GENERAL ASSEMBLY OF NORTH CAROLINA

EXTRA SESSION 1998

S	3 

SENATE BILL 2*
House Committee Substitute Favorable 3/25/98
House Committee Substitute #2 Favorable 3/25/98

Short Title:  RITE Care.  	(Public)

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Sponsors:

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Referred to:  

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March 24, 1998

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH RITE CARE: THE CHILD HEALTH INSURANCE PROGRAM TO PROVIDE HEALTH INSURANCE FOR CHILDREN UP TO ONE HUNDRED EIGHTY-FIVE PERCENT OF THE FEDERAL POVERTY LEVEL AND UNINSURED FOR SIX MONTHS PRIOR TO APPLICATION; TO PROVIDE ADMINISTRATION OF PROGRAM BENEFITS UNDER THE NORTH CAROLINA TEACHERS' AND STATE EMPLOYEES' COMPREHENSIVE MAJOR MEDICAL PLAN; TO AUTHORIZE PROGRAM ENROLLEES TO PURCHASE EXTENDED OR ADDITIONAL COVERAGE UNDER THE PROGRAM; TO AUTHORIZE PREMIUMS AND OTHER COST-SHARING UNDER THE PROGRAM; TO ESTABLISH THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON CHILD HEALTH INSURANCE; AND TO AUTHORIZE A TAX CREDIT FOR CERTAIN PURCHASERS OF DEPENDENT HEALTH INSURANCE AND LONG-TERM CARE INSURANCE.
The General Assembly of North Carolina enacts:
Section 1.  Article 2 of Chapter 108A of the General Statutes is amended by adding the following new Part to read:
"Part 8. Health Insurance for Children.
"§ 108A-70.18.  Definitions.
Unless the context clearly requires otherwise, the term:
(1)	'Comprehensive health coverage' means credible health coverage as defined under Title XXI.
(2)	'Family income' means the total amount of combined annual income for each member of the household who is legally responsible for support of the child covered under the Program.  The total amount of child support received during the prior year shall be included in calculating family income.
(3)	'FPL' or 'federal poverty level' means the federal poverty guidelines established by the United States Department of Health and Human Services, as revised each April 1.
(4)	'Program' or 'RITE Care' means the child health insurance program established in this Part.
(5)	'State Plan' means the State Child Health Plan for the State Children's Health Insurance Program established under Title XXI.
(6)	'Title XXI' means Title XXI of the Social Security Act, as added by Pub. L. 105-33, 111 Stat. 552, codified in scattered sections of 42 U.S.C. (1997).
(7)	'Uninsured' means the applicant for RITE Care benefits is and was not covered under any private or employer-sponsored comprehensive health insurance plan at the time of application and for the six months immediately preceding application.  If within the six months immediately preceding application a child has lost Medicaid eligibility due to a change in family income or has lost employer-sponsored comprehensive health care coverage due to layoff by the employer or cessation of the employer's business, and no other employer-sponsored comprehensive health care coverage is available to the family, then the child is deemed uninsured for purposes of eligibility for RITE Care benefits.
"§ 108A-70.19.  Short title; purpose; no entitlement.
This act may be cited as 'RITE Care: The Child Health Insurance Program Act of 1998.'  The purpose of this Part is to provide health insurance coverage to uninsured low-income children who are residents of this State.  Coverage shall be provided from State and federal funds and other funds appropriated for this purpose. Nothing in this Part shall be construed as obligating the General Assembly to appropriate funds for 'RITE Care' or as entitling any person to coverage under 'RITE Care.'
"§ 108A-70.20.  Program established.
'RITE Care: The Child Health Insurance Program' is established.  RITE Care shall be administered by the Department of Health and Human Services in accordance with this Part. Administration of RITE Care benefits and claims processing shall be as provided under Part 5 of Article 3 of Chapter 135 of the General Statutes.
"§ 108A-70.21. Program eligibility; benefits; premiums and other cost-sharing; coverage from private plans; purchase of extended or additional coverage.
