"NEW SECTION.  Sec. 1   The legislature finds that:
     (1) Each year, nearly one billion dollars in public funds are spent on the purchase of employee insurance benefits for more than two hundred thousand public school employees and their dependents;
     (2) The purchase of such benefits is fragmented among two hundred ninety-five local school districts and nine educational services districts. Each district combines state funds received with local levy moneys, federal funds, and other revenue sources to provide insurance benefits either directly or through contracts and provider agreements with benefit plan carriers or associations. This approach results in inefficiencies due to duplication of effort, fragmentation of pools, and reduced market leverage for purchasing such benefits;
     (3) There is a lack of transparency on how funds appropriated for school employee benefits are used, preventing the legislature from effectively exercising appropriate oversight over the disposition of state funds; and
     (4) Despite the past legislature's intent that school districts pool state benefit allocations for the purpose of eliminating major differences in out-of-pocket premium expenses for employees who do and do not need coverage for dependents, the current program is inconsistent with the stated intent and places an unfair burden on school employees with dependents by requiring such employees to pay nearly all of the premium costs for dependent coverage while imposing little or no premium charges on employees purchasing employee-only coverage.

NEW SECTION.  Sec. 2   The legislature intends to establish a consolidated system for purchasing insurance benefits for school employees and their dependents that:
     (1) Assures equitable access to quality and affordable health benefits for all eligible employees and their eligible dependents by reducing variation in premium expenses for employees who do and do not need coverage for dependents;
     (2) Improves transparency of financial data to assure prudent and efficient use of taxpayers' funds;
     (3) Assures cost-effectiveness through pooling of small groups, leveraged purchasing, administrative simplification, and efficient utilization of resources to minimize duplication and rework;
     (4) Ensures accountability to the taxpayers through timely use of a competitive bidding process, consistent with procurement requirements for the state, for the purchase of benefit plans from the private insurance market;
     (5) Enables shared responsibility through state, school district, and employee participation in purchasing system governance; and
     (6) Retains local collective bargaining for benefits not otherwise addressed through the school employees' benefits board which includes representatives of school employee unions. Subjects for local bargaining will be how many hours an employee must work to be eligible for plan participation and proration of part-time employee contribution. Additional subjects for negotiations are limited to contributions to voluntary employee benefit association accounts, short-term disability insurance, life insurance, internal revenue service section 125 contributions, and cancer insurance.
     The legislature further intends to reinvest any state savings from the consolidated system into state public education programs, including K-12 health benefits.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.05 RCW to read as follows:
     (1) The school employees' benefits board is created within the authority. The function of the school employees' benefits board is to design and approve insurance benefit plans for school employees.
     (2) By October 30, 2012, the governor shall appoint the following voting members to the school employees' benefits board as follows:
     (a) Two members from associations representing district level administrators;
     (b) Two members from an association representing school boards of directors;
     (c) Two members from an association representing certificated employees;
     (d) Two members from an association representing classified employees;
     (e) One member designated to represent employees as a collective group that is not otherwise affiliated with an employee association or nonrepresented employees;
     (f) One member nominated by an association representing school business officials;
     (g) The director of the authority or his or her designee;
     (h) One representative of the office of financial management; and
     (i) One representative of the office of the superintendent of public instruction, as a nonvoting member.
     (3) Initial members of the school employees' benefits board shall serve staggered terms not to exceed four years. Members appointed thereafter shall serve four-year terms.
     (4) Members of the school employees' benefits board must be compensated in accordance with RCW 43.03.250 and must be reimbursed for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060.
     (5) The school employees' benefits board shall select one of its appointed voting members as chair and another voting member as vice chair. The chair shall conduct meetings of the school employees' benefits board. The vice chair shall preside over meetings in the absence of the chair.
     (6) Beginning January 1, 2013, the school employees' benefits board shall:
     (a) Develop by-laws for the conduct of its business;
     (b) Study matters connected with the provision of health benefit plan coverage for eligible employees and their dependents on the best basis possible with regard to the welfare of the employees;
     (c) Develop employee benefit plans that include comprehensive, evidence-based health care benefits for employees. In developing these plans, the school employees' benefits board shall consider the following:
     (i) Methods of maximizing cost containment while ensuring access to quality health care;
     (ii) Development of provider arrangements that encourage cost containment and ensure access to quality care, including, but not limited to, prepaid delivery systems and prospective payment methods;
     (iii) Wellness, preventive care, chronic disease management, and other incentives that focus on proven strategies;
     (iv) Utilization review procedures to support cost-effective benefits delivery;
     (v) Ways to leverage efficient purchasing by coordinating with the public employees' benefits board;
     (vi) Effective coordination of benefits; and
     (vii) Minimum standards for insuring entities;
     (d) Use a competitive bidding process, consistent with procurement requirements for the state, for the purchase of health benefit plans, as defined in RCW 41.05.011, from the private insurance market, and ensure an array of plan choices with adequate provider networks for employees;     
     (e) Authorize plan premiums for an employee and the employee's dependents in a manner that encourages the use of cost-efficient health care systems, including establishing full-time employee premium contributions for the benchmark plan, as defined in RCW 41.05.011, such that the percentage of marginal dependent premiums paid by the employee is no greater than three times the percentage of premiums required for employee-only coverage, and requiring that all employees contribute some amount towards medical coverage for the benchmark plans chosen by the school employees' benefits board;
     (f) Establish the annual employer health premium contribution rate for any eligible full-time equivalent employee as the insurance benefit allocation rate specified in the omnibus appropriations act. The initial annual rate for premiums shall be charged as of January 1, 2014, or, if the school employees' benefits board finds that date not to be feasible, January 1, 2015;
     (g) Determine the terms and conditions of employee, dependent, and retiree enrollment policies and scope of coverage. Establishment of eligibility criteria is determined by each school district, subject to the requirements bargained at the district. At a minimum, the criteria established by the school employees' benefits board shall address the following:
     (i) The effective date of coverage following hire; and
     (ii) Coverage for dependents, including criteria for legal spouses; children up to age twenty-six; children of any age with disabilities, mental illness, or intellectual or other developmental disabilities; and state registered domestic partners, as defined in RCW 26.60.020, and others authorized by the legislature;
     (h) Determine the terms and conditions of purchasing system participation for employing agencies, consistent with this act;
     (i) Allow exceptions to mandatory participation of a school district in accordance with established terms and conditions for defined periods, so long as the exempted district complies with school employees' benefits board-required reporting, as described in RCW 28A.400.275, and premium participation levels for individual employees and employees with dependents, as described in this section. A district may opt out of participation if the district provides documentation to the school employees' benefits board and the school employees' benefits board verifies that:
     (i) The district administers medical benefits as a public trust, sponsored by the district on behalf of the district employees, that is in existence as of July 1, 2012, and is consistent with chapter 48.62 RCW;
     (ii) The district self-insures the provision of medical benefits;
     (iii) The district maintains a risk pool of at least two thousand employees;
     (iv) The district's total premiums and employee premium share for benefits plans provided or contracted for by the district are equal to or less than the premiums and employee premium share for benefit plans provided and administered by the school employees' benefits board;
     (v) The district provides adequate access to in-network providers; and
     (vi) The district demonstrates the capacity to provide the reports established in RCW 28A.400.275 and 41.05.075;
     (j) Establish penalties to be imposed when the employing agency fails to comply with established participation criteria or the data-sharing requirements specified in RCW 28A.400.275; and
     (k) Participate with the authority in the preparation of specifications and selection of carriers contracted for health benefit plan coverage, as defined in RCW 41.05.011, of eligible employees in accordance with the criteria set forth in rules. To the extent possible, the school employees' benefits board shall leverage efficient purchasing by coordinating with the public employees' benefits board.
     (7) In carrying out its duties under subsection (6)(c) through (k) of this section, the goal of the school employees' benefits board is to provide high quality medical, vision, dental, and other benefit plans for eligible employees and their eligible dependents at a cost affordable to the districts, the employees, and the taxpayers of Washington.
     (8) The school employees' benefits board may establish standing committees and ad hoc work groups to conduct research, engage stakeholders, and make recommendations that support the work of the school employees' benefits board.
     (9) The school employees' benefits board shall offer to employees for any open enrollment period a high deductible health plan option with a health savings account that conforms to section 223, Part VII of subchapter 1 of the internal revenue code of 1986. The school employees' benefits board shall comply with all applicable federal standards related to the establishment of health savings accounts.
     (10) By November 30, 2017, the authority shall review the benefit plans provided through the school employees' benefits board, complete an analysis of the benefits provided and the administration of the benefits plans, and determine whether provisions in this act have resulted in cost savings to the state. The authority shall submit a report to the relevant legislative policy and fiscal committees summarizing the results of the review and analysis.
     (11) Other than the design of benefit plans, selection of insurance plan carriers, determining premium rates and employer contribution shares by the board, nothing in sections 3 through 19 of this act may be construed to expand or contract collective bargaining rights or collective bargaining obligations.

