10.__Resident.__"Resident" means a person who resides within the State, as defined by rules adopted by the agency.

11.__Small Business Hardship Fund.__"Small Business Hardship Fund" means the fund created by section 374, subsection 1, paragraph A as part of the Maine Health Care Trust Fund.

SUBCHAPTER II

ENSURING ACCESS TO HEALTH CARE

§372.__Maine Health Care Plan

The Maine Health Care Plan is established to provide security through high-quality, affordable health care for the people of the State. The plan must offer health care services beginning July 1, 2002, and the agency shall administer and oversee the plan in accordance with this chapter.

1.__Goals of the Maine Health Care Plan.__The plan has the following goals:

A.__To eliminate income-based disparity in the health care status of citizens of the State;

B.__To reduce the rate of growth in the cost of health care services;

C.__To reduce waste and inefficiency in the administration of health care services and health insurance;

D.__To increase access to primary and preventive health care services;

E.__To reduce the number of excessively expensive health care procedures and eliminate unnecessary and harmful procedures;

F.__To promote cooperation among communities and providers of health care, to eliminate cost-accelerating practices, to coordinate the delivery of care and use of technology and equipment and to increase quality and cost efficiency;

G.__To distribute the costs of health care fairly and equitably;

H.__To simplify the health care system for consumers, businesses and providers;

I.__To ensure providers clinical freedom to treat patients based on health care needs and criteria; and

J.__To ensure accountability in all aspects of the system to promote public confidence and control of costs.

2. Eligibility for the Maine Health Care Plan.__In accordance with this subsection, residents and nonresidents are eligible to receive covered health care services from participating providers under the plan within this State if the service is necessary or appropriate for prevention, diagnosis or treatment of, or maintenance or rehabilitation following, injury, disability or disease.__The agency shall adopt rules regarding payment of premium, application for a plan card and membership in the plan.__ Rules adopted pursuant to this subsection are routine technical rules pursuant to Title 5, chapter 375, subchapter II-A.__The rules must provide for at least the following.

A.__Each resident of the State is eligible to receive health care under the plan and may enroll in the plan.

B.__A nonresident of the State who maintains significant contact with the State, including employment or self- employment within the State or attendance at a college, university or other institution of higher education in the State, is eligible to receive health care under the plan.__ Eligibility extends to a person qualifying under this paragraph and to that person's spouse and dependents.__The agency shall adopt rules establishing criteria for eligibility for nonresidents and determine the premium to be paid by them and the method of payment.

C.__A plan member who ceases to be eligible for the plan may elect, within 60 days of the event that causes ineligibility, to continue participation in the plan for a period of up to 18 months.__For the purposes of this paragraph, a plan member is considered to have lost eligibility due to disability if the member could be determined disabled under the federal Social Security Act, Title II or Title XVI.__The agency shall ensure that plan members who become ineligible for enrollment in the plan are promptly notified of the provisions of this paragraph.__ The agency shall adopt rules establishing the premium to be paid

by persons eligible under this paragraph and the method of payment.

D.__To establish eligibility, each person must apply for a plan card, pay to the fund the premium determined applicable pursuant to section 374, subsection 1, paragraph B and satisfy the application requirements established by the agency.

3.__Health care benefits.__As provided in this subsection, the plan must provide coverage for health care services from participating providers within this State if those services are necessary or appropriate for the prevention, diagnosis or treatment of, or maintenance or rehabilitation following, injury, disability or disease.__The agency shall adopt rules regarding provision of the following covered health care services:

A.__Hospital services;

B.__Medical and other professional services furnished by participating providers;

C.__Laboratory tests and imaging procedures;

D.__Home health care for persons requiring services performed by or under the supervision of professional or technical personnel, including but not limited to home care for acute illness, personal care attendant services and the medical component of home care for chronic illness.__ Notwithstanding any other provision of law, the plan may utilize copayments for permanent care services;

E.__Rehabilitative services for persons receiving therapeutic care;

