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05-A HIPAA Opt OutAGENDA INFORMATION SHEET PROJECT: Consider resolution exempting the City of Paris'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 of the enclosed resolution and the accompanying standard election form and notice to enrollees to exempt the City from coverage under the Federal statutes. RECOMMENDED ACTION: Consider approval of the resolution and the accompanying exemption form and notice to enrollees. 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 itself from the Federal statutes must be completed prior to May 1, 2003. COUNCIL DATE: Consider for action at City Council's March 8, 2004, regular Council meeting. ADDITIONAL MATERIALS: See enclosed resolution and attached exemption form and notice to enrollees. DRAFT F:kAttorney\LisahO. esolutions\CURRENT~HIPAA Opt-Out Res-2004.wpd February 17, 2004 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 AND NOTICE FORMS UNDER 42 U.S.C. SEC. 300GG-21; MAKING 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, to establish parity in the application of mental health benefits, and to address women's health and cancer rights; and, WHEREAS, the City of Paris'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 of the City of Paris 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 continue to exempt itself to avoid the potential of financial penalties, and it is deemed appropriate that such recommendation be taken; and, WHEREAS, the forms for the election and notice to enrollees under 42 U.S.C. Sec. 300gg- 21, attached hereto as Exhibit A, the same being the model form election and notice as set out in 45 C.F.R. Part 146 of the Federal Regulations 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 of Election and the form of Notice to Enrollees 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 are hereby, approved. Section 3. That the 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 and distribute the accompanying notice to enrollees 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 8th day of March, 2004. ATTEST: Curtis Fendley, Mayor Mattie Cunningham, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney March 8, 2004 HCFA Attn: David Holstein 7500 Security Blvd. Room S-L17 Baltimore, MD 21244-1850 RE: Election to be exempted from certain 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 May 1, 2004. Limitations on pre-existing condition exclusion periods (146.111); Special enrollment periods for individuals (and dependents) losing other coverage and special enrollment periods with respect to certain dependent beneficiaries (146.117); Prohibitions against discriminating against individual participants and beneficiaries based on health status (146.121); Standards relating to benefits for mothers and newborns (section 2704 of the PHS Act); Parity in the application of certain limits to mental health benefits. Benefits relating to women's health and cancer rights (section 903 of the PHS 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 do not prevent an election under Sec. 146.180(3) of 45 C.F.R. Part 16 of the Federal Regulations) that reimburse the City for medical claims paid in excess of stop loss levels. EXHIBIT A The City of Paris's group medical plan is identified as follows: Name of Plan: Plan Sponsor: Plan Manager: City of Paris, Texas Intergovernmental Employee Benefits Pool City of Paris W. E. Anderson As Plan Manager, I certify that I am authorized to submit this election on behalf of the Plan Sponsor, the 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 FEDERAL LAW IMPOSES UPON GROUP HEALTH PLANS CERTAIN LIMITATIONS OF PREEXISTING CONDITION EXCLUSION PERIODS. SPECIAL ENROLLMENT PERIODS FOR INDIVIDUALS (AND DEPENDENTS) LOSING OTHER COVERAGE, PROHIBITIONS AGAINST DISCRIMINATING AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS. STANDARDS RELATING TO BENEFITS FOR MOTHERS AND NEWBORNS. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH BENEFITS, AND A WOMAN'S RIGHT TO TREATMENT OF THE UNAFFECTED BREAST FOLLOWING A MASTECTOMY. FEDERAL LAW ALLOWS A NON-FEDERAL GOVERNMENTAL PLAN (SUCH AS THE CITY OF PARIS'S PLAN) TO EXEMPT ITS PLAN IN WHOLE OR IN PART FROM THESE REQUIREMENTS. THE CITY OF PARIS HAS ELECTED TO BE EXEMPT FROM THE FOLLOWING REQUIREMENTS: LIMITATIONS ON PREEXISTING CONDITION EXCLUSION PERIODS: SPECIAL ENROLLMENT PERIODS FOR INDIVIDUALS (AND DEPENDENTS) LOSING COVERAGE: PROHIBITIONS AGAINST DISCRIMINATING AGAINST iNDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS: STANDARDS RELATING TO BENEFITS FOR MOTHERS AND NEWBORNS: PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH BENEFITS: AND A WOMAN'S RIGHT TO TREATMENT OF THE UNAFFECTED BREAST AND RECONSTRUCTIVE SURGERY FOLLOWING A MASTECTOMY. BECAUSE OF THIS ELECTION, EMPLOYEES AND DEPENDENTS WILL BE SUBJECT TO BENEFIT LIMITS EVEN IF THEY HAD 12 OR 18 MONTHS OF COVERAGE UNDER ANOTHER PLAN WITHIN THE LAST 63 DAYS, THE DURATION OF A HOSPITAL CONFINEMENT FOR A MOTHER AND NEWBORN FOLLOWING THE BIRTH OF A CHILD WILL BE DETERMINED ON MEDICAL NECESSITY. AND MENTAL HEALTH BENEFITS HAVE AN ANNUAL MAXIMUM WHICH IS LES S THAN THE MAXIMUMS FOR OTHER MEDICAL CONDITIONS. EVEN THOUGH THE PLAN IS EXEMPT, EMPLOYEES AND DEPENDENTS WILL BE ABLE TO ENROLL IF THEY HAVE A QUALIFYING EVENT DURING THE PLAN YEAR AS SET FORTH IN THIS BOOKLET AND NO INDIVIDUAL WILL BE DECLINED COVERAGE OR CHARGED A HIGHER RATE BASED ON A MEDICAL CONDITION. THE PLAN'S QUALIFYING EVENTS ARE MORE LIBERAL THAN THE FEDERAL LAW. THE ENTIRE PLAN IS SUBJECT TO THIS EXEMPTION. THE EXEMPTION FROM THESE FEDERAL REQUIREMENTS WILL BE IN EFFECT FOR THE 2004 PLAN YEAR BEGINNING MAY 1, 2004, AND ENDING APRIL 30, 2005. THE ELECTION MAY BE RENEWED FOR SUBSEQUENT PLAN YEARS. HIPAA ALSO REQUIRES THE PLAN TO PROVIDE COVERED EMPLOYEES AND DEPENDENTS WITH A "CERTIFICATE OF CREDITABLE COVERAGE" WHEN THEY CEASE TO BE COVERED UNDER THE PLAN. THERE IS NO EXEMPTION FROM THIS REQUIREMENT. THE CERTIFICATE PROVIDES EVIDENCE THAT YOU WERE COVERED UNDER THIS PLAN, BECAUSE IF YOU CAN ESTABLISH YOUR PRIOR COVERAGE, YOU MAY BE ENTITLED TO CERTAIN RIGHTS TO REDUCE OR ELIMINATE A PREEXISTING CONDITION EXCLUSION IF YOU JOIN ANOTHER EMPLOYER'S HEALTH PLAN, OR IF YOU WISH TO PURCHASE AN INDIVIDUAL HEALTH INSURANCE POLICY. IF YOU HAVE ANY QUESTIONS, CONTACT TERRI LEIGH MADDING AT 784-9288.