SB 288: "An Act establishing the Alaska Health Purchasing Alliance; relating to group health insurance provided to employees of the University of Alaska, to employers and employees, to uninsured residents of the state, to certain Medicaid enrollees, and to persons in state custody; and providing for an effective date."

00SENATE BILL NO. 288 01 "An Act establishing the Alaska Health Purchasing Alliance; relating to group 02 health insurance provided to employees of the University of Alaska, to employers 03 and employees, to uninsured residents of the state, to certain Medicaid enrollees, 04 and to persons in state custody; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. PURPOSE. It is the purpose of this Act to provide comprehensive group 07 health insurance to as many residents of the state as possible and to do so in a cost-effective 08 manner by pooling insured groups under a state group health insurance policy or policies. It 09 is also the purpose of this Act to allow the expansion of the existing state group health 10 insurance pool in a manner that does not affect the existing collective bargaining process 11 between the state and employee unions and only after the state has determined that pooling 12 insured groups will result in cost savings to the state. 13 * Sec. 2. AS 14.40.170(b) is amended to read: 14  (b) The Board of Regents may

01  (1) adopt reasonable rules, orders, and plans with reasonable penalties 02 for the good government of the university and for the regulation of the Board of 03 Regents; 04  (2) determine and regulate the course of instruction in the university 05 with the advice of the president; 06  (3) set student tuition and fees; 07  (4) receive and spend university receipts in accordance with AS 37.07 08 ( [THE] Executive Budget Act); 09  (5) provide group health insurance for employees of the university 10 by participation in a state group health insurance policy provided under AS 21.58 11 [(AS 37.07)]. 12 * Sec. 3. AS 21 is amended by adding a new chapter to read: 13 CHAPTER 58. ALASKA HEALTH PURCHASING ALLIANCE. 14  Sec. 21.58.010. CREATION AND PURPOSE. (a) The Alaska Health 15 Purchasing Alliance is established. The alliance is a public corporation and an 16 instrumentality of the state in the Department of Commerce and Economic 17 Development but has a legal existence independent of and separate from the state. The 18 exercise by the alliance of the powers conferred by this chapter is considered an 19 essential function of the state. 20  (b) The purposes of the alliance are to establish group health insurance pools, 21 to provide pooled group health insurance coverage to residents of the state, and to 22 administer pooled group health insurance coverage obtained by the alliance. 23  Sec. 21.58.020. BOARD OF DIRECTORS. The alliance is managed by a 24 board of five directors. 25  Sec. 21.58.030. APPOINTMENT AND REMOVAL OF DIRECTORS. (a) 26 The directors of the alliance are appointed by the governor, subject to confirmation by 27 the legislature. A director may be removed only for good cause. 28  (b) In appointing directors to the board, the governor shall ensure that 29  (1) a majority of the board are experts in health insurance and fairly 30 represent the interests of the enrollees in having access to quality and affordable group 31 health insurance;

01  (2) the interests of consumers and health care providers are fairly 02 represented; 03  (3) the director is a resident of the state; and 04  (4) the board has a gender and geographic composition that 05 approximates the population of the state. 06  Sec. 21.58.040. TERM OF SERVICE. The term of a director is four years. 07 Terms of directors shall be staggered. A director may be appointed to successive 08 terms. A director appointed to fill a vacancy serves for the unexpired term of the 09 director. A term shall be measured from January 1 of the year in which the term of 10 the vacant position begins, regardless of when the vacancy is filled. 11  Sec. 21.58.050. COMPENSATION AND EXPENSES. A director is entitled 12 to receive compensation at the rate of $400 for each day spent in performing duties 13 as a board member and to travel and per diem expenses authorized by law for boards 14 and commissions under AS 39.20.180. 15  Sec. 21.58.060. OFFICERS. At the first meeting of each year, the board of 16 the alliance shall elect a chair and a vice-chair from among its members. The alliance 17 shall prescribe their duties by regulation. 18  Sec. 21.58.070. MEETINGS AND QUORUM. The board of the alliance shall 19 meet at least once every three months. Four members of the board constitute a 20 quorum for the transaction of business and the exercise of the powers and duties of the 21 alliance. 22  Sec. 21.58.080. ADMINISTRATIVE PROCEDURE. Actions of the alliance 23 under this chapter are subject to AS 44.62 (Administrative Procedure Act). 24  Sec. 21.58.090. STAFF AND PROFESSIONAL SERVICES CONTRACTS. 25 The alliance shall employ an executive director who serves at the pleasure of the 26 alliance as its chief administrative officer. The executive director may, with the 27 approval of the alliance, select and employ additional staff as necessary. The 28 executive director is in the exempt service under AS 39.25.110. Employees of the 29 alliance other than the executive director are in the classified service under 30 AS 39.25.100. In addition to its staff of regular employees, the alliance may contract 31 for the services of consultants and professional, technical, and financial advisors the

