H. B. 2956
(By Delegate Rodighiero)
[Introduced January 13, 2010; referred to the
Committee on Banking and Insurance then Finance.]
A BILL to amend and reenact §5-16-5 of the Code of West Virginia,
1931, as amended, relating to the Finance Board pursuant to
the West Virginia Public Employees Insurance Act not to
increase the types and levels of cost to applicable current
and retired employees during the 2010 and 2011 plan years.
Be it enacted by the Legislature of West Virginia:
That §5-16-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted 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 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 the
fifteenth day of October of the preceding fiscal year.
Provided,
That, However, 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 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 However, 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 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 However, 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 Also, 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.
(j) Notwithstanding any other provision to the contrary within
this article, the Finance Board may not increase the types and
levels of cost to current and retired employees during the 2010 and 2011 plan years.
NOTE: This bill shall prohibit the Finance Board pursuant to
the West Virginia Public Employees Insurance Act to increase the
types and levels of cost to applicable current and retired
employees during the 2010 and 2011 plan years.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.