2015 -- H 5838

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LC002040

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND

HOSPITALS -- SELF-INSURANCE OF DEVELOPMENT DISABILITY AGENCIES

     Introduced By: Representatives Hull, Ruggiero, Bennett, Corvese, and Slater

     Date Introduced: March 11, 2015

     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 support, 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 health care costs for

employees, retirees and other beneficiaries and to 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 health care

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 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 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. -- Funds that are 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 commercial 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 operation. -- The operators of developmental disability

agencies may, in their discretion, and with approval of the oversight board, spend from the funds

that which 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 health care 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

a reserve 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 health care 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 health care 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 and 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 health care oversight.

     40.1-24.6-11. Severability. -- If any provision of this chapter or any rule or regulation

created under this chapter, or the application of any provision of this chapter to any person or

circumstance shall be held invalid by any court of competent jurisdiction, the remainder of the

chapter, rule or regulation and the application of such provision to other persons or circumstances

shall not be affected thereby. The invalidity of any section or sections or parts of any section of

this chapter shall not affect the validity of the remainder of this chapter and to this end the

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provisions of the chapter are declared to be severable.

     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 -- SELF-INSURANCE OF DEVELOPMENT DISABILITY AGENCIES

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

group, to self-insure health care costs for employees, retirees and other beneficiaries and to allow

a third-party administrator to administer said program.

     This act would take effect upon passage.

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