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18A.2254 Self-insured plan for public employees -- Contract for third-party administrator -- Formulary change -- Health reimbursement account -- Public employee health insurance trust fund -- Annual a

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Page 1 of 4 18A.2254 Self-insured plan for public employees -- Contract for third-party administrator -- Formulary change -- Health reimbursement account -- Public <br>employee health insurance trust fund -- Annual audit -- Quarterly status <br>reports. (1) Based on the recommendation of the secretary of the Personnel Cabinet, the secretary of the Finance and Administration Cabinet, in lieu of contracting with one <br>(1) or more insurers licensed to do business in this state, shall procure, in <br>compliance with KRS 45A.080, 45A.085, and 45A.090, and reviewed by the <br>Government Contract Review Committee pursuant to KRS 45A.705, a contract <br>with one (1) or more third-party administrators licensed to do business in the <br>Commonwealth pursuant to KRS 304.9-052 to administer a self-insured plan <br>offered to the Public Employee Health Insurance Program for public employees. <br>The requirements for the self-insured plan shall be as follows: <br>(a) 1. The secretary of the Personnel Cabinet shall incorporate by reference in <br>an administrative regulation, pursuant to KRS 13A.2251, the plan year <br>handbook distributed by the Department for Employee Insurance in the <br>Personnel Cabinet to public employees covered under the self-insured <br>plan. The plan year handbook shall contain, at a minimum, the <br>premiums, employee contributions, employer contributions, and a <br>summary of benefits, copays, coinsurance, and deductibles for each plan <br>provided to public employees covered under the self-insured plan; 2. Prior to filing an administrative regulation for the self-insured plan with <br>the Legislative Research Commission, the secretary of the Personnel <br>Cabinet shall submit the administrative regulation to the secretary of the <br>Cabinet for Health and Family Services for review. Notwithstanding any <br>other provision of KRS Chapter 18A to the contrary, the administrative <br>regulation shall not be subject to review by the Personnel Board prior to <br>filing the administrative regulation with the Legislative Research <br>Commission; and 3. The secretary of the Personnel Cabinet shall file the administrative <br>regulation for the self-insured plan with the Legislative Research <br>Commission on or before September 15 of the year before each new <br>plan year begins; (b) The self-insured plan offered by the program shall cover hospice care at least equal to the Medicare benefit; (c) The Personnel Cabinet shall provide written notice of any formulary change to employees covered under the self-insured plan who are directly impacted by <br>the formulary change and to the Kentucky Group Health Insurance Board <br>fifteen (15) days before implementation of any formulary change. If, after <br>consulting with his or her physician, the employee still disagrees with the <br>formulary change, the employee shall have the right to appeal the change. The <br>employee shall have sixty (60) days from the date of the notice of the <br>formulary change to file an appeal with the Personnel Cabinet. The cabinet <br>shall render a decision within thirty (30) days from the receipt of the request Page 2 of 4 for an appeal. After a final decision is rendered by the Personnel Cabinet, the <br>employee shall have a right to file an appeal pursuant to the utilization review <br>statutes in KRS 304.17A-600 to 304.17A-633. During the appeal process, the <br>employee shall have the right to continue to take any drug prescribed by his or <br>her physician that is the subject of the formulary changes; (d) The Personnel Cabinet shall develop the necessary capabilities to ensure that an independent review of each formulary change is conducted and includes <br>but is not limited to an evaluation of the fiscal impact and therapeutic benefit <br>of the formulary change. The independent review shall be conducted by <br>knowledgeable medical professionals and the results of the independent <br>review shall be posted on the Web sites of the Personnel Cabinet and the <br>Cabinet for Health and Family Services and made available to the public upon <br>request within thirty (30) days of the notice from the Personnel Cabinet <br>required in paragraph (c) of this subsection; (e) If the self-insured plan restricts pharmacy benefits to a drug formulary, the plan shall comply with and have an exceptions policy in accordance with KRS <br>304.17A-535; (f) Premiums for all plans offered by the Public Employee Health Insurance Program to employees shall be based on the experience of the entire group; (g) The plan year for the Public Employee Health Insurance Program, whether for fully insured or self-insured benefits, shall be on a calendar year basis. (2) In addition to any fully insured health benefit plans or self-insured plans, beginning January 1, 2007, the Personnel Cabinet shall offer a health reimbursement account <br>for public employees insured under the Public Employee Health Insurance Program. <br>(a) If a public employee waives coverage provided by his or her employer under the Public Employee Health Insurance Program, the employer shall forward a <br>monthly amount to be determined by the secretary of the Personnel Cabinet, <br>but not less than one hundred seventy-five dollars (&#36;175), for that employee as <br>an employer contribution to the health reimbursement account. (b) The administrative fees associated with the health reimbursement account shall be an authorized expense to be charged to the public employee health <br>insurance trust fund. (3) (a) The public employee health insurance trust