November 10, 2005, Introduced by Senator JOHNSON and referred to the Committee on Education.
A bill to provide for catastrophic stop loss benefit plans; to
provide for a catastrophic stop loss fund; to create a board of
directors of the catastrophic stop loss benefit plan and
catastrophic stop loss fund; to prescribe the conditions upon which
school employers may provide certain benefits; to require the
compilation and release of certain information and data; and to
provide certain powers and duties to certain state officials,
departments, agencies, and authorities.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"school employees health benefit act".
Sec. 3. As used in this act:
(a) "Board" means the board of directors created under section
5.
(b) "Carrier" means a health insurance company authorized to
do business in this state under, and a health maintenance
organization operating under, the insurance code of 1956, 1956 PA
218, MCL 500.100 to 500.8302; and a nonprofit health care
corporation operating under the nonprofit health care corporation
reform act, 1980 PA 350, MCL 550.1101 to 550.1704.
(c) "Commissioner" means the commissioner of the office of
financial and insurance services.
(d) "Consumer price index" means the percentage of change in
the consumer price index for all urban consumers in the United
States city average for all items for the calendar year ending
prior to the June 1 effective date of the adjustment under section
7 as reported by the United States department of labor, bureau of
labor statistics, and as certified by the commissioner.
(e) "Public university" means a public university described in
section 4, 5, or 6 of article VIII of the state constitution of
1963.
(f) "School employee" means an employee of a school employer.
(g) "School employer" means a school district, a public school
academy, or an intermediate school district, as those terms are
defined in the revised school code, 1976 PA 451, MCL 380.1 to
380.1852, and a community college or junior college described in
section 7 of article VIII of the state constitution of 1963.
(h) "School medical benefit plan" means a plan established and
maintained by 1 or more school employers that provides for the
payment of medical benefits, including, but not limited to,
hospital and physician services, prescription drugs, and related
benefits, to school employees.
Sec. 5. (1) There is created a board of directors to
administer the catastrophic stop loss benefit plan and catastrophic
stop loss fund. The board shall consist of 9 directors as follows:
(a) The following 8 directors appointed by the governor with
the advice and consent of the senate:
(i) Until July 1, 2007, 2 directors with some background in
insurance issues representing school employers, and, effective July
1, 2007, 2 directors with some background in insurance issues
representing school employers participating in a catastrophic stop
loss benefit plan and catastrophic stop loss fund.
(ii) Until July 1, 2007, 2 directors with some background in
insurance issues representing collective bargaining organizations
that represent school employees, at least 1 of whom is recommended
by the Michigan state AFL-CIO, and, effective July 1, 2007, 2
directors representing collective bargaining organizations that
represent school employees of school employers as defined under
subdivision (a), at least 1 of whom is recommended by the Michigan
state AFL-CIO.
(iii) One director representing the general public.
(iv) One director representing the house of representatives
with some background in insurance issues as recommended by the
speaker of the house of representatives.
(v) One director with some background in insurance issues
representing the senate as recommended by the senate majority
leader.
(vi) One director who is an actuary in good standing with the
American academy of actuaries or the society of actuaries, who
shall serve ex officio and without vote.
(b) The commissioner or his or her designee, who shall serve
ex officio and without vote.
(2) The directors first appointed to the board shall be
appointed within 60 days after the effective date of this act.
(3) The board shall adopt rules providing for the composition
and term of successor boards to the initial board, consistent with
subsection (1). Terms of the board directors shall be staggered so
that the terms of all directors do not expire at the same time. The
appointment of a successor director or to fill a vacancy shall be
made in the same manner as the original appointment.
(4) Except as otherwise provided, each board director shall
have 1 vote on any matter coming before the board.
(5) The first meeting of the board shall be called by the
commissioner. At the first meeting, the board shall elect from
among the directors a chairperson and other officers as it
considers necessary or appropriate. After the first meeting, the
board shall meet at least quarterly, or more frequently at the call
of the chairperson or if requested by 3 or more directors.
(6) A majority of the directors of the board constitute a
quorum for the transaction of business at a meeting of the board. A
majority of the directors present and serving are required for
official action of the board.
(7) Directors of the board shall serve without compensation.
However, board directors may be reimbursed for their actual and
necessary expenses incurred in the performance of their official
duties as board directors.
