ENGROSSED
Senate Bill No. 772
(By Senators Plymale, Walker, Craigo, Fanning,
Jackson, Helmick and Minear)
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[Originating in the Select Committee on Public Employees'
Insurance; reported March 4, 1998.]
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A BILL to amend and reenact sections three and five, article
sixteen, chapter five of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, all relating to
employment of a deputy director; and the submission of the
financial statements and financial plans.
Be it enacted by the Legislature of West Virginia:
That sections three and five, article sixteen, chapter five of
the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted, all to read as follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-3. Public employees insurance agency continued; appointment,
qualification, compensation and duties of director of agency; employees; civil service coverage; director vested after specified date with powers of public employees insurance board; expiration of agency.
(a) The public employees insurance agency is continued, and
consists of the director, the finance board, the advisory board and
any employees who may be authorized by law. The director shall be
appointed by the governor, with the advice and consent of the
Senate. He or she shall serve at the will and pleasure of the
governor, unless earlier removed from office for cause as provided
by law. The director shall have at least three years experience in
health insurance administration prior to appointment as director.
The director shall receive an annual salary established by the
governor not to exceed sixty-five thousand dollars and actual
expenses incurred in the performance of official business. The
director shall employ such administrative, technical and clerical
employees as are required for the proper administration of the
insurance programs provided for in this article. The director
shall perform such duties as are required of him or her under the
provisions of this article and is the chief administrative officer
of the public employees insurance agency.
The director may employ
a deputy director: Provided, That the position of deputy director
shall be contingent upon a demonstration of cost-effectiveness, as
determined by the joint committee on government and finance, at the
end of the two year period immediately following his or her
employment.
(b) All positions in the agency, except for the director, his or her personal secretary
, the deputy director and the chief
financial officer shall be included in the classified service of
the civil service system pursuant to article six, chapter
twenty-nine of this code. Any person required to be included in
the classified service by the provisions of this subsection who was
employed in any of the positions included in this subsection on or
after the effective date of this article shall not be required to
take and pass qualifying or competitive examinations upon or as a
condition to being added to the classified service:
Provided, That
no person required to be included in the classified service by the
provisions of this subsection who was employed in any of the
positions included in this subsection as of the effective date of
this section shall be thereafter severed, removed or terminated in
his or her employment prior to his or her entry into the classified
service except for cause as if the person had been in the
classified service when severed, removed or terminated.
(c) The director is responsible for the administration and
management of the public employees insurance agency as provided for
in this article and in connection with his or her responsibility
shall have the power and authority to make all rules necessary to
effectuate the provisions of this article. Nothing in section four
or five of this article shall limit the director's ability to
manage on a day-to-day basis the group insurance plans required or
authorized by this article, including, but not limited to, administrative contracting, studies, analyses and audits,
eligibility determinations, utilization management provisions and
incentives, provider negotiations, provider contracting and
payment, designation of covered and noncovered services, offering
of additional coverage options or cost containment incentives,
pursuit of coordination of benefits and subrogation, or any other
actions which would serve to implement the plan or plans designed
by the finance board.
(d) The public employees insurance agency shall terminate in
the manner provided in article ten, chapter four of this code, on
the first day of July, two thousand one, unless extended by
legislation enacted before the termination date:
Provided, That
the public employees insurance agency advisory board, created in
section six of this article, shall terminate in the manner provided
in article ten, chapter four of this code on the first day of July,
one thousand nine hundred ninety-six.
§5-16-5. Purpose, powers and duties of the finance board; initial
financial plan; financial plan for following year; and
annual financial plans.
(a) The purpose of the finance board created by this article
is to bring fiscal stability to the public employees insurance
agency through development of an annual financial plan designed to
meet the agency's estimated total financial requirements, taking
into account all revenues projected to be made available to the agency, and apportioning necessary costs equitably among
participating employers, employees and retired employees and
providers of health care services.
(b) The finance board shall retain the services of an
impartial, professional actuary, with demonstrated experience in
analysis of large group health insurance plans, to estimate the
total financial requirements of the public employees insurance
agency for each fiscal year and to review and render written
professional opinions as to financial plans proposed by the finance
board. The finance board shall also employ the actuary to develop
alternative financing options and to perform such other services as
may be requested by the finance board. All reasonable fees and
expenses for actuarial services shall be paid by the public
employees insurance agency. Any financial plan or modifications to
a financial plan approved or proposed by the finance board pursuant
to this section shall be submitted to and reviewed by the actuary,
and may not be finally approved and submitted to the governor and
to the Legislature without the actuary's written professional
opinion that the plan may be reasonably expected to generate
sufficient revenues to meet all estimated program and
administrative costs of the agency, excluding incurred but
unreported claims, for the fiscal year for which the plan is
proposed. The actuary's opinion on the initial plan required by
subsection (d) of this section shall allow for a target of forty-five days of accounts payable to be carried over into the
next fiscal year. The actuary's opinion on the financial plan for
fiscal year one thousand nine hundred ninety-two shall allow for
between thirty and forty-five days of accounts payable to be
carried over into the next fiscal year. The actuary's opinion on
the financial plan for any succeeding fiscal year shall allow for
no more than thirty days of accounts payable to be carried over
into the next fiscal year. The actuary's opinion for any fiscal
year shall not include a requirement for establishment of a reserve
fund.