Sec. 4   RCW 41.05.011 and 2011 1st sp.s. c 15 s 54 are each reenacted and amended to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Authority" means the Washington state health care authority.
     (2) "Board" means the public employees' benefits board established under RCW 41.05.055.
     (3) "Dependent care assistance program" means a benefit plan whereby state and ((public)) state agency employees may pay for certain employment related dependent care with pretax dollars as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 129 or other sections of the internal revenue code.
     (4) "Director" means the director of the authority.
     (5) "Emergency service personnel killed in the line of duty" means law enforcement officers and firefighters as defined in RCW 41.26.030, members of the Washington state patrol retirement fund as defined in RCW 43.43.120, and reserve officers and firefighters as defined in RCW 41.24.010 who die as a result of injuries sustained in the course of employment as determined consistent with Title 51 RCW by the department of labor and industries.
     (6) "Employee" includes all employees of the state, whether or not covered by civil service; effective January 1, 2014, or if the school employees' benefits board finds that date to not be feasible, January 1, 2015, the employees of a school district; elected and appointed officials of the executive branch of government, including full-time members of boards, commissions, or committees; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature. Pursuant to contractual agreement with the authority, "employee" may also include: (a) Employees of a county, municipality, or other political subdivision of the state and members of the legislative authority of any county, city, or town who are elected to office after February 20, 1970, if the legislative authority of the county, municipality, or other political subdivision of the state seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.04.205 and 41.05.021(1)(g); (b) employees of employee organizations representing state civil service employees, at the option of each such employee organization((, and, effective October 1, 1995, employees of employee organizations currently pooled with employees of school districts for the purpose of purchasing insurance benefits, at the option of each such employee organization)); (c) through December 31, 2013, or if the school employees' benefits board finds that date to not be feasible, December 31, 2014, employees of a school district if the authority agrees to provide any of the school districts' insurance programs by contract with the authority as provided in RCW 28A.400.350; and (d) employees of a tribal government, if the governing body of the tribal government seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.05.021(1) (f) and (g). "Employee" does not include: Adult family homeowners; unpaid volunteers; patients of state hospitals; inmates; employees of the Washington state convention and trade center as provided in RCW 41.05.110; students of institutions of higher education as determined by their institution; and any others not expressly defined as employees under this chapter or by the authority under this chapter.
     (7) "Employee group" means employees of a similar employment type, such as administrative, represented classified, nonrepresented classified, confidential, represented certificated, or nonrepresented certificated, within a school district.
     (8) "Employer" means the state of Washington.
     (((8))) (9) "Employing agency" means a division, department, or separate agency of state government, including an institution of higher education; a county, municipality, school district, educational service district, or other political subdivision; and a tribal government covered by this chapter.
     (((9))) (10) "Faculty" means an academic employee of an institution of higher education whose workload is not defined by work hours but whose appointment, workload, and duties directly serve the institution's academic mission, as determined under the authority of its enabling statutes, its governing body, and any applicable collective bargaining agreement.
     (((10))) (11) "Flexible benefit plan" means a benefit plan that allows employees to choose the level of health care coverage provided and the amount of employee contributions from among a range of choices offered by the authority.
     (((11))) (12) "Health benefit plan" means medical, vision, dental, and other benefits included in those packages.
     (13) "Insuring entity" means an insurer as defined in chapter 48.01 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW.
     (((12))) (14) "Medical flexible spending arrangement" means a benefit plan whereby state ((and public)) employees may reduce their salary before taxes to pay for medical expenses not reimbursed by insurance as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (((13))) (15) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the salary reduction plan.
     (((14))) (16) "Plan year" means the time period established by the authority.
     (((15))) (17) "Premium payment plan" means a benefit plan whereby state ((and public)) employees may pay their share of group health plan premiums with pretax dollars as provided in the salary reduction plan under this chapter pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (((16))) (18) "Retired or disabled school employee" means:
     (a) Persons who separated from employment with a school district or educational service district and are receiving a retirement allowance under chapter 41.32 or 41.40 RCW as of September 30, 1993;
     (b) Persons who separate from employment with a school district or educational service district on or after October 1, 1993, and immediately upon separation receive a retirement allowance under chapter 41.32, 41.35, or 41.40 RCW;
     (c) Persons who separate from employment with a school district or educational service district due to a total and permanent disability, and are eligible to receive a deferred retirement allowance under chapter 41.32, 41.35, or 41.40 RCW.
     (((17))) (19) "Salary" means a state employee's monthly salary or wages.
     (((18))) (20) "Salary reduction plan" means a benefit plan whereby state ((and public)) employees may agree to a reduction of salary on a pretax basis to participate in the dependent care assistance program, medical flexible spending arrangement, or premium payment plan offered pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (((19))) (21) "School employees' benefits board" means the board established in section 3 of this act.
     (22) "School employees' benefits board benchmark plan" means a single medical plan with a fixed employer premium contribution amount that is used for all plans in the medical benefit plan portfolio and a defined relative value from which the relative value of other medical plans are set to provide a range of more rich and less rich plan designs. The benchmark plan fixed employer premium contribution amount and relative value may be adjusted on an annual basis to be compatible with the school employees' benefits board budget.
     (23) "School employees' benefits board participating organization" means a public school district or educational service district that participates in benefit plans provided by the school employees' benefits board.
     (24) "Seasonal employee" means ((an)) a state employee hired to work during a recurring, annual season with a duration of three months or more, and anticipated to return each season to perform similar work.
     (((20))) (25) "Separated employees" means persons who separate from employment with an employer as defined in:
     (a) RCW 41.32.010(17) on or after July 1, 1996; or
     (b) RCW 41.35.010 on or after September 1, 2000; or
     (c) RCW 41.40.010 on or after March 1, 2002;
and who are at least age fifty-five and have at least ten years of service under the teachers' retirement system plan 3 as defined in RCW 41.32.010(33), the Washington school employees' retirement system plan 3 as defined in RCW 41.35.010, or the public employees' retirement system plan 3 as defined in RCW 41.40.010.
     (((21))) (26) "State purchased health care" or "health care" means medical and health care, pharmaceuticals, and medical equipment purchased with state and federal funds by the department of social and health services, the department of health, the basic health plan, the state health care authority, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.
     (((22))) (27) "Tribal government" means an Indian tribal government as defined in section 3(32) of the employee retirement income security act of 1974, as amended, or an agency or instrumentality of the tribal government, that has government offices principally located in this state.