(8) The board is not a state board or agency and the
catastrophic stop loss fund administered by the board is not a
state fund.
Sec. 7. (1) Beginning July 1, 2006, the board shall implement
and administer a catastrophic stop loss fund that provides 1 or
more catastrophic stop loss benefit plans. The catastrophic stop
loss fund shall reimburse a participating school medical benefit
plan for a claim that exceeds the dollar threshold of the
catastrophic stop loss benefit plan chosen by the participating
school medical benefit plan. The board shall adopt a plan of
operation for the catastrophic stop loss fund and each catastrophic
stop loss benefit plan that shall provide for the management and
nonprofit operation of the catastrophic stop loss fund and each
catastrophic stop loss benefit plan consistent with this act.
(2) The board shall establish 1 or more catastrophic stop loss
benefit plans. In establishing the catastrophic stop loss fund and
each catastrophic stop loss benefit plan, the board shall do all of
the following:
(a) Provide for reimbursement to a participating school
medical benefit plan for the portion of a covered medical benefit
claim that exceeds a dollar threshold established by the board in
the catastrophic stop loss benefit plan selected by the school
medical benefit plan. The minimum dollar threshold to be provided
under a catastrophic stop loss benefit plan shall not be less than
$50,000.00 per individual claim. The board may provide for
additional catastrophic stop loss benefit plans that provide dollar
threshold levels above $50,000.00 per individual claim. A dollar
threshold level established under this subdivision in a
catastrophic stop loss benefit plan shall be adjusted to reflect
changes in the consumer price index by June 1 of each year.
(b) Provide that each catastrophic stop loss benefit plan is
subject to the following:
(i) Does not require any changes in the participating school
medical benefit plan for payment from the catastrophic stop loss
fund.
(ii) Provides for continuity of health care treatment and
providers for individuals covered under the participating school
medical benefit plan.
(c) Maintain a relevant and accurate loss and expense data
relative to all liabilities of each catastrophic stop loss benefit
plan.
(d) Require each school medical benefit plan to furnish claims
data at the times and in the form and detail as may be required by
the catastrophic stop loss benefit plan selected by that school
medical benefit plan.
(e) Determine a premium for each catastrophic stop loss
benefit plan that is sufficient to cover expected losses and
expenses that the catastrophic stop loss fund will likely incur
during the period for which the premium is applicable. The premium
shall include an amount to cover incurred but not reported losses
for the period and may be adjusted for any excess or deficient
premiums from previous periods. Excesses or deficiencies from
previous periods may be fully adjusted in a single period or may be
adjusted over several periods.
(f) Receive and distribute all sums required by the operation
of the catastrophic stop loss benefit plan.
(g) Adopt an investment policy for investing and reinvesting
the assets of the catastrophic stop loss fund.
(h) Provide a comprehensive program of case management
services that shall be offered to a participating school medical
benefit plan for a covered individual whose claim is covered under,
or is likely to become covered under, the catastrophic stop loss
fund.
(i) Provide 1 or more incentives to participating school
medical benefit plans, through a premium rate structure or other
means, to provide health promotion and chronic care management
programs to covered individuals of a participating school medical
benefit plan for the purpose of improving or maintaining the health
of covered individuals and reducing unnecessary or excessive
medical expenses. Health promotion and chronic care management
programs shall meet, if applicable, nationally recognized
accreditation standards. If nationally recognized accreditation
standards are not applicable, health promotion and chronic care
management programs shall meet standards established by the board
which shall include, at a minimum, complete health risk
assessments.
(3) All school medical benefit plans in this state shall be
offered the opportunity to participate in a catastrophic stop loss
benefit plan. A public university shall be offered the opportunity
to participate in a catastrophic stop loss benefit plan.
(4) The catastrophic stop loss fund shall do all of the
following:
(a) Assume 100% of all liability for any covered claim
exceeding the dollar threshold under the applicable catastrophic
stop loss benefit plan.
(b) Maintain relevant and accurate loss and expense data
relative to all liabilities of the catastrophic stop loss fund.
(c) Maintain reserves as are required by the commissioner as
being necessary in the exercise of sound and prudent actuarial
judgment for the preservation, maintenance, and operation of the
catastrophic stop loss fund.
Sec. 9. The board may do any of the following:
(a) Sue and be sued in the name of the catastrophic stop loss
benefit plan or catastrophic stop loss fund. A judgment against the
board shall not create any direct liability against the
participating school medical benefit plans or school employers.
