SB1497 - 572R - Senate Fact Sheet

Purpose

Requires a school district governing board (governing board) that establishes a
self-insurance program and employs at least 300 employees to obtain quotes for coverage and services at least once every three years. Requires the person who supports a school district's
self-insurance program to provide the school district prescribed insurance information at least 60 days before the end of the current benefit program year.

Background

A governing board may determine that self-insurance is in the best interest of the district and provide for a self-insurance program or programs for the school district, including risk management consultation. A governing board must verify that any risk management consultant or insurance administrator the governing board employs is licensed by the Department of Insurance and Financial Institutions. A school district governing board may: 1) enter into intergovernmental agreements or contracts for participation in programs offered by public agency pools; 2) separately contract with a trustee or board of trustees that provides a common self-insurance program or programs with pooled funds and risks to more than one district, a community college district, or an association of Arizona school districts that is funded by member school districts or a pool created for and operated solely for charter schools; 3) enter into cooperative procurement agreements with other school districts to participate in programs for self-insurance or the joint purchase of insurance; or 4) separately establish a self-insurance program solely for the school district.

If a governing board, either alone, in combination with another school district or with an association of Arizona school districts establishes a self-insurance program, the governing board or an association of school districts must place all funds into a trust to be used for payment of:
1) uninsured losses; 2) claims; 3) defense costs; 4) costs of training designed to reduce losses and claims; 5) the cost of related employee benefits including wellness programs, life, disability and other fully and partially insured group insurance plans; 6) programs that allow for participation in a cafeteria plan that meets federal tax requirements; and 7) costs of administration and other related expenses (A.R.S. § 15-382).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Requires a governing board, if the governing board establishes a self-insurance program and the school district employs at least 300 employees, to obtain quotes for coverage and services from authorized service providers at least once during every three-year period to determine whether comparable coverage and services are available at a more favorable price.

2. Prohibits a governing board from renewing coverage or services from any person that fails to provide timely, accurate and complete information as prescribed.

3. Requires, at least 60 days before the end of the current benefit program year, each trust, insurer, third-party administrator, pharmacy benefit manager or other person who supports a school district's self-insurance program to provide the following information to the school district in an electronic, machine-readable format:

a) monthly enrollment counts by employee-only and dependent tiers for each plan option offered to the school district for the two calendar years that immediately precede the current year;

b) monthly total claims paid for the two calendar years that immediately precede the current year, disaggregated by medical claims and prescription drug claims;

c) a detailed report on individuals whose total claims paid exceeds $50,000 for any of the three calendar years that immediately precede the current year and individuals whose total claims paid is projected to exceed $50,000 for the current year;

d) detailed prescription drug data for the immediately preceding 12-month period for all enrollees;

e) complete documentation for each benefit plan currently available to the school district's employees; and

f) a report of comprehensive eligibility census data for all employees and dependents who participate in the school district's insurance program that is updated not more than 60 days before the report is submitted.

4. Specifies that the detailed report relating to individuals who total claims paid exceed $50,000 must include only de-identified data, comply with the federal Health Insurance Portability and Accountability Act (HIPAA) and include:

a) the total claims paid for each individual;

b) each individual's diagnosis or a description of each individual's medical condition or conditions; and

c) a statement indicating whether each claim is completed with no further health care services expected or is ongoing with additional health care services expected or required to address the individual's diagnosis.

5. Specifies that the detailed prescription drug data must include:

a) the National Drug Code;

b) the date each prescription was filed;

c) the drug name;

d) the total days' supply of the drug;

e) the metric quantity that is dispensed;

f) the ingredient cost;

g) the dispensing fee;

h) the pharmacy provider number;

i) the amount paid by the school district, if any;

j) the amount paid by the enrollee, if any;

k) the total amount of rebates received, including rebates by the drug manufacturer and the method of allocation;

l) the amount of pharmacy benefit manager administrative fees paid, if any;

m) any other fees charged to the school district, including pre-claim fees, network access fees, data or clinical program fees, spread-pricing components and all sources of pharmacy benefit manager compensation charged to the school district; and

n) whether pricing is set on a pass-through or spread basis.

6. Specifies that the documentation for each benefit plan currently available must include:

a) summary benefits and coverage;

b) full plan documents or benefit booklets;

c) prescription drug formularies; and

d) cost-sharing structures, deductibles and out-of-pocket maximums.

7. Specifies that the report relating to comprehensive eligibility census data must include only de-identified data, comply with HIPAA and include the following for each person:

a) date of birth;

b) gender;

c) zip code of residence;

d) coverage tier; and

e) selected plan.

8. Makes technical and conforming changes.

9. Becomes effective on the general effective date.