Administrative Services, Facilities Construction and Management

Rule R23-23

Health Reform -- Health Insurance Coverage in State Contracts -- Implementation

Change in Proposed Rule

DAR File No.: 32772
Filed: 08/10/2009 01:31:30 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This change is made at the request of Hunter Finch, Governor's Office of Planning and Budget, to correct an incorrect citation in Subsection R23-23-4(3). The current rule and state law provides for and refers to the benchmark plan which is currently SelectHealth. It would be more efficient and appropriate to post the details of the benchmark plan on the Division of Facilities Construction and Management's (DFCM) website rather than having the contractors contact SelectHealth. This change will delete SelectHealth contact information and insert the DFCM website address.

Summary of the rule or change:

This rule change will correct an incorrect citation in Subsection R23-23-4(3). This change will delete SelectHealth contact information and insert the DFCM website address. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed new rule that was published in the July 15, 2009, issue of the Utah State Bulletin, on page 3. Underlining in the rule below indicates text that has been added since the publication of the proposed new rule mentioned above; strike out indicates text that has been deleted. You must view the change in proposed rule and the proposed new rule together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

• Section 63A-5-205
• Subsection 63A-5-103(1)(e)

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget as this is simply a change to an incorrect citation and relocation of information in the previously filed rule.

local governments:

There is no anticipated cost or savings to local government as this is simply a change to an incorrect citation and relocation of information in the previously filed rule.

small businesses:

There is no anticipated cost or savings to small businesses as this is simply a change to an incorrect citation and relocation of information in the previously filed rule.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated cost or savings to persons other than small businesses, businesses, or local government entities as this is simply a change to an incorrect citation and relocation of information in the previously filed rule.

Compliance costs for affected persons:

There are no anticipated compliance costs for affected persons because this is simply a change to an incorrect citation and relocation of information in the previously filed rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

This change will not cause a fiscal impact because this simply corrects an incorrect citation. This change will not cause a fiscal impact because it is simply a relocation of information. It was determined it will be more efficient and appropriate to post the details of the benchmark plan on the DFCM website rather than having the contractors contact SelectHealth.

Kimberly K. Hood, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Administrative Services
Facilities Construction and Management
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Priscilla Anderson at the above address, by phone at 801-538-9595, by FAX at 801-538-3378, or by Internet E-mail at phanderson@utah.gov
• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at abachman@utah.gov
• La Priel Dye at the above address, by phone at 801-538-3240, by FAX at 801-538-3313, or by Internet E-mail at ldye@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/01/2009

This rule may become effective on:

10/08/2009

Authorized by:

D. Gregg Buxton, Director

R23. Administrative Services, Facilities Construction and Management.

R23-23. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.

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R23-23-4. Applicability of Rule.

(1) Except as provided in Rule R23-23-4(2) below, this Rule R23-23 applies to all contracts entered into by the Division or the Board on or after July 1, 2009, if:

(a) the contract is for design and/or construction; and

(b) the prime contract is in the amount of $1,500,000 or greater; or

(i) a subcontract, at any tier, is in the amount of $750,000 or greater.

(2) This Rule R23-23 does not apply if:

(a) the application of this Rule R23-23 jeopardizes the receipt of federal funds,

(b) the contract is a sole source contract,

(c) the contract is an emergency procurement.

(3) This Rule R23-23 does not apply to a change order as defined in Section [ 63G-6-102] 63G-6-103, or a modification to a contract, when the contract does not meet the initial threshold required by Rule R23-23-4(1).

(4) A person who intentionally uses change orders or contract modifications to circumvent the requirements of subsection (1) is guilty of an infraction.

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R23-23-7. Requirements and Procedures a Contractor Must Follow.

A contractor (including consultants and designers) must comply with the following requirements and procedures in order to demonstrate compliance with Section 63A-5-205.

