Senate Bill No. 228

Introduced By _______________________________________________________________________________

A Bill for an Act entitled: "An Act establishing a statewide public school risk pool and health benefit plans; requiring public school districts to provide employees working half-time or 20 or more hours a week during the school year with full calendar year group health, medical, hospitalization, and surgical insurance benefits and dental insurance benefits; offering employees tax-deferred options to reduce salary for premium payments and to pay for otherwise unreimbursed expenses relating to health insurance and other related group benefits; authorizing trustees and retirees to elect health insurance coverage at their own expense; maintaining collective bargaining that allows for higher employer contributions toward premiums or extended dependent coverage; creating a public school benefits board; authorizing the board of investments to provide a loan for implementation of the statewide public school risk pool and health benefit plans and to issue bonds to finance the initial reserves; requiring employers and elective trustee and retiree members to pay an administrative services and reserve fund premium surcharge to pay costs of the board of investments implementation loan and to pay costs of bonds issued to finance the initial reserves for the statewide public school risk pool; superseding the unfunded mandate laws; and providing an immediate effective date, an applicability date, and a contingent termination date."

STATEMENT OF INTENT

A statement of intent is required for this bill because [section 4] authorizes the public school benefits board to adopt rules to establish and implement a public school risk pool and health benefit plans. The rules should provide for administration of the risk pool, eligibility and enrollment requirements, bid specifications, claims forms and procedures, distribution of claims, claims denial appeal procedures, and financial reporting procedures.

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1. Purpose. The purpose of [sections 1 through 3 and 5 through 7] is to:

(1) create a program under which employers are required to enroll, pay premiums, and otherwise provide employees who are regularly scheduled to work 20 or more hours a week during the school year or who are employed under contract on a half-time or greater basis during a school year with core benefits consisting of group hospitalization, health, medical, and surgical insurance benefits and dental insurance benefits made available on a statewide basis;

(2) offer members additional hospitalization, health, medical, and surgical benefits for dependents and other related health benefits, including vision, dental, disability, and life insurance for members and dependents, in an efficient manner, at the members' election, and at an affordable cost available to employees through tax-deferred salary reduction options;

(3) mitigate and eliminate previously experienced erratic annual health care insurance premium increases for members and employers by spreading health care cost experience over a larger and more stable public school risk group, while reducing administrative expenses associated with small health insurance groups;

(4) provide a greater share of members with health insurance coverage and provide equitable access to affordable health care protection; and

(5) effectively allow employers and members an opportunity to negotiate medical cost containment, quality assurances, and managed care measures with health care providers, which will partially insulate school district budgets and members' income from escalating health care costs.

NEW SECTION. Section 2. Definitions. As used in [sections 1 through 3 and 5 through 7], the following definitions apply:

(1) "Basic plan" means a plan adopted by the board that provides core benefits for each member, that provides lower premium and higher member cost sharing than occurring under the standard plan, and that provides benefits that are actuarially equivalent to health benefits provided to state employees on January 1, 1997, under the comparable traditional plan offered by the state group insurance program authorized pursuant to Title 2, chapter 18, part 8.

(2) "Board" means the public school benefits board established in [section 4].

(3) "Core benefits" means group hospitalization, health, medical, and surgical insurance benefits and dental insurance benefits required to be provided by employers for all members on a statewide basis pursuant to [sections 1 through 3 and 5 through 7] and in respect to which the employer is required to make premium contributions on behalf of each employee.

(4) "Department" means the department of administration provided for in 2-15-1001.

(5) "Employee" means a person employed by a public school organized pursuant to Title 20, chapter 6, or an education cooperative organized pursuant to Title 20, chapter 7, who is regularly scheduled to work 20 or more hours a week during the school year or who is employed under contract on a half-time or greater basis during the school year.

(6) "Employer" means all public schools organized pursuant to Title 20, chapter 6, and education cooperatives organized pursuant to Title 20, chapter 7.

(7) (a) "Group benefits" means core benefits provided for employees and core benefits and other vision, disability, accidental death and dismemberment, life, and other similar and related group benefits offered to members and dependents on a statewide basis pursuant to [sections 1 through 3 and 5 through 7].

