rendered by a health care provider, or at the direction of a health care provider, by a staff of registered or licensed practical nurses, or other health care providers;
     (c) The first twenty outpatient professional visits for the diagnosis or treatment of one or more mental or nervous conditions or alcohol, drug, or chemical dependency or abuse rendered during a calendar year by one or more physicians, psychologists, or community mental health professionals, or, at the direction of a physician, by other qualified licensed health care practitioners, in the case of mental or nervous conditions, and rendered by a state certified chemical dependency program approved under chapter 70.96A RCW, in the case of alcohol, drug, or chemical dependency or abuse;
     (d) Drugs and contraceptive devices requiring a prescription;
     (e) Services of a skilled nursing facility, excluding custodial and convalescent care, for not more than one hundred days in a calendar year as prescribed by a physician;
     (f) Services of a home health agency;
     (g) Chemotherapy, radioisotope, radiation, and nuclear medicine therapy;
     (h) Oxygen;
     (i) Anesthesia services;
     (j) Prostheses, other than dental;
     (k) Durable medical equipment which has no personal use in the absence of the condition for which prescribed;
     (l) Diagnostic x-rays and laboratory tests;
     (m) Oral surgery limited to the following: Fractures of facial bones; excisions of mandibular joints, lesions of the mouth, lip, or tongue, tumors, or cysts excluding treatment for temporomandibular joints; incision of accessory sinuses, mouth salivary glands or ducts; dislocations of the jaw; plastic reconstruction or repair of traumatic injuries occurring while covered under the pool; and excision of impacted wisdom teeth;
     (n) Maternity care services;
     (o) Services of a physical therapist and services of a speech therapist;
     (p) Hospice services;
     (q) Professional ambulance service to the nearest health care facility qualified to treat the illness or injury; and
     (r) Other medical equipment, services, or supplies required by physician's orders and medically necessary and consistent with the diagnosis, treatment, and condition.
     (((4))) (5) The pool shall offer at least one policy which closely adheres to benefits available in the private, individual market.
     (6) The board shall design and employ cost containment measures and requirements such as, but not limited to, care coordination, provider network limitations, preadmission certification, and concurrent inpatient review which may make the pool more cost-effective.
     (((5))) (7) The pool benefit policy may contain benefit limitations, exceptions, and cost shares such as copayments, coinsurance, and deductibles that are consistent with managed care products, except that differential cost shares may be adopted by the board for nonnetwork providers under point of service plans. ((The pool benefit policy cost shares and limitations must be consistent with those that are generally included in health plans approved by the insurance commissioner; however, no limitation, exception, or reduction may be used that would exclude coverage for any disease, illness, or injury.
     (6))) (8) The pool may not reject an individual for health plan coverage based upon preexisting conditions of the individual or deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions; except that it shall impose a six-month benefit waiting period for preexisting conditions for which medical advice was given, for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within six months before the effective date of coverage. The preexisting condition waiting period shall not apply to prenatal care services. The pool may not avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. Credit against the waiting period shall be as provided in subsection (((7))) (9) of this section.
     (((7))) (9)(a) Except as provided in (b) of this subsection, the pool shall credit any preexisting condition waiting period in its plans for a person who was enrolled at any time during the sixty-three day period immediately preceding the date of application for the new pool plan. For the person previously enrolled in a group health benefit plan, the pool must credit the aggregate of all periods of preceding coverage not separated by more than sixty-three days toward the waiting period of the new health plan. For the person previously enrolled in an individual health benefit plan other than a catastrophic health plan, the pool 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, a preceding health plan includes an employer-provided self-funded health plan.
     (b) The pool shall waive any preexisting condition waiting period 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. 300gg-41(b)).
     (((8))) (10) If an application is made for the pool policy as a result of rejection by a carrier, then the date of application to the carrier, rather than to the pool, should govern for purposes of determining preexisting condition credit.
     (11) The pool shall contract with organizations that provide care management that has been demonstrated to be effective and shall require that enrollees who are eligible for care management services participate in such programs on a continuous basis as a condition of receiving pool coverage.

