HOUSE BILL No. 4347
February 18, 1997, Introduced by Reps. Gubow, Hale, Martinez, Brater, Hanley, Bogardus, Gagliardi, Schroer, Leland, LaForge, Cherry, Dobronski, Emerson and Callahan and referred to the Committee on Insurance.
A bill to provide for a health plan with universal access;
to create the office of state health commissioner; to create a
commission; to provide for certain powers and duties; to provide
for certain powers and duties of certain state officers and agen-
cies; to provide for certain taxes, fees, and contributions; and
to provide for an appropriation.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1. This act shall be known and may be cited as
2 "Michicare".
3 Sec. 2. As used in this act:
4 (a) "Commission" means the commission created in section 4.
5 (b) "Commissioner" means the state health commissioner.
6 (c) "Global budget" means an annual budget that includes all
7 expenses other than capital expenditures.
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1 (d) "Health care facility" means a hospital, nursing home,
2 county medical care facility, hospice, health maintenance
3 organization, freestanding surgical outpatient facility, clinical
4 laboratory, community health center, migrant health center, ambu-
5 lance operation, advanced mobile emergency care service, or
6 limited advanced mobile emergency care service.
7 (e) "Health care provider" means a health care facility or a
8 person who is licensed or otherwise authorized under article 15
9 of the public health code, 1978 PA 368, MCL 333.16101 to
10 333.18838, to provide health care to individuals.
11 (f) "Health maintenance organization" means a not-for-profit
12 entity that delivers health services that are medically indicated
13 to enrollees under the terms of a health maintenance contract,
14 directly or through contracts with affiliated providers, without
15 regard to the frequency, extent, or kind of health services, and
16 that is responsible for the availability, accessibility, and
17 quality of the health services provided.
18 (g) "Hospice" means a health care program that provides a
19 coordinated set of services rendered at home or in outpatient or
20 institutional settings for individuals suffering from a disease
21 or condition with a terminal prognosis.
22 (h) "Hospital" means a facility offering inpatient, over-
23 night care, and services for observation, diagnosis, and treat-
24 ment of an individual with a medical, surgical, obstetric, chron-
25 ic, or rehabilitative condition requiring the daily direction or
26 supervision of a physician. The term includes a sanatorium
27 falling within the definition of "hospital" in title XVIII.
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1 (i) "Nurse specialist" means a registered nurse who has
2 received a specialty certification as a nurse midwife, nurse
3 anesthetist, or nurse practitioner.
4 (j) "Office" means the office of state health commissioner
5 created in section 3.
6 (k) "Participating provider" means a health care provider
7 who signs a participation agreement developed pursuant to
8 section 7(n) authorizing him or her to receive payment from the
9 plan by means of a global budget, capitation amounts, or fee for
10 service, for furnishing covered services to plan members.
11 (l) "Physician" means an individual licensed in this state
12 to engage in the practice of medicine or osteopathic medicine and
13 surgery.
14 (m) "Plan" means the health plan established by this act.
15 (n) "Resident" means a person domiciled in this state and
16 who has been domiciled in this state for not less than 30 days,
17 except that a newborn domiciled in this state is a resident from
18 the moment of birth.
19 (o) "Title XVIII" means title XVIII of the social security
20 act, chapter 531, 49 Stat. 620, 42 U.S.C. 1395 to 1395b, 1395b-2,
21 1395c to 1395i, 1395i-2 to 1395i-4, 1395j to 1395t, 1395u to
22 1395w-2, 1395w-4 to 1395yy, and 1395bbb to 1395ddd.
23 (p) "Title XIX" means title XIX of the social security act,
24 chapter 531, 49 Stat. 620, 42 U.S.C. 1396 to 1396f and 1396g-1 to
25 1396w.
26 Sec. 3. (1) The office of state health commissioner is
27 created within the department of community health. The office
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1 shall exercise its powers and functions, including the functions
2 of budgeting and procurement and management-related functions, as
3 an autonomous entity, independent of the director of the depart-
4 ment of community health. The head of the office of state health
5 commissioner shall be called the state health commissioner and
6 shall be elected pursuant to sections 21 and 23 of article V of
7 the state constitution of 1963.
8 (2) The commissioner shall appoint a deputy health commis-
9 sioner by not later than 30 days after the commissioner takes
10 office. If the commissioner is unable to perform the duties of
11 office, the deputy health commissioner may perform the duties of
12 office for a period not to exceed 90 days.