(c) All financial plans required by this section shall include
the design of a benefit plan or plans. All financial plans shall
establish:
(1) Maximum levels of reimbursement which the public employees
insurance agency makes to categories of health care providers;
(2) Any necessary cost containment measures for implementation
by the director;
(3) The levels of premium costs to participating employers;
and
(4) The types and levels of cost to participating employees
and retired employees.
The financial plans may provide for different levels of costs
based on the insureds' ability to pay. The finance board may
establish different levels of costs to retired employees based upon length of employment with a participating employer, ability to pay,
or other relevant factors. The financial plans may also include
optional alternative benefit plans with alternative types and
levels of cost. The finance board may develop policies which
encourage the use of West Virginia health care providers.
In addition, the finance board may allocate a portion of the
premium costs charged to participating employers to subsidize the
cost of coverage for participating retired employees, on such terms
as the finance board determines are equitable and financially
responsible.
(d) Initial plan. -- The director shall convene the first
meeting of the finance board no later than the fifteenth day of
September, one thousand nine hundred ninety. For presentation by
the director at the first meeting, the governor shall prepare an
estimate of the total amount of general and special revenues which
the state has or will have available to fund the public employees
insurance agency and its programs for the fiscal year ending on the
thirtieth day of June, one thousand nine hundred ninety-one.
Notwithstanding any provision of this article to the contrary,
during any meeting authorized by subsection (h) of this section to
review implementation of the initial financial plan in light of
actual experience, the finance board, in its discretion, may elect
to redesign the initial financial plan so that revenues generated
will meet all incurred and projected program and administrative costs of the public employees insurance agency by the end of the
fiscal year ending on the thirtieth day of June, one thousand nine
hundred ninety-two, rather than by the thirtieth day of June, one
thousand nine hundred ninety-one. Before implementing any such
modifications, the finance board shall obtain a written
professional opinion from its actuary stating that the modified
plan may be reasonably expected to generate sufficient revenues to
meet all estimated program and administrative costs of the public
employees insurance agency for the remainder of fiscal year one
thousand nine hundred ninety-one and for fiscal year one thousand
nine hundred ninety-two, allowing for between thirty and forty-five
days of accounts payable to be carried over into fiscal year one
thousand nine hundred ninety-three. The finance board shall also
afford interested and affected persons an opportunity to offer
comment on the modified plan at a public meeting of the finance
board. Regardless of whether or not the finance board modifies the
initial financial plan as authorized by this subsection, the
finance board shall prepare a financial plan for fiscal year one
thousand nine hundred ninety-two in accordance with subsection (e)
of this section.
The finance board shall prepare, no later than the tenth day
of November, one thousand nine hundred ninety, a proposed financial
plan designed to generate revenues sufficient to meet all program
and administrative costs of the public employees insurance agency which have already been incurred but are unpaid, or which the
actuary estimates will be incurred and paid during the remainder of
fiscal year one thousand nine hundred ninety-one, excluding
incurred but unreported claims. The finance board shall establish
in the proposed financial plan a target of forty-five days of
accounts payable which may be carried over into the next fiscal
year.
The finance board shall request its actuary to review the
proposed financial plan and to render a written professional
opinion stating whether the plan may be reasonably expected to
generate sufficient revenues to meet all estimated program and
administrative costs of the public employees insurance agency for
the fiscal year. The actuary's report shall explain the basis of
his or her opinion. If the actuary concludes that the proposed
financial plan will not generate sufficient revenues to meet all
anticipated costs, then the finance board shall make necessary
modifications to the proposed plan to ensure that all actuarially- determined financial requirements of the agency will be met.
Upon obtaining the actuary's opinion and making all necessary
modifications to the proposed plan, the finance board shall conduct
two or more public hearings to receive public comment on the
proposed financial plan, shall review such comments, and shall
finalize and approve the financial plan no later than the twentieth
day of November, one thousand nine hundred ninety. Employees shall be notified of any changes in the types and levels of employee
costs or benefits contained in the financial plan at least thirty
days prior to the date of implementation of the financial plan.