Sec. 3   RCW 48.41.160 and 1987 c 431 s 16 are each amended to read as follows:
     (1) ((A pool policy offered under this chapter shall contain provisions under which the pool is obligated to renew the policy until the day on which the individual in whose name the policy is issued first becomes eligible for medicare coverage. At that time, coverage of dependents shall terminate if such dependents are eligible for coverage under a different health plan. Dependents who become eligible for medicare prior to the individual in whose name the policy is issued, shall receive benefits in accordance with RCW 48.41.150.
     (2))) Any pool plan shall contain or incorporate by endorsement a guarantee of the continuity of coverage of the plan until the day on which the individual in whose name the policy is issued first becomes eligible for medicare coverage. For the purposes of this section, a plan is "renewed" when it is continued beyond the earliest date upon which, at the pool's sole option, the plan could have been terminated for other than nonpayment of premium. The pool may consider the individual's anniversary date as the renewal date for purposes of complying with the provisions of this section.
     (2) The guarantee of continuity of coverage required in health plans shall not prevent the pool from canceling or nonrenewing a health plan for:
     (a) Nonpayment of premium;
     (b) Violation of published policies of the pool;
     (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 pool pursuant to federal laws and regulations;
     (d) Covered persons who fail to pay any deductible or copayment amount owed to the pool and not the provider of health care services;
     (e) Covered persons committing fraudulent acts as to the pool;
     (f) Change or implementation of federal or state laws that no longer permit the continued offering of such coverage.
     (3) The provisions of this section do not apply in the following cases:
     (a) The pool has zero enrollment on a product;
     (b) The pool 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 pool may also allow unrestricted conversion to a fully comparable product;
     (c) The pool discontinues offering a particular type of health benefit plan and: (i) The pool provides notice to each individual of the discontinuation at least ninety days prior to the date of the discontinuation; (ii) the pool offers to each individual provided coverage of this type the option to enroll in any other individual product for which the individual is otherwise eligible and which is currently being offered by the pool; 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 pool acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for this coverage.
     (4) The pool may not change the rates for pool policies except on a class basis, with a clear disclosure in the policy of the pool's right to do so.
     (((3))) (5) A pool policy offered under this chapter shall provide that, upon the death of the individual in whose name the policy is issued, every other individual then covered under the policy may elect, within a period specified in the policy, to continue coverage under the same or a different policy.

Sec. 4   RCW 48.41.200 and 2000 c 79 s 17 are each amended to read as follows:
     (1) The pool shall determine the standard risk rate by calculating the average individual standard rate charged for coverage comparable to pool coverage by the five largest members, measured in terms of individual market enrollment, offering such coverages in the state. In the event five members do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage in the individual market.
     (2) Subject to subsection (3) of this section, maximum rates for pool coverage shall be as follows:
     (a) Maximum rates for a pool indemnity health plan shall be one hundred fifty percent of the rate calculated under subsection (1) of this section;
     (b) Maximum rates for a pool care management plan shall be one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and
     (c) Maximum rates for a person eligible for pool coverage pursuant to RCW 48.41.100(1)(a) who was enrolled at any time during the sixty-three day period immediately prior to the date of application for pool coverage in a group health benefit plan or an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005, where such coverage was continuous for at least eighteen months, shall be:
     (i) For a pool indemnity health plan, one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and
     (ii) For a pool care management plan, one hundred ten percent of the rate calculated under subsection (1) of this section.
     (3)(a) Subject to (b) and (c) of this subsection:
     (i) The rate for any person ((aged fifty to sixty-four)) whose current gross family income is less than two hundred fifty-one percent of the federal poverty level shall be reduced by thirty percent from what it would otherwise be;
     (ii) The rate for any person ((aged fifty to sixty-four)) whose current gross family income is more than two hundred fifty but less than three hundred one percent of the federal poverty level shall be reduced by fifteen percent from what it would otherwise be;
     (iii) The rate for any person who has been enrolled in the pool for more than thirty-six months shall be reduced by five percent from what it would otherwise be.
     (b) In no event shall the rate for any person be less than one hundred ten percent of the rate calculated under subsection (1) of this section.
     (c) Rate reductions under (a)(i) and (ii) of this subsection shall be available only to the extent that funds are specifically appropriated for this purpose in the omnibus appropriations act.

Sec. 5   RCW 48.41.037 and 2000 c 79 s 36 are each amended to read as follows:
     The Washington state health insurance pool account is created in the custody of the state treasurer. All receipts from moneys specifically appropriated to the account must be deposited in the account. Expenditures from this account shall be used to cover deficits incurred by the Washington state health insurance pool under this chapter in excess of the threshold established in this section. To the extent funds are available in the account, funds shall be expended from the account to offset that portion of the deficit that would otherwise have to be recovered by imposing an assessment on members in excess of a threshold of seventy cents per insured person per month. The commissioner shall authorize expenditures from the account, to the extent that funds are available in the account, upon certification by the pool board that assessments will exceed the threshold level established in this section. The account is subject to the allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.
     Whether the assessment has reached the threshold of seventy cents per insured person per month shall be determined by dividing the total aggregate amount of assessment by the proportion of total assessed members. Thus, stop loss members shall be counted as one-tenth of a whole member in the denominator given that is the amount they are assessed proportionately relative to a fully insured medical member.