Sec. 5   RCW 41.05.021 and 2011 1st sp.s. c 15 s 56 are each amended to read as follows:
     (1) The Washington state health care authority is created within the executive branch. The authority shall have a director appointed by the governor, with the consent of the senate. The director shall serve at the pleasure of the governor. The director may employ a deputy director, and such assistant directors and special assistants as may be needed to administer the authority, who shall be exempt from chapter 41.06 RCW, and any additional staff members as are necessary to administer this chapter. The director may delegate any power or duty vested in him or her by law, including authority to make final decisions and enter final orders in hearings conducted under chapter 34.05 RCW. The primary duties of the authority shall be to: Administer state employees' insurance benefits and ((retired or disabled)) school employees' insurance benefits; administer the basic health plan pursuant to chapter 70.47 RCW; administer the children's health program pursuant to chapter 74.09 RCW; study state-purchased health care programs in order to maximize cost containment in these programs while ensuring access to quality health care; implement state initiatives, joint purchasing strategies, and techniques for efficient administration that have potential application to all state-purchased health services; and administer grants that further the mission and goals of the authority. The authority's duties include, but are not limited to, the following:
     (a) To administer health care benefit programs for employees and ((retired or disabled)) school employees as specifically authorized in RCW 41.05.065 and section 3 of this act and in accordance with the methods described in RCW 41.05.075, 41.05.140, and other provisions of this chapter;
     (b) To analyze state-purchased health care programs and to explore options for cost containment and delivery alternatives for those programs that are consistent with the purposes of those programs, including, but not limited to:
     (i) Creation of economic incentives for the persons for whom the state purchases health care to appropriately utilize and purchase health care services, including the development of flexible benefit plans to offset increases in individual financial responsibility;
     (ii) Utilization of provider arrangements that encourage cost containment, including but not limited to prepaid delivery systems, utilization review, and prospective payment methods, and that ensure access to quality care, including assuring reasonable access to local providers, especially for employees residing in rural areas;
     (iii) Coordination of state agency efforts to purchase drugs effectively as provided in RCW 70.14.050;
     (iv) Development of recommendations and methods for purchasing medical equipment and supporting services on a volume discount basis;
     (v) Development of data systems to obtain utilization data from state-purchased health care programs in order to identify cost centers, utilization patterns, provider and hospital practice patterns, and procedure costs, utilizing the information obtained pursuant to RCW 41.05.031; and
     (vi) In collaboration with other state agencies that administer state purchased health care programs, private health care purchasers, health care facilities, providers, and carriers:
     (A) Use evidence-based medicine principles to develop common performance measures and implement financial incentives in contracts with insuring entities, health care facilities, and providers that:
     (I) Reward improvements in health outcomes for individuals with chronic diseases, increased utilization of appropriate preventive health services, and reductions in medical errors; and
     (II) Increase, through appropriate incentives to insuring entities, health care facilities, and providers, the adoption and use of information technology that contributes to improved health outcomes, better coordination of care, and decreased medical errors;
     (B) Through state health purchasing, reimbursement, or pilot strategies, promote and increase the adoption of health information technology systems, including electronic medical records, by hospitals as defined in RCW 70.41.020(4), integrated delivery systems, and providers that:
     (I) Facilitate diagnosis or treatment;
     (II) Reduce unnecessary duplication of medical tests;
     (III) Promote efficient electronic physician order entry;
     (IV) Increase access to health information for consumers and their providers; and
     (V) Improve health outcomes;
     (C) Coordinate a strategy for the adoption of health information technology systems using the final health information technology report and recommendations developed under chapter 261, Laws of 2005;
     (c) To analyze areas of public and private health care interaction;
     (d) To provide information and technical and administrative assistance to the two boards;
     (e) To review and approve or deny applications from counties, municipalities, and other political subdivisions of the state to provide state-sponsored insurance or self-insurance programs to their employees in accordance with the provisions of RCW 41.04.205 and (g) of this subsection, setting the premium contribution for approved groups as outlined in RCW 41.05.050;
     (f) To review and approve or deny the application when the governing body of a tribal government applies to transfer their employees to an insurance or self-insurance program administered under this chapter. In the event of an employee transfer pursuant to this subsection (1)(f), members of the governing body are eligible to be included in such a transfer if the members are authorized by the tribal government to participate in the insurance program being transferred from and subject to payment by the members of all costs of insurance for the members. The authority shall: (i) Establish the conditions for participation; (ii) have the sole right to reject the application; and (iii) set the premium contribution for approved groups as outlined in RCW 41.05.050. Approval of the application by the authority transfers the employees and dependents involved to the insurance, self-insurance, or health care program approved by the authority;
     (g) To ensure the continued status of the employee insurance or self-insurance programs administered under this chapter as a governmental plan under section 3(32) of the employee retirement income security act of 1974, as amended, the authority shall limit the participation of employees of a county, municipal, school district, educational service district, or other political subdivision, or a tribal government, including providing for the participation of those employees whose services are substantially all in the performance of essential governmental functions, but not in the performance of commercial activities;
     (h) To establish billing procedures and collect administration funds from school districts in a way that minimizes the administrative burden on districts;
     (i) Through December 31, 2013, or if the public employees' benefits board and the school employees' benefits board find that date to not be feasible, December 31, 2014, to publish and distribute to nonparticipating school districts and educational service districts by October 1st of each year a description of health care benefit plans available through the authority and the estimated cost if school districts and educational service district employees were enrolled;
     (j) To apply for, receive, and accept grants, gifts, and other payments, including property and service, from any governmental or other public or private entity or person, and make arrangements as to the use of these receipts to implement initiatives and strategies developed under this section;
     (k) To issue, distribute, and administer grants that further the mission and goals of the authority;
     (l) To adopt rules consistent with this chapter as described in RCW 41.05.160 including, but not limited to:
     (i) Setting forth the criteria established by the board under RCW 41.05.065 for determining whether an employee is eligible for benefits;
     (ii) Establishing an appeal process in accordance with chapter 34.05 RCW by which an employee may appeal an eligibility determination;
     (iii) Establishing a process to assure that the eligibility determinations of an employing agency comply with the criteria under this chapter, including the imposition of penalties as may be authorized by the board;
     (m)(i) To administer the medical services programs established under chapter 74.09 RCW as the designated single state agency for purposes of Title XIX of the federal social security act;
     (ii) To administer the state children's health insurance program under chapter 74.09 RCW for purposes of Title XXI of the federal social security act;
     (iii) To enter into agreements with the department of social and health services for administration of medical care services programs under Titles XIX and XXI of the social security act. The agreements shall establish the division of responsibilities between the authority and the department with respect to mental health, chemical dependency, and long-term care services, including services for persons with developmental disabilities. The agreements shall be revised as necessary, to comply with the final implementation plan adopted under section 116, chapter 15, Laws of 2011 1st sp. sess.;
     (iv) To adopt rules to carry out the purposes of chapter 74.09 RCW;
     (v) To appoint such advisory committees or councils as may be required by any federal statute or regulation as a condition to the receipt of federal funds by the authority. The director may appoint statewide committees or councils in the following subject areas: (A) Health facilities; (B) children and youth services; (C) blind services; (D) medical and health care; (E) drug abuse and alcoholism; (F) rehabilitative services; and (G) such other subject matters as are or come within the authority's responsibilities. The statewide councils shall have representation from both major political parties and shall have substantial consumer representation. Such committees or councils shall be constituted as required by federal law or as the director in his or her discretion may determine. The members of the committees or councils shall hold office for three years except in the case of a vacancy, in which event appointment shall be only for the remainder of the unexpired term for which the vacancy occurs. No member shall serve more than two consecutive terms. Members of such state advisory committees or councils may be paid their travel expenses in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended.
     (2) On and after January 1, 1996, the public employees' benefits board and the school employees' benefits board upon establishment may implement strategies to promote managed competition among employee health benefit plans. Strategies may include but are not limited to:
     (a) Standardizing the benefit package;
     (b) Soliciting competitive bids for the benefit package;
     (c) Limiting the state's contribution to a percent of the lowest priced qualified plan within a geographical area;
     (d) Monitoring the impact of the approach under this subsection with regards to: Efficiencies in health service delivery, cost shifts to subscribers, access to and choice of managed care plans statewide, and quality of health services. The health care authority shall also advise on the value of administering a benchmark employer-managed plan to promote competition among managed care plans.