(a)	Eligibility. – In order to be eligible for benefits under RITE Care, children must:
(1)	Be under the age of 19 and, if high-school age, be enrolled in high school;
(2)	Be ineligible for Medicaid, Medicare, or other federal government-sponsored health insurance;
(3)	Be uninsured;
(4)	Be in a family that meets the following family income requirements:
a.	Children age one year through five years whose family income is from one hundred thirty-four percent (134%) through one hundred eighty-five percent (185%) of the federal poverty level; and
b.	Children age six years through eighteen years whose family income is from one hundred one percent (101%) through one hundred eighty-five percent (185%) of the federal poverty level;
(5)	Be a resident of this State; and
(6)	Have paid the Program premium required under this Part.
Proof of family income and residency, and declaration of uninsured status shall be provided by the applicant at the time of application for RITE Care coverage.
If a responsible parent is under a court order to provide medical support or maintain health insurance for a child and has failed to comply with the court order, then the child is deemed uninsured for purposes of determining eligibility for RITE Care benefits if the following conditions are met at the time of application:
(1)	The custodial parent shows proof of subsequent legal action taken to enforce the order to obtain medical support or health insurance, and
(2)	There is no other government- or employer-sponsored comprehensive health insurance available to cover the child.
If medical support or health insurance is provided to the child after enrollment and prior to the expiration of the eligibility period for which the child is enrolled in RITE Care, then the child is deemed to be insured and ineligible for continued coverage under RITE Care.  The custodial parent has a duty to notify the Department within 10 days of receipt of medical support or health insurance, and the Department, upon receipt of notice, shall disenroll the child from RITE Care.  As used in this paragraph, the term 'responsible parent' means a person who is under a court order to pay child support.
Except as otherwise provided in this section, eligibility shall be continuous for one year.  At the end of each year, applicants may reapply for Program benefits. If, at the time of reapplication, the Department verifies that the applicant has not paid part or all of the premiums due for prior year coverage, then the applicant is not eligible for coverage until the past-due premiums have been paid in full. The amount owed for unpaid premiums shall be adjusted to apply only to the period for which coverage was provided.
It shall be the duty of enrollees in the Program to promptly inform the Department of any change in the enrollee's family income, residency, or uninsured status occurring during the period of enrollment.
(b)	Benefits. – Except as otherwise provided for eligibility, premiums, deductibles, copayments, and other cost-sharing charges, health benefits coverage provided to children eligible under RITE Care shall be equivalent to coverage provided for dependents under the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan, including optional prepaid plans.
Prescription drug providers shall accept as payment in full for outpatient prescriptions filled ninety percent (90%) of the average wholesale price for the prescription drug or the amounts published by the Health Care Financing Administration plus a dispensing fee not to exceed the amount authorized under subsection (d)(2) of this section.   All other health care providers providing services to Program enrollees shall accept as payment in full for services rendered the maximum allowable charges under the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan for services less any copayments assessed to enrollees under this Part.
(c)	Premiums. – There shall be no premium for RITE Care coverage for enrollees whose family income is less than one hundred thirty-four percent (134%) of the federal poverty level. The premium for RITE Care coverage for enrollees whose family income is at or above one hundred thirty-four percent (134%) of the federal poverty level shall be according to the following schedule:
Family Income	Monthly Premium
134%-150% FPL	$5.00 per child with a maximum monthly premium of $15.00 for three or more children.
151%-185% FPL	$10.00 per child with a maximum monthly premium of $28.00 for three or more children.
Premiums shall be collected by and payable to the Department in monthly installments.  The Department shall adopt rules for the efficient collection of premiums.  The rules shall provide maximum flexibility for the payment of premiums by enrollees.  The Department may contract with private business to provide premium collection and payment services.
(d)	Cost-Sharing. – There shall be no deductibles, copayments, or other cost-sharing charges for families covered under RITE Care whose family income is at or below one hundred fifty percent (150%) of the federal poverty level.  Families covered under RITE Care whose family income is above one hundred fifty percent (150%) of the federal poverty level shall be responsible for copayments to providers as follows:
(1)	Five dollars ($5.00) per child for each visit to a physician or clinic, except that there shall be no copayment required for well-baby, well-child, or age-appropriate immunization services;
(2)	Six dollars ($6.00) dispensing fee for each outpatient prescription drug purchased.
(3)	Twenty dollars ($20.00) for each emergency room visit unless:
a.	The child is admitted to the hospital, or
b.	No other reasonable care was available as determined by the Claims Processing Contractor of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan.
Copayments required under this subsection for prescription drugs apply only to prescription drugs prescribed on an outpatient basis.
