BILL NUMBER: AB 2142 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 2, 2012
AMENDED IN SENATE MAY 31, 2012
AMENDED IN ASSEMBLY APRIL 23, 2012
AMENDED IN ASSEMBLY MARCH 29, 2012
INTRODUCED BY Assembly Member Furutani
FEBRUARY 23, 2012
An act to amend Sections 22850, 22864, and 22911 of the Government
Code, relating to public employees' benefits, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2142, as amended, Furutani. Public employees' health benefits:
premiums.
The Public Employees' Medical and Hospital Care Act (PEMHCA),
which is administered by the Board of Administration of the Public
Employees' Retirement System (PERS) , authorizes the board
to contract with carriers offering health benefit plans. Existing
law also authorizes the board to contract for, or approve, health
benefit plans that charge a contracting agency and its employees and
annuitants rates based on regional variations in the costs of health
care services and to contract for, or approve, health benefit plans
exclusively for the employees and annuitants of contracting agencies,
as specified.
This bill would authorize the board to implement and administer
risk adjustment procedures that require health benefit plans to
adjust premiums and would authorize PERS to
redistribute premiums based on rules and regulations established by
the board.
PEMHCA requires premiums charged for enrollment in a health
benefit plan to reasonably reflect the cost of the benefits provided.
Existing law permits the board to enter into contracts with carriers
based on carrier performance, and to credit premiums to an employer
for expenditures that are likely to improve the health status of
employees and annuitants. Contributions and premiums paid under
PEMHCA are deposited in the Public Employees' Health Care Fund and
the Public Employees' Contingency Reserve Fund, both of which are
continuously appropriated special funds.
This bill would specify that the board has the authority to adjust
premiums as part of programs for health promotion and disease
prevention and develop procedures for risk adjustment of premiums
across plans that encourage plans to offer benefits based upon
medical and administrative efficiency and quality of care rather than
on the employee's or annuitant's health status or service areas with
low-risk populations. The bill would also specify that the Public
Employees' Health Care Fund would include any moneys from health
benefit plans for that risk adjustment. The bill would also authorize
the board to use reserves generated by one or more self-funded
health benefit plans for risk adjustment programs and procedures. By
authorizing moneys in those funds to be used for a new purpose, the
bill would make an appropriation.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22850 of the Government Code is amended to
read:
22850. (a) The board may, without compliance with any provision
of law relating to competitive bidding, enter into contracts with
carriers offering health benefit plans or with entities offering
services relating to the administration of health benefit plans.
(b) The board may contract with carriers for health benefit plans
or approve health benefit plans offered by employee organizations,
provided that the carriers have operated successfully in the hospital
and medical care fields prior to the contracting for or approval
thereof. The plans may include hospital benefits, surgical benefits,
inpatient medical benefits, outpatient benefits, obstetrical
benefits, and benefits offered by a bona fide church, sect,
denomination, or organization whose principles include healing
entirely by prayer or spiritual means.
(c) Notwithstanding any other provision of this part, the board
may contract with health benefit plans offering unique or specialized
health services.
(d) The board may administer self-funded or minimum premium health
benefit plans.
(e) The board may contract for or implement employee cost
containment and cost reduction incentive programs that involve the
employee, the annuitant, and family members as active participants,
along with the carrier and the provider, in a joint effort toward
containing and reducing the cost of providing medical and hospital
health care services to public employees. In developing these plans,
the board, in cooperation with the Department of Personnel
Administration Human Resources , may request
proposals from carriers and certified public employee
representatives.
(f) Notwithstanding any other provision of this part, the board
may do any of the following:
(1) Contract for, or approve, health benefit plans that charge a
contracting agency and its employees and annuitants rates based on
regional variations in the costs of health care services.
(2) Contract for, or approve, health benefit plans exclusively for
the employees and annuitants of contracting agencies. State
employees and annuitants may not enroll in these plans. The board may
offer health benefit plans exclusively for employees and annuitants
of contracting agencies in addition to or in lieu of other health
benefit plans offered under this part. The governing body of a
contracting agency may elect, upon filing a resolution with the
board, to provide those health benefit plans to its employees and
annuitants. The resolution shall be subject to mutual agreement
between the contracting agency and the recognized employee
organization, if any.
