Enrolled Version - Final Version
Senate Bill 408 History
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Committee Substitute (2)
Committee Substitute (1)
SB408 SUB2 ENR
Senate Bill No. 408
(Senators Minard, Foster, Jenkins, Kessler (Acting President), Chafin and
Stollings, original sponsors)
[Passed March 12, 2011; in effect ninety days from passage.]
AN ACT to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §33-16G-1, §33-16G-2,
§33-16G-3, §33-16G-4, §33-16G-5, §33-16G-6, §33-16G-7, §33-
16G-8 and §33-16G-9, all relating generally to the
establishment of a West Virginia Health Benefit Exchange;
setting forth purpose; defining terms; providing for the
establishment of the West Virginia Health Benefit Exchange;
establishing the governing board of directors; providing for
membership on the board of directors; setting forth meeting
requirements of the board of directors; allowing the board of
directors to hire an executive director and appropriate staff;
exempting employees from classified service; providing for an annual report by the board of directors; setting forth the
functions of the board; outlining the board's duties and
authority; providing for the response of the board in the
event of reduction of federal funding or legislative or
judicial invalidation of federal act; authorizing emergency
and legislative rulemaking; establishing a special revenue
account; training; purchasing exemption; and authorizing
assessment of fees.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §33-16G-1, §33-16G-2,
§33-16G-3, §33-16G-4, §33-16G-5, §33-16G-6, §33-16G-7, §33-16G-8
and §33-16G-9, all to read as follows:
ARTICLE 16G. WEST VIRGINIA HEALTH BENEFIT EXCHANGE ACT.
The purpose of this article is to establish a West Virginia
Health Benefit Exchange to facilitate the purchase and sale of
qualified health plans in the individual market in this state and
a Small Business Health Options Program within the exchange to
assist qualified small employers in this state in facilitating the
enrollment of their employees in qualified health plans.
For purposes of this article:
(a) "Board" means the board established in section four of
(b) "Commissioner" means the West Virginia Insurance
(c) "Exchange" means the West Virginia Health Benefit Exchange
established pursuant to section three of this article.
(d) "Federal Act" means the Federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152), and any amendments thereto, or regulations or guidance
(e) "Health carrier" or "carrier" means an entity subject to
the insurance laws of this state, or subject to the jurisdiction of
the commissioner, that contracts or offers to contract to provide,
deliver, arrange for, pay for, or reimburse any of the costs of
health care services, including a sickness and accident insurance
company, a health maintenance organization, a nonprofit hospital
and health service corporation, or any other entity providing a
plan of health insurance, health benefits or health services.
(f) "Secretary" means the Secretary of the United States
Department of Health and Human Services.
(g) "SHOP Exchange" means the Small Business Health Options
Program established under this article.
(h) "Small employer" means an employer that employed an
average of not more than fifty employees during the preceding
§33-16G-3. Establishment of exchange.
(a) There is established within the Offices of the Insurance Commissioner an entity known as the West Virginia Health Benefit
Exchange. This is a governmental entity of the state.
(b) The exchange shall pursue available federal funding for
operation of the exchange and shall promulgate rules necessary to
obtain federal recognition of the exchange as a certified exchange
under the Federal Act.
(c) The exchange may accept gifts, grants and bequests,
contract with other persons, and enter into memoranda of
understanding with other governmental agencies to carry out any of
its functions, including agreements with other states to perform
joint administrative functions. The provisions of article three,
chapter five-a of this code relating to the Purchasing Division of
the Department of Administration do not apply to these contracts:
Provided, That these contracts shall be awarded on a competitive
basis. The exchange may not enter into contracts with any health
insurance carrier or an affiliate of a health insurance carrier.
(d) The exchange may enter into information-sharing agreements
with federal and state agencies and other state exchanges to carry
out its responsibilities under this article, provided such
agreements include adequate protections with respect to the
confidentiality of the information to be shared and comply with all
state and federal laws and regulations.
§33-16G-4. Duties of exchange; decrease in funding or invalidation
of the Federal Act.
