2014 Kentucky Revised Statutes CHAPTER 18A - STATE PERSONNEL 18A.2254 Self-insured plan for public employees -- Contract for third-party administrator -- Formulary change -- Health reimbursement account or health flexible spending account -- Public employee health insurance trust fund -- Annual audit -- Quarterly status reports.
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18A.2254 Self-insured plan for public employees -- Contract for third-party
administrator -- Formulary change -- Health reimbursement account or
health flexible spending account -- Public employee health insurance
trust fund -- Annual audit -- Quarterly status 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 (1) or more insurers licensed to do business in this state, shall procure, in
compliance with KRS 45A.080, 45A.085, and 45A.090, and reviewed by the
Government Contract Review Committee pursuant to KRS 45A.705, a contract
with one (1) or more third-party administrators licensed to do business in the
Commonwealth pursuant to KRS 304.9-052 to administer a self-insured plan
offered to the Public Employee Health Insurance Program for public
employees. The requirements for the self-insured plan shall be as follows:
(a) 1.
The secretary of the Personnel Cabinet shall incorporate by
reference in an administrative regulation, pursuant to KRS
13A.2251, the plan year handbook distributed by the Department of
Employee Insurance in the Personnel Cabinet to public employees
covered under the self-insured plan. The plan year handbook shall
contain, at a minimum, the premiums, employee contributions,
employer contributions, and a summary of benefits, copays,
coinsurance, and deductibles for each plan provided to public
employees covered under the self-insured plan;
2.
Prior to filing an administrative regulation for the self-insured plan
with the Legislative Research Commission, the secretary of the
Personnel Cabinet shall submit the administrative regulation to the
secretary of the Cabinet for Health and Family Services for review.
Notwithstanding any other provision of KRS Chapter 18A to the
contrary, the administrative regulation shall not be subject to review
by the Personnel Board prior to filing the administrative regulation
with the Legislative Research Commission; and
3.
The secretary of the Personnel Cabinet shall file the administrative
regulation for the self-insured plan with the Legislative Research
Commission on or before September 15 of the year before each
new 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 the formulary change and to the Kentucky Group Health
Insurance Board fifteen (15) days before implementation of any formulary
change. If, after consulting with his or her physician, the employee still
disagrees with the formulary change, the employee shall have the right to
appeal the change. The employee shall have sixty (60) days from the
date of the notice of the formulary change to file an appeal with the
Personnel Cabinet. The cabinet shall render a decision within thirty (30)
days from the receipt of the request for an appeal. After a final decision is
rendered by the Personnel Cabinet, the employee shall have a right to file
(d)
(e)
(f)
(g)
(2)
(a)
(b)
(c)
(3)
(a)
an appeal pursuant to the utilization review statutes in KRS 304.17A-600
to 304.17A-633. During the appeal process, the employee shall have the
right to continue to take any drug prescribed by his or her physician that is
the subject of the formulary changes;
The Personnel Cabinet shall develop the necessary capabilities to ensure
that an independent review of each formulary change is conducted and
includes but is not limited to an evaluation of the fiscal impact and
therapeutic benefit of the formulary change. The independent review shall
be conducted by knowledgeable medical professionals and the results of
the independent review shall be posted on the Web sites of the Personnel
Cabinet and the Cabinet for Health and Family Services and made
available to the public upon request within thirty (30) days of the notice
from the Personnel Cabinet required in paragraph (c) of this subsection;
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 304.17A-535;
Premiums for all plans offered by the Public Employee Health Insurance
Program to employees shall be based on the experience of the entire
group; and
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.
In addition to any fully insured health benefit plans or self-insured plans,
beginning January 1, 2015, the Personnel Cabinet shall offer a health
reimbursement account or health flexible spending account for public
employees insured under the Public Employee Health Insurance
Program.
If a public employee waives coverage provided by his or her employer
under the Public Employee Health Insurance Program, the employer shall
forward a monthly amount to be determined by the secretary of the
Personnel Cabinet for that employee as an employer contribution to the
health reimbursement account or health flexible spending account, but not
less than one hundred seventy-five dollars ($175) per month, subject to
any conditions or limitations imposed by the secretary to comply with
applicable federal law.