(3) Implement and administer risk adjustment procedures consistent
with Section 22864 that require health benefit plans to adjust
premiums and authorize the system to redistribute
premiums based on rules and regulations established by the board for
this purpose.
(g) The board shall approve any employee association health
benefit plan that was approved by the board in the 1987-88 contract
year or prior, provided the plan continues to meet the minimum
standards prescribed by the board. The trustees of an employee
association health benefit plan are responsible for providing health
benefit plan administration and services to its enrollees.
Notwithstanding any other provision of this part, the California
Correctional Peace Officer Association Health Benefits Trust may
offer different health benefit plan designs with varying premiums in
different areas of the state.
(h) Irrespective of any other provision of law, the sponsors of a
health benefit plan approved under this section may reinsure the
operation of the plan with an admitted insurer authorized to write
disability insurance, if the premium includes the entire prepayment
fee.
SEC. 2. Section 22864 of the Government Code is amended to read:
22864. (a) Premiums charged for enrollment in a health benefit
plan shall reasonably reflect the cost of the benefits provided.
(b) This part does not limit the board's authority to do any of
the following:
(1) Enter into contracts with carriers providing compensation
based on carrier performance.
(2) Credit premiums to an employer for expenditures that the board
determines are likely to improve the health status of employees and
annuitants or otherwise reduce health care costs.
(3) Adjust the premiums charged under any health benefit plan or
contract to reflect regional variations in the cost of health care
services and other relevant factors. Any adjustment of these premiums
shall be at the sole discretion of the board and shall only apply to
the premiums charged to employees and annuitants of contracting
agencies. The board may require a contracting agency and its
employees and annuitants to pay the premium rate established pursuant
to this paragraph, which may be different than the health benefit
plan or contract premium rate that would otherwise be applicable to
that agency.
(4) Adjust premiums as part of programs for health promotion and
disease prevention.
(5) Develop procedures for risk adjustment of premiums across
plans that encourage plans to offer benefits based upon medical and
administrative efficiency and quality of care rather than on the
employee's or annuitant's health status or service areas with
low-risk populations. Any risk adjustment program or procedure shall
be at the sole discretion of the board.
SEC. 3. Section 22911 of the Government Code is amended to read:
22911. (a) There shall be maintained in the State Treasury the
Public Employees' Health Care Fund to fund the health benefit plans
administered or approved by the board. The board may invest funds in
the Public Employees' Health Care Fund in accordance with the
provisions of law governing its investment of the retirement fund.
(b) The Public Employees' Health Care Fund shall consist of the
following:
(1) Any self-funded or minimum premium plan premiums paid by
contracting agencies, the state and enrolled employees, annuitants,
and family members, including premiums paid directly for continuation
coverage authorized under the Consolidated Omnibus Budget
Reconciliation Act, and as authorized by this part.
(2) Any reserve moneys from terminated health benefit plans
designated by the board.
(3) Any moneys from a health benefit plan for risk adjustment
pursuant to Section 22864.
(c) Income earned on the Public Employees' Health Care Fund shall
be credited to the fund.
(d) Notwithstanding Section 13340, the Public Employees' Health
Care Fund is continuously appropriated, without regard to fiscal
years, to pay benefits and claims costs, the costs of administering
self-funded or minimum premium health benefit plans, refunds to those
who made direct premium payments, and other costs as the board may
determine necessary, consistent with its fiduciary duty.
(e) The Legislature finds and declares that the Public Employees'
Health Care Fund is a trust fund held for the exclusive benefit of
enrolled employees, annuitants, family members, the self-funded plan
administrator, and those contracting to provide medical and hospital
care services.
(f) Notwithstanding subdivisions (d) and (e), the board may use
reserves generated by one or more self-funded health benefit plans
for risk adjustment programs and procedures pursuant to
Sections paragraph (3) of subdivision (f) of
Section 22850 and paragraph (5) of subdivision (b) of
Section 22864.