(b) The term does not include:

(i) casualty insurance defined in 33-1-206;

(ii) marine insurance authorized in 33-1-209 and 33-1-221 through 33-1-229;

(iii) property insurance defined in 33-1-210;

(iv) surety insurance defined in 33-1-211; and

(v) title insurance defined in 33-1-212.

(8) "Managed care plan" means a plan provided by a health care provider network that is subject to review and regulation as a health maintenance organization pursuant to Title 33, chapter 31, and that provides health care or other benefits on a local, regional, or statewide basis.

(9) "Medicare supplement plan" means a plan adopted by the board that provides core benefits for members enrolled in medicare and that supplements benefits provided under the medicare program. The term may include a medicare managed care plan.

(10) "Member" means an employee, retiree, or trustee who is eligible for enrollment in the public school risk pool and health benefit plans.

(11) "Retiree" means:

(a) an employee who has terminated employment with an employer and who, at the time of termination, was continuously employed for a period of 10 or more school years, was 55 years of age or older, and was enrolled in a health benefit plan;

(b) an employee who has terminated employment with an employer and who, at the time of termination, was enrolled in a health benefit plan and was eligible for normal retirement pursuant to law or rules of the public employees' retirement system or the teachers' retirement system;

(c) an employee or trustee who was enrolled on July 1, 1998, as a retiree under terms of the employer's group medical plan; or

(d) a trustee who terminated board trusteeship with a school district and who, at the time of termination, was continuously enrolled in either the school district's or the statewide health benefit plan.

(12) "School year" means the annual period of pupil instruction scheduled and conducted by Montana public schools pursuant to 20-1-301.

(13) "Standard plan" means a plan adopted by the board that provides core benefits for each member, that provides a standard premium and lower member cost sharing than occurring under the basic plan, and that provides benefits that are actuarially equivalent to health benefits provided on January 1, 1997, to university system personnel by the board of regents under the comparable plan offered by the public employees' group insurance program authorized pursuant to Title 2, chapter 18, part 7.

(14) "Trustee" means a member of a public school board who has served continuously in that position for 5 or more years and who has elected to be enrolled in the public school risk pool and health benefit plans.

NEW SECTION. Section 3. Mandatory public school risk pool and health benefit plans -- enrollment -- flexible spending plans -- collective bargaining of higher employer contributions -- surcharge. (1) On or after [the effective date of this act], the board shall study the public school risk pool and health benefit plans and adopt rules for defining the public school risk pool and establishing provisions of the health benefit plans.

(2) By April 1, 1998, the board shall adopt:

(a) a basic plan and a standard plan, one or more locally available managed care plans, and one or more medicare supplement plans providing for health and dental insurance benefits for each member. The plans adopted by the board must be operating and available to all employers and members by no later than July 1, 1998.

(b) an actuarially sound alternative tiered-rate and composite-rate premium structure for each adopted plan that offers all employers the option of either selecting a premium payment method for all employees or selecting a premium payment method for certified and classified employees only. The board shall, by June 15, 1998, notify the department of the adoption of the alternative tiered-rate and composite-rate premium structure adopted for each plan.

(c) a statewide premium payment program that permits employees to reduce gross salary and have the untaxed reduction applied to premium payments for all group benefits as permitted by section 125 of the Internal Revenue Code and that is available to all employers and members by no later than July 1, 1998; and

(d) a statewide flexible spending account program that permits members to reduce gross salary and have the untaxed reduction applied to unreimbursed medical and dependent care expenses as permitted by section 125 of the Internal Revenue Code and that is available to all employers and employees by no later than July 1, 1998.

(3) Between July 1, 1998, and September 1, 1998, or upon the expiration of a collective bargaining agreement, whichever occurs first, an employer shall:

(a) enroll each employee in the public school risk pool and provide core benefits under the standard, basic, or managed care plan as elected by the employee;

(b) adopt the statewide premium payment program and the flexible spending account program established in subsection (2) that, subject to section 125 of the Internal Revenue Code, provide each employee with the option of participating in the statewide premium payment and flexible spending account programs;

(c) enroll each retiree and trustee member who is eligible under [sections 1 through 3 and 5 through 7] and elects benefits coverage under the standard, basic, or managed care plan or the medicare supplement plan; and

(d) notify the department of the employer's selection of a premium payment method for all eligible employee, retiree, and trustee members or of the selection of a separate premium payment method for certified and classified employees.

