READ FIRST TIME 02/25/11.   

     AN ACT Relating to creating flexibility in the medicaid program; adding a new section to chapter 74.09 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that mounting budget pressures combined with growth in enrollment and constraints in the medicaid program have forced open discussion throughout the country and in our state concerning complete withdrawal from the medicaid program. The legislature recognizes that a better and more sustainable way forward would involve new state flexibility for managing its medicaid program built on the success of the basic health plan and Washington's transitional bridge waiver, where elements of consumer participation and choice, benefit design flexibility, and payment flexibility have helped keep costs low. The legislature further finds that either a centers for medicare and medicaid services' innovation center project or a section 1115 demonstration project, or both, with capped eligibility group per capita payments would allow the state to operate as a laboratory of innovation for bending the cost curve, preserving the safety net, and improving the management of care for low-income populations.

NEW SECTION.  Sec. 2   A new section is added to chapter 74.09 RCW to read as follows:
     (1) By October 1, 2011, the department shall submit a request to the centers for medicare and medicaid services' innovation center and, if needed to achieve one or all of the objectives outlined in this section, a section 1115 demonstration waiver request to the federal department of health and human services to revise the medical assistance program as codified in Title XIX of the federal social security act. The demonstration shall be known as the "medicaid modernization" demonstration. The demonstration request shall be designed to ensure the broadest federal financial participation under Titles XIX and XXI of the federal social security act. To the extent permitted under federal law, the demonstration shall include the following components:
     (a) Establishment of base-year, eligibility group per capita payments for the state medicaid program, with maximum flexibility provided to the state for managing the health care trend as well as provisions for shared savings if per capita expenditures are below the negotiated rates. The capped eligibility group per capita payments shall be based on targeted per capita costs for the full duration of the five-year demonstration period and shall include due consideration and flexibility for unforeseen events, changes in the delivery of health care, and changes in federal or state law. The capped eligibility group per capita payments shall take into account any and all provisions of the federal patient protection and affordable care act which will have an impact on federal resources devoted to Titles XIX and XXI of the federal social security act programs. Federal payments for each eligibility group shall be based on the product of the negotiated per capita payments for the eligibility group times the actual caseload for the eligibility group;
     (b) Flexibility over benefit design for all categories of eligibility under Titles XIX and XXI to include:
     (i) Alignment with the federal patient protection and affordable care act's Sec. 1302(b) essential health benefits design; and
     (ii) The ability to provide supplemental benefits beyond the essential health benefits design for certain populations that meet clinical criteria such as children, pregnant women, individuals with disabilities, and elderly adults.     
     (c) The ability to implement limited, reasonable, and enforceable cost sharing and premiums for all categories of eligibility under Title XIX and XXI to encourage informed consumer behavior and lower utilization of health services, while ensuring that access to evidence-based, preventative and primary care is not hindered;
     (d) The ability to streamline eligibility determination and administration of multiple categories of eligibility and to verify eligibility information more frequently;
     (e) The flexibility to adopt innovative reimbursement methods such as bundled, global, and risk-bearing payment arrangements, that promote effective purchasing, efficient use of health services, and support health homes, accountable care organizations, and other innovations intended to contain costs, improve health, and incent smart consumer decision making;
     (f) The ability for all medicaid and children's health insurance program clients to voluntarily enroll in the insurance exchange and broadened authority to enroll clients in employer-sponsored insurance when available and deemed cost-effective for the state, with authority to require clients to remain enrolled in their chosen plan for the calendar year;
     (g) An expedited process of forty-five days or less in which the centers for medicare and medicaid services must respond to any state request for certain changes to the demonstration once it is implemented to ensure that the state has the necessary flexibility to manage within its eligibility group per capita payment caps; and
     (h) The development of an alternative payment methodology for federally qualified health centers and rural health clinics that enables capitated or global payment of enhanced payments.
     (2) The department shall evaluate the merits of moving to an insurance subsidy model for certain medicaid populations and shall explore any federal flexibility if and when it is provided to the states for such purpose.
     (3) The department shall report to the joint legislative select committee on health reform implementation, if operational, on proposed waiver provisions by August 1, 2011, and by September 15, 2011.
     (4) The department shall hold ongoing stakeholder discussions as it is developing the waiver request, and provide opportunities for public review and comment as the request is being developed.
     (5) The department and the health care authority shall identify statutory changes that may be necessary to ensure successful and timely implementation of the demonstration, submitted to the federal department of health and human services as the medicaid modernization demonstration.
     (6) The legislature must authorize prior to its implementation any demonstration approved by the federal department of health and human services under this section.