F.__Prescription drugs and devices.__Unless the prescribing practitioner certifies that a more expensive drug is medically necessary, the plan may cover only part of the cost of a drug dispensed in a package or form of dosage or administration when the agency determines that a less expensive package or form of dosage or administration is available that is pharmaceutically equivalent in its therapeutic effect.__If a plan member chooses to purchase a more expensive drug under this paragraph, the plan member is responsible for paying the amount not covered by the plan;

G.__Mental health services;

H.__Substance abuse treatment;

I.__Primary and acute dental services;

J.__Vision appliances, including lenses, frames and contact lenses, according to a schedule established by the agency;

K.__Medical supplies and durable medical equipment and selected assistance devices;

L.__Hospice care; and

M.__Health care services payable pursuant to Title 39-A for all employees whose date of injury is on or after July 1, 2002.

Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

4. Benefit delivery.__Covered health care services must be provided to plan members by the participating providers of their choice through organized delivery systems or the open plan.__The delivery of covered health care services to plan members is subject to the provisions of this subsection.__The agency shall adopt rules regarding benefit delivery by the plan that include but are not limited to the following.

A.__Organized delivery systems authorized by the agency may provide health care services to plan members.

B.__The open plan is available to all plan members and to all participating providers.

C.__The plan must pay for health care services provided to plan members while they are out of the State.__The plan member must have been out of the State temporarily for reasons other than to obtain the health care services, or the member must have obtained the health care services out of the State for compelling reasons related to the suitability of the services, the nature of the condition and personal circumstances.__The agency shall establish and operate a plan to pay for health care services provided to plan members while they are outside the State.__The payments must be made at the rates established by the agency for comparable services provided by the plan in the State.__ Charges in excess of the payment rates established in accordance with this paragraph are the responsibility of the plan member.

D.__The plan must pay cash benefits to a provider of health care services or to a plan member for a reasonable amount charged for medically necessary, emergency health care

services obtained by a plan member from a provider who is not a participating provider.

E.__Copayments or deductibles do not apply to health care services provided through the plan, except that, to encourage the use of the most appropriate and cost-effective mode of service, an organized delivery system may require reasonable payments by a plan member if payment is approved by the agency and does not substantially interfere with access to needed health care services.

F.__Accountability to the public of the open plan and organized delivery systems must be ensured in order to promote public confidence in the health care delivery system and awareness of the costs of care.

G.__Flexible enrollment and transfer processes that preserve plan member confidence and ensure that health care needs are met must be provided.

H.__Opportunity for negotiation of fair rates of compensation with participating providers in the open plan and organized delivery systems and negotiation with pharmaceutical companies for similarly classified pharmaceuticals must be provided.

I.__A program to expand services to underserved rural and low-income communities must be established.

J.__Mechanisms must be developed to provide incentives to participating providers in the open plan and to organized delivery systems for additional savings that do not compromise the quality of health care.

Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

5.__Provider requirements.__Participating providers, the open plan and organized delivery systems may not charge a plan member or a 3rd party for covered health services and may not charge rates in excess of the reimbursement levels set by the agency.__A participating provider of health care services, the open plan and organized delivery systems may not refuse to provide services to a plan member on the basis of health status, medical condition, previous insurance status, race, color, creed, age, national origin, alienage or citizenship status, gender, sexual orientation, disability, marital status or arrest record except as appropriate to the provider's professional specialization or other medically appropriate circumstances.

6.__Provision of information by participating providers.__A participating provider shall make information available to the agency and permit examination of its records by the agency as necessary for the purposes of this section and section 374.

7.__Organized delivery system requirements.__For fiscal year 2002-03 organized delivery systems must have target loss ratios of 88% and caps on administrative costs of 10%.__For fiscal year 2003-04 organized delivery systems must have target loss ratios of 90% and caps on administrative costs of 8%.__For each succeeding fiscal year the loss ratio must increase 1% and the administrative cost cap decrease 1% until the agency determines that the greatest efficiency has been reached.