13 Sec. 4. (1) A commission is created within the office. The
14 commission shall consist of the directors of the department of
15 community health, the family independence agency, the commis-
16 sioner of insurance, and the director of the office of services
17 to the aging, who shall all be ex officio, nonvoting members of
18 the commission and the following 17 voting members appointed by
19 the commissioner:
20 (a) Five representatives of health care consumer advocacy
21 organizations that have a statewide constituency and who have
22 been involved in activities related to health care consumer advo-
23 cacy including issues of interest to low and moderate income
24 individuals.
25 (b) Four representatives of labor organizations.
26 (c) Four representatives of business and industry.
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1 (d) One representative of hospitals.
2 (e) One representative of nursing homes.
3 (f) One representative of physicians.
4 (g) One representative of licensed health care professionals
5 who are not physicians.
6 (2) The members first appointed to the commission shall be
7 appointed within 30 days after the commissioner takes office.
8 (3) Members of the commission shall serve for 4-year terms,
9 or until a successor is appointed, whichever is later.
10 (4) If a vacancy occurs on the commission, the commissioner
11 shall make an appointment for the unexpired term in the same
12 manner as the original appointment.
13 (5) The commissioner may remove a commission member for
14 incompetency, dereliction of duty, malfeasance, misfeasance, or
15 nonfeasance in office, or any other good cause.
16 (6) The first meeting of the commission shall be held within
17 45 days after the commissioner takes office. At the first meet-
18 ing, the commission shall elect from among its members a chair-
19 person and other officers as it considers necessary or
20 appropriate. After the first meeting, the commission shall meet
21 at least quarterly or more often upon the call of the chair or as
22 provided by the commission.
23 (7) Nine commission members constitute a quorum for the
24 transaction of business at a commission meeting. Nine commission
25 members are necessary for official commission action.
26 (8) The business that the commission may perform shall be
27 conducted at a public meeting of the commission held in
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1 compliance with the open meetings act, 1976 PA 267, MCL 15.261 to
2 15.275.
3 (9) A writing prepared, owned, used, in the possession of,
4 or retained by the commission in the performance of an official
5 function is subject to the freedom of information act, 1976 PA
6 442, MCL 15.231 to 15.246.
7 (10) Commission members shall serve without compensation.
8 However, commission members may be reimbursed for their actual
9 and necessary expenses incurred in the performance of their offi-
10 cial duties as commission members.
11 Sec. 5. (1) There is created a health plan to provide com-
12 prehensive health care coverage including long-term care and
13 mental health and substance abuse services to all residents of
14 this state, using a unified, publicly funded, financing
15 mechanism.
16 (2) Every resident of this state is a member of the plan. A
17 nonresident of this state who is employed in this state may
18 choose to become a member by paying the requisite contributions
19 under section 25.
20 (3) Membership in the plan does not impinge upon a member's
21 right to consent to or to refuse treatment or other services
22 offered under the plan.
23 (4) A member in the plan shall have free choice of health
24 care providers.
25 (5) The plan shall pay for covered services provided to a
26 plan member in the amounts and subject to the conditions as are
27 prescribed by rules promulgated under this act. Hospitals,
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1 nursing homes, health maintenance organizations, community health
2 centers, and migrant health centers shall receive global
3 budgets. Other participating providers shall be directly reim-
4 bursed on a fee-for-service basis.
5 Sec. 7. The commission shall do all of the following:
6 (a) Establish policies and procedures for the operation of
7 the plan.
8 (b) Develop a budget for the plan, with separate line items
9 for prevention, services, training, capital expenditures, and
10 administrative costs.
11 (c) Recommend and pursuant to public hearings implement cost
12 containment strategies consistent with the studies called for in
13 subdivision (t) that will provide controls on the total plan
14 budget.
15 (d) Develop a schedule of covered services, which shall
16 include those services listed in section 21. The commission
17 shall hold public hearings as part of this process.
18 (e) Establish a review process for assessing and modifying
19 covered services and renegotiating the reimbursement schedule
20 based upon research on the effectiveness of particular health
21 tests and procedures required under subdivision (t).
22 (f) Assure that prevention and primary health care services
23 are available to all members and encourage all members to select
24 a primary health care provider to manage their care.
25 (g) Negotiate an annual, global budget with each participat-
26 ing hospital, nursing home, health maintenance organization,
27 community health center, and migrant health center.
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1 (h) After consultation and negotiation with health care
2 providers, develop a reimbursement schedule for covered
3 services.
4 (i) Decide which types of health care providers are eligible
5 to be participating providers.
6 (j) Create a plan fund to receive earmarked tax revenues and
7 federal funds, and to pay for covered services, capital expendi-
8 tures, administrative costs, and other costs allowable under this
9 act.
10 (k) Establish procedures for the handling and accounting of
11 plan assets and money.