(1) Demonstrating Compliance with Health Insurance Requirements. The following requirements must be met by a contractor (including consultants, designers and others under contract with the Division) that is subject to the requirements of this Rule no later than the time of execution of the contract:

(a) demonstrate compliance by a written certification to the Director that the contractor has and will maintain for the duration of the contract an offer of qualified health insurance coverage for the contractor's employees; and

(b) The contractor shall also provide such written certification prior to the execution of the contract, in regard to all subcontractors (including subconsultants) at any tier that is subject to the requirements of this Rule.

(2) Recertification. The Director shall have the right to request a recertification by the contractor by submitting a written request to the contractor, and the contractor shall so comply with the written request within ten (10) working days of receipt of the written request; however, in no case may the contractor be required to demonstrate such compliance more than twice in any 12-month period.

(3) Demonstrating Compliance with Actuarially Equivalent Determination. The actuarially equivalent determination required by Subsections 63A-5-205(1)(e)(i) and (iii) is met by the contractor if the contractor provides the Director with a written statement of actuarial equivalency from either the Utah Insurance Department or an actuary selected by the contractor or the contractor's insurer.

For purposes of this Rule R23-23-7(3), actuarially equivalency is achieved by meeting or exceeding any of the following:

(a) In accordance with Section 26-40-106(2)(a), the largest insured commercial enrollment offered by a health maintenance organization in the State, [ which the Children's Health Insurance Program has determined is the SelectHealth plan currently offered by SelectHealth, 4646 West Lake Park Blvd, Salt Lake City, Utah 84130. The reference to SelectHealth herein is to provide an example of a qualifying plan and is not intended to endorse or indicate a preference for the use of SelectHealth as the insurance provider in any way; or] which details of the plan are provided on the website of the Division at http://dfcm.utah.gov/downloads/Health%20Insurance%20Benchmark.pdf; or

(b) provides coverage that is actuarially equivalent to 75 percent of the benefit plan determined under Rule R23-23-7(3)(a) above and employer's premium contribution as required by statute.

(4) The health insurance must be available upon the first of the month following the initial ninety (90) days from the beginning of employment.

(5) Architect and Engineer Compliance Process. Architects and engineers that are subject to this Rule must demonstrate compliance with this Rule in any annual submittal under Section 63G-6-702. During the procurement process and no later than the execution of the contract with the architect or engineer, the architect or engineer shall confirm that their applicable subcontractors or subconsultants meet the requirements of this Rule.

(6) General (Prime) Contractors Compliance Process. Contractors that are subject to this Rule must demonstrate compliance with this Rule for their own firm and any applicable subcontractors, in any pre-qualification process that may be used for the procurement. At the time of execution of the contract, the contractor shall confirm that their applicable subcontractors or subconsultants meet the requirements of this Rule.

(7) Notwithstanding any prequalification process, any contract subject to this Rule shall contain a provision requiring compliance with this Rule from the time of execution and throughout the duration of the contract.

(8) Hearing and Penalties.

(a) Hearing. Any hearing for any penalty under this Rule conducted by the Board or the Division shall be conducted in the same manner as any hearing required for a suspension or debarment.

(b) Penalties that may be imposed by Board or Division. The penalties that may be imposed by the Board or the Division if a contractor, consultant, subcontractor or subconsultant, at any tier, intentionally violates the provisions of this Rule R23-23, may include:

(i) a three-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the first violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(ii) a six-month suspension of the contractor or subcontractor from entering into future contracts with the State upon the second violation, regardless of which tier the contractor or subcontractor is involved with the future design and/or construction contract;

(iii) an action for debarment of the contractor or subcontractor in accordance with Section 63G-6-804 upon the third or subsequent violation; and

(iv) monetary penalties which may not exceed 50 percent of the amount necessary to purchase qualified health insurance coverage for an employee and the dependents of an employee of the contractor or subcontractor who was not offered qualified health insurance coverage during the duration of the contract.

(c) In addition to the penalties imposed above, a contractor, consultant, subcontractor or subconsultant who violates the provisions of this Rule shall be liable to the employee for health care costs not covered by insurance.

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KEY: health insurance, contractors, contracts

Date of Enactment or Last Substantive Amendment: 2009

Authorizing, and Implemented or Interpreted Law: 63A-5-103(1)(e); 63A-5-205