8.__Role of other health care programs.__Until the agency determines otherwise, the plan is supplemental to all coverage available to a plan member from another health care program, including but not limited to the Medicare program of the federal Social Security Act, Title XVIII; the Medicaid program of the federal Social Security Act, Title XIX; the Civilian Health and Medical Program of the Uniformed Services,__10 United States Code, Sections 1071-1106; the federal Indian Health Care Improvement Act, 25 United States Code, Sections 1601-1682; other 3rd-party payors who may be billable for health care services; and any state and local health programs, including but not limited to workers' compensation and employers' liability insurance, pursuant to former Title 39 and Title 39-A.__Health care services billed to 3rd-party payors other than the plan must be paid for by those programs, and coverage under the plan is supplemental to that coverage.__A plan member who receives health care services under another health care program__or from a 3rd- party payor to which the plan is supplemental shall pay a premium to the fund in proportion to the health care benefits available to the plan member under the plan.

SUBCHAPTER III

ENSURING THE QUALITY, AFFORDABILITY AND

EFFICIENCY OF HEALTH CARE

§373.__Quality; affordability; efficiency; health planning

The agency shall undertake the following duties to ensure the quality, affordability, efficiency and planning of health care for the citizens of the State.

1.__Quality of care.__The agency shall establish a quality assurance program and shall adopt rules to implement that program.__Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter

II-A.__The program must include but is not limited to:

A.__Operation of the plan;

B.__Utilization of covered health care services of participating and nonparticipating providers;

C.__Evaluation of the performance of participating providers;

D.__Standards and continuity of care;

E.__A plan for increased delivery of preventive and primary care;

F.__Access to information and data for the agency;

G.__A plan to ensure that the open plan and organized delivery systems address public health needs;

H.__Plan member involvement in policy decisions; and

I.__An efficient complaint resolution process regarding quality of care and utilization and rate controls.

2.__Affordability of care.__The agency shall establish an affordability assurance program and shall adopt rules to implement that program.__Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.__The program must include but is not limited to:

A.__Rates of compensation for participating providers in organized delivery systems and in the open plan;

B.__Operation of the Small Business Hardship Fund to assist employers for which the plan constitutes a hardship;

C.__Maintenance of a prescription drug formulary; and

D.__Cost containment mechanisms for organized delivery systems and for the open plan.__Cost containment mechanisms may include primary care case management, guaranteed provider payment, variable reimbursement rates for providers, review of treatment and services concurrent with the provision of the treatment and services, expenditure targets, practice parameters and treatment norms.

3.__Efficiency of care.__The agency shall establish an efficiency-of-care program and shall adopt rules to implement

that program.__Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.__The agency shall review health care malpractice insurance costs and shall work with organized delivery systems, participating providers and insurers to ensure that the resources of the fund are used for maximum service delivery.__The agency shall develop claims handling and data collection methods and forms, including but not limited to uniform billing forms and procedures to facilitate the exchange of information and communication between the agency and participating providers.

4.__Health planning.__The agency shall establish a health planning program and adopt rules to implement that program.__ Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.__ Health planning must be considered in light of the programs on quality, affordability and efficiency established under subsections 1 to 3.__The program must include but is not limited to:

A.__Global budgets for all expenditures of the plan for the base year of the plan and for each following year based on the level of expenditures in the preceding year as increased by the percentage of increase in the average per capita personal income applicable to the State, as developed by the United States Department of Commerce;

B.__Global budgets for hospitals and institutional providers with adjustments for case mix, volume and region and separate capital budgets for hospitals and institutional providers;

C.__A certificate of need program, pursuant to chapter 103;

D.__A health planning program; and

E.__Data collection regarding health care needs, resources and expenditures.

SUBCHAPTER IV

FINANCING OF MAINE HEALTH CARE PLAN

§374.__Financing of Maine Health Care Plan

Financing of the plan is accomplished by the fund.

1.__Maine Health Care Trust Fund.__The Maine Health Care Trust Fund is established to finance the plan.__Deposits into the

fund and expenditures from the fund must be made pursuant to this section and to rules adopted by the agency to carry out the purposes of this section.__All income generated pursuant to this chapter must be deposited in the fund, which does not lapse but carries forward from one fiscal year to the next.__Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

A.__The Small Business Hardship Fund is established as a part of the fund to assist self-employed persons and employers for which participation in the plan constitutes a hardship.