01 alliance considers necessary for the purpose of developing information, conducting 02 hearings, studies, investigations, or other proceedings, or otherwise exercising its 03 powers. 04  Sec. 21.58.100. GENERAL POWERS. The alliance may 05  (1) sue or be sued; 06  (2) make contracts and execute all instruments necessary or convenient 07 for carrying out its business; 08  (3) establish administrative or accounting procedures; 09  (4) acquire, own, hold, dispose of, and encumber personal property and 10 lease real property in the exercise of its powers; 11  (5) establish appropriate levels of reserves to cover expenses of the 12 alliance; 13  (6) perform all other acts necessary and proper to carry out the duties 14 of the alliance. 15  Sec. 21.58.110. DUTIES. The alliance shall 16  (1) procure a policy or policies of group health insurance as required 17 under AS 21.58.130; 18  (2) adopt regulations to implement this chapter; 19  (3) develop a benefits package that includes different levels of group 20 health care services that enrollees in the state group health insurance policy are entitled 21 to receive and determine the eligibility requirements for enrollment; 22  (4) at least annually, review the group health care benefits package and 23 revise it as determined by the alliance, taking into consideration the health needs of 24 the state, available funding, and other relevant factors as determined by the alliance; 25  (5) with funds from the state group health fund, procure coverage 26 required under the state group health insurance plan; the alliance may procure coverage 27 from one or more companies licensed to transact group health insurance in the state 28 for all persons who are eligible to be enrollees of the state group health insurance plan; 29 and 30  (6) hold public meetings and annually report to enrollees, the governor, 31 and the legislature.

01  Sec. 21.58.120. GROUP HEALTH INSURANCE FUND. The state group 02 health insurance fund is established as a separate account in the general fund. The 03 fund shall be administered by the alliance and used to purchase group health or life 04 insurance under AS 21.58.110 or 21.58.130. The fund consists of appropriations by 05 the legislature, individual or employer contributions, and private or government grants. 06  Sec. 21.58.130. PROCUREMENT OF GROUP INSURANCE. (a) The 07 alliance 08  (1) shall solicit proposals from insurance companies that are licensed 09 to transact group health or life insurance in the state under the procurement procedures 10 adopted by the alliance under AS 36.30.015(e); and 11  (2) shall select one or more companies with which it will contract to 12 provide group health or life insurance, after considering the cost of the insurance, the 13 availability from the company of program features directed at reducing the cost of 14 providing the insurance, and other relevant factors as determined by the alliance. 15  (b) The alliance may contract for insurance coverage for enrollees for a term 16 that it considers to be the most advantageous to the alliance and its enrollees, for a 17 period not exceeding three years. 18  Sec. 21.58.140. ENROLLEES. (a) A person is eligible to be an enrollee in 19 the state group health or life insurance plan under this chapter in a given year if the 20 person is a resident of the state, has complied with the procedures established by the 21 alliance under (d) of this section, and the person is 22  (1) an employee of the state; 23  (2) an employee of a municipality; 24  (3) an employee of a school district; 25  (4) an employee of the University of Alaska; 26  (5) an employee of the North Pacific Management Council; 27  (6) a Medicaid enrollee; 28  (7) uninsured; 29  (8) an employer in this state or an employee of an employer in this 30 state; 31  (9) a person committed to the custody of the state; or

01  (10) a licensee holding a current operating agreement for a vending 02 facility under AS 23.15.110 - 23.15.210. 03  (b) For purposes of enrollment, the alliance shall by regulation define 04 residency in a manner that is consistent with AS 01.10.055 and with this chapter. A 05 person who is eligible to be an enrollee shall be enrolled by the alliance in the state 06 group health insurance plan and a spouse or unmarried children who are dependents 07 of the enrollee shall be enrolled in the state group health insurance plan. 08  (c) The alliance shall cancel an enrollee's coverage if, during the fiscal year, 09 the enrollee becomes ineligible to be an enrollee. 10  (d) The alliance shall establish by regulation appropriate procedures for 11 processing applications for enrollment, for determining the eligibility of enrollees, for 12 enrolling enrollees, for determining and collecting the applicable fees, for canceling 13 an enrollee's coverage, and for processing appeals by enrollees of adverse decisions 14 by the alliance regarding eligibility, enrollment, determination or collection of 15 applicable fees, or cancellation of coverage. 16  Sec. 21.58.150. DISCRIMINATION AGAINST ENROLLEES PROHIBITED. 17 A health care provider may not discriminate against an enrollee with respect to the 18 availability, cost, or quality of health care services wholly or in part on the basis of 19 the person's status as an enrollee. 20  Sec. 21.58.160. CONFIDENTIALITY OF ENROLLEE INFORMATION. 21 Medical and financial information regarding applicants or current or former enrollees 22 is confidential and is not subject to public disclosure. The alliance by regulation may 23 establish reasonable standards for the release of limited information in specified 24 circumstances, including the release of reasonably necessary information to insurance 25 companies and the release of information with the written authorization of the 26 applicant or enrollee. 27  Sec. 21.58.170. GROUP HEALTH INSURANCE PLAN. (a) The alliance 28 shall adopt regulations specifying the group health care services required to be covered 29 by state group health insurance, taking into consideration the services requested by the 30 public, the needs and characteristics unique to state residents, the goal of prevention 31 of illness and promotion of wellness, the cost of providing the benefits package, the

