2013 -- H 5556

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LC01370

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- HEALTH CARE--HEALTH

BENEFIT EXCHANGE

     Introduced By: Representatives Corvese, Azzinaro, Ucci, O'Brien, and Hull

     Date Introduced: February 14, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

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GOVERNMENT" is hereby amended by adding thereto the following chapter:

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     CHAPTER 155

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THE RHODE ISLAND HEALTH BENEFIT EXCHANGE ACT

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     42-155-1. Short title. -- This chapter shall be known as "The Rhode Island Health

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Benefit Exchange Act."

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     42-155-2. Legislative Findings. -- It is hereby found that:

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     (1) Statutory changes to Rhode Island law are necessary in order to establish an American

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health benefit exchange in Rhode Island and its administrative authority in a manner that is

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consistent with the federal patient protection and affordable care act (public law 111-148), as

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amended by the federal health care and education reconciliation act of 2010 (public law 111-152).

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In doing so, it is the intent of the legislature to do all of the following:

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     (i) Reduce the number of uninsured Rhode Island citizens by creating an organized,

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transparent marketplace for the citizens of Rhode Island to purchase affordable, quality health

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care coverage, to claim available federal tax credits and cost-sharing subsidies, and to meet the

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personal responsibility requirements imposed under the federal act.

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     (ii) Strengthen the health care delivery system.

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     (iii) Guarantee the availability and renewability of health care coverage through the

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private health insurance market to qualified individuals and qualified small employers.

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     (iv) Require that health care service plans and health insurers issuing coverage in the

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individual and small employer markets compete on the basis of price, quality, and service, and

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not on risk selection.

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     (v) Meet the requirements of the federal act and all applicable federal guidelines and

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regulations.

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     (vi) Explore the role of exchange as part of a robust health planning process that

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optimizes efficiency, coordinated care delivery, and financing of the health care system.

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     42-155-3. Definitions. -- As used in this chapter, the following words and terms shall

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have the following meanings, unless the context indicates another or different meaning or intent:

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     (1) "Employee" has the same meaning as defined in section 27-50-3.

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     (2) “Exchange” means the Rhode Island Health Benefit Exchange established by section

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42-155-4.

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     (3) "Federal act" means the federal Patient Protection and Affordable Care Act (Public

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Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010

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(Public Law 111-152), and any amendments to, or regulations or guidance issued under, those

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acts.

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     (4) "Health plan" and “qualified health plan” have the same meanings as those terms are

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defined in Section 1301 of the federal act.

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     (5) "Health care provider" means a person licensed or certified in this state to practice

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medicine, pharmacy, chiropractic, nursing, physical therapy, podiatry, dentistry, optometry,

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occupational therapy, or other healing arts.

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     (6) "Insurer" means every medical service corporation, hospital service corporation,

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accident and sickness insurer, dental service corporation, and health maintenance organization

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licensed under title 27, or as defined in section 42-62-4.

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     (7) "Secretary" means the secretary of the federal department of health and human

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services.

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     (8) "Small employer" has the same meaning as defined in section 27-50-3.

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     (9) "SHOP" means the Small Business Health Options Program established by

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subparagraph 42-155-4 (C).

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     (10) "Qualified dental plan" means a dental plan as described in section 1311(d)(2)(B)(ii)

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of the federal act.

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     (11) "Qualified individuals" and "qualified employers" shall have the same meaning as

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defined in the federal act.

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     42-155-4. Establishment of exchange--Purpose. -- (a) There is hereby authorized,

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created, and established a public corporation of the state having a distinct legal existence from the

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state and not constituting a department of state government to be known as "the Rhode Island

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health benefit exchange." The corporation is constituted a public instrumentality exercising public

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and essential governmental functions, and the exercise by the corporation of the powers conferred

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by this chapter shall be deemed and held to be the performance of an essential governmental

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function of the state.

