PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 02-01-032.
Title of Rule: Washington state health insurance pool (WSHIP) plan of operation.
Purpose: E2SSB 6067, chapter 79, Laws of 2000, changed the composition of the board of the pool and many of the operating procedures. These proposed rules implement that law.
Other Identifying Information: Insurance Commissioner Matter No. R 2001-15.
Statutory Authority for Adoption: RCW 48.02.060, 48.41.040, 48.41.170, 48.44.050, and 48.46.200.
Statute Being Implemented: RCW 48.41.040.
Summary: The new board of WSHIP recently revised their plan of operation to reflect the changes in law and submitted the amended plan to the commissioner. The plan of operation must be adopted by rule after a public hearing by the commissioner. The proposed rules repeal sections in chapter 284-91 WAC that are redundant or conflict with chapter 79, Laws of 2000.
Reasons Supporting Proposal: E2SSB 6067, chapter 79, Laws of 2000, changed the composition of the board of the pool and many of the operating procedures. These proposed rules implement that law.
Name of Agency Personnel Responsible for Drafting and Implementation: Michael Arnis, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7043; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.
Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: The WSHIP board recently revised the plan of operation to reflect the changes in law and submitted the amended plan to the commissioner. The proposed plan of operation consists of three documents.
(1) Articles of Organization of WSHIP: This document further defines classes for member plans and how those classes vote for a director. Indemnification of the board of directors is also defined within this document.
(2) Bylaws of WSHIP: This document provides for the definitions and practices of the board of directors and its committees. These include procedures for board meetings, actions by the board, and standing committees. This document also addresses potential conflict of interest, the grievance procedure, and record keeping.
(3) Operating Rules of WSHIP: This document provides for board practices when working with enrollees and applicants, and their complaints and grievances. Specifications for publicizing WSHIP are also contained.
The plan of operation must be adopted by rule after a public hearing by the commissioner. The proposed rules repeal sections in chapter 284-91 WAC that are redundant or conflict with chapter 79, Laws of 2000.
Proposal Changes the Following Existing Rules: The title of the chapter would be changed to "Washington State Health Insurance Pool" and the following WAC sections would be repealed: WAC 284-91-010, 284-91-020, 284-91-025, 284-91-030, 284-91-040, 284-91-050, and 284-91-060.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
The board of directors is comprised of ten members, representing consumers, small and large employers, health care providers, health care agents, and health insurance carriers. The insurance commissioner is an ex officio member of the board of directors. The powers and duties of the board of directors are contained in RCW 48.41.060. Program duties include determining eligibility, approving rates, and assessing member plans. Administrative duties include the authority to contract for services, appoint committees, and conduct audits.
The contents of the plan of operation are outlined in RCW 48.41.050. The statute contains items such as the handling and accounting of assets and money, the times and places of meetings of the board of directors, and establishing an impartial grievance process.
The current WSHIP plan of operation and provisions of chapter 284-91 WAC do not account for legislative changes that occurred in 2000. The WSHIP board of directors is proposing a completely revised and updated plan of operation to address the recent changes in law as well as other changes in methods WSHIP chooses to do business.
Comments were sought from stakeholders and the updated draft has been an agenda item in the board's meetings, which are open to the public.
On December 10, 2001, a CR-101 was filed announcing the agency's intent to begin rule making in this area. The CR-101 was mailed to affected parties and posted on the agency website.
Is the Rule Required by Federal Law or Federal Regulation? This rule is not required by federal law or regulation.
Industry Affected by the Proposed Rule: The proposed rules and proposed plan of operation would impact health care service contractors (HCSC), health maintenance organizations (HMOs), and commercial insurers providing disability or stop loss insurance. The industry codes that would be affected by the proposed rules include SIC codes 6321 and 6324.
Percentage of the Industries in the Four-Digit Standard Industrial Classification Affected by the Rule: The proposed plan of operation would affect 100% of the carriers who provide individual health insurance to Washington state residents.
Parts of the Proposed Rule That May Impose a Cost to Business: The proposed plan of operation should not impose additional costs on businesses. The purpose of this rule making is to establish clear mechanisms that allow the board of directors to conduct its duties effectively. The board of directors defined the programmatic and administrative duties of WSHIP within three separate documents that comprise the plan of operation:
Articles of Organization of WSHIP: This document further defines classes for member plans and how those classes vote for a director. Indemnification of the board of directors is also defined within this document.
Bylaws of WSHIP: This document provides for definitions and the practices of the board of directors and its committees. These include procedures for board meetings, actions by the board, and standing committees. This document also addresses potential conflict of interest, the grievance procedure, and record keeping.
Operating Rules of WSHIP: This document provides for board practices when working with enrollees and applicants, and their complaints and grievances. Specifications for publicizing WSHIP are also contained.
The plan of operation is a mechanism that allows the board of directors to assess member plans effectively and to provide service to applicants and enrollees as mandated within chapter 48.41 RCW.
The proposal also repeals the existing provisions of chapter 284-91 WAC. Those provisions governing the current plan of operation and procedures of WSHIP are viewed as redundant, unnecessary, or contradictory with changes in statute.
Briefly Describe the Reporting, Record-keeping, and Other Compliance Requirements of the Proposed Rule: There are no new record-keeping requirements as a result of the plan of operation. The plan of operation provides for specific mechanisms for notices, communication to enrollees, and meeting minutes. Tasks such as these are currently performed by WSHIP administration and the board of directors. They can also be found in the current plan of operation, primarily under Article XIII Reports, Records, and Accounting.
