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06-G HIPAA and PHA Opt-OutAGENDA INFORMATION SHEET PROJECT: Consider resolution exempting the City ofParis's participation in the TML health program from the Health Insurance Portability and Accountability Act (HIPAA) and the Public Health Services Act (PHS). BACKGROUND: Federal legislation allows municipalities such as the City of Paris with self-funded insurance plans, including insurance pools such as the TML Insurance Pool, to exempt itself from the requirements of the Health Insurance Portability and Accountability Act (HIPAA) and the Public Health Services Act (PHS). These exemptions are extended to municipalities as a matter of federal law and are consistent with the Federal Constitution. Cities customarily act on these exemptions because otherwise they adversely affect the cities health plans with regard to pre-qualification and coverage periods for new employees, acceptance of prior participating individuals in other health plans upon employment, and other problems. The City Council has in past years adopted the necessary resolution to exempt the City from these particular federal acts, and doing so again is consistent with said prior Council action and with the City's current involvement in the TML insurance risk pool. DESCRIPTION: Consider adoption ofthe enclosed resolution and the accompanying standard election form to exempt the City from coverage under the Federal statutes. RECOMMENDED ACTION: Consider approval ofthe resolution and the accompanying exemption form. STAFF CONTACT: Gene Anderson, Personnel Director; Larry W. Schenk, City Attorney; Michael E. Malone, City Manager COST: There is no cost incumbent on the City in exercising this opportunity for exemption; there could be considerable cost incurred to the City if the City fails to exempt itself from the statutes. SCHEDULE: The City's action in exempting itselffrom the Federal statutes mustbe completed priar to May 1, 2002. COUNCIL DATE: Consider for action at City Council's March 11, 2002, regular Council meeting. ADDITIONAL MATERIALS: See enclosed resolution and attached exemption form. DRAFT J:Wttorney~isa~esolntionsACiJRRENT~AA OpLOntRes2002.wptl March 4, 2002 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, ELECTING, PURSUANT TO 42 U.S.C. SEC. 300GG-21, EXEMPTION FROM THE REQUIREMENTS OF THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) AND THE PUBLIC HEALTH SERVICES ACT (PHS); AUTHORIZING THE EXECUTION OF THE NECESSARY ELECTION FORMS UNDER 42 U.S.C. SEC. 300GG-21; MAHING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Paris has a uniform group benefits plan that is administered by the Texas Municipal League Intergovernmental Employee Benefits Pool (TML-IEBP); and, WHEREAS, effective with the first plan year following July 1, 1997, the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which establishes a standard definition for what can be considered an existing condition, went into effect, with the effective date for the City of Paris being May 1, 1998; and, WHEREAS, in addition to HIPAA, the Federal Government has amended the Public Health Services Act (PHS) to standardize benefits relating to mothers and newborns and to establish parity in the application of inental health benefits; and, WHEREAS, the City ofParis's employee health benefit plan is a non-Federal governmental plan, and HIPAA allows such plans to elect to be exempt from any or all of this new legislation; and, WHEREAS, the City Council ofthe City ofParis has acted to approved such exemptions in the past and, WHEREAS, because of the severe penalties which are established in the law for non- compliance, the City's plan administrator, TML-IEBP, recommends that the City of Paris continues to exempt itself to avoid the potential of financial penalties, and it is deemed appropriate that such recommendation be taken; and, WHEREAS, the form for the Election Under 42 U.S.C. Sec. 300gg-21, attached hereto as Exhibit A, should, in all things, be approved, and the Personnel Director, as plan manager, should be authorized to execute the same; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the form ofthe Election Under 42 U. S.C. Sec. 300gg-21, which exempts the City of Paris from the requirements of the Health Insurance Portability and Accountability Act (HIPAA) and the Public Health Services Act (PHS), attached hereto as Exhibit A, be, and the same is hereby, approved. Section 3. Thatthe Personnel Director, as plan manager, be, and he is hereby, authorized and directed to execute, on behalf of the City of Paris, the election form pursuant to 42 U.S.C. Sec. 300gg-21, under the terms and conditions and in the form shown in Exhibit A, attached hereto. Section 4. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this l lth day of March, 2002. Michael J. Pfiester, Mayor ATTEST: Thomas E. Haynes, Assistant City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney ~ P ClIT y~ p El i p~A~4 II-. March 12, 2002 HCFA Attn: David Holstein 7500 Security Blvd. Room S-L17 Baltimore, MD 21244-1850 RE: E[ection to be exempted from cenain requirements under HIPAA Dear Mr. Holstein: The City of Paris elects that its group medical plan be exempted from the following requirements of the Health Insurance Portability and Accountability Act of 1996 for the Plan Year beginning October 1, 1999: 1. L'unitations on pre-existing condition exclusion periods (146.111); 2. Special enrollment periods for individuals (and dependents) losing other coverage and special enrollment periods with respect to certain dependent beneficiaries (146.117); 3. Prohibitions against discriminating against individual participants and beneficiaries based on health status (146.121); 4. Standards relating to benefits for mothers and newborns (section 2704 of the PHS Act); 5. Parity in the application of certain limits to mental health benefits; and 6. Benefits relating to women's heal[h and cancer rights (section 903 of the PH5 Act). Treatment or reduction of the non-affected breast following a mastectomy. The medical benefits payable by the City's health plan are self-funded. The plan is protected against catastrophic loss by aggregate and individual stop loss policies which reimburse the City for medical claims paid in excess of stop loss levels. The City of Paris group medical plan is identified as follows: Name of Plan: City of Paris, Texas Intergovernmental Employee Benefits Pool Plan Sponsor: City of Paris Plan Manager: W. E. Anderson P.O. BO% 9037 • PARIS, TEXAS 75461-9037 •(903) 785-7511 • FAX (903) 785-8519 `~?_NBIT A As Plan Manager, I certify that I am authorized to make this election on behalf of the Plan Sponsor, Ahe City of Paris. A copy of the notice to our employees of our election to be exempted is enclosed. This notice will be included as part of our plan's summary plan description, to be distributed upon enrollment and each year to all covered employees. We would appreciate written acknowledgment of this election. Sincerely, W. E. Anderson Personnel Director /lw NOTICE TO PLAN PARTICIPANTS REGARDING THE CITY OF PARIS'S ELECTION UNDER 42 U.S.C 300 gg-21 THIS IS TO NOTIFY YOU THAT FEDERAI, LAW IIvIPOSES UPON GROUP HEALTH PLANS CERTAIN LIIvIITATIONS OF PREEXISTING CONDITION EXCLUSION PERIODS. SPECIAL ENROLLMENT PERIODS FOR INDIVIDUALS (AND DEPENDENTS) LOSING OTHER COVERAGE, PROHIBITIONS AGAINST DISCRIIvIINATING AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS, STANDARDS RELATING TO BENEFITS FOR MOTHERS AND NEWBORNS, AND PARITY IN THE APPLICATION OF CERTAIN LIIvIITS TO MENTAL HEALTH BENEFITS AND A WOMAN'S RIGHT TO TREATMENT OF THE UNAFFECTED BREAST FOLLOWING A MASTECTOMY. FEDERAI, LAW ALLOWS A NON-FEDERAI, GOVERNMENTAL PLAN (SUCH AS THE CITY OF PARIS'S PLAN) TO EXEMPT ITS PLAN IN WHOLE OR IN PART FROM THESE REOLIIREMENTS. THE CITY OF PARIS HAS ELECTED TO BE EXEMPT FROM THE FOLLOWING REOLIIREMENTS: LIMITATIONS ON PREEXISTING CONDITION EXCLUSION PERIODS, SPECIAL ENROLLMENT PERIODS FOR INDIVIDUALS (AND DEPENDENTS) LOSING COVERAGE, PROHIBITIONS AGAINST DISCRIIvIINATING AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS, STANDARDS RELATING TO BENEFITS FOR MOTHERS AND NEWBORNS, AND THE PARITY IN THE APPLICATION OF CERTAIN LIIvIITS TO MENTAL HEALTH BENEFITS. BECAUSE OF THIS ELECTION EMPLOYEES AND DEPENDENTS WII,L BE SUB7ECT TO BENEFIT LIIvIITS EVEN IF THEY HAD 12 OR 18 MONTHS OF COVERAGE LJNDER ANOTHER PLAN WITHIN THE LAST 63 DAYS, THE DLJRATION OF A HOSPITAL CONFINEMENT FOR A MOTHER AND NEWBORN FOLLOWING THE BIRTH OF A CHII,D WII,L BE DETERMIINED ON MEDICAL NECESSITY, AND MENTAL HEALTH BENEFITS HAVE AN ANNTJAL MAXIIvILJM WHICH IS LESS THAN THE MAXIIvILJMS FOR OTHER MEDICAL CONDITION. EVEN THOUGH THE PLAN IS EXEMPT, EMPLOYEES AND DEPENDENTS WII,L BE ABLE TO ENROLL IF THEY HAVE A OUALIFYING EVENT DLJRING THE PLAN YEAR AS SET FORTH IN THIS BOOKLET AND NO INDIVIDUAL WII,L BE DECLINED COVERAGE OR CHARGED A HIGHER RATE BASED ON A MEDICAL CONDITION. THE PLANS OUALIFYING EVENTS ARE MORE LIBERAI, THAN THE FEDERAI, LAW. THE ENTIRE PLAN IS SUB7ECT TO THIS EXEMPTION.