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     (b) It is the intent of the general assembly by the passage of this chapter to vest in the

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exchange all powers, authority, rights, privileges, and titles that may be necessary to enable it to

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accomplish the purposes herein set forth, and this chapter and the powers herein granted shall be

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liberally construed in conformity with those purposes.

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     (c) The exchange is created, established, and incorporated for the following purposes: to

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facilitate the purchase and sale of qualified health plans and qualified dental plans in the

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individual market in this state to provide for the establishment of a small business health options

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program (SHOP exchange) to assist qualified small employers in this state in facilitating the

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enrollment of their employees in qualified health plans offered in the small group market; to

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reduce the number of uninsured; to provide a transparent marketplace and consumer education;

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and to assist individuals with access to programs, tax credits and subsidies.

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     42-155-5. General powers. -- The exchange shall have the following powers, together

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with all powers incidental thereto or necessary for the performance of those stated in this chapter:

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     (1) To have perpetual succession.

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     (2) To sue and be sued, complain and defend, in its corporate name.

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     (3) To have a corporate seal which may be altered at its pleasure, and to use the seal by

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causing it, or a facsimile of the seal, to be impressed or affixed or in any other manner

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reproduced.

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     (4) To purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, and

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otherwise deal in and with, real or personal property, or any interest therein, wherever situated.

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     (5) To sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of

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all or any part of its property and assets.

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     (6) To make and enter into all contracts, agreements, and guarantees and incur liabilities,

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borrow money at those rates of interest that the corporation may determine, issue its notes, and

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other obligations, and secure any of its obligations by mortgage or pledge of all or any of its

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property, and income, necessary or incidental to the performance of its duties and the execution

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of its powers under this chapter.

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     (7) To conduct its business, carry on its operations, and have offices and exercise the

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powers granted by this chapter.

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     (8) To elect or appoint officers and agents of the exchange, and to define their duties,

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including authority to employ attorneys, accountants, consultants and such other employees or

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agents as the exchange shall deem necessary in its judgment.

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     (9) To make and alter by-laws, not inconsistent with this chapter.

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     (10) To accept grants, donations, loans of funds, and contributions in money, services,

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materials, or otherwise, from the United States or any of its agencies, from this state and its

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agencies or from any other source, and to use or expend those moneys, services, materials, or

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other contributions in carrying out the purposes of this chapter.

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     (11) To have and exercise all powers necessary or convenient to effect its purposes;

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provided however, that the corporation shall not have any power to create, empower or otherwise

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establish any corporation, subsidiary corporation, corporate body, any form of partnership, or

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other separate entity without the express approval and authorization of the general assembly.

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     42-155-6. Appointment of directors. -- (a) The exchange shall be governed by an

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executive board which shall consist of eleven (11) members as follows:

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     (1) The director of the department of administration or his or her designee;

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     (2) The commissioner of the office of the health insurance commissioner or his or her

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designee;

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     (3) The secretary of the executive office of health and human services or his or her

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designee; and,

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     (4) Eight (8) shall be appointed by the governor from the general public, with the advice

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and consent of the senate, two (2) of whom shall represent a consumer organization and two (2)

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of whom shall represent small businesses. Appointments to the board shall be made to provide

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demonstrated and acknowledged expertise in a diverse range of health care areas including, but

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not limited to, the following:

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     (i) Individual health care coverage;

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     (ii) Small employer health care coverage;

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     (iii) Health benefits plan administration;

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     (iv) Health care finance and accounting;

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     (v) Administering a public or private health care delivery system;

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     (vi) Purchasing health plan coverage;

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     (vii) Labor-management relations;

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     (viii) State employee health purchasing;

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     (ix) Electronic commerce; and

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     (x) Promoting health and wellness.

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     (b) The governor shall consider the expertise of the other members of the board and

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attempt to make appointments so that the board’s composition reflects a range and diversity of

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skills, backgrounds, and geographic and stakeholder perspectives.

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     (c) Each member of the board shall have the responsibility and duty to meet the

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requirements of this chapter, the federal act, and all applicable state and federal laws and

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regulations, to serve the public interest of the individuals and small businesses seeking health care

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coverage through the exchange, and to ensure the operational well-being and fiscal solvency of

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the exchange.