The finance board shall submit to the governor and to the
Legislature the final, approved financial plan no later than the
first day of December, one thousand nine hundred ninety. The
financial plan shall become effective and shall be implemented by
the director on the first day of January, one thousand nine hundred
ninety-one.
(e) Plan for fiscal year one thousand nine hundred ninety-two.
-- No later than the first day of December, one thousand nine
hundred ninety, the governor shall prepare and provide to the
finance board an estimate of the total amount of general and
special revenues which the state will have available to fund the
public employees insurance agency and its programs for the fiscal
year beginning the first day of July, one thousand nine hundred
ninety-one. The finance board shall request its actuary to
estimate the total financial requirements of the public employees
insurance agency for the fiscal year.
The finance board shall prepare a proposed financial plan
designed to generate revenues sufficient to meet all estimated
program and administrative costs of the public employees insurance
agency for the fiscal year. The proposed financial plan shall
allow for between thirty and forty-five days of accounts payable to be carried over into the next fiscal year. Before final adoption
of the proposed financial plan, the finance board shall request its
actuary to review the plan and to render a written professional
opinion stating whether the plan will generate sufficient revenues
to meet all estimated program and administrative costs of the
public employees insurance agency for the fiscal year. The
actuary's report shall explain the basis of its opinion. If the
actuary concludes that the proposed financial plan will not
generate sufficient revenues to meet all anticipated costs, then
the finance board shall make necessary modifications to the
proposed plan to ensure that all actuarially-determined financial
requirements of the agency will be met.
Upon obtaining the actuary's opinion, the finance board shall
conduct one or more public hearings in each congressional district
to receive public comment on the proposed financial plan, shall
review such comments, and shall finalize and approve the financial
plan.
The finance board shall submit to the governor and to the
Legislature its final, approved financial plan for fiscal year one
thousand nine hundred ninety-two, together with the actuary's final
written opinion, no later than the first day of May, one thousand
nine hundred ninety-one. The financial plan shall become effective
and shall be implemented by the director on the first day of July,
one thousand nine hundred ninety-one.
(f) Annual plans. -- The finance board shall prepare, in the
manner provided in subsection (e) of this section, an annual
financial plan for fiscal year one thousand nine hundred ninety- three and each fiscal year thereafter during which the finance
board remains in existence. Any such financial plan shall be
designed to allow thirty days or less of accounts payable to be
carried over into the next fiscal year. For each such fiscal year,
the governor shall provide his or her estimate of total revenues to
the finance board no later than the first day of July of the
preceding fiscal year. The finance board shall submit its final,
approved financial plan, after obtaining the necessary actuary's
opinion and conducting one or more public hearings in each
congressional district, to the governor and to the Legislature no
later than the first day of January preceding the fiscal year. The
financial plan for a fiscal year shall become effective and shall
be implemented by the director on the first day of July of such
fiscal year. In addition to each final, approved financial plan
required under this section, the finance board shall also
simultaneously
submit financial statements based on generally
accepted accounting practices (GAAP) and the final, approved plan
restated on an accrual basis of accounting, which shall include
allowances for incurred but not reported claims: Provided, That
the financial statements and the accrual-based financial plan
restatement shall not effect the approved financial plan.
(g) The provisions of chapter twenty-nine-a of this code shall
not apply to the preparation, approval and implementation of the
financial plans required by this section.
(h) The finance board shall meet on at least a quarterly basis
to review implementation of its current financial plan in light of
the actual experience of the public employees insurance agency.
The board shall review actual costs incurred, any revised cost
estimates provided by the actuary, expenditures, and any other
factors affecting the fiscal stability of the plan, and may make
any additional modifications to the plan necessary to ensure that
the total financial requirements of the agency for the current
fiscal year are met. The financial board may not increase the
types and levels of cost to employees during its quarterly review
except in the event of a true emergency.
(i) For any fiscal year in which legislative appropriations
differ from the governor's estimate of general and special revenues
available to the agency, the finance board shall, within thirty
days after passage of the budget bill, make any modifications to
the plan necessary to ensure that the total financial requirements
of the agency for the current fiscal year are met.
(j) The types and levels of costs to employers, employees and
retired employees participating in public employees insurance
agency group insurance plans which are currently in effect on the
effective date of this article are hereby authorized. The types and levels of costs to employees participating in public employees
insurance agency group insurance plans which are currently in
effect on the effective date of this article shall remain in effect
unless and until changed or authorized to be changed by the finance
board in a financial plan prepared and approved in accordance with
this section.