H. B. 2927
(By Delegates Sobonya, Miller, C., Azinger,
Sumner, Rowan, Schoen, McGeehan, Ross, Hunt,
Eldridge and Barker)
[Introduced March 3, 2009; referred to the
Committee on the Judiciary then Finance.]
A BILL to amend and reenact §5-16-4 and §5-16-5 of the Code of West
Virginia, 1931, as amended, all relating to requiring the
Legislature to approve changes in costs imposed by the Public
Employees Insurance Agency Finance Board instead of being
approved by promulgation of new rules proposed by the board's
director.
Be it enacted by the Legislature of West Virginia:
That §5-16-4 and §5-16-5 of the Code of West Virginia, 1931,
as amended, be amended and reenacted, all to read as follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-4. Public Employees Insurance Agency Finance Board
continued; qualifications, terms and removal of
members; quorum; compensation and expenses;
termination date.
(a) The Public Employees Insurance Agency Finance Board is
continued and consists of the Secretary of the Department of
Administration or his or her designee and eight members appointed
by the Governor, with the advice and consent of the Senate, for terms of four years and until the appointment of their successors.
Members may be reappointed for successive terms. No more than five
members, including the Secretary of the Department of
Administration, may be of the same political party.
(b) Of the eight members appointed by the Governor, one member
shall represent the interests of education employees, one shall
represent the interests of public employees, one shall represent
the interests of retired employees, one shall represent the
interests of organized labor and four shall be selected from the
public at large. The Governor shall appoint the member
representing the interests of education employees from a list of
three names submitted by the largest organization of education
employees in this state. The Governor shall appoint the member
representing the interests of organized labor from a list of three
names submitted by the state's largest organization representing
labor affiliates. The four members appointed from the public shall
each have experience in the financing, development or management of
employee benefit programs. All appointments shall be selected to
represent the different geographical areas within the state and all
members shall be residents of West Virginia. No member may be
removed from office by the Governor except for official misconduct,
incompetence, neglect of duty, neglect of fiduciary duty or other
specific responsibility imposed by this article or gross
immorality.
(c) The Secretary of the Department of Administration shall
serve as chair of the finance board, which shall meet at times and places specified by the call of the chair or upon the written
request to the chair of at least two members. The Director of the
Public Employees Insurance Agency shall serve as staff to the
board. Notice of each meeting shall be given in writing to each
member by the director at least three days in advance of the
meeting. Five members constitute a quorum. The board shall pay
each member the same compensation and expense reimbursement that is
paid to members of the Legislature for their interim duties, as
recommended by the Citizens Legislative Compensation Commission and
authorized by law, for each day or portion of a day engaged in the
discharge of official duties.
(d) Upon termination of the board and notwithstanding any
provisions in this article to the contrary, the director is
authorized to assess monthly employee premium contributions and to
change the types and levels of costs to employees only in
accordance with this subsection. Any assessments or changes in
costs imposed pursuant to this subsection shall
be implemented by
legislative rule proposed recommended by the director
for
promulgation pursuant to the provisions of article three, chapter
twenty-nine-a of this code to the Legislature prior to January 1 of
each year in the form of an official finding and then shall be
reviewed and either approved, amended or disapproved by the
Legislature. Any employee assessments or costs previously
authorized by the finance board
prior to adoption of this statute
shall then remain in effect until amended by
rule of the Director
promulgated Act of the Legislature pursuant to this subsection.
§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 the 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
October 15, 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
January 1, preceding the fiscal year. The financial plan for a
fiscal year becomes effective and shall be implemented
by the
director only after review, any needed amendment, and approval by
the Legislature, on July 1 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) By January 1, of each year 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 in
this article. Factors that the board shall consider include, but
are not 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 July 1, 2002, and in
each plan year thereafter, until and including the plan year which
commences on July 1, 2006, 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, including the amounts of any
subsidization of retired employee benefits. Effective in the plan
year commencing on July 1, 2006, and in each plan year thereafter,
the aggregate premium cost-sharing percentages between employers
and employees, including the amounts of any subsidization of
retired employee benefits, shall be at a level of eighty percent
for the employer and twenty percent for employees, except for the
employers provided in subsection (d), section eighteen of this
article whose 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 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
: Provided further, That the aggregate premium
cost-sharing percentages between employers and employees, including
the amounts of any subsidization of retired employee benefits, may
be offset, in part, by a legislative appropriation for that
purpose.
(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 finance 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.
NOTE: The purpose of this bill is to require the Legislature
to approve changes in costs imposed by the Public Employees
Insurance Agency Finance board instead of being approved by
promulgation of new rules proposed by the board's director.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.