12 (l) Develop a system to handle claims in an expeditious
13 manner to avoid undue delay in participating providers receiving
14 payment.
15 (m) Develop and implement a program to publicize the plan's
16 existence, the services covered, and how and where to obtain
17 these services. All printed material shall be in language and in
18 languages that plan members can understand.
19 (n) Develop a participation agreement for providers that
20 includes, but is not limited to, all of the following:
21 (i) Agreement not to discriminate against plan members on
22 the basis of race, sex, age, ethnicity, handicap, or income.
23 (ii) Agreement to honor plan members' rights.
24 (iii) Agreement to establish a means for plan members to
25 gain access to their own medical records.
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1 (o) Establish procedures under which members and providers
2 may appeal decisions to an impartial body on issues of
3 eligibility, medical necessity, and reimbursement amount.
4 (p) Provide an effective system of quality assurance and
5 develop agreements with medical providers to establish protocols
6 on peer review and medical provider discipline and provide tech-
7 nical assistance to providers to improve quality of care and
8 establish a graduated system of disciplinary action to assist
9 providers in improving quality of care.
10 (q) Provide a system to ensure the confidentiality of member
11 identified records.
12 (r) File an annual report with the governor, the secretary
13 of the senate, and the clerk of the house of representatives sum-
14 marizing the activities of the plan in the preceding calendar
15 year, including a financial report of money received, benefits
16 paid, expenses of administration and other payments, and data on
17 complaints received about the plan. The annual report shall be
18 available to the public.
19 (s) Arrange for an independent, annual audit of plan
20 operations.
21 (t) Conduct studies, as necessary, on remaining problems of
22 access and steps necessary to address those problems; the effi-
23 cacy of cost containment measures in the plan; the effectiveness
24 of particular health tests or procedures; provider performance;
25 plan member satisfaction; the general health of plan members; the
26 effect of the plan on the need for nursing home care; whether the
27 plan has affected employment opportunities of plan members; and
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1 on any other health plan related issue. All studies upon their
2 completion shall be available to the public.
3 (u) Issue recommendations, as necessary, to the legislature
4 for changes to this act and other state law, and to congress for
5 changes in federal law, to improve access to health care, ensure
6 health care quality, and control health care costs.
7 Sec. 8. The commissioner shall do all of the following:
8 (a) Administer the plan. The commissioner's goal in admin-
9 istering the plan shall be to provide comprehensive health care
10 coverage for all plan members within the limits of dedicated rev-
11 enues available, to ensure access to covered services for all
12 members, and to ensure the quality of those services.
13 (b) Seek necessary waivers, execute agreements, and comply
14 with requirements to enable all payments available under title
15 XVIII, title XIX, and other federal health programs to be cred-
16 ited to the plan.
17 (c) Develop interdepartmental agreements with the depart-
18 ments of community health, transportation, education, including
19 Michigan rehabilitation service and disability determination
20 service, family independence agency, and with other appropriate
21 departments and offices including the office of services to the
22 aging to facilitate access to services under the plan.
23 (d) Promulgate rules pursuant to the administrative proce-
24 dures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, as neces-
25 sary to implement this act.
26 Sec. 9. (1) The commissioner is authorized to pay for all
27 of the following out of plan funds:
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1 (a) Member health care claims.
2 (b) Administrative expenses acquired under the plan.
3 (c) Capital expenditures of hospitals, nursing homes, commu-
4 nity health centers, and migrant health centers, that may include
5 construction, renovation, and equipment costs.
6 (d) Education aimed at health promotion and the prevention
7 of illness or injury.
8 (e) Part or all of the education and training expenses of
9 medical and nursing students and graduates in return for a com-
10 mitment to practice in medically underserved areas in this
11 state.
12 (f) Part or all of the malpractice premiums of participating
13 providers upon conditions set by the plan.
14 (2) The plan may provide funds to county health departments
15 to effect any plan goal.
16 Sec. 11. The commissioner may do all of the following:
17 (a) Hire and supervise staff to work for the plan.
18 (b) Enter into contracts necessary or proper to carry out
19 the provisions and purposes of this act.
20 (c) Contract for any of the tasks in section 8, or, with the
21 commission's approval, section 7, if such action is cost
22 effective.
23 (d) Enter into contracts with plans in other states for cov-
24 erage of emergency or urgent care of members while present in
25 other states, and for coverage of residents of other states while
26 present in this state.
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1 (e) Pay for covered services received by a member in
2 emergency or urgent situations while in another state.
3 (f) Pay for covered services received by a nonmember in
4 emergency or urgent situations and seek reimbursement directly
5 from the nonmember and through subrogation from a third party
6 payer.