(a) In carrying out the duties under this article, the
(1) Consult with stakeholders, including but not limited to
consumers, carriers, producers, providers and advocates for hard to
reach populations; and
(2) Meet the following financial integrity requirements:
(A) Keep an accurate accounting of all activities, receipts
and expenditures and annually submit to the secretary, the
Governor, the commissioner and the Legislature a report concerning
(B) Fully cooperate with any investigation conducted by the
secretary pursuant to the secretary's authority under the Federal
Act and allow the secretary, in coordination with the Inspector
General of the United States Department of Health and Humans
(i) Investigate the affairs of the exchange;
(ii) Examine the properties and records of the exchange; and
(iii) Require periodic reports in relation to the activities
undertaken by the exchange; and
(C) In carrying out its activities under this article, not use
any funds intended for the administrative and operational expenses
of the exchange for staff retreats, promotional giveaways,
excessive executive compensation or promotion of federal or state
legislative and regulatory modifications.
(b) (1) The implementation of the provisions of this article,
other than this subsection, section three of this article, and
section five of this article, shall be contingent on a
determination by the board that sufficient financial resources exist or will exist in the fund, which determination shall be based
on, at a minimum:
(A) Financial projections identifying that sufficient
resources exist or will exist in the fund to implement the
(B) A comparison of the projected resources available to
support the exchange and the projected costs of activities required
by this article.
(2) In the event any portion of the Federal Act or of any
regulation or other guidance issued thereunder is legislatively or
judicially invalidated and rendered of no effect in this state, the
board shall immediately issue a bulletin setting forth its legal
opinion as to the effect of such legislative or judicial action on
the legal status of the corresponding provisions of such act,
regulation or guidance as set forth in this article or in rules
promulgated hereunder; the board shall also issue recommendations
to the Legislature for amendments to this article necessitated by
such judicial or legislative action.
§33-16G-5. Establishment of governing board of the exchange;
(a) The exchange shall operate subject to the supervision and
control of a governing board. The powers conferred upon the board
by this article and the carrying out of its purposes and duties
shall be considered to be essential governmental functions and for
a public purpose. The Governor shall appoint a chairperson of the
board from the membership set forth in subsection (b) of this section, with the advice and consent of the Senate.
(b) The board shall be composed of the following members:
(1) Four voting ex officio members: The Commissioner; the
Commissioner of the West Virginia Bureau for Medical Services; the
Director of the West Virginia Children's Health Insurance Program;
and the Chair of the West Virginia Health Care Authority. Ex
officio members may designate a representative to serve in his or
(2) Four persons appointed by the Governor with advice and
consent of the Senate, each to represent the interests of one of
the following groups: Individual health care consumers; small
employers; organized labor; and insurance producers;
(3) One person to represent the interests of payors who is
selected by majority vote of an advisory group comprising
representatives of the ten carriers with the highest health
insurance premium volume in this state in the preceding calendar
year, as certified by the commissioner. Beginning in 2014, the
advisory group shall be comprised only of representatives of those
carriers that are offering qualified plans in the exchange
regardless of premium volume: Provided, That the member selected
pursuant to this paragraph may not be an employee of a carrier or
an affiliate of a carrier eligible to select such member; and
(4) One person to represent the interests of health care
providers selected by the majority vote of an advisory group
comprised of a representative of each of the following: West
Virginia Association of Free Clinics, West Virginia Hospital Association, West Virginia State Medical Association, West Virginia
Primary Care Association, West Virginia Nurses Association, West
Virginia Society of Osteopathic Medicine, West Virginia Academy of
Family Physicians, West Virginia Pharmacists Association, West
Virginia Dental Association, West Virginia Behavioral Health Care
Providers, West Virginia Chiropractic Society, West Virginia
Optometric Association, West Virginia Podiatric Medical
Association, West Virginia Physical Therapists Association, and a
full-time health officer of a county or regional health department
selected by all full-time health officers of all county or regional
(5) Selection of board members pursuant to paragraphs (3) and
(4) of this subdivision shall be conducted in a manner and at such
times designated by the chair of the board.