01 cost of providing or procuring the group insurance coverage, and the funds available 02 in the state group health insurance fund. 03  (b) The alliance shall conduct a comprehensive public involvement process 04 designed to solicit information and opinions regarding the services required to be 05 covered under (a) of this section. 06  Sec. 21.58.180. PREMIUMS. A premium may be charged to an enrollee for 07 coverage as established by the alliance by regulation. In establishing a premium, the 08 alliance shall establish a standard fee and a sliding scale fee and shall consider the cost 09 of coverage, funding available, and other factors the alliance determines are relevant. 10  Sec. 21.58.190. SOLICITATION OF ELIGIBLE PERSONS. The alliance, 11 under a plan approved by the director, shall disseminate appropriate information to the 12 residents of the state regarding the existence of the state group health insurance plan 13 and the means of enrollment. 14  Sec. 21.58.200. REVIEW AND REPORT ON GROUP HEALTH CARE 15 EXPENDITURES. The alliance shall annually review and report to the legislature and 16 the governor on the total amount of group health care expenditures in the state and the 17 amount of increase or decrease in group health care expenditures in the state. 18  Sec. 21.58.400. DEFINITIONS. In this chapter, 19  (1) "alliance" means the Alaska Health Purchasing Alliance established 20 in AS 21.58.010; 21  (2) "enrollee" means a person whose application for coverage under the 22 state group health insurance plan has been accepted by the alliance, who has completed 23 applicable enrollment procedures, and who is covered by group health insurance; 24  (3) "group health insurance company" means an insurer that is 25 authorized to transact group health insurance and includes a hospital service 26 corporation, a medical service corporation, or a health maintenance organization; 27  (4) "health care services" means preventive, diagnostic, medical, 28 surgical, reproductive, psychiatric, psychologic, rehabilitative, health maintenance, 29 dental, podiatric, optometric, optical, audiologic, nutritive, and chiropractic care; 30 prescription drugs, laboratory and radiologic services, medical supplies, durable 31 medical equipment and devices; personal assistance services; inpatient and outpatient

01 care; home health care; hospice care; and long-term or institutional care; 02  (5) "health insurance" means a group contract or other plan providing 03 group coverage of health care services, accidental death and dismemberment insurance, 04 or indemnity insurance, that is issued by a health insurance company, a hospital service 05 corporation, a medical service corporation, or a health maintenance organization; 06 "health insurance" includes disability insurance under AS 21.12.050; 07  (6) "state group health insurance fund" is the fund established in 08 AS 21.58.120; 09  (7) "uninsured" means a person who is not covered by an individual 10 or group health insurance plan. 11 * Sec. 4. AS 23.15.136 is amended to read: 12  Sec. 23.15.136. GROUP INSURANCE FOR CERTAIN LICENSEES. The 13 agency shall purchase group insurance coverage under AS 21.58.130 [AS 39.30.090] 14 for licensees holding current operating agreements. The employer share of the 15 insurance premium shall be paid from the vocational rehabilitation small business 16 enterprise revolving fund. 17 * Sec. 5. AS 24.20.206 is amended to read: 18  Sec. 24.20.206. DUTIES. The Legislative Budget and Audit Committee shall 19  (1) report to the legislature its recommendations relating to the 20 confirmation of appointees to the Board of Trustees of the Alaska Permanent Fund 21 Corporation; 22  (2) annually review the long-range operating plans of all agencies of 23 the state that perform lending or investment functions; 24  (3) review periodic reports from all agencies of the state that perform 25 lending or investment functions; 26  (4) prepare a complete report of investment programs, plans, 27 performance, and policies of all agencies of the state that perform lending or 28 investment functions and notify the legislature within 30 days after the convening of 29 each regular session that the report is available; 30  (5) in conjunction with the finance committee of each house 31 recommend annually to the legislature the investment policy for the general fund

