GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	2 

SENATE BILL 1269
Second Edition Engrossed 7/16/92

Short Title:  State Health Plan.	(Public)
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Sponsors: Senator Sherron.
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Referred to:  State Personnel and State Government.
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July 8, 1992

A BILL TO BE ENTITLED
AN ACT TO MODIFY THE ADMINISTRATIVE STRUCTURE OF THE TEACHERS' AND STATE EMPLOYEES' COMPREHENSIVE MAJOR MEDICAL PLAN.
The General Assembly of North Carolina enacts:
Section 1.   G.S. 135-38 reads as rewritten:
"§ 135-38.  Committee on Employee Hospital and Medical Benefits.
(a)	The Committee on Employee Hospital and Medical Benefits shall consist of 12 members as follows:
								(1)	Six members of the House appointed by the Speaker of the House; and
(2)	Six members of the Senate appointed by the President Pro Tempore of the Senate.
(b)	The President Pro Tempore of the Senate and Speaker of the House shall appoint the members of the Committee for two-year terms beginning on July 1 of odd-numbered years.
(c)	The Committee shall:
(1)	Review existing and proposed programs of hospital, medical and related care provided by Part 3 of this Article.  The Executive Administrator and the Board of Trustees shall provide the Committee with any information or assistance requested by the Committee in performing its duties under this Article;
(2)	Meet at least quarterly; and
(3)	Scrutinize systematically the actions of the Executive Administrator, the Board of Trustees, the Claims Processor, and the State Health Plan.
(d)	The time members spend on Committee business shall be considered official legislative business for purposes of G.S. 120-3."
Sec. 2.  G.S. 135-39 reads as rewritten:
"§ 135-39.  Board of Trustees established.
(a)	There is hereby established the Board of Trustees of the Teachers' and State Employees' Comprehensive Major Medical Plan.
(a1)	The Board of Trustees of the Teachers' and State Employees' Comprehensive Major Medical Plan shall consist of nine members.  Members who are not teachers, employees or retired employees enrolled in the Plan shall possess professional experience in health affairs, health economics, health insurance, health claims administration, health claims processing, related employee fringe benefit administration, or other related business or financial affairs.
					(b1)  One member shall be appointed by the Governor, and shall serve a term to expire June 30, 1994.  Subsequent terms shall be for two years.  Vacancies shall be filled by the Governor.
(c1)	Four members shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120-121.  Terms shall be for two years.  Vacancies shall be filled in accordance with G.S. 120-122.  One member shall be an employee enrolled in the Plan, and one member shall be a retired employee enrolled in the Plan.
(d1)	Four members shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120-121.  Terms shall be for two years.  Vacancies shall be filled in accordance with G.S. 120-122.  One member shall be an employee enrolled in the Plan, and one member shall be a teacher, as described in Article 20 of G.S. 115C, enrolled in the Plan.
(e)	The Governor shall have the power to remove the member appointed by him under subsection (b1).  The General Assembly may remove any member appointed under subsections (c1) or (d1).
(f)	The members of the Board of Trustees shall receive one hundred dollars ($100.00) per day, except employees eligible to enroll in the Plan, whenever the full Board of Trustees holds a public session, and travel allowances under G.S. 138-6 when traveling to and from meetings of the Board of Trustees or hearings under G.S. 135-39.7, but shall not receive any subsistence allowance or per diem under G.S. 138-5, except when holding a meeting or hearing where this section does not provide for payment of one hundred dollars ($100.00) per day.
(g)	No State employee, member of the General Assembly, State officer, or anyone who is receiving benefits under the Plan or who is eligible to receive benefits under the Plan or who provides services, equipment or supplies under the Plan shall be eligible for membership on the Board of Trustees, except for the designated employees, teacher, and retired employee appointed under subsections (b1) through (d1) of this section, provided that such designated persons may not serve on the executive committee.
(h)	No member of the Board of Trustees may serve more than three consecutive two-year terms.
	."
Sec. 3.  G.S. 135-39.2 reads as rewritten:
"§ 135-39.2.  Officers, quorum, meetings.
(a)	The Board of Trustees shall elect from its own membership such officers as it sees fit.
(b)	Six members of the Board of Trustees in office shall constitute a quorum. Decisions of the Board of Trustees shall be made by a majority vote of the Trustees present, except as otherwise provided in this Part.
	(c)	The Board of Trustees shall meet at least monthly.  Special meetings may be called by the Executive Administrator, the Chairman, or at the written request of three members."