7 (g) Make loans to providers for start-up costs of an indi-
8 vidual or group practice in medically underserved areas in this
9 state.
10 (h) Invest plan funds as permitted by law.
11 Sec. 12. (1) The commission shall establish in each local
12 department of community health a community health planning
13 committee.
14 (2) The community health planning committee shall be com-
15 posed of 9 members providing proportionate representation from
16 business, labor, health care providers, and consumers and con-
17 sumer organizations in the community. Members shall be appointed
18 by the bodies that appoint the director of the local department
19 of community health and shall serve 3-year terms. A member shall
20 not serve for more than 2 terms.
21 (3) The health planning committee shall assist the commis-
22 sion in carrying out its functions under section 7. The health
23 planning committee shall hold at least 2 public hearings each
24 year to receive testimony from experts and the public on the
25 status of health care, access to health care, and health care
26 costs in the community.
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1 (4) The health care planning committee shall present an
2 annual report to the commission and to the public summarizing the
3 findings of its hearings and its meetings, detailing actions it
4 has taken concerning health care access, quality, and costs in
5 the community, and listing any recommendations it proposes for
6 the coming year.
7 Sec. 13. (1) A physician, nurse specialist, or other eligi-
8 ble health care provider may become a participating provider by
9 signing a participation agreement. A participating provider
10 shall be eligible for reimbursement for covered services provided
11 to a plan member that are within the scope of authorized practice
12 of the individual or institution providing the services.
13 (2) The plan shall revoke the right of participation of any
14 health care provider who loses his or her license as a health
15 care provider or who is convicted of health care fraud.
16 Sec. 15. Each participating hospital, long-term care facil-
17 ity, community health center, and migrant health center shall
18 negotiate with the plan for an annual budget based on past per-
19 formance and projected changes in the number or scope of
20 services. Requests for payment of capital costs shall be submit-
21 ted separately through the certificate of need process.
22 Sec. 17. A participating provider that is not paid on a
23 capitation basis or by global budget shall submit his or her
24 accounts for payment of covered services performed for plan mem-
25 bers directly to the plan for payment and shall look solely to
26 the plan for payment of services rendered under the plan.
27 Payment by the plan shall constitute payment in full for the
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1 service. A participating provider shall not collect from a plan
2 member any money for a covered service rendered under the plan.
3 Sec. 19. The commissioner shall design and maintain a
4 system of processing claims to ensure that providers receive
5 timely payment in the correct amount for allowable claims with a
6 minimum of paperwork.
7 Sec. 21. Covered services shall include at least the fol-
8 lowing services if medically necessary and approved by a physi-
9 cian or appropriate professional:
10 (a) Professional services for health maintenance, preven-
11 tion, diagnosis, and treatment of injuries, illnesses, and
12 conditions. Treatment shall include services for acute care,
13 rehabilitation, and health maintenance.
14 (b) Ongoing community based support services, including per-
15 sonal assistance services and respite care.
16 (c) Rehabilitative services, including physical, occupation-
17 al, and speech therapy to enable a member to recover and maintain
18 health.
19 (d) Hospital services, including in-patient hospitalization
20 for the treatment of mental and emotional disorders.
21 (e) Outpatient mental health services.
22 (f) Nursing home services.
23 (g) Services of a licensed hospice.
24 (h) Services of a home health agency.
25 (i) Services by a licensed ambulance or emergency medical
26 treatment team.
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1 (j) Dental services, including artificial teeth.
2 (k) Prenatal care, well child care, and immunizations.
3 (l) Diagnostic tests, including hearing and vision
4 examinations.
5 (m) Prescription drugs.
6 (n) Blood and blood products, anesthetics, and oxygen.
7 (o) Orthoses and prostheses.
8 (p) Eyeglasses, hearing aids, and rental or purchase of
9 durable medical equipment.
10 (q) Diagnostic X-rays and laboratory tests.
11 Sec. 23. A medical policy, certificate, or contract that
12 provides reimbursement on an expense-incurred or indemnity basis
13 for any service or services covered under the plan shall not be
14 sold to a plan member.
15 Sec. 25. The plan shall be funded through an employee
16 health care contribution, the health portions of worker's compen-
17 sation and no-fault automobile insurance, a sales tax on serv-
18 ices, and federal funds from existing mental health programs,
19 public health programs, substance abuse programs, title XIX, and
20 title XVIII.
21 Sec. 27. Each year the legislature shall appropriate to the
22 plan the amount of all earmarked taxes, the amount of all federal
23 funds for health care anticipated to be received, and additional
24 funds the legislature shall consider appropriate. The earmarked
25 taxes and federal funds shall not be appropriated by the state
26 for other purposes.
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