H. B. 2918
(By Mr. Speaker, Mr. Kiss, and Delegate Browning)
[Introduced February 10, 2003; referred to the
Committee on Pensions and Retirement then Finance.]
A BILL to amend and reenact sections 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
excluding costs projected to be paid for retired employees
from the calculation for premium cost sharing; and limiting
the funds transferred annually to the reserve fund to ten
percent of the projected medical and prescription drug claim
cost for each fiscal year.
Be it enacted by the Legislature of West Virginia:
That sections 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.
§5-16-5. 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 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 its 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 medical and prescription drug claims cost
for employees and retirees directly covered by the 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 exclude the cost
projected by the PEIB 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 which would be stricken; and
underscoring indicates new language which would be added.