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     (d) A member of the board or of the staff of the exchange shall not be employed by, a

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consultant to, a member of the board of directors of, affiliated with, or otherwise a representative

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of, an insurer, a health insurance agent or broker, a health care provider, or a health care facility

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or health clinic while serving on the board or on the staff of the exchange. A member of the board

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or of the staff of the exchange shall not be a member, a board member, or an employee of a trade

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association of insurers, health facilities, health clinics, or health care providers while serving on

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the board or on the staff of the exchange. A member of the board or of the staff of the exchange

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shall not be a health care provider unless he or she receives no compensation for rendering

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services as a health care provider and does not have an ownership interest in a professional health

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care practice.

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     (e) A board member shall not receive compensation for his or her service on the board

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but may receive a per diem and reimbursement for travel and other necessary expenses, while

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engaged in the performance of official duties of the board.

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     (f) Each board member shall, before entering upon his or her duties, take an oath to

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administer the duties of his or her office faithfully and impartially, and the oath shall be filed in

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the office of the secretary of state.

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     (g) There shall not be any liability in a private capacity on the part of the board or any

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member of the board, or any officer or employee of the board, for or on account of any act

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performed or obligation entered into in an official capacity, when done in good faith, without

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intent to defraud, and in connection with the administration, management, or conduct of this title

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or affairs related to this title.

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     42-155-7. Members--Term of Office--Vacancies. -- (a) Three (3) of those new members

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first appointed by the governor pursuant to subdivision (a)(4) shall serve initial terms of three (3)

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years; two (2) of those new members first appointed by the governor pursuant to subdivision

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(a)(4) shall serve an initial term of two (2) years; and two (2) of those new members, appointed

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by the governor pursuant to subdivision (a)(4), shall serve an initial term of one year. Thereafter,

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all appointed members of the board shall be appointed to serve for terms of three (3) years.

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     (b) The board members are eligible to succeed themselves.

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     (c) A vacancy other than by expiration shall be filled in the manner of the original

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appointment but only for the unexpired portion of the term.

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     (d) Members of the board shall be removable by the governor pursuant to the provisions

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of section 36-1-7 of the general laws and for cause only, and removal solely for partisan or

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personal reasons unrelated to capacity or fitness for the office shall be unlawful.

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     42-155-8. Officers--Quorum and vote required for action--Executive director. -- (a)

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The governor, upon the appointment of the appointed members of the board, shall select from the

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appointed members a chairperson and vice chairperson. The board shall thereupon select a

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secretary from among its membership. A quorum shall consist of six (6) members of the board. A

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majority vote of those present shall be required for action.

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     (b) The governor shall appoint an executive director, subject to the advice and consent of

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the senate, to organize, administer, and manage the operations of the exchange. The executive

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director shall be exempt from civil service and shall serve at the pleasure of the governor.

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     42-155-9. Training requirements. -- The board shall conduct a training course for newly

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appointed and qualified members within six (6) months of their qualification or designation. The

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course shall be developed by the chair or the executive director of the exchange. The board may

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approve the use of any board and/or staff member and/or individuals to assist with training. The

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training course shall include instruction in the following areas: the provisions of chapters 42-46,

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36-14, and 38-2; and the board’s rules and regulations. The director of the department of

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administration shall, within ninety (90) days of the effective date of this act, prepare and

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disseminate training materials relating to the provision of chapters 42-46, 36-14, and 38-2.

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     42-155-10. Advisory committee. -- The board shall form an advisory committee,

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comprised of experts in the health care field, including, but not limited to, health insurers,

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insurance brokers, and health care providers. The advisory committee shall provide advice, data,

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and suggestions to the board, and shall provide input into the board recommendations to the

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governor and general assembly as required in this chapter.