fund is established in the Personnel Cabinet. The purpose of the public employee health insurance trust <br>fund is to provide funds to pay medical claims and other costs associated with <br>the administration of the Public Employee Health Insurance Program self-<br>insured plan under a competitively bid contract as provided by KRS Chapter <br>45A and reviewed by the Government Contract Review Committee pursuant <br>to KRS 45A.705. Unless authorized by the General Assembly, the trust fund <br>shall not utilize funds for any other purpose and the trust fund receipts from <br>prior plan years shall not be used to pay claims and expenses for current or <br>subsequent plan years, except as provided by paragraph (b) of this subsection. Page 3 of 4 (b) In the event of a projected deficit in the trust fund balance of a prior plan year, the secretary of the Finance and Administration Cabinet may declare an <br>emergency and transfer up to twenty-five percent (25%) of another prior plan <br>year's balance to that plan year, provided the Governor, all members of the <br>General Assembly, and Legislative Research Commission are notified at least <br>thirty (30) days prior to the transfer. The Legislative Research Commission <br>shall refer the notice to appropriate committees of jurisdiction for their review. (c) The following moneys shall be directly deposited into the trust fund: 1. Employer and employee premiums collected under the self-insured plan; 2. Interest and investment returns earned by the self-insured plan; 3. Rebates and refunds attributed to the self-insured plan; and 4. All other receipts attributed to the self-insured plan. (d) Any balance remaining in the public employee health insurance trust fund at the end of a fiscal year shall not lapse. Any balance remaining at the end of a <br>fiscal year shall be carried forward to the next fiscal year and be used solely <br>for the purpose established in paragraphs (a) and (b) of this subsection. The <br>balance of funds in the public employee health insurance trust fund shall be <br>invested by the Office of Financial Management consistent with the <br>provisions of KRS Chapter 42, and interest income shall be credited to the <br>trust fund. Any balance for a specific plan year and any subsequent interest <br>income for that specific plan year shall be accounted for separately. (e) The Auditor of Public Accounts shall be responsible for a financial audit of the books and records of the trust fund. The audit shall be conducted in <br>accordance with generally accepted accounting principles and shall be <br>completed within ninety (90) days of the close of the fiscal year. All audit <br>reports shall be filed with the Governor, the President of the Senate, the <br>Speaker of the House of Representatives, and the secretary of the Personnel <br>Cabinet. (f) The secretary of the Personnel Cabinet shall file a quarterly report on the status of the trust fund with the Governor, the Interim Joint Committee on <br>Appropriations and Revenue, the Kentucky Group Health Insurance Board, <br>and the Advisory Committee of State Health Insurance Subscribers. The first <br>status report shall be submitted no later than July 30, 2006, and subsequent <br>reports shall be submitted no later than sixty (60) days following the end of <br>each calendar quarter. The report shall include the following: <br>1. The current balance of the trust fund and the amount of the balance <br>associated with each plan year; 2. A detailed description of all income to the trust fund since the last <br>report; 3. A detailed description of any receipts due to the trust fund; 4. A total amount of payments made for medical and pharmacy claims <br>from the trust fund by plan year; Page 4 of 4 5. A detailed description of all payments made to the third-party <br>administrator of the self-insured plan by the trust fund; 6. Current enrollment data, including monthly enrollment since the last <br>report, of the Public Employee Health Insurance Program self-insured <br>plan; 7. Any other information the secretary may include; 8. Any other information requested by the Interim Joint Committee on <br>Appropriations and Revenue concerning the operation of the Public <br>Employee Health Insurance Program self-funded plan or the trust fund; <br>and 9. In addition to the information required under subparagraphs 1. to 8. of <br>this paragraph, the quarterly report filed in July and January shall also <br>include the following: <br>a. A projection of the medical claims incurred but not yet reported <br>that are considered liabilities to the trust fund; b. A statement of any other trust fund liabilities; c. A detailed calculation outlining proposed premium rates for the <br>next plan year, including base claims, trend assumptions, <br>administrative fees, and any proposed plan or benefit changes; d. A detailed description of the current in-state and out-of-state <br>networks provided under the plan, any changes to the networks <br>since the last report, and any proposed changes to the in-state or <br>out-of-state networks during the next six (6) months; and e. Specific data regarding the third-party administrator's performance <br>under the contract. The data shall include the following: i. Any results or outcomes of disease management and wellness programs; ii. Results of case management audits and educational and communication efforts; and iii. Comparison of actual measurable results to contract performance guarantees. Effective: July 15, 2008 <br>History: Amended 2008 Ky. Acts ch. 10, sec. 1, effective July 15, 2008. -- Created 2006 Ky. Acts ch. 252, Pt. XXIX, sec. 1, effective April 25, 2006. Legislative Research Commission Note (4/25/2006). 2006 Ky. Acts ch. 252, Pt. XXIX, sec. 1, which created this section, was partially vetoed by the Governor on April 24, <br>2006, in Veto #29 and Veto #30.