Hawaii-2014-SB2827-Amended

PART I

SECTION 1. The legislature finds that the effectiveness of our health care system is of considerable importance to every state resident from the perspective of cost, accessibility, and quality. The State has a particular responsibility for the effectiveness of the health care system as purchaser of health insurance for nearly forty per cent of the population.

In addition, the quality of care in our system is not consistently high, access to needed care is not reliably available across all islands or for all people, and health information technology is not used to its full capacity for improving care and reducing errors and duplication.

The legislature recognizes that health care transformation is necessary and will require alignment of health care strategies, priorities, and investments for both the private sector and state agencies.

Pursuant to Act 224, Session Laws of Hawaii 2013, Hawaii's health care transformation program resides temporarily, through June 30, 2015, in the office of the governor. There is currently no permanent state agency with authority to support, coordinate, oversee, and evaluate change and innovation in our health care system.

The purpose of this part is to continue the program on a long-term basis and codify Hawaii's commitment to health care transformation by:

(1) Creating the structure and authority for health care transformation;

(2) Extending to June 30, 2017, the duration of the health care transformation program, which is established and temporarily placed within the office of the governor;

(3) Transferring the functions of Hawaii's health care transformation program to the state health planning and development agency of the department of health, along with its existing resources and personnel, and renaming the state health planning and development agency to encompass this expanded purpose; and

(4) Appropriating funds for the healthcare transformation coordinator to carry out the functions, operations, and purposes of the health care transformation program.

SECTION 2. Chapter 323D, Hawaii Revised Statutes, is amended as follows:

1. By adding a new part to be appropriately designated and to read:

"PART . OFFICE OF HEALTH CARE TRANSFORMATION

§323D-A Office of health care transformation. (a) There is established within the Hawaii health care planning and policy authority an office of health care transformation. The office shall be headed by a health care transformation officer who shall be appointed by the governor subject to section 26-34 and who shall report directly to the governor.

(b) Section 26-35(a)(1) shall not apply to the office of health care transformation. Notwithstanding section 26-35(a)(2), the financial requirements from state funds of the office shall be submitted through the director of health and included in the budget for the department of health, and neither the authority administrator nor director of health shall change the office's submissions in any way. Notwithstanding section 26-35(a)(4), the employment, appointment, promotion, transfer, demotion, discharge, and job descriptions of all officers and employees of or under the jurisdiction of the office shall be determined by the office, subject to applicable personnel laws, and shall not be subject to the approval of the authority administrator or the director of health.

(c) The health care transformation officer shall oversee and supervise the office of health care transformation and shall organize, manage, and lead multi-sector statewide health care transformation activities, including:

(1) Identifying the issues that need to be addressed to achieve statewide health care transformation;

(2) Developing health system goals, strategies, frameworks, and timelines, as well as proposed legislation and rules, directed at health care transformation;

(3) Coordinating health policy and purchasing across state agencies to promote alignment in quality measures, data collection, payment strategies, insurance regulation, waivers, and plan amendments consistent with improving public and population health to the extent allowable under federal law;

(4) Identifying processes, measures, and goals to evaluate and improve the quality and cost-effectiveness of health care services;

(5) Pursuing opportunities for administrative uniformity or alignment of processes, measures, and other matters directed at improving the quality and cost-effectiveness of health care services;

(6) Identifying fair and efficient payment models for health care services;

(7) Coordinating and overseeing policy and programs to improve, expand, and use health information technology to organize, store, safeguard, exchange, report, and analyze clinical, cost, educational, technical, administrative, regulatory, and other health care-related data;

(8) Identifying and overseeing state and private sector initiatives to improve access to care including, but not limited to, insurance expansion, workforce training, and support for community-based health organizations;

(9) Developing a state health care transformation plan;

(10) Reporting annually to the governor and the legislature on the status and implementation of the state health care transformation plan;

(11) Performing other necessary or desirable functions to facilitate the intent of this section;

(12) Notwithstanding section 323D-61, employing persons in the office exempt from chapters 76 and 89; and

(13) Contracting for services that may be necessary for the purposes of this section.

(d) The health care transformation officer may apply for, receive, and disburse grants, fees, and donations from all sources for health care transformation activities; provided that all donations accepted from private sources shall be expended in the manner prescribed by the contributor, and all moneys shall be deposited into the health care transformation special fund established under section 323D-B. The health care transformation officer may also receive directly for the office's purposes, donated personal services and personal property for which funding is not required.

(e) The health care transformation officer shall submit an annual report to the governor and the legislature no later than twenty days prior to the convening of each regular session of the legislature on the activities under the authority of the health care transformation officer, and the expenditure of all moneys received from all sources and deposited into the health care transformation special fund in support of this section.