Sec. 4. Part 2 of Article 3 of Chapter 135 of the General Statutes is amended by adding a new section to read:
"§ 135-39.11.  Board of Trustees.
The Board of Trustees shall have the following powers and duties:
(1)	Provide general direction to the Executive Administrator;
(2)	Preparing and submitting to the Governor and the General Assembly annual cost estimates for the health benefits plan, including those required by Article 15 of Chapter 120 of the General Statutes;
(3)	Recommending to the Governor and the General Assembly changes or additions to the health benefits program and health care cost containment programs, together with statements of financial and actuarial effects as required by Article 15 of Chapter 120 of the General Statutes;
(4)	In case of termination of the contract under G.S. 135-39.5A, to select a new Claims Processor, after competitive bidding procedures approved by the Department of Administration;
(5)	Implementing pilot programs necessary to evaluate proposed cost containment measures which are not in direct conflict with Part 3 of this Article, and expending funds necessary for the implementation of such programs; and
(6)	Authorizing coverage for alternative forms of care not otherwise provided by the Plan in individual cases when medically necessary, medically equivalent to services covered by the Plan, and when such alternatives would be less costly than would have been otherwise."
Sec. 5.  G.S. 135-39.4A reads as rewritten:
"§ 135-39.4A.  Executive Administrator.
(a)	The Plan shall have an Executive Administrator.
(b)	The Executive Administrator shall be appointed by the Commissioner of Insurance.  The term of employment and salary of the Executive Administrator shall be set by the Commissioner of Insurance upon the advice of the Committee on Employee Hospital and Medical Benefits.  The Executive Administrator may be removed from office by the Commissioner of Insurance, upon the advice of the Committee on Employee Hospital and Medical Benefits, and any vacancy in the office of Executive Administrator may be filled by the Commissioner of Insurance with the term of employment and salary set upon the advice of the Committee on Employee Hospital and Medical Benefits.
(c)	to (e)	Repealed by Session Laws 1987, c. 857, s. 5, effective July 1, 1987.
(f)	The Executive Administrator may employ such clerical and professional staff, and such other assistance as may be necessary to assist the Executive Administrator and the Board of Trustees in carrying out their duties and responsibilities under this Article. The Executive Administrator may also negotiate, renegotiate and execute contracts with third parties in the performance of his duties and responsibilities under this Article; provided any contract negotiations, renegotiations and execution with a Claims Processor or with an optional prepaid hospital and medical benefit plan or with a preferred provider of institutional or professional hospital and medical care shall be done only after consultation with the Committee on Employee Hospital and Medical Benefits and approval by the Board of Trustees.
(f1)	The Executive Administrator shall assist the Board of Trustees in carrying out its powers and duties.
(g)	The Executive Administrator shall be responsible for:
(1)	Cost management programs;
(2)	Education and illness prevention programs;
(3)	Training programs for Health Benefit Representatives;
(4)	Membership functions;
(5) 	Long-range planning;
(5a)	Establishing and operating a hospital bill audit program and a fraud detection program;
(6) 	Provider and participant relations; and
(7) 	Communications.
(h)	The Executive Administrator shall make reports and recommendations on the Plan to the President Pro Tempore of the Senate, the Speaker of the House of Representatives and the Committee on Employee Hospital and Medical Benefits."
Sec. 6. G.S. 135-39.5 reads as rewritten:
"§ 135-39.5.  Powers and duties of the Executive Administrator and Board of Trustees.
The Executive Administrator and Board of Trustees of the Teachers' and State Employees' Comprehensive Major Medical Plan shall have the following powers and duties:
(1)	Supervising and monitoring of the Claims Processor.
(2)	Providing for enrollment of employees in the Plan.
(3)	Communicating with employees enrolled under the Plan.
(4)	Communicating with health care providers providing services under the Plan.
(5)	Making payments at appropriate intervals to the Claims Processor for benefit costs and administrative costs.
(6)	Conducting administrative reviews under G.S. 135-39.7.
(7)	Annually assessing the performance of the Claims Processor.
		(10)	Working with State employee groups to improve health benefit programs.
(11)	Repealed by Session Laws 1985, c. 732, s. 9.
(12)	Determining basis of payments to health care providers, including payments in accordance with G.S. 58-260.6.
(13)	Requiring bonding of the Claims Processor in the handling of State funds.
(14)	Repealed by Session Laws 1985, c. 732, s. 7.
	(16)	Notwithstanding the provisions of Part 3 of this Article, to formulate and implement cost-containment measures which are not in direct conflict with that Part.