Sec. 6   RCW 41.05.022 and 1995 1st sp.s. c 6 s 3 are each amended to read as follows:
     (1) The health care authority is hereby designated as the single state agent for purchasing health services.
     (2) On and after January 1, 1995, at least the following state-purchased health services programs shall be merged into a single, community-rated risk pool: Health benefits for groups of employees of school districts and educational service districts that voluntarily purchase health benefits as provided in RCW 41.05.011 prior to commencement of the school employees' benefits board program under section 3 of this act; health benefits for state employees; health benefits for eligible retired or disabled school employees not eligible for parts A and B of medicare; and health benefits for eligible state retirees not eligible for parts A and B of medicare.
     (3) Upon commencement of the consolidated purchasing program under section 3 of this act, health benefits for groups of employees of school districts and educational service districts shall be merged into a single, community-rated risk pool separate and distinct from the pool described in subsection (2) of this section.
     (4) By September 1, 2013, the health care authority, in consultation with the public employees' benefits board and the school employees' benefits board, shall submit to the appropriate committees of the legislature a complete analysis of the most appropriate risk pool for the retired and disabled school employees, to include at a minimum an analysis of the size of the nonmedicare and medicare retiree enrollment pools, the impacts on cost for state and school district retirees of moving retirees from one pool to another, the need for and the amount of an ongoing retiree subsidy allocation from the active school employees, and the timing and suggested approach for a transition from one risk pool to another.
     (5) At a minimum, and regardless of other legislative enactments, the state health services purchasing agent shall:
     (a) Require that a public agency that provides subsidies for a substantial portion of services now covered under the basic health plan use uniform eligibility processes, insofar as may be possible, and ensure that multiple eligibility determinations are not required;
     (b) Require that a health care provider or a health care facility that receives funds from a public program provide care to state residents receiving a state subsidy who may wish to receive care from them, and that an insuring entity that receives funds from a public program accept enrollment from state residents receiving a state subsidy who may wish to enroll with them;
     (c) Strive to integrate purchasing for all publicly sponsored health services in order to maximize the cost control potential and promote the most efficient methods of financing and coordinating services;
     (d) Consult regularly with the governor, the legislature, and state agency directors whose operations are affected by the implementation of this section; and
     (e) Ensure the control of benefit costs under managed competition by adopting rules to prevent employers from entering into an agreement with employees or employee organizations when the agreement would result in increased utilization in public employees' benefits board plans or reduce the expected savings of managed competition.

Sec. 7   RCW 41.05.026 and 2005 c 274 s 277 are each amended to read as follows:
     (1) When soliciting proposals for the purpose of awarding contracts for goods or services, the ((administrator)) director shall, upon written request by the bidder, exempt from public inspection and copying such proprietary data, trade secrets, or other information contained in the bidder's proposal that relate to the bidder's unique methods of conducting business or of determining prices or premium rates to be charged for services under terms of the proposal.
     (2) When soliciting information for the development, acquisition, ((or)) implementation, or evaluation of state purchased health care services, the ((administrator)) director shall, upon written request by the respondent, exempt from public inspection and copying such proprietary data, trade secrets, or other information submitted by the respondent that relate to the respondent's unique methods of conducting business, data unique to the product or services of the respondent, ((or)) data related to determining prices or rates to be charged for services, or employee or member data protected by federal or state privacy laws.
     (3) Actuarial formulas, statistics, cost and utilization data, or other proprietary information submitted upon request of the ((administrator)) director, board, school employees' benefits board, or a technical review committee created to facilitate the development, acquisition, or implementation of state purchased health care under this chapter by a contracting insurer, health care service contractor, health maintenance organization, vendor, or other health services organization may be withheld at any time from public inspection when necessary to preserve trade secrets or prevent unfair competition.
     (4) The board, school employees' benefits board, or a technical review committee created to facilitate the development, acquisition, or implementation of state purchased health care under this chapter, may hold an executive session in accordance with chapter 42.30 RCW during any regular or special meeting to discuss information submitted in accordance with subsections (1) through (3) of this section.
     (5) A person who challenges a request for or designation of information as exempt under this section is entitled to seek judicial review pursuant to chapter 42.56 RCW.

