A&F issues municipal health insurance rules

On Aug. 12, the Executive Office for Administration and Finance issued emergency regulations that outline administrative procedures for two aspects of the Municipal Health Insurance Reform Act.

The law, Chapter 69 of the Acts of 2011, charged A&F with promulgating regulations governing the expedited negotiations that will occur between municipalities and employee unions over changes to health insurance plans and for the process to be followed by a municipal health insurance review panel if the matter is not resolved during the expedited negotiations.

For example, the regulations specify the information that is required in notifications that must be sent to the local insurance advisory committee and to the local unions about the proposed modification of employee health plans.

The emergency regulations will expire in three months, at which point A&F will issue permanent regulations.

In order to take advantage of the options for modifying employee health plans under the new law, a community must first adopt Section 21. Under the new regulations, the “appropriate public authority” – the mayor in a city or board of selectmen in a town – must notify each collective bargaining unit and the Retired State, County and Municipal Employees Association at least two calendar days prior to the vote. The vote must be in the following form: “The [name of the political subdivision] elects to engage in the process to change health insurance benefits under M.G.L. Ch.32B, sections 21-23.”

Once the community has adopted Section 21, it may use either Section 22 to modify the insurance “plan design” or Section 23 to transfer employees into the state’s Group Insurance Commission. Both options require benchmarking against the GIC’s most-subscribed plan, which is currently the Tufts Navigator Plan.

Section 22 allows the municipality to change insurance plan features such as co-payments and deductibles to a level not exceeding the dollar amounts of the same items in the most-subscribed GIC plan. The city or town may offer limited networks, but not exclusively. The city or town may introduce tiered networks provided that the dollar amounts of the tiers do not exceed those of the most-subscribed GIC plan.

If the appropriate public authority proposes transferal into the GIC, under Section 23, it must demonstrate that it can save at least 5 percent more than it could by making plan design changes.

In either case, the law mandates a 30-day negotiation period between the appropriate public authority and the Public Employee Committee over the proposed changes. The vote of the Public Employee Committee is weighted based on the membership of each public employee union, with 10 percent of the vote reserved for retirees. If the parties agree on the changes, they are enacted and go into effect for employees after the required 60-day notice. If the change is to transfer subscribers into the GIC, the commission must be notified and the city or town can transfer employees at the next available transfer date.

If the appropriate public authority and the PEC cannot reach agreement, the law mandates the establishment of a three-member Municipal Health Insurance Review Panel. The appropriate public authority chooses one member of the panel, the PEC chooses another, and the third member – an “impartial party” – is chosen from a list provided by the secretary of Administration and Finance. If the community and PEC cannot agree on the impartial party within three days, the A&F secretary will make the decision.

The primary role of the review panel is to certify that the proposal laid out by the appropriate public authority is accurate. If the panel determines that the plan and savings are in accordance with the law, they must certify the changes.

The law requires the appropriate public authority to include in its proposal a plan “to mitigate, moderate or cap the impact of [the proposed health insurance changes] for subscribers, including retirees, low-income subscribers and subscribers with high out-of-pocket health care costs, who would otherwise be disproportionately affected.”

The mitigation plan may include health reimbursement accounts, wellness programs, health care trust funds for emergency medical care, or other specified options. No more than 25 percent of the first-year savings realized by the insurance plan changes shall be allotted to the mitigation plan. The savings that subscribers will realize from reduced insurance premiums may not be included as part of the 25 percent. Savings realized from transferring all eligible retirees into Medicare, as required by the Municipal Health Insurance Reform Act, also may not be counted.

The new regulations require all communities to report to the secretary of Administration and Finance each year comparing their existing health insurance plans with maximum possible savings available by making plan design changes.

Municipal officials are urged to consult with counsel regarding the law and regulations before moving forward.

• Download municipal health reform final emergency regulations (92K Word)