§323D-B Health care transformation special fund; established. (a) There is established in the state treasury the health care transformation special fund, which shall be administered by the health care transformation officer. All moneys collected by the officer pursuant to section 323D-A(d) shall be deposited into the health care transformation special fund.

(b) Moneys in the health care transformation special fund shall be used for the purposes of this part."

2. By amending its title to read:

"CHAPTER 323D

HAWAII HEALTH CARE PLANNING AND [~~RESOURCES DEVELOPMENT AND HEALTH CARE COST CONTROL~~] POLICY AUTHORITY"

SECTION 3. Section 323D-2, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Authority" means the Hawaii health care planning and policy authority."

2. By repealing the definition of "state agency".

["~~"State agency" means the state health planning and development agency established in section 323D-11.~~"]

SECTION 4. Section 323D-12, Hawaii Revised Statutes, is amended to read as follows:

"§323D-12 Health care planning and [~~development~~] policy functions; [~~state agency.~~] authority. (a) The [~~state agency~~] authority shall:

(1) Have as a principal function the responsibility for promoting accessibility for all the people of the State to quality health care services at reasonable cost. The [~~state agency~~] authority shall conduct such studies and investigations as may be necessary as to the causes of health care costs including inflation. The [~~state agency~~] authority may contract for services to implement this paragraph. The certificate of need program mandated under part V shall serve this function. The [~~state agency~~] authority shall promote the sharing of facilities or services by health care providers whenever possible to achieve economies and shall restrict unusual or unusually costly services to individual facilities or providers where appropriate;

(2) Serve as staff to and provide technical assistance and advice to the statewide council and the subarea councils in the preparation, review, and revision of the state health services and facilities plan;

(3) Conduct the health planning activities of the State in coordination with the subarea councils, implement the state health services and facilities plan, and determine the statewide health needs of the State after consulting with the statewide council; [~~and~~]

(4) Perform the health care transformation functions described in part ; and

[~~(4)~~] (5) Administer the state certificate of need program pursuant to part V.

(b) The [~~state agency~~] authority may:

(1) Prepare [~~such~~] reports and recommendations on Hawaii's health care costs and public or private efforts to reduce or control costs and health care quality as it deems necessary. The [~~report~~] reports may include, but not be limited to, a review of health insurance plans, the availability of various kinds of health insurance and malpractice insurance to consumers, and strategies for increasing competition in the health insurance field.

(2) Prepare and revise as necessary the state health services and facilities plan.

(3) [~~Prepare, review, and revise the annual implementation plan.~~

~~(4)~~] Assist the statewide council in the performance of its functions.

[~~(5)~~] (4) Determine the need for new health services proposed to be offered within the State.

[~~(6)~~] (5) Assess existing health care services and facilities to determine whether there are redundant, excessive, or inappropriate services or facilities and make public findings of any that are found to be so. The [~~state agency~~] authority shall weigh the costs of the health care services or facilities against the benefits the services or facilities provide and there shall be a negative presumption against marginal services.

[~~(7)~~] (6) Provide technical assistance to persons, public or private, in obtaining and filling out the necessary forms for the development of projects and programs.

[~~(8)~~] (7) Prepare reports, studies, and recommendations on emerging health issues[~~, such as medical ethics, health care rationing, involuntary care, care for the indigent, and standards for research and development of biotechnology and genetic engineering~~].

[~~(9)~~] (8) Conduct such other activities as are necessary to meet the purposes of this chapter."

SECTION 5. Section 323D-12.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§323D-12.6[~~] State health~~] Health care planning and [~~development~~] policy special fund; created; deposits; expenditures; fees. (a) There is established within the state treasury, to be administered by the [~~state~~] health care planning and [~~development agency, the state health planning and development~~] policy authority, the health care planning and policy special fund into which shall be deposited all moneys collected under chapter 323D[.], with the exception of all moneys collected under part , which shall be deposited into the health care transformation special fund established under section 323D-B.

(b) Moneys in the health care planning and policy special fund shall be expended by the [~~state health planning and development agency~~] authority to assist in offsetting program expenses of the [~~agency.~~] authority.

(c) The [~~agency~~] authority shall adopt rules in accordance with chapter 91 to establish reasonable fees for the purposes of this chapter."