B.__Payments are deposited into the fund from the following sources:

(1)__Premium payments made by individuals and employers as follows:

(a)__Premium levels for individuals must be based on 2 levels of income: income under $35,000 per year and income over $35,000 per year; and

(b)__Assessment levels for employers based on 2 levels of profitability: that measured by a profit margin smaller than 10% and that measured by a profit margin greater than 10%;

(2)__Premium payments made by residents and nonresidents based on earned income not included in subparagraph 1 and on unearned income;

(3)__Payments made by federal, state and local governmental units;

(4)__Payments from the increase in the cigarette tax from 37.0 mills to 39.5 mills levied pursuant to Title 36, section 4365, beginning in fiscal year 2002.__ Payments from the cigarette tax must be deposited in the Small Business Hardship Fund.__Only amounts not required for that fund may be transferred from that fund into the Maine Health Care Trust Fund;

(5)__Copayments for permanent care made pursuant to section 372, subsection 3, paragraph D; and

(6)__Other payments made pursuant to law.

C.__Expenditures from the fund are authorized for the following purposes:

(1)__One percent of the budget of the fund for health promotion and injury, disease and disability prevention programs;

(2)__Payments to participating providers for health care services rendered pursuant to section 372, subsection 4;

(3)__Payments to nonparticipating providers for health care services rendered pursuant to section 372, subsection 4;

(4)__Payments for capital expenditures approved pursuant to chapter 103;

(5)__Payments to the Small Business Hardship Fund;

(6)__Payments for administration of the fund and the plan;

(7)__Payments for the operations and expenditures of the agency, the council and any advisory committees authorized by law or appointed by the agency; and

(8)__Other payments made pursuant to law.

2.__Requirements for expenditures.__The agency shall adopt rules setting the requirements for expenditures from the fund.__ Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.__The agency shall perform quarterly reviews of expenditures within the open plan and organized delivery systems to determine whether expenditures are within the budget of the agency.__The requirements include:

A.__For organized delivery systems, rates that are based on capitation, that utilize risk adjustment and that are set to reflect whether a region is underserved or has low income and utilization rates;

B.__For participating providers in the open plan, rates that are set to reflect costs, volume and relative value of services and that may be based on contracts and capitation;

C.__For institutional providers and hospitals, rates that are based on global budgets; and

D.__For rural health centers and the family planning system, rates that reflect their special mission and needs.

SUBCHAPTER V

MAINE HEALTH CARE AGENCY

§375.__Establishment

The Maine Health Care Agency is established as an independent executive agency to:

1.__Maine Health Care Plan.__Administer and oversee the Maine Health Care Plan established by section 372;

2.__Maine Health Care Council.__Take action under the direction of the Maine Health Care Council established by section 377; and

3.__Maine Health Care Trust Fund.__Administer and oversee the Maine Health Care Trust Fund established by section 374.

§376.__General powers

In addition to the powers granted to the agency elsewhere in this chapter, the agency is authorized to act as necessary to carry out the purposes of this chapter, including but not limited to the following.

1.__Rulemaking.__The agency may adopt, amend and repeal rules as necessary for the proper administration and enforcement of this chapter, subject to the Maine Administrative Procedure Act.__ Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

2.__Executive director and staff.__The agency shall employ an executive director, who must have had experience in the organization, financing or delivery of health care and who shall perform the duties delegated by the agency.__The agency may delegate to the executive director any of its functions and duties except the adoption of rules, the establishment of a global budget for health care for the State under section 373, subsection 4 and the approval of certification of need applications under chapter 103.__The executive director is an unclassified employee and serves at the pleasure of the council.__ The executive director, at the direction of the agency, shall hire personnel to administer this chapter, subject to the Civil Service Law and within the budget set by the agency.

3.__Receipt of gifts, grants and payments; fees.__The agency may solicit, receive and accept gifts, grants, payments and other

funds and advances from any person and enter into agreements with respect to those grants, gifts, payments and other funds and advances, including agreements that involve the undertaking of studies, plans, demonstrations and projects.__The agency may charge and retain fees to recover the reasonable costs incurred in reproducing and distributing reports, studies and other publications and in responding to requests for information.

