COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 433
(By Senators Plymale, Edgell, Minard, Kessler, Bowman, Caldwell,
Hunter, White, Rowe, Fanning, Sharpe, Ross, Dempsey, Love and
Snyder)
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[Originating in the Committee on Government Organization;
reported February 20, 2003.]
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A BILL to amend and reenact sections two, five and twenty-five,
article sixteen, chapter five of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, all relating
to providing coverage to certain employees who work full time
whether regularly employed or not; excluding costs projected
to be paid for retired employees from the calculation for
premium cost sharing; and limiting funds transferred annually
to the reserve fund to eight percent of the projected total
plan costs for each fiscal year.
Be it enacted by the Legislature of West Virginia:
That sections two, five and twenty-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.
§5-16-2. Definitions.
The following words and phrases as used in this article,
unless a different meaning is clearly indicated by the context,
have the following meanings:
(1) "Agency" means the public employees insurance agency
created by this article.
(2) "Director" means the director of the public employees
insurance agency created by this article.
(3) "Employee" means any person, including elected officers,
who works regularly full-time in the service of the state of West
Virginia and, for the purpose of this article only, the term
"employee" also means any person, including elected officers, who
works regularly full-time in the service of a county board of
education; a county, city or town in the state; any separate
corporation or instrumentality established by one or more counties,
cities or towns, as permitted by law; any corporation or
instrumentality supported in most part by counties, cities or
towns; any public corporation charged by law with the performance
of a governmental function and whose jurisdiction is coextensive
with one or more counties, cities or towns; any comprehensive
community mental health center or comprehensive mental retardation facility established, operated or licensed by the secretary of
health and human resources pursuant to section one, article two-a,
chapter twenty-seven of this code and which is supported in part by
state, county or municipal funds; any person who works regularly
full-time in the service of the university of West Virginia board
of trustees or the board of directors of the state college system;
and any person who works regularly full-time in the service of a
combined city-county health department created pursuant to article
two, chapter sixteen of this code. On and after the first day of
January, one thousand nine hundred ninety-four, and upon election
by a county board of education to allow elected board members to
participate in the public employees insurance program pursuant to
this article, any person elected to a county board of education
shall be considered to be an "employee" during the term of office
of the elected member: Provided, That the elected member shall pay
the entire cost of the premium if he or she elects to be covered
under this article. Any matters of doubt as to who is an employee
within the meaning of this article shall be decided by the
director.
On or after the first day of July, one thousand nine hundred
ninety-seven, a person shall be considered an "employee" if that
person meets the following criteria:
(i) Participates in a job-sharing arrangement as defined in
section one, article one, chapter eighteen-a of this code;
(ii) Has been designated, in writing, by all other
participants in that job-sharing arrangement as the "employee" for purposes of this section; and
(iii) Works at least one third of the time required for a
full-time employee.
(4) "Employer" means the state of West Virginia, its boards,
agencies, commissions, departments, institutions or spending units;
a county board of education; a county, city or town in the state;
any separate corporation or instrumentality established by one or
more counties, cities or towns, as permitted by law; any
corporation or instrumentality supported in most part by counties,
cities or towns; any public corporation charged by law with the
performance of a governmental function and whose jurisdiction is
coextensive with one or more counties, cities or towns; any
comprehensive community mental health center or comprehensive
mental retardation facility established, operated or licensed by
the secretary of health and human resources pursuant to section
one, article two-a, chapter twenty-seven of this code and which is
supported in part by state, county or municipal funds; and a
combined city-county health department created pursuant to article
two, chapter sixteen of this code. Any matters of doubt as to who
is an "employer" within the meaning of this article shall be
decided by the director. The term "employer" does not include
within its meaning the national guard.
(5) "Finance board" means the public employees insurance
agency finance board created by this article.
(6) "Person" means any individual, company, association,
organization, corporation or other legal entity, including, but not limited to, hospital, medical or dental service corporations;
health maintenance organizations or similar organization providing
prepaid health benefits; or individuals entitled to benefits under
the provisions of this article.
(7) "Plan", unless the context indicates otherwise, means the
medical indemnity plan, the managed care plan option or the group
life insurance plan offered by the agency.
(8) "Retired employee" means an employee of the state who
retired after the twenty-ninth day of April, one thousand nine
hundred seventy-one, and an employee of the university of West
Virginia board of trustees or the board of directors of the state
college system or a county board of education who retires on or
after the twenty-first day of April, one thousand nine hundred
seventy-two, and all additional eligible employees who retire on or
after the effective date of this article, meet the minimum
eligibility requirements for their respective state retirement
system and whose last employer immediately prior to retirement
under the state retirement system is a participating employer:
Provided, That for the purposes of this article, the employees who
are not covered by a state retirement system shall, in the case of
education employees, meet the minimum eligibility requirements of
the state teachers retirement system and in all other cases, meet
the minimum eligibility requirements of the public employees
retirement system.