Sec. 6   RCW 48.41.100 and 2001 c 196 s 3 are each amended to read as follows:
     (1) The following persons who are residents of this state are eligible for pool coverage:
     (a) Any person who provides evidence of a carrier's decision not to accept him or her for enrollment in an individual health benefit plan as defined in RCW 48.43.005 based upon, and within ninety days of the receipt of, the results of the standard health questionnaire designated by the board and administered by health carriers under RCW 48.43.018;
     (b) Any person who continues to be eligible for pool coverage based upon the results of the standard health questionnaire designated by the board and administered by the pool administrator pursuant to subsection (3) of this section;
     (c) Any person who resides in a county of the state where no carrier or insurer eligible under chapter 48.15 RCW offers to the public an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005 at the time of application to the pool, and who makes direct application to the pool; and
     (d) Any medicare eligible person upon providing evidence of rejection for medical reasons, a requirement of restrictive riders, an up-rated premium, or a preexisting conditions limitation on a medicare supplemental insurance policy under chapter 48.66 RCW, the effect of which is to substantially reduce coverage from that received by a person considered a standard risk by at least one member within six months of the date of application.
     (2) The following persons are not eligible for coverage by the pool:
     (a) Any person having terminated coverage in the pool unless (i) twelve months have lapsed since termination, or (ii) that person can show continuous other coverage which has been involuntarily terminated for any reason other than nonpayment of premiums. However, these exclusions do not apply to eligible individuals 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));
     (b) Any person on whose behalf the pool has paid out one million dollars in benefits;
     (c) Inmates of public institutions and persons ((whose benefits are duplicated under public)) enrolled in publicly funded medical assistance programs. However, these exclusions do not apply to eligible individuals 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));
     (d) Any person who resides in a county of the state where any carrier or insurer regulated under chapter 48.15 RCW offers to the public an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005 at the time of application to the pool and who does not qualify for pool coverage based upon the results of the standard health questionnaire, or pursuant to subsection (1)(d) of this section.
     (3) When a carrier or insurer regulated under chapter 48.15 RCW begins to offer an individual health benefit plan in a county where no carrier had been offering an individual health benefit plan:
     (a) If the health benefit plan offered is other than a catastrophic health plan as defined in RCW 48.43.005, any person enrolled in a pool plan pursuant to subsection (1)(c) of this section in that county shall no longer be eligible for coverage under that plan pursuant to subsection (1)(c) of this section, but may continue to be eligible for pool coverage based upon the results of the standard health questionnaire designated by the board and administered by the pool administrator. The pool administrator shall offer to administer the questionnaire to each person no longer eligible for coverage under subsection (1)(c) of this section within thirty days of determining that he or she is no longer eligible;
     (b) Losing eligibility for pool coverage under this subsection (3) does not affect a person's eligibility for pool coverage under subsection (1)(a), (b), or (d) of this section; and
     (c) The pool administrator shall provide written notice to any person who is no longer eligible for coverage under a pool plan under this subsection (3) within thirty days of the administrator's determination that the person is no longer eligible. The notice shall: (i) Indicate that coverage under the plan will cease ninety days from the date that the notice is dated; (ii) describe any other coverage options, either in or outside of the pool, available to the person; (iii) describe the procedures for the administration of the standard health questionnaire to determine the person's continued eligibility for coverage under subsection (1)(b) of this section; and (iv) describe the enrollment process for the available options outside of the pool.
     (4) The board shall ensure an independent analysis of the eligibility standards is conducted, with emphasis on those populations identified in subsection (2) of this section and the impacts on the pool and the state budget. The board shall report the findings to the legislature by December 1, 2007.

Sec. 7   RCW 48.41.190 and 1989 c 121 s 10 are each amended to read as follows:
     Neither the participation by members, the establishment of rates, forms, or procedures for coverages issued by the pool, nor any other joint or collective action required by this chapter or the state of Washington shall be the basis of any legal action, civil or criminal liability or penalty against the pool, any member of the board of directors, or members of the pool either jointly or separately. The pool, members of the pool, board directors of the pool, officers of the pool, employees of the pool, the commissioner, the commissioner's representatives, and the commissioner's employees 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 pool to enforce the pool's statutory or contractual duties or obligations.

NEW SECTION.  Sec. 8   The sum of five million dollars, or as much thereof as may be necessary, is appropriated for the fiscal year ending June 30, 2008, from the general fund to the Washington state health insurance pool account to be used to cover deficits incurred by the pool in excess of the threshold established in RCW 48.41.037.