(b) Reinsure all or any portion of its potential liability
with reinsurers licensed to transact insurance in this state or
approved by the commissioner.
(c) Provide for appropriate housing, equipment, and personnel
as may be necessary to assure the efficient operation of the
catastrophic stop loss benefit plan and catastrophic stop loss
fund.
(d) Adopt reasonable rules for the administration of the
catastrophic stop loss benefit plan and catastrophic stop loss
fund, enforce those rules, and delegate authority, as the board
considers necessary to assure proper administration and operation.
(e) Contract for goods and services, including independent
claims management and actuarial, investment, and legal services to
assure the efficient operation of the catastrophic stop loss
benefit plan and catastrophic stop loss fund.
(f) Hear and determine complaints of a school employer, school
medical benefit plan, or school employee or covered dependent
concerning the operation of the catastrophic stop loss benefit plan
or catastrophic stop loss fund.
(g) Perform other acts that are necessary or proper to
accomplish the purposes of the catastrophic stop loss benefit plan
and catastrophic stop loss fund.
Sec. 11. (1) Subject to collective bargaining requirements
under 1947 PA 336, MCL 15.201 to 15.217, a school employer may
provide medical, optical, and dental benefits to school employees
and their dependents by any of the following methods:
(a) By establishing and maintaining a plan on a self-insured
basis as provided in this act. A plan under this subdivision does
not constitute doing the business of insurance in this state and is
not subject to the insurance laws of this state.
(b) By joining with other school employers and establishing
and maintaining a plan on a self-insured basis as provided in this
act. A plan under this subdivision does not constitute doing the
business of insurance in this state and is not subject to the
insurance laws of this state.
(c) By entering into an agreement under which contributions
are made to a trust fund for the purpose of providing medical,
dental, or optical benefits to school employees and their
dependents under a plan agreed to by the school employer. A trust
fund under this subdivision may receive contributions from 1 or
more school employers and may provide medical, dental, and optical
benefits to school employees of 1 or more school employers. A plan
under this subdivision does not constitute doing the business of
insurance in this state and is not subject to the insurance laws of
this state.
(d) By procuring coverage from 1 or more carriers, either on
an individual basis or with 1 or more other school employers.
(e) By forming a multiple employer welfare arrangement under
chapter 70 of the insurance code of 1956, 1956 PA 218, MCL 500.7001
to 500.7090.
(2) This act does not prohibit a school employer from
participating, for the payment of medical benefits and claims, in a
purchasing pool or coalition to procure insurance or coverage,
health care plan services, or administrative services.
(3) A school medical benefit plan participating in a
catastrophic stop loss benefit plan that elects not to participate
in a program of case management under section 7(2)(h) shall provide
to covered individuals case management services that meet the case
management accreditation standards established by the national
committee on quality assurance, the joint commission on health care
organizations, or the utilization review accreditation commission.
Sec. 13. (1) In addition to other requirements as provided in
this act, a self-insured school medical benefit plan shall do all
of the following:
(a) Maintain such reserves as are necessary, in the exercise
of sound and prudent actuarial judgment, to cover the projected
cost of medical benefits for covered school employees and
dependents. A report of amounts so reserved and disbursements made
from such funds, together with a written report of a member of the
American academy of actuaries or the society of actuaries
certifying whether the amounts reserved conform to the requirements
of this subsection, are computed in accordance with accepted loss
reserving standards, and are fairly stated in accordance with sound
loss reserving principles, shall be prepared and filed with the
commissioner, within 90 days after the last day of the fiscal year
of the school employer. This report shall be made available for
inspection by any person at all reasonable times during regular
business hours, and, upon request, copies of the report shall be
provided at cost within a reasonable period of time of the request.
(b) Provide for administration of the plan using personnel of
the school employer or employers, personnel of an organization
representing employees of the school employer, or by awarding a
contract, without the necessity of competitive bidding, to any
person, political subdivision, or corporation. No such contract
shall be entered into without full, prior, and public disclosure of
all terms and conditions. The disclosure shall include, at a
minimum, a statement listing all representations made in connection
with any possible savings and losses resulting from the contract,
and potential liability of the school employer or school employee.