SECTION 6. Act 224, Session Laws of Hawaii 2013, is amended as follows:

1. By amending section 2 to read:

"SECTION 2. (a) There is established and temporarily placed within the office of the governor the health care transformation program, which shall terminate on [~~July 1, 2015.~~] June 30, 2017. The principal mission of the program is to identify the issues that need to be addressed to achieve statewide health care transformation, and develop a strategy, framework, and timeline, as well as proposed legislation and rules, directed at the transformation, and to thereby improve the quality and cost-effectiveness of the health care delivery system, and ensure that Hawaii residents and visitors have access to high-quality and cost effective health care. The governor shall consider a broad range of initiatives, issues, and strategies, including:

(1) The identification of processes, measures, and goals to evaluate and improve the quality and cost-effectiveness of health care services;

(2) Opportunities for administrative uniformity or the standardization of processes, measures, and other matters directed at improving the quality and cost-effectiveness of health care service;

(3) Fair and efficient payment models for health care services;

(4) Streamlined authorization procedures for health care services;

(5) Improvement and expansion of the use of information technologies to organize, store, safeguard, exchange, and report clinical, cost, educational, technical, administrative, regulatory, and other health care-related data;

(6) Improvement and promotion of the establishment and use of cost-effective preferred drug lists; and

(7) Any other issue, solution, or initiative necessary or appropriate to further the principal mission of the program.

(b) To facilitate the development of the strategy, framework, and timeline, as well as legislation and rules pursuant to subsection (a), the governor may obtain information by informally consulting, individually or as a group, with any stakeholder or subject-matter expert selected by the program. The governor may informally collaborate, individually or as a group, with any stakeholder or subject-matter expert, to enable the program to plan and develop proposed strategies, including proposed legislation and rules."

2. By amending section 3 to read:

"SECTION 3. The governor shall submit a progress report containing the status of the health care transformation program, including findings and recommendations to the legislature, no later than twenty days prior to the convening of the regular [~~session~~] sessions of 2014[.], 2015, and 2016. The governor shall submit a final report on the health care transformation program, including findings, recommendations, and any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of [~~2015.~~] 2017."

SECTION 7. Effective July 1, 2017, chapter 323D, Hawaii Revised Statutes, is amended by replacing all references to the "state health planning and development program" with references to the "Hawaii health care planning and policy program," by replacing all references to the "state health planning and development agency" with references to the "Hawaii health care planning and policy authority," and by replacing all references to the "state agency" and the "agency" with references to the "authority" as the context requires.

SECTION 8. Effective July 1, 2017, all rights, powers, functions, and duties of the health care transformation program in the office of the governor are transferred to the Hawaii health care planning and policy authority. All employees who occupy civil service positions and whose functions are transferred to the Hawaii health care planning and policy authority by this Act shall retain their civil service status, whether permanent or temporary. Employees shall be transferred without loss of salary, seniority (except as prescribed by applicable collective bargaining agreements), retention points, prior service credit, any vacation and sick leave credits previously earned, and other rights, benefits, and privileges, in accordance with state personnel laws and this Act; provided that the employees possess the minimum qualifications and public employment requirements for the class or position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

Any employee who, prior to this Act, is exempt from civil service and is transferred as a consequence of this Act may retain the employee's exempt status, but shall not be appointed to a civil service position as a consequence of this Act. An exempt employee who is transferred by this Act shall not suffer any loss of prior service credit, vacation or sick leave credits previously earned, or other employee benefits or privileges as a consequence of this Act; provided that the employee possesses legal and public employment requirements for the position to which transferred or appointed, as applicable; provided further that subsequent changes in status may be made pursuant to applicable employment and compensation laws. The health care transformation officer of the Hawaii health care planning and policy authority may prescribe the duties and qualifications of these employees and fix their salaries without regard to chapter 76, Hawaii Revised Statutes.

SECTION 9. Effective July 1, 2017, all appropriations, other funds, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the health care transformation program relating to the functions transferred to the office of health care transformation shall be transferred with the functions to which they relate.

SECTION 10. Effective July 1, 2017, all deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the health care transformation program in the office of the governor are transferred to the Hawaii health care planning and policy authority.

SECTION 11. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the health care transformation program in the office of the governor shall remain in full force and effect. Effective July 1, 2017, every reference to the governor�s health care transformation program in those deeds, leases, contracts, loans, agreements, permits, or other documents shall be construed as a reference to the office of health care transformation or health care transformation officer, as appropriate.

SECTION 12. The administrative rules of the State health planning and development agency that are in effect as of the effective date of this Act shall remain in effect until amended by the Hawaii health care planning and policy authority. All references in those rules to the "state health planning and development program" shall be read to mean the "Hawaii health care planning and policy program;" all references to the "state health planning and development agency" shall be read to mean the "Hawaii health care planning and policy authority," and all references to the "state agency" and the "agency" shall be read to mean the "authority" as the context requires.

SECTION 13. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the healthcare transformation coordinator to carry out the functions, operations, and purposes of the health care transformation program.

The sum appropriated shall be expended by the office of the governor for the purposes of this part.