(6) Each member appointed pursuant to paragraph (2) of this
section or selected pursuant to paragraph (3) or (4) of this
subsection shall serve a term of four years and is eligible to be
reappointed, except that the term of each of the four persons
initially appointed pursuant to paragraph (2) of this section to
represent the groups listed therein shall be as follows: Individual
consumer, one year; small employers, two years; labor, three years;
and producers, four years. Any appointed or selected member whose
term has expired may continue to serve until either he or she has
been reappointed or his or her successor has been duly appointed or
(c) Board members may be removed by the Governor for cause.
(d) Members of the board are not entitled to compensation for
services performed as members but are entitled to reimbursement for
all reasonable and necessary expenses actually incurred in the
performance of their duties.
(e) Seven members of the board constitute a quorum, and the
affirmative vote of six members is necessary for any action taken
by vote of the board. No vacancy in the membership of the board
impairs the rights of a quorum by such vote to exercise all the
rights and perform all the duties of the board.
(f) The board may employ an executive director who has overall
management responsibility for the exchange and such employees as
may be necessary. The executive director and employees of the
exchange shall receive a salary as provided by the board. The
executive director and all employees of the board are exempt from
the classified service and not subject to the procedures and
protections provided by article two, chapter six-c of this code and
article six, chapter twenty-nine of this code;
(g) The board may establish ad hoc or standing advisory
committees of consumers and other stakeholder groups or interested
parties to study particular policy issues and to advise the board.
(h) The board shall make an annual report to the Governor and
also file it with the Joint Committee on Government and Finance.
The report shall summarize the activities of the exchange in the
preceding calendar year.
(i) Neither the board nor its employees are liable for any
obligations of the exchange. No member of the board or employee of the exchange is liable and no cause of action of any nature may
arise against them for any act or omission related to the
performance of their powers and duties under this article unless
the act or omission constitutes willful or wanton misconduct. The
board may provide in its bylaws or rules for indemnification of,
and legal representation for, its members and employees.
(j) Members of the board shall receive governmental ethics
training within the first six months of being appointed.
Additional ethics training is required for board members at least
every two years thereafter.
§33-16G-6. Funding; publication of costs.
(a) On and after July 1, 2011, the board is authorized to
assess fees on health carriers selling qualified dental plans or
health benefit plans in this state, including health benefit plans
sold outside the exchange, and shall establish the amount of such
fees and the manner of the remittance and collection of such fees
in legislative rules. Fees shall be based on premium volume of the
qualified dental plans or health benefit plans sold in this state
and shall be for the purpose of operation of the exchange.
(b) The exchange shall publish the average costs of licensing,
regulatory fees and any other payments required by the exchange,
and the administrative costs of the exchange, on an Internet
website to educate consumers on such costs. This information shall
include information on moneys lost to waste, fraud and abuse.
The board may promulgate emergency rules and propose legislative rules for adoption by the Legislature pursuant to the
provisions of article three, chapter twenty-nine-a of this code to
implement the provisions of this article. Emergency or legislative
rules promulgated under this section may not conflict with or
prevent the application of the federal act or regulations
promulgated by the secretary under such act.
§33-16G-8. Relation to other laws.
Nothing in this article, and no action taken by the exchange
pursuant to this article, preempts or supersedes the authority of
the commissioner to regulate the business of insurance within this
state and, except as expressly provided to the contrary in this
article, all health carriers offering qualified health plans in
this state shall comply fully with all applicable health insurance
laws of this state and orders issued by the commissioner.
§33-16G-9. Special revenue account created.
(a) There is hereby created a special revenue account in the
State Treasury, designated the "West Virginia Health Benefits
Exchange Fund", which shall be an interest-bearing account and may
be invested in the manner permitted by article six, chapter twelve
of this code, with the interest income a proper credit to the fund,
unless otherwise designated in law. The fund shall be administered
by the board and used to pay all proper costs incurred in
implementing the provisions of this article. Moneys deposited into
this account are available for expenditure as the board may direct
in accordance with the provisions of this article. Expenditures
shall be for the purposes set forth in this article, are authorized from collections and do not revert to the General Fund.
(b) The following shall be paid into this account:
(1) All funds from the federal government received and
dedicated to or otherwise able to be used for the purposes of this
(2) All other payments, gifts, grants, bequests or income from
(3) Fees on health carriers established by the board; and
(4) Appropriations from the Legislature.