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     42-155-11. Planning, establishment, and recommendations. -- (a) The board shall

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apply for any and all grants made available to the exchange pursuant to section 1311 or other

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sections of the federal act. The exchange shall use the services of the office of the health

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insurance commissioner as needed.

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     (b) The board shall be responsible for using the funds awarded by the United States

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secretary of health and human services for the planning and establishment of the exchange,

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consistent with subdivision (b) of section 1311 of the federal act. The exchange shall use the

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services of the office of the health insurance commissioner as needed.

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     (c) The functions and operations of the exchange shall not expand beyond the minimum

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requirements of the federal act without further action by the legislature. No later than January 1,

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2014, the board shall submit a report to the governor and general assembly addressing the

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following, at a minimum:

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     (1) Progress organizing the exchange and the plan for implementation of each of the

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duties articulated in section 1311 of the federal act, including any perceived obstacles to full

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implementation;

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     (2) Plans for the information technology that will support the exchange, including any

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joint purchasing arrangements and opportunities for federal financing;

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     (3) Data analysis and recommendations regarding the costs, benefits, and market impacts

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associated with any expansion of the exchange functions and scope beyond the duties articulated

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in section 1311 of the federal act. Include in this analysis an assessment of the basic health plan

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option, as well as the estimated impact on premiums associated with mandating expanded

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participation in the exchange by groups not included in section 1311 of the federal act;

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     (4) Recommendations to achieve financial self-sufficiency for the exchange, and an

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analysis of the costs and benefits to purchasers, and market impacts of each recommendation.

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     (5) The exchange shall consider the extent to which benefits for Christian Scientist

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spiritual care services are made available under the exchange so long as such benefits do not

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result in additional cost to the state pursuant to the federal act.

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     42-155-12. General requirements. -- (a) The exchange shall make qualified health plans

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available to qualified individuals and qualified employers beginning with effective dates on or

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before January 1, 2016.

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     (b) The exchange shall not make available any health benefit plan that is not a qualified

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health plan.

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     (c) The exchange shall allow an insurer to offer a plan that provides limited scope dental

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benefits meeting the requirements of section 9832 (c)(2)(A) of the internal revenue code of 1986

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through the exchange, either separately or in conjunction with a qualified health plan, if the plan

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provides pediatric dental benefits meeting the requirements of section 1302(b)(1)(J) of the federal

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act, provided that the limited scope dental benefits, the pediatric dental benefits, and the other

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health benefits coverage provided by the carrier are priced separately and are also made available

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for purchase at the same price.

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     (d) No health plan under which coverage is purchased in whole or in part with any state

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or federal funds through the exchange, shall provide coverage for induced abortions, except

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where the life of the mother would be endangered if the fetus were carried to term or where the

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pregnancy resulted from rape or incest. Coverage is deemed to be purchased with state or federal

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funds if any tax credit or cost sharing credit is applied toward the health plan. This subsection

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does not prevent an insurer from providing any person or entity with an optional rider, for which

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there must be paid a separate premium for induced abortions; providing, however, that such

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coverage is not purchased in whole or part with any state or federal funds.

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     (e) The exchange shall do all that is necessary to implement the requirements of section

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1311 of the federal act.

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     42-155-13. Purchases. -- The exchange shall be considered a public agency and subject

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to the provisions of chapter 2 of title 37 entitled, "state purchases."

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     42-155-14. Rules and regulations. -- The exchange may adopt rules and regulations or

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any amendments to rules and regulations according to the provisions of chapter 35 of title 42.

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     42-155-15. Applicability of other laws. -- The exchange shall be subject to the

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provisions of chapter 2 of title 38 ("access to public records") and chapter 46 of this title ("open

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meetings") and, in addition, the members of the board shall be subject to the provisions of chapter

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14 of title 36 ("code of ethics").

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     42-155-16. Financial accountability. -- (a) The board shall ensure that the

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establishment, operation, and administrative functions of the exchange do not exceed the

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combination of federal funds, private donations, and other non-state general revenue funds

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available for this purpose. In accordance with the federal act, effective January 1, 2017, no state

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general revenue monies shall be used for the purposes of this chapter; and no liability incurred by

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the exchange or any of its officers or employees may be satisfied using moneys from state general

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revenue.