(9) "Total plan cost" means all costs associated in any way
with the administration and operation of all programs and plans of the public employee insurance agency, including but not limited to
claim costs for medical and prescription drug expenses, managed
care capitation payments, administration, life insurance costs, and
wellness program costs.
§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 annual financial plans and long-range
plans 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 actuary shall also assist in the development of
alternative financing options and perform any other services
requested by the finance board or the director. 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, including
incurred but unreported claims, for the fiscal year for which the
plan is proposed. The actuary's opinion on the financial plan for
each 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
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) (1) The finance board shall prepare an annual financial
plan for each fiscal year during which the finance board remains in
existence. The finance board chairman shall request the actuary to
estimate the total financial requirements of the public employees
insurance agency for the fiscal year.
(2) 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 no more than thirty 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 the
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.
(3) 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.
(4) Any 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 fiscal year, the governor shall provide his or her
estimate of total revenues to the finance board no later than the
fifteenth day of October of the preceding fiscal year: Provided,
That, for the prospective financial plans required by this section,
the governor shall estimate the revenues available for each fiscal
year of the plans based on the estimated percentage of growth in
general fund revenues. 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 becomes effective and shall be implemented by the director on the first day of July of the 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, however, That the
financial statements and the accrual-based financial plan
restatement shall not affect the approved financial plan.
(e) 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.
(f) Beginning on the first day of January, two thousand, and
every year thereafter, the finance board shall submit to the
governor and the Legislature a prospective financial plan, for a
period not to exceed five years, for the programs provided for in
this article. Factors that the board shall consider include, but
shall not be limited to, the trends for the program and the
industry; the medical rate of inflation; utilization patterns; cost
of services; and specific information such as average age of
employee population, active to retiree ratios, the service delivery
system and health status of the population.
(g) The prospective financial plans shall be based on the
estimated revenues submitted in accordance with subdivision (4),
subsection (d) of this section and shall include an average of the
projected cost-sharing percentages of premiums and an average of the projected deductibles and copays for the various programs.
Beginning in the plan year which commences on the first day of
July, two thousand two, and in each plan year thereafter, until and
including the plan year which commences on the first day of July,
two thousand six, the prospective plans shall include incremental
adjustments toward the ultimate level required in this subsection,
in the aggregate cost-sharing percentages of premium between
employers and employees. Effective in the plan year commencing on
the first day of July, two thousand six, and in each plan year
thereafter, the aggregate premium cost-sharing percentages between
employers and employees shall be at a level of eighty percent for
the employer and twenty percent for employees: Provided, That,
effective the first day of July, two thousand four, the calculation
of the employees premium cost sharing may not include any projected
claims cost for retired employees: Provided, however, That except
for the employers provided for in subsection (d), section eighteen
of this article whose shall have their premium cost-sharing
percentages shall be governed by that subsection. After the
submission of the initial prospective plan, the board may not
increase costs to the participating employers or change the average
of the premiums, deductibles and copays for employees, except in
the event of a true emergency as provided for in this section:
Provided, That if the board invokes the emergency provisions, the
cost shall be borne between the employers and employees in
proportion to the cost-sharing ratio for that plan year: Provided,
however, That for purposes of this section, "emergency" means that the most recent projections demonstrate that plan expenses will
exceed plan revenues by more than one percent in any plan year.
(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.
§5-16-25. Reserve fund.
Upon the effective date of this section, the finance board
shall establish and maintain a reserve fund for the purposes of
offsetting unanticipated claim losses in any fiscal year.
Beginning with the fiscal year two thousand two plan and for each
succeeding fiscal year plan, the finance board shall transfer ten
percent of the projected total plan costs for that year into the reserve fund, which is to be certified by the actuary and included
in the final, approved financial plan submitted to the governor and
Legislature in accordance with the provisions of this article.
Beginning with the fiscal year two thousand five plan and for each
succeeding fiscal year plan, the finance board shall transfer
eight percent of the projected total plan costs for that year into
the reserve fund, which is to be certified by the actuary and
included in the final, approved financial plan submitted to the
governor and Legislature in accordance with the provisions of this
article. Any moneys saved in a plan year shall be transferred into
the reserve fund. At the close of any fiscal year in which the
balance in the reserve fund exceeds the recommended reserve amount
by fifteen percent, the executive director shall transfer that
amount to the fund established in section fourteen-a, article two,
chapter five-a of this code for appropriation by the Legislature.
NOTE: The purpose of this bill is to provide PEIA coverage to
certain employees who work full-time whether regularly employed or
not, to exclude the cost projected by the PEIA to be paid for
retired employees premium from the 80/20 premium cost-sharing plan
between employers and active employees, and to limit the amount of
money transferred to the reserve fund each fiscal year thus
providing more funds for current plan costs.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.