The Department shall ensure that the total annual aggregate cost-sharing, including premiums, with respect to all children in a family receiving RITE Care benefits under this Part shall not exceed five percent (5%) of the family's income for the year involved.
(e)	Coverage From Private Plans. – The Department shall, from funds appropriated for RITE Care, pay the cost for dependent coverage provided under a private insurance plan for persons eligible for coverage under RITE Care if all of the following conditions are met:
(1)	The person eligible for RITE Care coverage requests to obtain dependent coverage from a private insurer in lieu of coverage under RITE Care and shows proof that coverage under the private plan selected meets the requirements of this subsection;
(2)	The dependent coverage under the private plan is actuarially equivalent to the coverage provided under RITE Care;
(3)	The cost of dependent coverage under the private plan is the same as or less than the cost of coverage under RITE Care; and
(4)	The total annual aggregate cost-sharing, including premiums, paid by the enrollee under the private plan for all dependents covered by the plan, do not exceed five percent (5%) of the enrollee's family income for the year involved.
The Department may reimburse an enrollee for private coverage under this subsection upon a showing of proof that the dependent coverage is in effect for the period for which the enrollee is eligible for RITE Care.
(f)	Purchase of Extended Coverage. – An enrollee in RITE Care who loses eligibility due to an increase in family income above one hundred eighty-five percent (185%) of the federal poverty level and up to and including two hundred percent (200%) of the federal poverty level, may purchase at full premium cost continued coverage under RITE Care for a period not to exceed one year beginning on the date the enrollee becomes ineligible under the income requirements for the Program.  The same benefits, copayments, and other conditions of enrollment under RITE Care shall apply to extended coverage purchased under this subsection.
(g)	Option to Purchase Additional Benefits. – An enrollee in RITE Care may purchase, on a fully contributory basis, optional coverage for dental, vision, and hearing services.  The Department shall select coverage options for enrollees that offer the best benefit package at the most reasonable cost.
(h)	No State Funds for Voluntary Participation. – No State or federal funds shall be used to cover, subsidize, or otherwise offset the cost of coverage obtained under subsection (f) or (g) of this section.
"§ 108A-70.22.  Coverage for children with special needs.
(a)	Definition. – As used in this section, the term 'children with special needs' or 'special needs child' means children who are enrolled in RITE Care and who have or are at elevated risk for (biologic or acquired) chronic physical, developmental, behavioral, or emotional conditions and who also require health and related (but not educational and not recreational) services of a type and amount not usually required by children of the same age.
(b)	Eligibility for Special Needs Coverage. – In order to be eligible for coverage under this section a special needs child must be a child who is enrolled in RITE Care.  A child with special needs shall, to the extent funds are available for coverage under this section, be eligible for coverage for services that are necessary to enable the child to remain in the child's home as an alternative to institutionalization, and that are not covered under RITE Care.  The level of and reimbursement for services for special needs children under this section shall be the same as available for special needs children under the Medical Assistance Program as authorized in the Current Operations Appropriations Act.
(c)	Evaluation Required. – No funds may be expended for coverage under this section unless the Department has made a determination that coverage for the services is not available under RITE Care. The Department shall conduct an evaluation of each RITE Care enrollee requesting special needs coverage to determine eligibility under this section.
(d)	The Department may adopt rules for eligibility for coverage under this section.
"§ 108A-70.23.  Claims processing; payments.
(a)	The North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan shall be responsible for the administration and processing of claims for benefits under the Program, as provided under Part 5 of Article 3 of Chapter 135 of the General Statutes.
(b)	The Department shall, from premiums collected, from State and federal appropriations, and from any other funds made available for this purpose, make payments to the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan as determined by the Plan for its administration, claims processing, and other services authorized to provide coverage to children eligible for benefits under this Part.
"§ 108A-70.24. State Plan for Children's Health Insurance Program.
The Department shall develop and submit a State Plan to implement 'RITE Care: the Child Health Insurance Program' authorized under this Part to the federal government as application for federal funds under Title XXI.  The State Plan submitted under this Part shall be developed by the Department only as authorized by and in accordance with this Part.  No provision in the State Plan submitted under this Part may expand or otherwise alter the scope or purpose of RITE Care from that authorized under this Part.  The Department shall include in the State Plan submitted only those items required by this Part and required by the federal government to qualify for federal funds under Title XXI and necessary to secure the State's federal fund allotment for the applicable fiscal period. The Department shall not amend the State Plan nor submit any amendments thereto to the federal government for review or approval without the specific approval of the General Assembly.