PART II

SECTION 14. The legislature finds that the Patient Protection and Affordable Care Act encourages states to develop innovative approaches to insuring their populations by authorizing states to apply for waivers from certain requirements of the Act. To be eligible, a state must demonstrate that its proposed health insurance reforms are as comprehensive and affordable as the federal requirements for insurance sold in its state health insurance exchange. In addition, proposed reforms must be budget neutral for the federal government. States that are granted innovation waivers may receive federal assistance to operate their reform programs in an amount that is equivalent to the aggregate amount of tax credits and cost-sharing subsidies that the federal government would have paid for individuals enrolled in state health insurance exchanges.

The legislature also finds that Hawaii has a bold history as an innovator in ensuring that its residents have access to health care. The Hawaii Prepaid Health Care Act has ensured the availability of employer-sponsored health insurance for workers and their families, and the State's Med-QUEST program has provided access to comprehensive managed care for low-income families. The legislature believes that, while Hawaii has taken great steps in implementing the health insurance exchange and other insurance reforms required by the Patient Protection and Affordable Care Act, the State may be able to create a more effective alternative solution for providing affordable health coverage to individuals.

The purpose of this part is to establish a state innovation waiver task force to develop a health care reform plan that meets requirements for obtaining a state innovation waiver.

SECTION 15. (a) There is created the state innovation waiver task force, to be attached to the office of the governor for administrative purposes.

(b) The task force shall consist of the following members, or their respective designees:

(1) The healthcare transformation coordinator, who shall serve as chair;

(2) The director of health;

(3) The director of labor and industrial relations;

(4) The administrator of the MedQUEST division of the department of human services;

(5) The insurance commissioner;

(6) The chief information officer of the office of information management and technology;

(7) The administrator of the Hawaii employer-union health benefits trust fund;

(8) The executive director of the Hawaii Health Authority;

(9) The executive director of the Hawaii Health Connector;

(10) The executive director of the Hawaii Health Information Exchange;

(11) A representative of The Chamber of Commerce Hawaii;

(12) Two persons with expertise in health care delivery or health insurance, to be designated by the president of the senate; and

(13) Two persons with expertise in health care delivery or health insurance, to be designated by the speaker of the house of representatives.

(1) Examine the feasibility of alternative approaches to the health reform requirements described under section 1332(a)(2) of the federal act;

(2) Examine alternatives to and possible exemptions or waivers from requirements relating to allowable premium rate variations based upon age, as described in section 1201 of the federal act;

(3) Examine the feasibility of options for providing affordable insurance coverage for uninsured and underinsured individuals in Hawaii through brokers and professional employer organizations that include innovations to the State's existing medicaid program; and

(4) Develop a plan for applying for a state innovation waiver that meets the requirements of section 1332 of the federal act, including:

(A) Developing a strategy for health care reform that:

(i) Provides coverage that is at least as comprehensive as required by the federal act;

(ii) Provides coverage and cost-sharing protections that are at least as affordable as under the federal act;

(iii) Makes health insurance coverage available to as many residents of Hawaii as under the federal act; and

(iv) Is budget neutral for the federal government;

(B) Examining the feasibility of options for providing affordable insurance coverage for uninsured and underinsured individuals in Hawaii that include innovations to the State's existing medicaid program; and

(C) Ensuring compliance with all applicable public notice requirements of 31 Code of Federal Regulations part 33 and 45 Code of Federal Regulations part 155, as amended.

(d) The task force shall prepare a draft application for a state innovation waiver, to take effect for plan years beginning after January 1, 2017.

(e) The members of the task force shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

(f) The task force shall submit an interim report to the legislature, no later than twenty days prior to the convening of the regular session of 2015, that includes:

(1) Identification of opportunities for state agencies to collaborate on new information technology that will advance the goals of the federal act and state innovation; and

(2) Recommendations on the allocation of existing moneys available for health reform and innovation, including any proposed legislation.

(g) The task force shall submit a final report of its findings and recommendations to the legislature, including any proposed legislation and the draft application, no later than twenty days prior to the convening of the regular session of 2016.

(h) The task force shall be dissolved on June 30, 2017.

(i) For the purposes of this section, "federal act" means the Patient Protection and Affordable Care Act (Public Law 111-148), as amended, and any regulations adopted thereunder.

SECTION 16. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the operations of the state innovation waiver task force.

The sum appropriated shall be expended by the office of the governor for the purposes of this part.

PART III

SECTION 17. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 18. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 19. This Act shall take effect on July 1, 2014; provided that sections 2 through 5 and sections 7 through 12 shall take effect on July 1, 2017; and provided further that Part II shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2827
TWENTY-SEVENTH LEGISLATURE, 2014		S.D. 2
STATE OF HAWAII		H.D. 1