Sec. 8   RCW 41.05.050 and 2009 c 537 s 5 are each amended to read as follows:
     (1) Every: (a) Department, division, or separate agency of state government; (b) county, municipal, school district, educational service district, or other political subdivisions; and (c) tribal governments as are covered by this chapter, shall provide contributions to insurance and health care plans for its employees and their dependents, the content of such plans to be determined by the authority. Contributions, paid by the county, the municipality, other political subdivision, or a tribal government for their employees, shall include an amount determined by the authority to pay such administrative expenses of the authority as are necessary to administer the plans for employees of those groups, except as provided in subsection (4) of this section.
     (2) If the authority at any time determines that the participation of a county, municipal, other political subdivision, or a tribal government covered under this chapter adversely impacts insurance rates for state employees, the authority shall implement limitations on the participation of additional county, municipal, other political subdivisions, or a tribal government.
     (3) The contributions of any: (a) Department, division, or separate agency of the state government; (b) county, municipal, or other political subdivisions; and (c) any tribal government as are covered by this chapter, shall be set by the authority, subject to the approval of the governor for availability of funds as specifically appropriated by the legislature for that purpose. Insurance and health care contributions for ferry employees shall be governed by RCW 47.64.270.
     (4)(a) Until the consolidated purchasing program under section 3 of this act is established, the authority shall collect from each participating school district and educational service district an amount equal to the composite rate charged to state agencies, plus an amount equal to the employee premiums by plan and family size as would be charged to state employees, for groups of district employees enrolled in authority plans. The authority may collect these amounts in accordance with the district fiscal year, as described in RCW 28A.505.030.
     (b) For all groups of district employees enrolling in authority plans for the first time after September 1, 2003, until commencement of the consolidated purchasing program under section 3 of this act the authority shall collect from each participating school district an amount equal to the composite rate charged to state agencies, plus an amount equal to the employee premiums by plan and by family size as would be charged to state employees, only if the authority determines that this method of billing the districts will not result in a material difference between revenues from districts and expenditures made by the authority on behalf of districts and their employees. The authority may collect these amounts in accordance with the district fiscal year, as described in RCW 28A.505.030.
     (c) If the authority determines at any time that the conditions in (b) of this subsection cannot be met, the authority shall offer enrollment to additional groups of district employees on a tiered rate structure until such time as the authority determines there would be no material difference between revenues and expenditures under a composite rate structure for all district employees enrolled in authority plans.
     (d) The authority may charge districts a one-time set-up fee for employee groups enrolling in authority plans for the first time.
     (e) Beginning January 1, 2014, or, if the school employees' benefits board finds that date to not be feasible, January 1, 2015, all school districts shall commence participation in the school employees' benefits board program established under section 3 of this act, unless they qualify for an exception provided in section 3 of this act. All school districts and educational service districts, and all district employee groups participating in the public employees' benefits board plans before January 1, 2014, or if the school employees' benefits board finds that date not to be feasible, January 1, 2015, shall thereafter participate in the school employees' benefits board program administered by the authority, unless the district opts out of participation consistent with section 3 of this act.
     (f) For the purposes of this subsection:
     (i) "District" means school district and educational service district; and
     (ii) "Tiered rates" means the amounts the authority must pay to insuring entities by plan and by family size.
     (((f))) (g) Notwithstanding this subsection and RCW 41.05.065(4), the authority may allow districts enrolled on a tiered rate structure prior to September 1, 2002, and until January 1, 2014, to continue participation based on the same rate structure and under the same conditions and eligibility criteria.
     (5) The authority shall transmit a recommendation for the amount of the employer contribution to the governor and the director of financial management for inclusion in the proposed budgets submitted to the legislature.

Sec. 9   RCW 41.05.055 and 2009 c 537 s 6 are each amended to read as follows:
     (1) The public employees' benefits board is created within the authority. The function of the board is to design and approve insurance benefit plans for employees and to establish eligibility criteria for participation in insurance benefit plans.
     (2) The board shall be composed of nine members appointed by the governor as follows:
     (a) Two representatives of state employees, one of whom shall represent an employee union certified as exclusive representative of at least one bargaining unit of classified employees, and one of whom is retired, is covered by a program under the jurisdiction of the board, and represents an organized group of retired public employees;
     (b) Through December 31, 2013, or if the school employees' benefits board finds that date to not be feasible, December 31, 2014, two representatives of school district employees, one of whom shall represent an association of school employees and one of whom is retired, and represents an organized group of retired school employees. Thereafter, and only while retired school employees are served by the board, only a retired representative shall serve on the board;
     (c) Four members with experience in health benefit management and cost containment; and
     (d) The ((administrator)) director.
     (3) ((The member who represents an association of school employees and one member appointed pursuant to subsection (2)(c) of this section shall be nonvoting members until such time that there are no less than twelve thousand school district employee subscribers enrolled with the authority for health care coverage.
     (4))) The governor shall appoint the initial members of the board to staggered terms not to exceed four years. 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 ((administrator)) director shall serve as chair of the board. Meetings of the board shall be at the call of the chair.