"§ 108A-70.25.  Application process; outreach efforts; appeals.
(a)	Application. – The Department shall use an application form for RITE Care that is concise, relatively easy for the applicant to comprehend and complete, and only as lengthy as necessary for identifying applicants, determining eligibility for RITE Care or Medicaid, and providing information to applicants on requirements for application submission and proof of eligibility.  Application forms shall be obtainable from public health departments and county departments of social services.  Applications shall be processed by the county department of social services and may be submitted by mail.  The Department may adopt rules for the submission and processing of applications and for securing the proof of eligibility for benefits under this Part.
The application form for RITE Care shall have printed on it or attached to it a notice stating substantially: 'RITE Care: A Child Health Insurance Program' is a federally funded program that may be discontinued if federal funds are not provided for its continuation.  Applicants who lose health care coverage under RITE Care because the program has ended may not be able to obtain coverage from a private insurer because of health conditions arising while covered under RITE Care.  Applicants are encouraged, therefore, to obtain private health insurance as soon as possible.
(b)	Outreach Efforts. – The Department shall adopt procedures governing outreach activities at the State and local level to ensure that RITE Care is adequately publicized statewide and to comply with federal outreach requirements. The Department shall make information about the Program available through the Internet, and shall explore the feasibility of securing a 24-hour toll-free telephone number for purposes of enhancing outreach and access to program information. In developing outreach procedures, the Department shall establish system linkages to ensure the collaboration and coordination of expertise, funding streams, delivery systems, and other appropriate resources and activities between and among RITE Care and such ongoing programs and efforts as:
WIC Program
Maternal and Child Health Block Grant
Children's Special Health Services
Smart Start.
Head Start.
The Department may seek private and federal grant funds for outreach activities.  The Department shall also seek the participation of the private sector in providing no-cost or low-cost avenues for publicizing RITE Care in local communities and statewide.
(c)	A person who is dissatisfied with the action of a county department of social services with respect to the determination of initial, continuing, or renewed eligibility for benefits under the Program may appeal the action in accordance with G.S. 108A-79.
"§ 108A-70.26.  Data collection; reporting.
(a)	The Department shall ensure that the following data is collected, analyzed, and reported in a manner that will most effectively and expeditiously enable the State to evaluate Program goals, objectives, operations, and health outcomes for children:
(1)	Number of applicants for coverage under the Program;
(2)	Number of RITE Care applicants deemed eligible for Medicaid;
(3)	Number of applicants deemed eligible for RITE Care, by income level, age, family size;
(4)	Number of applicants deemed ineligible for RITE Care and the basis for ineligibility;
(5)	Number of applications made at county departments of social services, public health departments, and by mail;
(6)	Total number of children enrolled in RITE Care to date and for the immediately preceding fiscal year;
(7)	Total number of children enrolled in Medicaid through the Program application process;
(8)	Trends showing the Program's impact on hospital utilization, immunization rates, and other indicators of quality of care, and cost-effectiveness and efficiency;
(9)	Trends relating to the health status of children;
(10)	Other data that would be useful in carrying out the purposes of this Part.
(b)	The Department shall report annually to the Joint Legislative Oversight Committee on Child Health Insurance the following information:
(1)	Data collected as required under subsection (a) of this section and an analysis thereof giving trends and projections for continued Program funding;
(2)	Program areas working most effectively and least effectively;
(3)	Performance measures used to ensure Program quality, fiscal integrity, ease of access, and appropriate utilization of preventive and medical care;
(4)	Effectiveness of system linkages in addressing access, quality of care, and Program efficiency;
(5)	Recommended changes in the Program necessary to improve Program efficiency and effectiveness;
(6)	Any other information requested by the Committee pertinent to the provision of health insurance for children and the implementation of RITE Care.
The Department shall provide a copy of the report to the members of the Joint Appropriations Subcommittee on Health and Human Services.
"§ 108A-70.27.  Fraudulent misrepresentation.
(a)	It shall be unlawful for any person to knowingly and willfully, and with intent to defraud, make or cause to be made a false statement or representation of a material fact in an application for coverage under this Part or intended for use in determining eligibility for coverage.