The administrative fees associated with the health reimbursement
account or health flexible spending account shall be an authorized
expense to be charged to the public employee health insurance trust
fund.
The public employee health insurance trust fund is established in the
Personnel Cabinet. The purpose of the public employee health insurance
trust fund is to provide funds to pay medical claims and other costs
associated with the administration of the Public Employee Health
Insurance Program self-insured plan under a competitively bid contract as
provided by KRS Chapter 45A and reviewed by the Government Contract
Review Committee pursuant to KRS 45A.705. Unless authorized by the
General Assembly, the trust fund shall not utilize funds for any other
(b)
(c)
(d)
(e)
(f)
purpose and the trust fund receipts from prior plan years shall not be used
to pay claims and expenses for current or subsequent plan years, except
as provided by paragraph (b) of this subsection.
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 emergency and transfer up to twenty-five percent (25%) of
another prior plan year's balance to that plan year, provided the
Governor, all members of the General Assembly, and Legislative
Research Commission are notified at least thirty (30) days prior to the
transfer. The Legislative Research Commission shall refer the notice to
appropriate committees of jurisdiction for their review.
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.
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 fiscal year shall be carried forward to the next fiscal year and be
used solely for the purpose established in paragraphs (a) and (b) of this
subsection. The balance of funds in the public employee health insurance
trust fund shall be invested by the Office of Financial Management
consistent with the provisions of KRS Chapter 42, and interest income
shall be credited to the trust fund. Any balance for a specific plan year
and any subsequent interest income for that specific plan year shall be
accounted for separately.
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
accordance with generally accepted accounting principles and shall be
completed within ninety (90) days of the close of the fiscal year. All audit
reports shall be filed with the Governor, the President of the Senate, the
Speaker of the House of Representatives, and the secretary of the
Personnel Cabinet.
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
Appropriations and Revenue, the Kentucky Group Health Insurance
Board, and the Advisory Committee of State Health Insurance
Subscribers. The first status report shall be submitted no later than July
30, 2006, and subsequent reports shall be submitted no later than sixty
(60) days following the end of each calendar quarter. The report shall
include the following:
1.
The current balance of the trust fund and the amount of the balance
associated with each plan year;
2.
A detailed description of all income to the trust fund since the last
report;
3.
4.
5.
6.
7.
8.
9.
A detailed description of any receipts due to the trust fund;
A total amount of payments made for medical and pharmacy claims
from the trust fund by plan year;
A detailed description of all payments made to the third-party
administrator of the self-insured plan by the trust fund;
Current enrollment data, including monthly enrollment since the last
report, of the Public Employee Health Insurance Program
self-insured plan;
Any other information the secretary may include;
Any other information requested by the Interim Joint Committee on
Appropriations and Revenue concerning the operation of the Public
Employee Health Insurance Program self-funded plan or the trust
fund; and
In addition to the information required under subparagraphs 1. to 8.
of this paragraph, the quarterly report filed in July and January shall
also include the following:
a.
A projection of the medical claims incurred but not yet reported
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
next plan year, including base claims, trend assumptions,
administrative fees, and any proposed plan or benefit changes;
d.
A detailed description of the current in-state and out-of-state
networks provided under the plan, any changes to the
networks since the last report, and any proposed changes to
the in-state or out-of-state networks during the next six (6)
months; and
e.
Specific data regarding the third-party administrator's
performance 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, 2014
History: Amended 2014 Ky. Acts ch. 82, sec. 1, effective July 15, 2014. -Amended 2012 Ky. Acts ch. 10, sec. 3, effective July 12, 2012. -- 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 (7/15/2014). In codification, the Reviser
of Statutes has altered the numbering within subsection (2) of this statute from
the way it appeared in 2014 Ky. Acts ch. 82, sec. 1, under the authority of KRS
7.136(1)(c).
2014-2016 Budget Reference. See State/Executive Branch Budget, 2014 Ky. Acts
ch. 117, Pt. IV, 5 at 744.
2014-2016 Budget Reference. See State/Executive Branch Budget, 2014 Ky. Acts
ch. 117, Pt. IV, 9 at 744.
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, 2006, in Veto #29 and Veto #30.
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