Sec. 10   RCW 41.05.075 and 2007 c 259 s 34 are each amended to read as follows:
     (1) The ((administrator)) director shall provide benefit plans designed by the board and the school employees' benefits board through a contract or contracts with insuring entities, through self-funding, self-insurance, or other methods of providing insurance coverage authorized by RCW 41.05.140.
     (2) The ((administrator)) director shall establish a contract bidding process that:
     (a) Encourages competition among insuring entities;
     (b) Maintains an equitable relationship between premiums charged for similar benefits and between risk pools including premiums charged for retired state and school district employees under the separate risk pools established by RCW 41.05.022 and 41.05.080 such that insuring entities may not avoid risk when establishing the premium rates for retirees eligible for medicare;
     (c) Is timely to the state budgetary process; and
     (d) Sets conditions for awarding contracts to any insuring entity.
     (3)(a) School districts directly providing health benefit plans, as defined in RCW 41.05.011, or their contracted insuring entities providing health benefit plans to school districts on December 31, 2011, shall provide the authority the following specified data on the following dates to support an initial benefits plans procurement and rate setting:
     (i) Data shall be provided by June 30, 2012, and if the school employees' benefits board finds an implementation date of January 1, 2015, to be feasible, additional data by June 30, 2013;
     (ii) The data must cover the period January 1, 2010, through December 31, 2011, and if the school employees' benefits board finds it to be necessary, the additional period of January 1, 2011, through December 31, 2012, and include:
     (A) A summary of the benefit packages offered to each group of district employees, including covered benefits, point-of-service cost-sharing, member count, and the group policy number;
     (B) Aggregated subscriber and member demographic information, including age band and gender, by insurance tier by month and by benefit packages;
     (C) Monthly total by benefit package, including premiums paid, inpatient facility claims paid, outpatient facility claims paid, physician claims paid, pharmacy claims paid, capitation amounts paid, and other claims paid;
     (D) A listing for each applicable calendar year the large claims defined as annual amounts paid in excess of one hundred thousand dollars including the amount paid, the member enrollment status, and the primary diagnosis; and
     (E) A listing for each applicable calendar year the allowed claims by provider entity.
Any data that may be confidential and contain personal health information may be protected in accordance with a data-sharing agreement.
     (b) If a school district or their insuring entity fail to provide the requested data by the June 30th deadline, the authority shall notify the district, the office of financial management, and the office of the superintendent of public instruction. If a school district or contractor fails to comply with any reporting requirements established by the board, the school employees' benefits board shall mandate participation in its consolidated purchasing program as of January 1st of the initial year of implementation. A noncompliant carrier shall be excluded from bidding on the school employees' benefits board consolidated purchasing system.
     (4) The ((administrator)) director shall establish a requirement for review of utilization and financial data from participating insuring entities, third-party administrators, brokers, and all entities providing benefits-related services on a quarterly basis.
     (((4))) (5) The ((administrator)) director shall centralize the enrollment files for all employee and retired or disabled school employee health plans offered under chapter 41.05 RCW and develop enrollment demographics on a plan-specific basis.
     (((5))) (6) All claims data shall be the property of the state. The ((administrator)) director may require of any insuring entity, third-party administrator, or other entity providing benefits-related services that submits a bid to contract for coverage all information deemed necessary including:
     (a) Subscriber or member demographic and claims data necessary for risk assessment and adjustment calculations in order to fulfill the ((administrator's)) director's duties as set forth in this chapter; and
     (b) Subscriber or member demographic and claims data necessary to implement performance measures or financial incentives related to performance under subsection (((7))) (9) of this section.
     (((6))) (7) A participating school district or a school district granted an exception to participation under section 3 of this act is responsible to ensure required data is maintained in a uniform format prescribed by the director and provided to the authority whether the district provides benefits on a self-insured or a fully insured basis.
     (8) All contracts with insuring entities for the provision of health care benefits shall provide that the beneficiaries of such benefit plans may use on an equal participation basis the services of practitioners licensed pursuant to chapters 18.22, 18.25, 18.32, 18.53, 18.57, 18.71, 18.74, 18.83, and 18.79 RCW, as it applies to registered nurses and advanced registered nurse practitioners. However, nothing in this subsection may preclude the ((administrator)) director from establishing appropriate utilization controls approved pursuant to RCW 41.05.065(2) (a), (b), and (d).
     (((7))) (9) The ((administrator)) director shall, in collaboration with other state agencies that administer state purchased health care programs, private health care purchasers, health care facilities, providers, and carriers:
     (a) Use evidence-based medicine principles to develop common performance measures and implement financial incentives in contracts with insuring entities, health care facilities, and providers that:
     (i) Reward improvements in health outcomes for individuals with chronic diseases, increased utilization of appropriate preventive health services, and reductions in medical errors; and
     (ii) Increase, through appropriate incentives to insuring entities, health care facilities, and providers, the adoption and use of information technology that contributes to improved health outcomes, better coordination of care, and decreased medical errors;
     (b) Through state health purchasing, reimbursement, or pilot strategies, promote and increase the adoption of health information technology systems, including electronic medical records, by hospitals as defined in RCW 70.41.020(4), integrated delivery systems, and providers that:
     (i) Facilitate diagnosis or treatment;
     (ii) Reduce unnecessary duplication of medical tests;
     (iii) Promote efficient electronic physician order entry;
     (iv) Increase access to health information for consumers and their providers; and
     (v) Improve health outcomes;
     (c) Coordinate a strategy for the adoption of health information technology systems using the final health information technology report and recommendations developed under chapter 261, Laws of 2005.
     (((8))) (10) The ((administrator)) director may permit the Washington state health insurance pool to contract to utilize any network maintained by the authority or any network under contract with the authority.

Sec. 11   RCW 41.05.120 and 2005 c 518 s 921 and 2005 c 143 s 3 are each reenacted and amended to read as follows:
     (1) The public employees' and retirees' insurance account is hereby established in the custody of the state treasurer, to be used by the ((administrator)) director for the deposit of contributions, the remittance paid by school districts and educational service districts under RCW 28A.400.410, reserves, dividends, and refunds, for payment of premiums for employee and retiree insurance benefit contracts and subsidy amounts provided under RCW 41.05.085, and transfers from the ((medical)) flexible spending administrative account as authorized in RCW 41.05.123. Moneys from the account shall be disbursed by the state treasurer by warrants on vouchers duly authorized by the ((administrator)) director. Moneys from the account may be transferred to the medical flexible spending account to provide reserves and start-up costs for the operation of the medical flexible spending account program.
     (2) The state treasurer and the state investment board may invest moneys in the public employees' and retirees' insurance account. All such investments shall be in accordance with RCW 43.84.080 or 43.84.150, whichever is applicable. The ((administrator)) director shall determine whether the state treasurer or the state investment board or both shall invest moneys in the public employees' insurance account.
     (3) During the 2005-07 fiscal biennium, the legislature may transfer from the public employees' and retirees' insurance account such amounts as reflect the excess fund balance of the fund.
     (4) The school employees' insurance account is hereby established in the custody of the state treasurer, to be used by the director for the deposit of contributions, reserves, dividends, and refunds, for payment of premiums for school employee insurance benefit contracts. Moneys from the account shall be disbursed by the state treasurer by warrants on vouchers duly authorized by the director. Moneys from the account may be transferred to a medical flexible spending account to provide reserves and start-up costs for the operation of a medical flexible spending account program.
     (5) The state treasurer and the state investment board may invest moneys in the school employees' insurance account. These investments must be in accordance with RCW 43.84.080 or 43.84.150, whichever is applicable. The director shall determine whether the state treasurer or the state investment board or both shall invest moneys in the school employees' insurance account.

Sec. 12   RCW 41.05.130 and 1988 c 107 s 11 are each amended to read as follows:
     (1) The state health care authority administrative account is hereby created in the state treasury. Moneys in the account, including unanticipated revenues under RCW 43.79.270, may be spent only after appropriation by statute, and may be used only for operating expenses of the authority.
     (2) The school employees' insurance administrative account is hereby created in the state treasury. Moneys in the account may be spent only after appropriation by statute, and may be used for operating, contracting, and other administrative expenses of the authority in administration of the school employees insurance program.

Sec. 13   RCW 41.05.140 and 2011 1st sp.s. c 15 s 59 are each amended to read as follows:
     (1) Except for property and casualty insurance, the authority may self-fund, self-insure, or enter into other methods of providing insurance coverage for insurance programs under its jurisdiction, including the basic health plan as provided in chapter 70.47 RCW. The authority shall contract for payment of claims or other administrative services for programs under its jurisdiction. If a program does not require the prepayment of reserves, the authority shall establish such reserves within a reasonable period of time for the payment of claims as are normally required for that type of insurance under an insured program. The authority shall endeavor to reimburse basic health plan health care providers under this section at rates similar to the average reimbursement rates offered by the statewide benchmark plan determined through the request for proposal process.
     (2) Reserves established by the authority for employee and retiree benefit programs shall be held in ((a)) separate trust funds by the state treasurer and shall be known as the public employees' and retirees' insurance reserve fund and the school employees' insurance account. The state investment board shall act as the investor for the funds and, except as provided in RCW 43.33A.160 and 43.84.160, one hundred percent of all earnings from these investments shall accrue directly to each of the public employees' and retirees' insurance reserve fund and the school employees' insurance account.
     (3) Any savings realized as a result of a program created for employees and retirees under this section shall not be used to increase benefits unless such use is authorized by statute.
     (4) Reserves established by the authority to provide insurance coverage for the basic health plan under chapter 70.47 RCW shall be held in a separate trust account in the custody of the state treasurer and shall be known as the basic health plan self-insurance reserve account. The state investment board shall act as the investor for the funds as set forth in RCW 43.33A.230 and, except as provided in RCW 43.33A.160 and 43.84.160, one hundred percent of all earnings from these investments shall accrue directly to the basic health plan self-insurance reserve account.
     (5) Any program created under this section shall be subject to the examination requirements of chapter 48.03 RCW as if the program were a domestic insurer. In conducting an examination, the commissioner shall determine the adequacy of the reserves established for the program.
     (6) The authority shall keep full and adequate accounts and records of the assets, obligations, transactions, and affairs of any program created under this section.
     (7) The authority shall file a quarterly statement of the financial condition, transactions, and affairs of any program created under this section in a form and manner prescribed by the insurance commissioner. The statement shall contain information as required by the commissioner for the type of insurance being offered under the program. A copy of the annual statement shall be filed with the speaker of the house of representatives and the president of the senate.
     (8) The provisions of this section do not apply to the administration of chapter 74.09 RCW.