(b)	It shall be unlawful for any applicant, recipient or person acting on behalf of the applicant or recipient to knowingly and willfully, and with intent to defraud, conceal or fail to disclose any condition, fact, or event affecting the applicant's or recipient's initial or continued eligibility to receive coverage or benefits under this Part.
(c)	It is unlawful for any person knowingly, willingly, and with intent to defraud, to obtain or attempt to obtain, or to assist, aid, or abet another person, either directly or indirectly, to obtain money, services, or any other thing of value to which the person is not entitled as a recipient under this Part, or otherwise to deliberately misuse a Program identification card. This misuse includes the sale, alteration, or lending of the Program identification card to others for services and the use of the card by someone other than the recipient to receive or attempt to receive RITE Care program coverage for services rendered to that individual.
Proof of intent to defraud does not require proof of intent to defraud any particular person.
(d)	A person who violates a provision of this section shall be guilty of a Class I felony.
(e)	For purposes of this section the word 'person' includes any natural person, association, consortium, corporation, body politic, partnership, or other group, entity, or organization."
Section 2.  Legislative oversight committee. (a) There is established the Joint Legislative Oversight Committee on Child Health Insurance.  The powers and duties of the Committee shall be to:
(1)	Monitor the implementation of RITE Care: The Child Health Insurance Program established under this act;
(2)	Review reports from the Department of Health and Human Services, the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan, and other government and public and private sector agencies and organizations on the implementation of RITE Care and other child health insurance initiatives; and
(3)	Make recommendations to the General Assembly regarding RITE Care and other issues relating to child health and health insurance coverage for children.
(b) The Speaker of the House of Representative shall appoint to the Committee six members of the House of Representatives, one of whom shall be appointed cochair, and the President Pro Tempore of the Senate shall appoint six members of the Senate, one of whom shall be appointed cochair.
Section 3. (a) Division II of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.27.  Credit for child health insurance.
(a)	Credit. – A taxpayer is allowed a credit against the tax imposed by this Division equal to one-third of the taxpayer's child health insurance premium paid during the taxable year.  The credit may not exceed five percent (5%) of the taxpayer's adjusted gross income (AGI), as calculated under the Code, for the taxable year.  A nonresident or part-year resident who claims the credit allowed by this section shall reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c), as appropriate.  In order to claim a credit under this section, a taxpayer must provide any information required by the Secretary to establish the taxpayer's eligibility for the credit and the amount of the credit.
(b)	Definitions. – The following definitions apply in this section:
(1)	Child health insurance premium. – The amount paid by the taxpayer for insurance coverage of the taxpayer's dependent children under a private or employer-sponsored comprehensive health insurance plan and the amount paid to purchase extended coverage under the RITE Care Program pursuant to G.S. 108A-70.21.  The term does not include, however, amounts deducted from or not included in the taxpayer's gross income for the taxable year.
(2)	Dependent child. – A child under the age of 19 for whom the taxpayer is allowed to deduct a personal exemption under section 151(c)(1)(B) of the Code for the taxable year.
(c)	Credit Refundable. – If the credit allowed by this section exceeds the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowable, the Secretary shall refund the excess to the taxpayer.  The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Division.  In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits."
(b) G.S. 105-160.3(b) is amended by adding a new subdivision to read:
"(4)	G.S. 105-151.27.  Credit for child health insurance."
(c)	The Department of Revenue shall withhold from collections under Division II of Article 4 of Chapter 105 of the General Statutes for the 1999-2000 fiscal year the amount necessary to reimburse it for its additional costs of printing, postage, programming, and administration directly attributable to this act.  It is the intent of the General Assembly to appropriate funds to the Department of Revenue for the 1999-2001 fiscal biennium to cover the costs of auditing ten percent (10%) of the tax credits claimed under this section.  These costs include salary, benefits, and work space for 10 auditors and two clerical support positions.  It is also the intent of the General Assembly to appropriate funds to the Department of Revenue for the 1999-2000 fiscal year for the one-time programming costs required for the credit authorized by this section.
(d)	This section is effective for taxable years beginning on or after January 1, 1999, and expires for taxable years beginning on or after January 1, 2001.