01 surplus and for the income from the permanent fund; 02  (6) provide for an annual post audit and annual operational and 03 performance evaluation of the Alaska Permanent Fund Corporation investments and 04 investment programs; 05  (7) provide for an annual operational and performance evaluation of the 06 Alaska Housing Finance Corporation and the Alaska Industrial Development and 07 Export Authority; the performance evaluation must include, but is not limited to, a 08 comparison of the effect on various sectors of the economy by public and private 09 lending, the effect on resident and nonresident employment, the effect on real wages, 10 and the effect on state and local operating and capital budgets of the programs of the 11 Alaska Housing Finance Corporation and the Alaska Industrial Development and 12 Export Authority; 13  (8) provide assistance to the trustees of the trust established in 14 AS 37.14.400 - 37.14.450 in carrying out their duties under AS 37.14.415; 15  (9) provide for an annual post audit and annual operational and 16 performance evaluation of the Alaska Health Purchasing Alliance. 17 * Sec. 6. AS 36.30.015(e) is amended to read: 18  (e) The board of directors of the Alaska Railroad Corporation, [AND] the 19 board of directors of the Alaska Aerospace Development Corporation, and the board 20 of directors of the Alaska Health Purchasing Alliance shall adopt procedures to 21 govern the procurement of supplies, services, professional services, and construction. 22 The procedures must be substantially equivalent to the procedures prescribed in this 23 chapter and in regulations adopted under this chapter. 24 * Sec. 7. AS 37.05.146(4)(R) is amended to read: 25  (R) receipts of the group insurance programs established under 26 AS 21.58 [AS 39.30.090]; 27 * Sec. 8. AS 37.07.030 is amended to read: 28  Sec. 37.07.030. RESPONSIBILITIES OF THE LEGISLATURE. The 29 legislature shall 30  (1) provide for a budget review function; 31  (2) analyze the comprehensive operating and capital improvements

01 programs and financial plans recommended by the governor; 02  (3) adopt legislation to authorize implementation of the governor's 03 comprehensive operating and capital improvements programs and financial plans or 04 appropriate alternatives to those plans; 05  (4) provide for a post-audit function to cover financial transactions, 06 program accomplishment, and compliance with legislative intent; 07  (5) adopt or revise the estimate of receipts required to balance the 08 succeeding fiscal year's budget in order that proposed expenditures do not exceed 09 estimated receipts for that fiscal year; 10  (6) adopt, revise, or initiate revenue measures in order to balance the 11 succeeding fiscal year's budget and the capital improvements section of the budget for 12 the succeeding six years; 13  (7) appropriate funds for the operation of the Alaska Health 14 Purchasing Alliance. 15 * Sec. 9. AS 39.25.110 is amended by adding a new paragraph to read: 16  (31) the executive director of the Alaska Health Purchasing Alliance. 17 * Sec. 10. AS 44.62.330(a) is amended by adding a new paragraph to read: 18  (60) Alaska Health Purchasing Alliance. 19 * Sec. 11. AS 39.30.090, 39.30.091, and 39.30.095 are repealed. 20 * Sec. 12. PHASED TRANSITION PERIOD. Notwithstanding the provisions of AS 21.58, 21 the Alaska Health Purchasing Alliance shall implement the provisions of AS 21.58 on an 22 orderly and gradual basis as follows: 23 (1) by December 31, 1996, the alliance shall begin to provide coverage to a 24 person described under AS 21.58.140(a)(1), (4), (5), and (10), or a person eligible for coverage 25 under former AS 39.30.090; 26 (2) by December 31, 1997, the alliance shall begin to provide coverage to a 27 person described under AS 21.58.140(a)(2) and (3); 28 (3) by December 31, 1998, the alliance shall begin to provide coverage to a 29 person described under AS 21.58.140(a)(6) - (9) if the alliance determines that coverage can 30 be provided in a cost-effective manner. 31 * Sec. 13. TRANSITION OF COVERAGE. Notwithstanding the provisions of this Act,

01 insurance coverage provided by the Department of Administration under former AS 39.30.090 02 shall continue until the Alaska Health Purchasing Alliance provides group health or life 03 insurance in place of the coverage offered under former AS 39.30.090. 04 * Sec. 14. TRANSFER OF FUNDS. Money existing in the group health and life benefits 05 fund under AS 39.30.095 on the effective date of this Act shall be transferred by the 06 commissioner of administration into the group health insurance fund under AS 21.58.120. 07 * Sec. 15. The Alaska Health Purchasing Alliance shall conduct a study to determine if 08 pooling insured groups under one state group health insurance policy, as contemplated by this 09 Act, results in group health insurance cost savings to the state and to determine if voluntary 10 participation or mandatory participation in state group health insurance is required to make 11 the program cost effective. The study shall be completed by January 15, 1997, shall be 12 provided to the legislature and, upon request, to a member of the public. 13 * Sec. 16. This Act takes effect July 1, 1996.