Sec. 14   RCW 41.05.143 and 2007 c 507 s 1 are each amended to read as follows:
     (1) The uniform medical plan benefits administration account is created in the custody of the state treasurer. Only the ((administrator)) director or the ((administrator's)) director's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for contracted expenditures for uniform medical plan claims administration, data analysis, utilization management, preferred provider administration, and activities related to benefits administration where the level of services provided pursuant to a contract fluctuate as a direct result of changes in uniform medical plan enrollment. Moneys in the account may also be used for administrative activities required to respond to new and unforeseen conditions that impact the uniform medical plan, but only when the authority and the office of financial management jointly agree that such activities must be initiated prior to the next legislative session.
     (2) Receipts from amounts due from or on behalf of uniform medical plan enrollees for expenditures related to benefits administration, including moneys disbursed from the public employees' and retirees' insurance account, shall be deposited into the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures. All proposals for allotment increases shall be provided to the house of representatives appropriations committee and to the senate ways and means committee at the same time as they are provided to the office of financial management.
     (3) The uniform dental plan benefits administration account is created in the custody of the state treasurer. Only the ((administrator)) director or the ((administrator's)) director's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for contracted expenditures related to benefits administration for the uniform dental plan as established under RCW 41.05.140. Receipts from amounts due from or on behalf of uniform dental plan enrollees for expenditures related to benefits administration, including moneys disbursed from the public employees' and retirees' insurance account, shall be deposited into the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.
     (4) The public employees' benefits board medical benefits administration account is created in the custody of the state treasurer. Only the ((administrator)) director or the ((administrator's)) director's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for contracted expenditures related to claims administration, data analysis, utilization management, preferred provider administration, and other activities related to benefits administration for self-insured medical plans other than the uniform medical plan. Receipts from amounts due from or on behalf of enrollees for expenditures related to benefits administration, including moneys disbursed from the public employees' and retirees' insurance account, shall be deposited into the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.
     (5) The school employees' benefits board medical benefits administration account is created in the custody of the state treasurer. Only the director or the director's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for contracted expenditures related to claims administration, data analysis, utilization management, preferred provider administration, and other activities related to benefits administration for self-insured medical plans other than the uniform medical plan. Receipts from amounts due from or on behalf of enrollees for expenditures related to benefits administration, including moneys disbursed from the school employees' insurance account, shall be deposited into the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.
     (6) A self-insured dental plan benefits administration account is created in the custody of the state treasurer. Only the director or the director's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for contracted expenditures related to benefits administration for a self-insured dental plan as established under RCW 41.05.140. Receipts from amounts due from or on behalf of a self-insured dental plan enrollees for expenditures related to benefits administration, including moneys disbursed from the school employees' insurance account, shall be deposited into the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

Sec. 15   RCW 41.05.670 and 2011 c 316 s 6 are each amended to read as follows:
     (1) Effective January 1, 2013, the authority must contract with all of the public employees' benefits board managed care plans and the self-insured plan or plans to include provider reimbursement methods that incentivize chronic care management within health homes resulting in reduced emergency department and inpatient use.
     (2) Health home services contracted for under this section may be prioritized to enrollees with complex, high cost, or multiple chronic conditions.
     (3) For the purposes of this section, "chronic care management((,))" and "health home" have the same meaning as in RCW 74.09.010.
     (4) Contracts with fully insured plans and with any third-party administrator for the self-funded plan that include the items in subsection (1) of this section must be funded within the resources provided by employer funding rates provided for employee health benefits in the omnibus appropriations act.
     (5) Nothing in this section shall require contracted third-party health plans administering the self-insured contract to expend resources to implement items in subsection (1) of this section beyond the resources provided by employer funding rates provided for employee health benefits in the omnibus appropriations act or from other sources in the absence of these provisions.
     (6) The school employees' benefits board shall implement the provisions of this section, consistent with the requirements in section 3 of this act.

Sec. 16   RCW 28A.400.270 and 1990 1st ex.s. c 11 s 4 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout RCW 28A.400.275 and 28A.400.280.
     (1) "School district employee benefit plan" means the overall plan used by the district for distributing fringe benefit subsidies to employees, including the method of determining employee coverage ((and the amount of employer contributions, as well as the characteristics of benefit providers and the specific benefits or coverage offered)). It shall not include coverage offered to district employees for which there is no contribution from public funds.
     (2) "Fringe benefit" does not include liability coverage, old-age survivors' insurance, workers' compensation, unemployment compensation, retirement benefits under the Washington state retirement system, or payment for unused leave for illness or injury under RCW 28A.400.210.
     (3) "Basic benefits" ((are)) may be determined through local bargaining and are limited to medical, dental, vision, group term life, and group long-term disability insurance coverage, consistent with section 3 of this act.
     (4) "Benefit providers" include insurers, third party claims administrators, direct providers of employee fringe benefits, health maintenance organizations, health care service contractors, and the Washington state health care authority or any plan offered by the authority.
     (5) "Group term life insurance coverage" means term life insurance coverage provided for, at a minimum, all full-time employees in a bargaining unit or all full-time nonbargaining group employees.
     (6) "Group long-term disability insurance coverage" means long-term disability insurance coverage provided for, at a minimum, all full-time employees in a bargaining unit or all full-time nonbargaining group employees.