4.__Studies and analyses.__The agency may conduct studies and analyses related to the provision of health care, health care costs and matters it considers appropriate.

5.__Grants.__The agency may make grants to persons to support research or other activities undertaken in furtherance of the purposes of this chapter.__Without the specific written authorization of the agency, a party receiving a grant from the agency may not release, publish or otherwise use results of the research or information made available by the agency.

6.__Contracts.__The agency may contract with anyone for services necessary to carry out the activities of the agency.__ Without the specific written authorization of the agency, a party entering into a contract with the agency may not release, publish or otherwise use information made available to it under contracted responsibilities.

7.__Audits.__To the extent necessary to carry out its responsibilities, the agency, during normal business hours and upon reasonable notification, may audit, examine and inspect any records of any health care provider, organized delivery system or contractor.

8.__Data collection.__The agency shall institute a data collection system to acquire and analyze information on the provision of health care and health care costs.__All data released by the agency must protect the confidentiality of the health care provider and the client and, whenever possible, must be released as aggregate data.

9.__Complaint resolution.__In cooperation with health care providers and plan members, the agency shall institute a complaint resolution system to handle the complaints of health care providers and plan members.

10.__Funding.__The agency shall determine the level of funding required to carry out the purposes of this chapter.__It shall submit biennially to the Legislature for approval a proposed budget with levels of premiums and assessments and taxes under Title 36, section 4365.__Funding for the agency budget approved by the Legislature is paid from the fund.

11.__Coordination with federal, state and local health care systems.__The agency shall institute a system to coordinate the activities of the agency and the plan with the health care programs of the federal, state and municipal governments.

12.__Reports.__On or before January 1st of each year the agency shall submit to the Governor and the Legislature an annual report of its operations and activities during the previous year and the funding, tax and budget requirements of subsection 10.__ This report must include facts, suggestions and policy recommendations that the agency considers necessary.__As it determines appropriate, the agency shall publish and disseminate information helpful to the citizens of this State in making informed choices in obtaining health care, including the results of studies or analyses undertaken by the agency.

13.__Advisory committees.__The agency may appoint advisory committees to advise and assist the agency.__Members of those committees serve without compensation but may be reimbursed by the agency for necessary expenses while on official business of the committee.

14.__Headquarters.__The agency's central office must be in the Augusta area, but the agency may hold hearings and sessions at any place in the State.

15.__Seal.__The agency may have a seal bearing the words "Maine Health Care Agency."

§377.__Maine Health Care Council

The Maine Health Care Council is established as the decision- making and directing council for the agency.

1.__Membership.__The council is composed of 3 members, appointed by the Governor and, within 30 days after authorization, subject to review by the joint standing committees of the Legislature having jurisdiction over banking and insurance matters and over health and human services matters and to confirmation by the Legislature.

Persons eligible for appointment to the council must have had experience in the organization, delivery or financing of health care.__At least one member of the council must be an individual with experience in the delivery and organization of primary and preventive care and public health services.__At least one member of the council must be an individual who is not a health care provider and has not worked for a health care provider or health insurer.__Members of the council shall devote full time to their duties.

2.__Terms.__The terms of the members are staggered.__Of the initial appointees, one must be appointed for one year, one for 2 years and one for 3 years.__Thereafter, all appointments are for 5-year terms, except that a member appointed to fill a vacancy in an unexpired term serves only for the remainder of that term.__ Members hold office until the appointment and confirmation of their successors.

3.__Chair; voting.__The Governor shall designate one member of the council as chair.__The chair shall preside at meetings of the council, is responsible for the expedient organization of the agency's work and may vote on all matters before the council.__ Two council members constitute a quorum.__The council may take action only by an affirmative vote of at least 2 members.

4.__Duties.__The council shall direct, administer and oversee the agency in the performance of its duties under this chapter.__ The council shall annually prepare a state health plan in accordance with chapter 101.__The council has broad authority to carry out the purposes of this chapter.