(e)  This section becomes effective only if the United States Secretary for Health and Human Services approves the State Plan to implement RITE Care: A Child Health Insurance Program established under this act.
Section 3.1. (a) Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.28.  Credit for premiums paid on long-term care insurance.
(a)	Credit. – An individual is allowed, as a credit against the tax imposed by this Division, an amount equal to fifteen percent (15%) of the premium costs paid during the taxable year on a qualified long-term care insurance contract that offers coverage to either the individual, the individual's spouse, or a dependent for whom the individual was allowed to deduct a personal exemption under section 151(c)(1)(A) of the Code for the taxable year.  The credit allowed by this section may not exceed three hundred fifty dollars ($350.00) for each qualified long-term care insurance contract for which a credit is claimed.  A nonresident or part-year resident who claims the credit allowed by this subsection shall reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c), as appropriate.
(b)	Definition. – For purposes of this section, the term 'qualified long-term care insurance contract' has the same meaning as defined in section 7702B of the Code.
(c)	Credit Refundable. – If the credit allowed by this section exceeds the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowable, the Secretary shall refund the excess to the taxpayer.  The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Division.  In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits."
(b) G.S. 105-160.3(b) is amended by adding a new subdivision to read:
"(4)	G.S. 105-151.28.  Credit for long-term care insurance."
(c) The Legislative Research Commission shall study the effectiveness of the credit enacted by this act.  The Department of Revenue shall provide the Commission data on the usage of this credit, including profiles of taxpayer categories using the credit.  The Division of Aging, Department of Human Resources, shall provide the Commission data on the effect of the credit on the State's Medicaid costs.  The Commission shall report its findings and recommendations to the 2001 General Assembly.
(d) This section is effective for taxable years beginning on or after January 1, 1999, and expires for taxable years beginning on or after January 1, 2001.
Section 4. (a) Article 3 of Chapter 135 of the General Statutes is amended by adding the following new Part to read:
"Part 5.  Child Health Insurance Program.
"§ 135-42.  Undertaking.
(a)	The State of North Carolina undertakes to make available a child health insurance program (hereinafter called the 'Program') to provide comprehensive major medical coverage to low-income, uninsured children who are residents of this State and who meet the eligibility requirements established for the Program under Part 8 of Article 2 of Chapter 108A of the General Statutes. The Executive Administrator and Board of Trustees of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan (hereinafter called the 'Plan') shall administer the Program under this Part and shall carry out their duties and responsibilities in accordance with Parts 2 and 3 of this Article and with applicable provisions of Part 8 of Article 2 of Chapter 108A.
(b)	The benefits provided under the Program shall be equivalent to and made available through the Plan pursuant to Articles 2 and 3 of this Chapter and administered by the Plan's Executive Administrator and Board of Trustees. To the extent there is a conflict between the provisions of Part 8 of Article 2 of Chapter 108A and Part 3 of this Article pertaining to eligibility, premiums, deductibles, copayments, and other cost-sharing charges, the provisions of Part 8 of Article 2 of Chapter 108A shall control. In administering the benefits provided by this Part, the Executive Administrator and Board of Trustees shall have the same type of powers and duties that are provided under Part 3 of this Article for hospital and medical benefits.
(c)	The benefits authorized by this Part are available only to children who are residents of this State and who meet the eligibility requirements established for the Program under Part 8 of Article 2 of Chapter 108A of the General Statutes.
"§ 135-42.1.  Right to alter, amend, or repeal.
The General Assembly reserves the right to alter, amend, or repeal this Part."
(b) G.S. 135-38(c) reads as rewritten:
"(c)	The Committee shall review programs of hospital, medical and related care provided by Part 3 and Part 5 of this Article and programs of long-term care benefits provided by Part 4 of this Article as recommended by the Executive Administrator and Board of Trustees of the Plan. 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. The Committee shall meet not less than once each quarter to review the actions of the Executive Administrator and Board of Trustees. At each meeting, the Executive Administrator shall report to the Committee on any administrative and medical policies which have been issued as rules and regulations in accordance with G.S. 135-39.8, and on any benefit denials, resulting from the policies, which have been appealed to the Board of Trustees."
(c) G.S. 135-39.5 is amended by adding a new subdivision to read:
"(23)	Implementing and administering a program of child health insurance benefits pursuant to Part 5 of this Article."
