2014 -- H 7342

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LC003413

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND

HOSPITALS

     Introduced By: Representatives Hull, Bennett, McLaughlin, Morgan, and Johnston

     Date Introduced: February 06, 2014

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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

DEVELOPMENTAL DISABILITIES AND HOSPITALS" is hereby amended by adding thereto

the following chapter:

CHAPTER 24.6

SELF INSURANCE OF DEVELOPMENTAL DISABILITY AGENCIES

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

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

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

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

developmental disabilities in Rhode Island.

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

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

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

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

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

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

create and establish a fund for this purpose.

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

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

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

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

40.1-24.6-9.

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

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

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

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

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

may disaffiliate from the fund and agreement.

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

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

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

disability agencies, subject to approval by the oversight board as established in § 40.1-24.6-3(b).

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

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

out the provisions of this chapter.

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

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

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

fund.

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

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

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

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

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

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

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

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

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

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

legal, or other service expenses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

section.

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

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

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

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

business regulation or the office of the health insurance commissioner.

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

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

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

the chairman of the joint committee on healthcare oversight.

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

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

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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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

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

third party administrator to administer said program.

     This act would take effect upon passage

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