(c) Enter into a contract with a member of the American
academy of actuaries or the society of actuaries for the
preparation of the written actuarial evaluation of a plan as
required under subdivision (a). The actuarial evaluation shall be
based on all of the following information:
(i) Access fees to a facility and provider discount network or
other contracted provider network.
(ii) Paid claims for the immediately preceding 3 years,
including pharmacy.
(iii) Estimated incurred claims for the immediately preceding 3
years.
(iv) Plan administrative costs.
(v) Chronic case management fees.
(vi) Disease case management fees.
(vii) Preventive and wellness plan fees.
(d) Enter into agreements with providers of services to the
school medical benefit plan, subject to the requirements of this
act and as established by the commissioner.
(2) A school employer may, to the extent permitted under the
written agreement, assume the risks of any other school employers.
Sec. 15. (1) Beginning on the effective date of this act, a
school employer shall not enter into or renew a school medical
benefit plan or an administrative services agreement for a school
medical benefit plan unless the school employer will be furnished
with complete and accurate claims utilization and cost information
as provided in subsection (2)(a) to (j) with respect to the school
employer's claims and benefits under the school medical benefit
plan.
(2) Beginning on the effective date of this act, all school
medical benefit plans in this state shall compile and make
available upon request to the school employer complete and accurate
claims utilization and cost information for the school medical
benefit plan in the aggregate and for each school employer as
follows:
(a) The number of persons covered under the school medical
benefit plan.
(b) If applicable, the number of persons covered under a
policy, certificate, or contract issued by a carrier.
(c) The number of claims paid.
(d) The dollar amount of claims paid and the dollar amount of
claims incurred but not reported.
(e) The claims experience, by coverage component and by
provider.
(f) The dollar amount of premiums or fees paid, if any.
(g) The dollar amount of administrative expenses or retentions
incurred or paid.
(h) The dollar amount of provider, network, case management,
precertification, or other service fees paid, as applicable.
(i) The dollar amount of any fees or commissions paid to
agents or brokers by the school medical benefit plan or by any
school employer or carrier participating in or providing services
to the school medical benefit plan.
(j) Other information as may be required by the commissioner.
(3) The claims utilization and cost information required to be
compiled under this section shall be compiled on an annual basis
and shall cover a relevant period. For purposes of this subsection,
the term "relevant period" means the 24-month period ending no more
than 120 days prior to the effective date or renewal date of the
school medical benefit plan under consideration. However, if the
school medical benefit plan has been in effect for a period of less
than 24 months, the relevant period shall be that shorter period.
(4) A school employer or combination of school employers shall
make public the claims utilization and cost information required
under this section no later than 60 days before the effective date
or renewal date of the school medical benefit plan or the
administrative services agreement under consideration. The school
employer shall make the claims utilization and cost information
required under this section available for inspection by any person
at all reasonable times during regular business hours, and, upon
the request of such person, copies of documents containing the
information shall be provided at cost within a reasonable period of
time.
(5) The claims utilization and cost information required under
this section shall not include any protected health information as
defined in the health insurance portability and accountability act
of 1996, Public Law 104-191, or regulations promulgated under that
act, 45 CFR parts 160 and 164.
Sec. 17. To encourage and facilitate informed decisions
concerning school medical benefit plan design, the administration
of school medical benefit plans, the selection of medical service
providers, and the planning of medical care, the commissioner shall
do all of the following:
(a) Gather data that evaluate and compare the cost,
efficiency, and performance of administrative services provided to
school medical benefit plans, including claims payment timeliness
and accuracy, and make available easily accessible comparative
ratings and descriptions of those plan administrators on a regular
basis.
(b) Working with other state departments and agencies, ensure
access on a regular basis for school employers, school medical
benefit plans, and covered school employees to all of the following
information:
(i) Information concerning cost and performance of Michigan
hospitals, medical clinics, and other health care facilities,
including, but not limited to, licensure, accreditation, and
performance measures for those facilities as recommended by
national organizations such as the national quality forum.
(ii) Information concerning cost and performance of Michigan
physicians and other health care providers, including, but not
limited to, medical training, years in practice, board
certification, verified licensure information, patient experience,
and the results of at least 2 clinical performance measures of
physicians and other health care providers recommended by national
organizations such as the national quality forum.
Enacting section 1. This act does not take effect unless
Senate Bill No. 897 of
the 93rd Legislature is enacted into law.