Sec. A-2. Working capital advance. The State Controller shall transfer a $400,000 working capital advance to the dedicated account of the Maine Health Care Trust Fund on the effective date of this Part. The Maine Health Care Agency shall repay this working capital advance by June 30, 2003.

Sec. A-3. Effective date. This Part takes effect January 1, 2002.

PART B

Sec. B-1. Maine Health Care Plan Transition Advisory Committee.

1. Establishment. The Maine Health Care Plan Transition Advisory Committee is established to advise the members of the Maine Health Care Council.

2. Membership. The committee consists of 20 members, who are appointed as specified in this subsection and are subject to confirmation by the Legislature.

Four members must be legislators. Two of those members must be appointed by the President of the Senate, one from each party, and 2 must be appointed by the Speaker of the House of Representatives, one from each party.

Sixteen representatives of the public must be appointed as follows: eight members by the Governor, 4 members by the President of the Senate and 4 members by the Speaker of the House of Representatives.

The appointing authorities shall notify the Executive Director of the Legislative Council upon making their appointments. All appointments must be made within 30 days of the effective date of this Part. Within the next 30 days the appointments must be reviewed and approved by a joint committee consisting of the members of the joint standing committees of the Legislature having jurisdiction over banking and insurance matters and over health and human services matters and must be confirmed by the Legislature.

The public members must represent statewide organizations from the following groups: consumers, uninsured persons, providers of maternal and child health services, Medicaid recipients, persons with disabilities, persons who are elderly, organized labor, allopathic and osteopathic physicians, nurses and allied health care professionals, organized delivery systems, hospitals, community health centers, the family planning system and the business community, including a representative of small business.

When appointment of all members of the committee is completed, the chair of the Legislative Council shall call the committee together for its first meeting. The first meeting must be held within 90 days of the effective date of this Part. The members of the committee shall elect a chair from among the members.

3. Responsibilities. The committee shall hold public hearings, solicit public comments and advise the Maine Health Care Council for the purposes of planning the transition to the Maine Health Care Plan and recommending legislative changes to accomplish the purposes of the Maine Revised Statutes, Title 22, chapter 106.

4. Staffing and funding. The Maine Health Care Council shall provide staffing and funding for the committee.

5. Compensation. Members of the committee serve without compensation. They are entitled to reimbursement from the Maine Health Care Council for travel and other necessary expenses incurred in the performance of their duties on the committee.

6. Reports. As it determines appropriate, the committee shall report to the Maine Health Care Council. The committee shall report to the Governor and to the Legislature on July 1, 2002, January 1, 2003, July 1, 2003 and December 31, 2003.

7. Completion of duties. The committee shall complete its duties on December 31, 2003, when all terms of membership on the committee expire.

Sec. B-2. Effective date. This Part takes effect January 1, 2002.

PART C

Sec. C-1. 2 MRSA §6-F is enacted to read:

§6-F.__Salaries of members of Maine Health Care Council and

executive director of Maine Health Care Agency

Notwithstanding any other provisions of law, the salaries of members of the Maine Health Care Council and of certain employees of the Maine Health Care Agency are as follows.

1.__Members, Maine Health Care Council.__The salaries of the members of the Maine Health Care Council are within salary range 91.

2.__Executive director, Maine Health Care Agency.__The salary of the executive director of the Maine Health Care Agency is within salary range 91.

Sec. C-2. Effective date. This Part takes effect January 1, 2002.

PART D

Sec. D-1. 24-A MRSA §2185-A is enacted to read:

§2185-A.__Benefits that duplicate the health care benefits of the

Maine Health Care Plan

Health insurance policies and contracts and health care contracts and plans are subject to the following provisions.

1.__Prohibited conduct.__A person, insurer, health maintenance organization or nonprofit hospital or medical service organization may not sell or offer for sale in this State a health insurance policy or contract or a health care contract or plan that offers benefits that duplicate the health care benefits offered by the Maine Health Care Plan under Title 22, section 372, subsection 3 unless that person, insurer, health maintenance organization or nonprofit hospital or medical service organization has been authorized as an organized delivery system

by the Maine Health Care Agency pursuant to section 372, subsection 4, paragraph A.__A violation of this section constitutes an unfair and deceptive trade practice under section 2152.

