2017 -- H 5529

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LC000397

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO BEHAVIORAL HEALTHCARE, DEVELOPMENTAL DISABILITIES AND

HOSPITALS -- SELF-INSURANCE OF DEVELOPMENTAL DISABILITY AGENCIES

     Introduced By: Representatives Hull, and Ruggiero

     Date Introduced: February 16, 2017

     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 actuarially sound principles 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 fund 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.

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     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 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 their 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

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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 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 DEVELOPMENTAL DISABILITY AGENCIES

***

     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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LC000397

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