(4) Except as provided in subsection (5), an employer shall, no sooner than July 1, 1998, and no later than September 1, 1998, pay monthly to the department from any budgeted fund, as defined in 20-9-201, not less than the minimum premium amount determined by the board to be equal to the premium amount necessary to insure and provide core benefits on behalf of each employee under the standard plan. The premium includes a $15 administrative services and reserve fund premium surcharge to pay for the costs of repaying the loan received from the board of investments to implement the public school risk pool and health benefit plans and to pay the costs of the initial reserve bonds issued by the board of investments.

(5) If the employer contribution for health and related insurance benefits for school personnel covered by a collective bargaining agreement on January 1, 1997, is in excess of the amount required for single employee coverage under the standard plan, the employer shall continue to provide benefits and make payments to the department that provide the same level of coverage for all school personnel covered by the collective bargaining agreement until September 1, 2000.

(6) Employer contributions in excess of the amounts required under subsection (4) or (5) may be negotiated through collective bargaining.

(7) A trustee or a retiree may, at the time of retirement and at the trustee's or retiree's expense, elect to be enrolled in the public school risk pool and receive health benefits under the standard, basic, or managed care plan or may, if eligible, enroll in the medicare supplement plan. A trustee or retiree who elects to enroll in the public school risk pool shall pay the monthly $15 administrative services and reserve fund premium surcharge established in subsection (4).

(8) If the employer contribution for health and related insurance benefits for retired school personnel pursuant to a collective bargaining agreement on January 1, 1997, is in excess of the amount required for single employee coverage under the standard plan, the employer:

(a) shall continue to provide benefits and make payments to the department that provide the same level of coverage for all retired school personnel covered by the collective bargaining agreement until September 1, 2000; and

(b) if required in a collective bargaining agreement, may continue to make contributions after September 1, 2000, on behalf of retirees.

(9) The department shall deposit all reserve funds and premiums paid to a health benefit plan to be expended by the department for claims under the plan.

(10) The department shall deposit the surcharge received and income earned from the investment of a health benefit plan's reserve fund into an account to offset the costs of administering the plan.

(11) The provisions of Title 33 do not apply to the department when exercising the powers and duties provided for in this section.

NEW SECTION. Section 4. Public school benefits board -- composition -- duties. (1) There is created a public school benefits board.

(2) The board consists of 11 members appointed to 5-year staggered terms by the governor. The members of the board must be enrolled in the public school risk pool and must be appointed from lists submitted to the governor as follows:

(a) two public school board trustees appointed from one list containing up to four nominees submitted jointly by the Montana school board association and the Montana rural education association;

(b) two public school administrators appointed from a list containing up to four nominees submitted by the school administrators of Montana;

(c) six members of labor organizations, as defined in 39-31-103, appointed from one list containing up to 12 nominees submitted jointly by the Montana education association and the Montana federation of teachers. Of the six members, at least two must be classified personnel. As used in this subsection, "classified personnel" means persons not required to be certified under Title 20, chapter 4.

(d) one retiree, appointed from a list containing up to two nominees, submitted to the governor by labor organizations, as defined in 39-31-103.

(3) When a vacancy occurs, the governor shall notify the organization or organizations authorized to submit nominations pursuant to subsection (2). Within 30 days of receiving notification, the authorized organization or organizations shall submit a list of nominees to the governor. If an organization or organizations fail to submit a list within 30 days, the governor may designate any person meeting the requirements of the vacancy to fill the position.

(4) The board shall:

(a) review the design and operation of health benefit plans and may amend by rule any core benefits or health benefit plan;

(b) maintain health benefit plans on an actuarially sound basis and maintain reserves sufficient to liquidate the unrevealed claims liability and other liabilities of health benefit plans;

(c) establish specifications for bid proposals providing for health benefit plans and the claims administration procedures for those plans, accept or reject bids, and enter into contracts for the review or provision of health benefits or the administration for those plans;

(d) perform or obtain an analysis of rate adequacy of all health benefit plans administered under [sections 1 through 3 and 5 through 7] and annually contract for an independent audit and financial evaluation of all health benefits plans; and

(e) meet at least quarterly to review the operation and financing of the existing health benefit plans, to review enrollment or claims administration matters, to determine procedures providing for review of claims denials and appeals, and to direct and advise the department on health benefit matters.

