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 - Kentucky Statutes

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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
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 for 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 Page 2 of 4 for an appeal. After a final decision is rendered by the Personnel Cabinet, the
employee shall have a right to file 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; (d) 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; (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
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
for public employees insured under the Public Employee Health Insurance Program.
(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
monthly amount to be determined by the secretary of the Personnel Cabinet,
but not less than one hundred seventy-five dollars ($175), for that employee as
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
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
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 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. 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
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. (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
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. (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
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. (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
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. A detailed description of any receipts due to the trust fund; 4. A total amount of payments made for medical and pharmacy claims
from the trust fund by plan year; Page 4 of 4 5. A detailed description of all payments made to the third-party
administrator of the self-insured plan by the trust fund; 6. Current enrollment data, including monthly enrollment since the last
report, of the Public Employee Health Insurance Program self-insured
plan; 7. Any other information the secretary may include; 8. 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 9. 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, 2008
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,
2006, in Veto #29 and Veto #30.