2.__Allowed conduct.__A person, insurer, health__maintenance organization or nonprofit hospital or medical service organization may sell or offer for sale in the State a health insurance policy or contract or a health care contract or plan that offers coverage and benefits that are supplemental to and do not duplicate covered health care benefits offered by the Maine Health Care Plan under Title 22, section 372, subsection 3.

Sec. D-2. Effective date. This Part takes effect July 1, 2002 and applies to all policies, contracts and plans delivered or issued for delivery on or after July 1, 2002. For purposes of this section, all contracts are deemed to be renewed no later than the next yearly anniversary of the contract date.

PART E

Sec. E-1. 36 MRSA §4365, 2nd ¶, as amended by PL 1997, c. 643, Pt. T, §3 and affected by §6, and affected by c. 750, Pt. D, §1, is further amended to read:

Beginning November 1, 1997, as a public health measure, the tax imposed under this section is 37 mills per cigarette. Beginning December 1, 2001, the tax imposed under this section is 39.5 mills per cigarette.

Sec. E-2. 36 MRSA §4365-E is enacted to read:

§4365-E.__Rate of tax after November 30, 2001

Cigarettes stamped at the rate of 37.0 mills per cigarette and held for resale after November 30, 2001 are subject to tax at the rate of 39.5 mills per cigarette.

A person holding cigarettes for resale is liable for the difference between the tax rate of 39.5 mills per cigarette and the tax rate of 37.0 mills per cigarette in effect before December 1, 2001. Stamps indicating payment of the tax imposed by this section must be affixed to all packages of cigarettes held for resale as of December 1, 2001, except that cigarettes held in vending machines as of that date do not require that stamp.

Notwithstanding any other provision of this chapter, it is presumed that all cigarette vending machines are filled to capacity on December 1, 2001, and the tax imposed by this section must be reported on that basis. A credit against this inventory tax must be allowed for cigarettes stamped at the 39.5 mill rate placed in vending machines before December 1, 2001.

Payment of the tax imposed by this section must be made to the State Tax Assessor before February 15, 2002, accompanied by forms prescribed by the State Tax Assessor and credited to the Maine Health Care Trust Fund.

PART F

Sec. F-1. Employment retraining. The Maine Health Care Agency shall coordinate with the Department of Economic and Community Development, the Department of Labor and private industry councils to ensure that employment retraining services are available for administrative workers employed by insurers and providers who are displaced due to the transition to the Maine Health Care Plan.

Sec. F-2. Delivery of long-term health care services. The Maine Health Care Agency shall study the delivery of long-term health care services to plan members. The study must address the best and most efficient manner of delivery of health care services to individuals needing long-term care and funding sources for long- term care. In undertaking the study, the agency shall consult with the Maine Health Care Plan Transition Advisory Committee, the Long-term Care Steering Committee established pursuant to the Maine Revised Statutes, Title 22, section 5107-B, representatives of consumers and potential consumers of long-term care services, representatives of providers of long-term care services and representatives of employers, employees and the public. The agency shall report to the Legislature on or before January 1, 2003 and shall include suggested legislation in the report.

Sec. F-3. Provision of health care services. The Maine Health Care Agency shall study the provision of health care services under the Medicaid and Medicare programs. The study must consider the waivers necessary to coordinate the Medicaid and Medicare programs with the Maine Health Care Plan, the method of coordination of benefit delivery and compensation, reorganization of State Government necessary to achieve the objectives of the agency and any other changes in law needed to carry out the purposes of the Maine Revised Statutes, Title 22, chapter 106. The agency shall apply for all waivers required to coordinate the benefits of the Maine Health Care Plan and the Medicaid and Medicare programs. The agency shall report to the Legislature on or before March 1, 2002 and shall include suggested legislation in the report.