Sec. 17   RCW 28A.400.275 and 1990 1st ex.s. c 11 s 5 are each amended to read as follows:
     (1) Any contract for employee benefits executed after April 13, 1990, between a school district and a benefit provider or employee bargaining unit is null and void unless it contains an agreement to abide by state laws relating to school district employee benefits. The term of the contract may not exceed one year.
     (2) Districts are prohibited from entering into any agreement or contract for insurance benefits for employees that would prevent the sharing of data necessary to comply with RCW 41.05.075 and this section.
     (3) Through December 31, 2013, upon establishment of the school employees' benefits board under section 3 of this act, school districts shall annually submit to the Washington state health care authority summary descriptions of all benefits offered under the district's employee benefit plan. The districts shall also submit data to the health care authority specifying the total number of employees and, for each employee, types of coverage or benefits received including numbers of covered dependents, the number of eligible dependents, the amount of the district's contribution, additional premium costs paid by the employee through payroll deductions, and the age and sex of the employee and each dependent. The plan descriptions and the data shall be submitted in a format and according to a schedule established by the health care authority. After December 31, 2013, school districts shall submit such data as required by the school employees' benefits board to administer the consolidated purchasing of health services.
     (((3))) (4) Through December 31, 2013, or upon establishment of the school employees' benefits board under section 3 of this act, any benefit provider offering a benefit plan by contract with a school district under subsection (1) of this section shall agree to make available to the school district the benefit plan descriptions and, where available, the demographic information on plan subscribers that the district is required to report to the Washington state health care authority under this section. After December 31, 2013, a benefit provider shall submit such data as required under contract by the school employees' benefits board.
     (((4) This section shall not apply to benefit plans offered in the 1989-90 school year)) (5) Each school district shall, consistent with the eligibility provisions of section 3 of this act:
     (a) Carry out all actions required by the health care authority under chapter 41.05 RCW including, but not limited to, those necessary for the operation of benefit plans, education of employees, claims administration, and appeals process; and
     (b) Report all data relating to employees eligible to participate in benefits or plans administered by the health care authority in a format designed and communicated by the health care authority.
     (6) Those districts that opt out of the school employees' benefits board consistent with provisions of section 3 of this act, must provide the data requested by the school employees' benefits board, either directly or through their contracted insuring entities providing medical, vision, and dental benefits. Data shall be submitted in accordance with the terms of the granted exception from mandatory participation. If a school district or contractor fails to comply with any reporting requirements established by the board, the school employees' benefits board will mandate participation in its consolidated purchasing program as of January 1st of the following year. A noncompliant carrier may be excluded from bidding on the school employees' benefits board consolidated purchasing system during subsequent competitive procurements.
     (7) School districts may continue to use brokers for administrative services, and districts that opt out of the school employees' benefits board may continue to use brokers for the procurement of their benefits as well as administrative services. All contract expenses paid to brokers must be reported to the school employees' benefits board.

Sec. 18   RCW 28A.400.280 and 2011 c 269 s 1 are each amended to read as follows:
     (1) Except as provided in subsection (2) of this section, school districts may provide employer fringe benefit contributions after October 1, 1990, only for basic benefits. However, school districts may continue payments under contracts with employees or benefit providers in effect on April 13, 1990, until the contract expires.
     (2) School districts may provide employer contributions after October 1, 1990, for optional benefit plans, in addition to basic benefits((, only for employees included in pooling arrangements under this subsection)). Optional benefits may include direct agreements as defined in chapter 48.150 RCW, but may not include employee beneficiary accounts that can be liquidated by the employee on termination of employment. Optional benefit plans may be offered only if:
     (a) The school district pools benefit allocations among employees using a pooling arrangement that includes at least one employee bargaining unit and/or all nonbargaining group employees;
     (b) Each full-time employee included in the pooling arrangement is offered basic benefits, including coverage for dependents, without a payroll deduction for premium charges;
     (c) Each full-time employee included in the pooling arrangement, regardless of the number of dependents receiving basic coverage, receives the same additional employer contribution for other coverage or optional benefits; and
     (d) For part-time employees included in the pooling arrangement, participation in optional benefit plans shall be governed by the same eligibility criteria and/or proration of employer contributions used for allocations for basic benefits.
     (3) Savings accruing to school districts due to limitations on benefit options under this section shall be pooled and made available by the districts to reduce out-of-pocket premium expenses for employees needing basic coverage for dependents. School districts are not intended to divert state benefit allocations for other purposes.
     (4) Upon establishment of the school employees' benefits board in section 3 of this act, participating school districts may continue using pooling arrangements for optional benefits not provided by the school employees' benefits board.

Sec. 19   RCW 28A.400.350 and 2011 c 269 s 2 are each amended to read as follows:
     (1) The board of directors of any of the state's school districts or educational service districts may make available medical, dental, vision, liability, life, ((health, health care,)) accident, disability, and salary protection or insurance, direct agreements as defined in chapter 48.150 RCW, or any one of, or a combination of the types of employee benefits enumerated in this subsection, or any other type of insurance or protection, for the members of the boards of directors, the students, and employees of the school district or educational service district, and their dependents. Except as provided in subsection (5) of this section, such coverage may be provided by contracts with private carriers, with the state health care authority ((after July 1, 1990, pursuant to the approval of the authority administrator)), or through self-insurance or self-funding pursuant to chapter 48.62 RCW, or in any other manner authorized by law. Any direct agreement must comply with RCW 48.150.050.
     (2)(a) Whenever funds are available for these purposes the board of directors of the school district or educational service district may contribute all or a part of the cost of such protection or insurance for the employees of their respective school districts or educational service districts and their dependents. The premiums on such liability insurance shall be borne by the school district or educational service district.
     (b) After October 1, 1990, school districts may not contribute to any employee protection or insurance other than liability insurance unless the district's employee benefit plan conforms to RCW 28A.400.275 and 28A.400.280.
     (c) Upon implementation of the school employees' benefits board program under section 3 of this act, school district contributions to any employee insurance that is purchased through the health care authority must conform to the requirements established by chapter 41.05 RCW and the school employees' benefits board. School district bargaining may include how many hours an employee must work to be eligible for plan participation and proration of part-time employee contribution. Additional subjects for negotiations are limited to contributions to voluntary employee benefit association accounts, short-term disability insurance, life insurance, internal revenue service section 125 contributions, and cancer insurance.
     (3) For school board members, educational service district board members, and students, the premiums due on such protection or insurance shall be borne by the assenting school board member, educational service district board member, or student. The school district or educational service district may contribute all or part of the costs, including the premiums, of life, health, health care, accident or disability insurance which shall be offered to all students participating in interschool activities on the behalf of or as representative of their school, school district, or educational service district. The school district board of directors and the educational service district board may require any student participating in extracurricular interschool activities to, as a condition of participation, document evidence of insurance or purchase insurance that will provide adequate coverage, as determined by the school district board of directors or the educational service district board, for medical expenses incurred as a result of injury sustained while participating in the extracurricular activity. In establishing such a requirement, the district shall adopt regulations for waiving or reducing the premiums of such coverage as may be offered through the school district or educational service district to students participating in extracurricular activities, for those students whose families, by reason of their low income, would have difficulty paying the entire amount of such insurance premiums. The district board shall adopt regulations for waiving or reducing the insurance coverage requirements for low-income students in order to assure such students are not prohibited from participating in extracurricular interschool activities.
     (4) All contracts for insurance or protection written to take advantage of the provisions of this section shall provide that the beneficiaries of such contracts may utilize on an equal participation basis the services of those practitioners licensed pursuant to chapters 18.22, 18.25, 18.53, 18.57, and 18.71 RCW.
     (5) The authority to make available medical, dental, and vision insurance to school employees under this section expires upon establishment of the school employees' benefits board under section 3 of this act, unless the school employees' benefits board provides an exception to the mandatory participation as established in section 3 of this act. Any school district receiving an exception to participation must continue reporting health care experience and financial data to the health care authority.
     (6) Districts are prohibited from entering into any agreement or contract for insurance benefits for employees that would prevent sharing of data necessary to comply with RCW 41.05.075 and 28A.400.275."