			(20)	Determining administrative and medical policies that are not in direct conflict with Part 3 of this Article upon the advice of the Claims Processor and upon the advice of the Plan's consulting actuary when Plan costs are involved.
(21)	Supervising the payment of claims and all other disbursements under this Article, including the recovery of any disbursements that are not made in accordance with the provisions of this Article."
Sec. 7.  G.S. 135-39.5A reads as rewritten:
"§ 135-39.5A.  Termination.
The Board of Trustees may terminate the contract with the Claims Processor as provided in the request for proposal."
Sec. 8.  G.S. 135-39.5B reads as rewritten:
"§ 135-39.5B.  Prepaid plans.
The Board of Trustees may, after consultation with the Committee on Employee Hospital and Medical Benefits, provide for optional prepaid hospital and medical benefits plans. Benefits offered under such optional plans shall be comparable to those offered under the Plan. The amounts of State funds contributed for such optional plans shall not be more than the amounts contributed for each person eligible under G.S. 135-40.2 on a noncontributory Employee Only basis, with the person selecting an optional plan paying any excess, if necessary. The amount of State funds contributed to such optional plans shall also not exceed the amount of an optional plan's cost for Employee Only coverage. The Board of Trustees is authorized to assess and collect fees from participating optional plans provided by this section for administrative purposes and for risk management purposes. Such fees may be based upon  the enrollees' risk factors and the number and types of contracts enrolled by each participating optional plan, and may be collected by the Plan in a manner prescribed by the Board of Trustees.  In no instance shall benefits be paid under Part 3 of this Article for persons enrolled in an optional prepaid hospital and medical benefit plan authorized under this section on and after the effective date of enrollment in the optional prepaid plan, except in cases of continuous hospital confinement approved by the Executive Administrator."
Sec. 9.  G.S. 135-39.6A reads as rewritten:
"§ 135-39.6A. Premiums set.
The Board of Trustees shall, from time to time, and after consulting with the Committee on Employee Hospital and Medical Benefits, establish premium rates for the Comprehensive Major Medical Plan except as they may be established by the General Assembly in the Current Operations Appropriations Act, and establish regulations for payment of the premiums. Premium rates shall be established for coverages where Medicare is the primary payer of health benefits separate and apart from the rates established for coverages where Medicare is not the primary payer of health benefits."
Sec. 10.  G.S. 135-39.7 reads as rewritten:
"§ 135-39.7.  Administrative review.
If, after exhaustion of internal appeal handling as outlined in the contract with the Claims Processor any person is aggrieved, the Claims Processor shall bring the matter to the attention of the Executive Administrator and Board of Trustees, which may make a binding decision on the matter in accordance with procedures established by the Board of Trustees.  The decision is appealable under the contested case provisions of Chapter 150B of the General Statutes.  The Executive Administrator and Board of Trustees shall provide a written summary of the decisions made pursuant to this section to all employing units, all health benefit representatives, the oversight team provided for in G.S. 135-39.3, all relevant health care providers affected by a decision, and to any other parties requesting a written summary and approved by the Executive Administrator and Board of Trustees to receive a summary immediately following the issuance of a decision."
Sec. 11.  G.S. 135-39.8 reads as rewritten:
"§ 135-39.8.  Rules and regulations.
The Executive Administrator and Board of Trustees may issue rules and regulations to implement Parts 2 and 3 of this Article.  Rules and regulations of the Board of Trustees shall remain in effect until amended or repealed by the Executive Administrator and Board of Trustees.  The Executive Administrator and Board of Trustees shall provide a written description of the rules and regulations issued under this section to all employing units, all health benefit representatives, the oversight team provided for in G.S. 135-39.3, all relevant health care providers affected by a rule or regulation, and to any other parties requesting a written description and approved by the Executive Administrator and Board of Trustees to receive a description on a timely basis. The Plan is exempt from the rule-making requirements of Chapter 150B of the General Statutes."
Sec. 12.  G.S. 135-39.9 is repealed.
Sec. 13.  G.S. 135-39.10 reads as rewritten:
"§ 135-39.10.  Meaning of ‘Executive Administrator and Board of Trustees'.
Whenever in this Article the words ‘Executive Administrator and Board of Trustees' appear, they mean that the Board of Trustees of the Teachers' and State Employees' Comprehensive Major Medical Plan shall have the power, duty, right, responsibility, privilege or other function mentioned, after consulting with the Executive Director.”
Sec. 14.  This act shall not be construed to obligate the General Assembly to make any appropriation to implement the provisions of this act.
Sec. 15.  This act becomes effective October 1, 1992.