(d)	G.S. 135-39.6 is amended by adding the following subsection to read:
"( d)	Separate and apart from the special funds authorized by subsections (a) and (b) of this section, there shall be a Child Health Insurance Fund.  All appropriations, allocations, or any other receipts, including earnings on investments, occurring or arising in connection with benefits provided under the Child Health Insurance Program shall be deposited into the Child Health Insurance Fund.  Disbursements from the Child Health Insurance Fund shall include any and all amounts required to pay the benefits and administrative costs of the Child Health Insurance Program as may be determined by the Executive Administrator and Board of Trustees."
(e)  G.S. 135-39.6A is amended by adding the following subsection to read:
"( c)	The Executive Administrator and Board of Trustees shall establish premium rates for benefits provided under Part 5 of this Article. The Department of Health and Human Services shall, from premiums collected, from State and federal appropriations, and from any other funds made available for the Child Health Insurance Program established under Part 8 of Article 2 of Chapter 108A of the General Statutes, make payments to the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan as determined by the Plan for its administration, claims processing, and other services authorized to provide coverage to children eligible for benefits provided under Part 5 of this Article."
(f)  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, 3, 4, and 5 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."
(g) The title of Chapter 135 of the General Statutes reads as rewritten:
"Retirement System for Teachers and State Employees; Social Security; Child Health Insurance Program."
(h) The title of Article 3 of Chapter 135 of the General Statutes reads as rewritten:
"Other Teacher, Employee Benefits;
Child Health Benefits."
Section 5. In order to ensure that health insurance coverage provided to children from public funds is not duplicative of coverage provided to the same children pursuant to court orders for medical support or health insurance,  the Department of Health and Human Services shall develop a plan for collecting and retrieving data from child support orders filed by the clerks of court of this State.  The purpose of the plan shall be to enable the Department to readily identify children covered by support orders and also covered under private health insurance, or eligible for coverage under the State Medicaid Program or the State Child Health Insurance Program.  No later than October 1, 1998, the Department shall report on the development of this plan to the Joint Legislative Oversight Committee on Child Health Insurance.
Section 6. (a) There is appropriated from the General Fund to the Department of Health and Human Services the sum of twelve million three hundred seven thousand three hundred twelve dollars ($12,307,312) for the 1998-99 fiscal year to be used for the State Child Health Insurance Program established under this act and under Title XXI of the Social Security Act, as added by Pub. L. 105-33, 111 Stat. 552.  The Office of State Budget and Management shall include in the proposed continuation budget the amount of State funds necessary for Program implementation for the budgeted fiscal year but not more than the amount necessary to draw down the maximum amount of federal funds available to the State for the budgeted fiscal year for the Child Health Insurance Program under Title XXI of the Social Security Act, as added by Pub. L. 105-33, 111 Stat. 552.
(b) Special needs funds.  Of the funds available to the Department of Health and Human Services for health insurance coverage for children enrolled in RITE Care, the sum of fifteen million dollars ($15,000,000) shall be deposited into the Children's Special Health Services Fund in the Department of Health and Human Services to provide coverage for special needs children in accordance with G.S. 108A-70.22 as enacted in this act. 
(c) No State funds appropriated under this act may be expended for any purpose other than as provided under this act for the implementation of the State Child Health Insurance Program established under this act and approved by the United States Secretary of Health and Human Services under Title XXI of the Social Security Act, as added by Pub. L. 105-33, 111 Stat. 552.
(d)	Funds appropriated under this section and not expended or obligated in the 1998-99 fiscal year shall revert to the General Fund on June 30, 1999.
Section 7.  The Department of Health and Human Services shall apply to the Health Care Financing Administration for an 1115(b) Medicaid waiver to allow the State to make ineligible for Medicaid a person who is covered under a private or employer-sponsored comprehensive health care insurance plan.
Section 8. Section 6 of this act becomes effective July 1, 1998.  Health insurance coverage provided to children under the Child Health Insurance Program established under this act shall become effective no earlier than October 1, 1998. The remainder of this act is effective when it becomes law and expires on June 30 of the State fiscal year for which federal funds appropriated to the State under Title XXI of the Social Security Act amount to less than seventy percent (70%) of total prior year expenditures for the Child Health Insurance Program established under this act pursuant to Title XXI of the Social Security Act, as added by Pub. L. 105-33, 111 Stat. 552.