2012 -- H 7489

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LC01241

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND

HOSPITALS

     Introduced By: Representatives Hull, McLaughlin, Slater, Dickinson, and Diaz

     Date Introduced: February 09, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 40.1 of the General Laws entitled "BEHAVIORAL HEALTHCARE,

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DEVELOPMENTAL DISABILITIES AND HOSPITALS" is hereby amended by adding thereto

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the following chapter:

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     CHAPTER 24.6

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SELF INSURANCE OF DEVELOPMENTAL DISABILITY AGENCIES

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     40.1-24.6-1. Definitions. – As used in this chapter: “developmental disability agency”

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means any organization that has been established and licensed by the department of behavioral

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healthcare, developmental disabilities and hospitals for the purpose of providing either

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employment vocational supports, residential and/or day support services for adults with

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developmental disabilities in Rhode Island.

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     40.1-24.6-2. Purpose. – The purpose of this chapter is to authorize operators of

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developmental disability agencies acting as a group, to self-insure healthcare costs for employees,

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retirees and other beneficiaries and allow a third-party administrator to administer said program.

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     40.1-24.6-3. Authorization to self-insure; Establishment of fund. – (a) Operators of

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developmental disability agencies are hereby authorized and empowered to self-insure healthcare

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provided to their employees, and their dependents and their retirees and their dependents and to

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create and establish a fund for this purpose.

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     (b) The fund shall have an oversight board consisting of a designated representative from

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each participating developmental disability agency. The oversight board will be responsible for

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drafting and adopting rules and regulations for the management and operation of the fund,

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consistent with actuarial sound principal and in accordance with the requirements established in

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section 40.1-24.6-9.

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     40.1-24.6-4. Obligations of participating entities. – Operators of developmental

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disability agencies intending to self-insure and participate in the self-insurance fund shall enter

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into a contractual agreement with one another, which shall, among other provisions, describe and

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define each operator’s obligations relative to funding, length of commitment, and participation in

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the program. Such an agreement shall also define and delineate the terms upon which an operator

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may disaffiliate from the fund and agreement.

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     40.1-24.6-5. Amount of fund. – Self-insurance funds may be established to insure the

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health costs of the employees, their covered dependents, and the retirees and their covered

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dependents, not otherwise insured, to the extent determined by the operators of developmental

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disability agencies, subject to approval by the oversight board as established in subsection 40.1-

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24.6-3(b).

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     40.1-24.6-6. Payment to and from fund. – (a) The self-insurance funds shall be used by

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the operators of developmental disability agencies as non-lapsing, revolving funds for carrying

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out the provisions of this chapter.

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     (b) The financial notes and obligations issued by the fund pursuant to the provisions of

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this chapter will not be deemed to constitute a debt or liability of the state of Rhode Island or

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political subdivision of the state but will be payable solely from the revenues or assets of the

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fund.

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     40.1-24.6-7. Investment of fund. – Moneys in the funds currently not needed to meet

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expenses and obligations of self insurance shall be deposited in a depository bank or may be

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invested in savings accounts or certificates of commercials or savings banks or trust companies,

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or in obligations of the United States or its agencies, or in any other short-term investments, as

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would be made by prudent men or women of discretion and intelligence. Investment earnings of

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the funds are deemed receipts and become assets of the funds subject to the non-lapsing,

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revolving provisions of subsection 40.1-24.6-6(a).

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     40.1-24.6-8. Expenses of operations. – The operators of developmental disability

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agencies may, in their discretion, and with approval of the oversight board, expend out of the

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fund, moneys that may be necessary for any expenses of self-insurance including administrative,

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legal, or other service expenses.

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     40.1-24.6-9. Stop-loss coverage. – Any operator of a developmental disability agency

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authorized to self-insure healthcare costs for employees, retirees, and other beneficiaries under

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this chapter shall participate in a group stop-loss policy provided by a licensed insurance

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company. This group stop-loss policy coverage shall include a specific deductible stop-loss

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policy and aggregate stop-loss coverage, both of which will apply to the pool of participating

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developmental disability agencies. Under the specific deductible stop-loss coverage, the licensed

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insurance carrier will assume liability beyond the specific deductible amount up to the limits of

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the policy and for the aggregate stop-loss coverage, the licensed insurance carrier will assume all

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of the claims threshold beyond one hundred-twenty five percent (125%) of the expected claims

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for the policy year, up to the limits of the policy. In addition to stop-loss policy coverage, the

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oversight board for the group of participating developmental disability agencies shall provide for

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reserving of an appropriate amount of funds to cover the estimated cost of claims incurred, but

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unpaid, during the term of the policy or contract which shall be added to the expected claim level.

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These funds shall be in addition to funds reserved to cover the claims paid during the term of the

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policy or contract for payment of healthcare costs for employees, retirees, and other beneficiaries.

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Contracts or other documents evidencing stop-loss policy coverage in the amount consistent with

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this section shall be delivered to the director of the Rhode Island department of administration for

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his or her review and approval. The group of developmental disability agencies shall not be

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authorized to self-insure healthcare costs for employees, retirees, and other beneficiaries until the

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director has reviewed and approved the group stop-loss policy coverage as provided in this

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section.

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     40.1-24.6-10. Oversight and reporting. – (a) The group of developmental disability

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agencies nor the oversight board shall not be considered an insurance company and shall not be

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subject to the provisions of the general or public laws of the state of Rhode Island or regulations

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regarding insurance companies and, therefore, shall in no way be regulated by the department of

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business regulation or the office of the health insurance commissioner.

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     (b) The oversight board shall issue an annual financial report that will include, but not be

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limited to, a list of receipts, expenditures, and balances and the overall financial solvency of the

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fund to the executive office of health and human services, the department of administration, and

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the chairman of the joint committee on healthcare oversight.

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     40.1-24.6-11. Severability. – The provisions of this chapter are severable, and if any of

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its provisions are held unconstitutional by any court of competent jurisdiction, the decision of the

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court shall not affect or impair any of the remaining provisions.

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SECTION 2. This act shall take effect upon passage.

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LC01241

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND

HOSPITALS

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     This act would authorize operators of developmental disability agencies, acting as a

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group, to self-insure healthcare costs for employees, retirees and other beneficiaries, and allow a

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third party administrator to administer said program.

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     This act would take effect upon passage

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LC01241

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