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     (b) The implementation of the provisions of the chapter, other than section 42-155-4 and

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subdivision 42-155-5(10) shall be contingent on a determination by the board that sufficient

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financial resources exist or will exist to fund the exchange. The determination shall be based on at

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least the following:

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     (1) Financial projections identifying that sufficient resources exist or will exist to

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implement the exchange.

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     (2) A comparison of the projected resources available to support the exchange and the

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projected costs of activities required by this chapter.

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     (3) The financial projections demonstrate the sufficiency of resources for at least the first

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two (2) years of operation under this chapter.

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     (c) The board shall provide notice to the governor, the speaker of the house and the

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senate president that sufficient financial resources exist in the fund to implement this chapter.

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     (d) If the board determines that the level of resources cannot support the actions and

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responsibilities described in subsection (a), it shall provide the governor, the speaker of the house

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and the senate president a detailed report on the changes to the functions, contracts, or staffing

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necessary to address the fiscal deficiency along with any contingency plan should it be impossible

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to operate the exchange without the use of state general revenue moneys.

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     (e) The board, working with the executive office of health and human services, shall

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assess the impact of the exchange’s operations and policies on other publicly funded health

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programs administered by the state and the impact of publicly funded health programs

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administered by the state on the exchange’s operations and policies. This assessment shall

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include, at a minimum, an analysis of potential cost shifts or cost increases in other programs that

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may be due to exchange policies or operations. The assessment shall be completed on at least an

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annual basis and submitted to the governor, the speaker of the house and the senate president.

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     42-155-17. Audit. -- (a) The exchange shall cause a financial and/or performance audit of

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its functions and operations in compliance with the generally acceptable governmental auditing

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standards and conducted by the auditor general or a certified public accounting firm qualified in

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performance audits.

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     (b) The audit shall be performed as often as deemed appropriate by the auditor general.

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The auditor general shall determine the scope of the audit.

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     (c) If the audit is not directly performed by his or her office, the selection of the auditor

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and the scope of the audit shall be subject to the approval of the auditor general.

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     (d) The results of the audit shall be made public upon completion, posted on the

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exchange's website and otherwise made available for public inspection.

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     42-155-18. Relation to other laws. – Nothing in this chapter, and no action taken by the

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exchange pursuant to this chapter, shall be construed to preempt or supersede the authority of the

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health insurance commissioner to regulate the business of insurance within this state, the director

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of the department of health to oversee the licensure of health care providers, the certification of

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health plans under chapter 23-17.13, or the licensure of utilization review agents under chapter

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23-17.12, or the director of the department of human services to oversee the provision of medical

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assistance under chapter 40-8. Except as expressly provided to the contrary in this chapter, all

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insurers offering qualified health plans or qualified dental plans in this state shall comply fully

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with all applicable health insurance laws and regulations of this state.

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     42-155-19. Severability. -- The provisions of this chapter are severable, and if any

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provision hereof shall be held invalid in any circumstances, any invalidity shall not affect any

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other provisions or circumstances. This chapter shall be construed in all respects so as to meet

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any constitutional requirements. In carrying out the purposes and provisions of this chapter, all

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steps shall be taken which are necessary to meet constitutional requirements.

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     SECTION 2. This act shall take effect upon passage.

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LC01370

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- HEALTH CARE--HEALTH

BENEFIT EXCHANGE

***

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     This act would create the Rhode Island health benefit exchange, a quasi-government

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which would facilitate the purchase and sale of health plans and dental plans for qualified small

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employers in this state in the enrollment of their employees; reduce the number of uninsured; and

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assist individuals with access to programs, tax credits and subsidies. This act would also spell out

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the administrative authority of the executive board, how the members are selected and the manner

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in which they would operate.

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     This act would take into effect upon passage.

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LC01370

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