(5) The board may:

(a) establish rules that it considers proper for determining employee, retiree, and trustee member enrollment eligibility and providing for timely enrollment in the public school risk pool and health benefit plans, for claims review and appeals procedures, and generally for the administration and operation of the public school risk pool and health benefit plans; and

(b) conduct claims, financial, and operational reviews as necessary to properly monitor the performance of health benefit plan vendors.

(6) The board is allocated to the department for administrative purposes only as prescribed in 2-15-121. However, the board may hire its own personnel, and 2-15-121(2)(d) does not apply.

(7) Members of the board must be compensated in the same manner as members of a quasi-judicial board as provided in 2-15-124, except that the requirement that at least one member be an attorney does not apply.

NEW SECTION. Section 5. General duties of department. The department, at the direction of the board, shall:

(1) negotiate and administer contracts for public school health benefit plans;

(2) provide administrative and clerical staff for the board and for enrollment and other services related to the public school risk pool and health benefit plans;

(3) prepare an annual report that describes enrollment trends within the public school risk pool, benefit provisions and premium structure of the health benefit plans, and administrative experience relating to the plans, that details historical and projected program costs and the status of reserve funds, and that makes recommendations, if any, for changes in the existing public school risk pool, health benefit plans, premium structures, or related matters;

(4) provide information and educational services through local public school districts for members regarding the public school risk pool and health benefit plans; and

(5) provide assistance to public school benefits and payroll administrators and to members regarding enrollment and premium payment procedures associated with the public school risk pool and health benefit plans.

NEW SECTION. Section 6. Administrative costs. The department shall include the costs of administering and negotiating health benefit plans established under [sections 1 through 3 and 5 through 7] and administering third-party claim expenses, as well as the costs of hiring necessary consultants, actuaries, and auditors under [sections 1 through 3 and 5 through 7], as part of the costs for the public school risk pool and health benefit plans.

NEW SECTION. Section 7. Biennial audit of health benefit plans required. The public school health benefit plans established under [sections 1 through 3 and 5 through 7], whether established on a self-funded basis or not, must be audited every 2 years. The audit must cover the 2-year period since the last audit and be conducted by or at the direction of the legislative auditor.

NEW SECTION. Section 8. Board of investments loan -- reserve bonds -- use of premium surcharge. (1) The board of investments may provide to the public school benefits board a loan in the amount of $600,000 for the biennium beginning July 1, 1997, and ending June 30, 1999, for the purpose of implementing the statewide public school risk pool and health benefit plans.

(2) The board of investments may finance the initial reserves for the statewide public school risk pool and health benefit plans from the proceeds of bonds having a term of no more than 10 years issued pursuant to the Municipal Finance Consolidation Act of 1983 authorized in Title 17, chapter 5, part 16.

(3) The premium surcharge portion of the premium collected under [section 3] may be used only to administer repayment of the costs of the initial loan to the public school benefits board for implementation of [sections 1 through 3 and 5 through 7] and the costs of repaying bonds issued and loan proceeds given under this section.

NEW SECTION. Section 9. Codification instruction. (1) [Sections 1 through 3 and 5 through 7] are intended to be codified as an integral part of Title 2, chapter 18, and the provisions of Title 2, chapter 18, apply to [sections 1 through 3 and 5 through 7].

(2) [Section 4] is intended to be codified as an integral part of Title 2, chapter 15, part 10, and the provisions of Title 2, chapter 15, part 10, apply to [section 4].

NEW SECTION. Section 10. Implementation of staggered terms. (1) To implement the staggered-term system provided for in [section 4], the first terms of the members are as follows:

(a) three members shall serve 3-year terms;

(b) four members shall serve 4-year terms; and

(2) Upon expiration of the terms provided for in subsection (1), each member shall serve a 5-year term.

NEW SECTION. Section 11. Unfunded mandate law superseded. The provisions of [this act] expressly supersede and modify the requirements of 1-2-112 through 1-2-116.

NEW SECTION. Section 12. Effective date -- applicability. [This act] is effective on passage and approval and applies to contracts entered into on or after [the effective date of this act].

NEW SECTION. Section 13. Contingent termination. The $15 premium surcharge imposed on employers pursuant to [section 3] terminates on the date that the board of investments notifies the governor and the public school benefits board that the loan and the bonds issued to the public school benefits board pursuant to [section 8] have been repaid in full.

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