Professional Services That May Be Needed to Comply with the Requirements of the Proposed Rule: It is expected that no new professional services will be needed by smaller businesses under the proposed plan of operation. In fact, by clarifying some administrative mechanisms, the proposed plan of operation improves some of the processes in the current plan of operation. There may be some minimal costs associated with reading and comprehending the proposed plan of operation.
Cost of Equipment: There is no anticipated additional cost of equipment.
Cost of Supplies: There is no anticipated additional cost of supplies.
Cost of Labor: There is no anticipated additional cost of labor.
Cost of Increased Administration: There is no anticipated additional cost of increased administration.
Compliance Costs for the Industries Affected by the Proposed Rules: The proposed plan of operation will establish clear mechanisms to be used by the board of directors and will not incur any additional cost beyond the time spent in reading and comprehending the rule.
Proportionality of the Economic Burden on Small Businesses: The proposed plan of operation will not impose a disproportionately higher economic burden on smaller carriers. Assessments to fund WSHIP are set by statute. The insurance commissioner does not anticipate any economic burdens due to the proposed rules for any size of carrier. The costs are established by statute and currently proportional and should remain proportional for small businesses. There should be no proportional differences in costs of equipment, supplies, labor, or administration.
Mitigation Measures That Could Be Used to Reduce the Economic Impact of the Rule on Small Businesses and Still Meet the Objectives: No additional mitigation to reduce economic costs of the proposed plan of operation appears to be possible or necessary (due to the lack of anticipated costs). The board of directors drafted the plan of operation in a public setting. One of the directors represents small employers. Research, review, legal analysis, and discussions contributed to the document. It was approved in an open meeting before it was submitted to the insurance commissioner. The proposed plan of operation covers many of the same issues as the current plan of operation, and even provides clarification for some administrative mechanisms that have been performed since the inception of WSHIP. The insurance commissioner, as an ex officio member of the board of directors, will work with the board if any negative impacts emerge for small businesses.
Steps the Commissioner Will Take to Reduce the Costs of the Rule on Small Businesses: See above.
Mitigation Techniques That Have Been Considered and Incorporated into the Proposed Rule: As noted previously, the board of directors includes representatives from industry, consumers, employers, agents and providers. The CR-102 was filed only after the board approved the plan of operation and submitted it to the insurance commissioner. No mitigatory suggestions have been made or appear to be possible while ensuring the fair, reasonable, and equitable administration of the pool. Staff from the Office of Insurance Commissioner participated in the discussions and review of the plan of operation with the board in an effort to provide for effective and clear mechanisms and practices that allow the board of directors to fulfill its duties.
Mitigation Techniques That Were Considered for Incorporation into the Proposed Rule but Were Rejected: See above.
Informing and Involving Affected Businesses: As noted earlier, the proposed plan of operation was developed and approved by the WSHIP board of directors through research and numerous discussions in open meetings. One of the directors represents small employers. The proposed plan of operation retains many of the administrative mechanisms of the current plan of operation.
The CR-101 was filed on December 10, 2001, when the board of directors began its update of the plan of operation. The proposal was published in the Washington State Register and was posted on the insurance commissioner's website with contact names and numbers. Affected parties, including carriers of all sizes, were mailed the CR-101. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process.
Involvement of Small Business in the Development of the Proposed Rule: See above.
Informing Affected Small Businesses of the Proposed Rule: See above.
A copy of the statement may be obtained by writing to Kacy Scott, P.O. Box 40255, Olympia, WA 9804 [98504]-0255, e-mail kacys@oic.wa.gov, phone (360) 705-7041, fax (360) 586-0341.
RCW 34.05.328 applies to this rule adoption. This proposal is a significant legislative rule for the purposes of RCW 34.05.328.
Hearing Location: Best Western Executive, Vashon Room, 200 Taylor Avenue, Seattle, WA 98109, on January 6, 2003, at 6:00 p.m.
Assistance for Persons with Disabilities: Contact Lori Villaflores by January 3, 2003, TDD (360) 664-3154.
Submit Written Comments to: Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacys@oic.wa.gov, fax (360) 586-3109, by January 3, 2003.
Date of Intended Adoption: January 21, 2003.
November 20, 2002
Mike Kreidler
Insurance Commissioner
OTS-6055.1
WASHINGTON STATE HEALTH INSURANCE ((ACCESS REGULATION)) POOL
(1) Articles of organization by the WSHIP board on September 5, 2002;
(2) Bylaws by the WSHIP board on September 5, 2002; and
(3) Operating rules by the WSHIP board on September 5, 2002.
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The following sections of the Washington Administrative Code are repealed:
| WAC 284-91-010 | Board of directors. |
| WAC 284-91-020 | Organizational meeting, duties of board of directors. |
| WAC 284-91-025 | Plan of operation approved. |
| WAC 284-91-027 | Plan of operation. |
| WAC 284-91-030 | Duties of administrator. |
| WAC 284-91-040 | Forms to be used by administrator. |
| WAC 284-91-050 | Involuntary terminations for other than nonpayment of premiums. |
| WAC 284-91-060 | Eligibility in counties without commercially available coverage equivalent to pool coverage. |