SUMMARY

This bill establishes a universal access health care system that offers choice of coverage through organized delivery systems or through a managed care system operated by the Maine Health Care Agency and channels all health care dollars through a dedicated trust fund.

1. Part A of the bill does the following.

It establishes the Maine Health Care Plan to provide security through high-quality, affordable health care for the people of the State. All residents and nonresidents who maintain significant contact with the State are eligible for covered health care services through the Maine Health Care Plan. The plan is funded by the Maine Health Care Trust Fund, a dedicated fund receiving payments from employers, individuals and plan members and, after fiscal year 2001, from the 5¢ per package increase in the cigarette tax. The Maine Health Care Plan provides a range of benefits, including hospital services, health care services from participating providers, laboratories and imaging procedures, home health services, rehabilitative services, prescription drugs and devices, mental health services, substance abuse treatment services, dental services, vision appliances, medical supplies and equipment and hospice care. Health care services through the Maine Health Care Plan are provided by participating providers in organized delivery systems and through the open plan, which is available to all providers. The plan is supplemental to other health care programs that may be available to plan members, such as Medicare, Medicaid, the federal Civilian Health and Medical Program of the Uniformed Services, the federal Indian Health Care Improvement Act and workers' compensation.

It establishes the Maine Health Care Agency to administer and oversee the Maine Health Care Plan, to act under the direction of the Maine Health Care Council and to administer and oversee the Maine Health Care Trust Fund. The Maine Health Care Council is the decision-making and directing council for the agency and is composed of 3 full-time appointees.

It directs the Maine Health Care Agency to establish programs to ensure quality, affordability, efficiency of care and health planning. The agency health planning program includes the establishment of global budgets for health care expenditures for the State and for institutions and hospitals. The health planning program also encompasses the certificate of need responsibilities of the agency, the health planning responsibilities pursuant to the Maine Revised Statutes, Title

22, chapter 103, data collection.

It contains a directive to the State Controller to advance $400,000 to the Maine Health Care Trust Fund on the effective date, January 1, 2002. This amount must be repaid from the fund by June 30, 2003.

2. Part B of the bill establishes the Maine Health Care Plan Transition Advisory Committee. Composed of 20 members, appointed and subject to confirmation, the committee is charged with holding public hearings, soliciting public comments and advising the Maine Health Care Agency on the transition from the current health care system to the Maine Health Care Plan. Members of the committee serve without compensation but may be reimbursed for their expenses. The committee is directed to report to the Governor and to the Legislature on July 1, 2001, January 1, 2002, July 1, 2002 and December 31, 2002. The committee completes its work on December 31, 2002.

3. Part C of the bill establishes the salaries of the members of the Maine Health Care Council and the executive director of the Maine Health Care Agency.

4. Part D of the bill prohibits the sale on the commercial market of health insurance policies and contracts that duplicate the coverage provided by the Maine Health Care Plan. It allows the sale of health care policies and contracts that do not duplicate and are supplemental to the coverage of the Maine Health Care Plan.

5. Part E of the bill imposes a 5¢ per package increase in the cigarette tax beginning December 1, 2001. Proceeds from the cigarette tax increase are paid to the Maine Health Care Trust Fund.

6. Part F of the bill directs the Maine Health Care Agency to ensure employment retraining for administrative workers employed by insurers and providers who are displaced by the transition to the Maine Health Care Plan. It directs the Maine Health Care Agency to study the delivery and financing of long-term care services to plan members. Consultation is required with the Maine Health Care Plan Transition Advisory Committee, representatives of consumers and potential consumers of long-term care services and representatives of providers of long-term care services, employers, employees and the public. A report to the Legislature is due January 1, 2003.

The Maine Health Care Agency is directed to study the provision of health care services under the Medicaid and Medicare programs, waivers, coordination of benefit delivery and compensation, reorganization of State Government necessary to accomplish the objectives of the Maine Health Care Agency and legislation needed to carry out the purposes of the bill. The agency is directed to apply for all waivers required to coordinate the benefits of the Maine Health Care Plan and the Medicaid and Medicare programs. A report is due to the Legislature by March 1, 2002.