ALC-Employee Benefits Division Oversight Subcommittee

All right, the adult It OK, members will, uh, call the meeting to order. The first item on the agenda is going to be B review and approval of United Healthcare amended contract for plan year 2025. Mr. Wallace, do you want to come forward? And I think you know the drill whenever you get there, if you just introduce yourself and you'll be recognized to again. Grant Wallace, director of employee benefits division. So what you have before you is an amended agreement to the United Healthcare contract we are in the 3rd year. Of that initial, uh, contract period with UnitedHealthcare for the Medicare Advantage PPO plan for our retirees. What with the passage of the inflation Reduction Act, there were substantial changes to the way Medicare Advantage programs are going to be administered and specifically Part D plans moving forward. A lot of these impacts will hit in plan year 2026, but some of them do occur in playing year 2025. What we were attempting to do and we employee benefits division. What we were attempting to do with this amendment is start to anticipate some of the. Those increased costs because what is happening, our plans are having to absorb more of the cost. The federal government is reducing its uh contribution to these programs, uh, we're trying to hold our members. And our retirees at a level set. Uh, there are some changes which, uh. Prevent them from getting increased costs, example, the Part D cap, uh, at 2000 out of pocket, that means plants have to absorb that increased cost. So what we were attempting to do was start to telegraph what those costs would be for the state and for our premiums for our retirees and smooth that path so that in 2026, there was not this huge increase that everybody had to absorb. So, uh, initially when this was brought to you, there was a uh a proposed $50 per member per month increase due to some ongoing negotiations that was reduced to 45, so what you have in front of you is an agreement for a $45 per member per month increase, which then results when you trickle it down to the 90/10 cost share that we share with our retirees, it would increase the retirees' premium by $4.50 per month. So that's what you have before you, I'd be glad To answer any questions. OK. Um, Senator Irvin, do you have a question, OK, so $4.50 per month. Is that what you said for, for their share for just this is just for the retirees, correct? And then the state's portion then is $41.50. OK, and how many, um, how many roughly do we have on the plan? 31,000 just shy of 32,000 or 3200. Sorry. 200. Wait That is a huge difference. Let me make sure I get my numbers right. Don't confuse myself, it. It is Monday. You know, total numbers of. State Public school retirees, how many is that? It's just shy of the 32,000,000. When you combine the ASC and PSC sides. OK, and then. Do we, is this part of ours? So the state. Is on the state, we're going to have to put in. What total I'm trying to times our share is increasing 8.8. Yeah. So our total increase to the original contract is 8.8 million. OK. And so I, so the 4150 at 32,000 is around roughly 1.328 million. So 1.8 million is, where's the additional 5 million going? Well, when you Look at the 45 per member per month. OK. Oh, OK, this is. 4.6 million, uh, the cost would be $4.6 million for the state plan and 4.2 million for the public school plan, which is the total of the 8.8 million that the state has for playing year 2025. OK. All right, thank you. Are, are you 100% sure on that 320? If you need some time, I, I was thinking it was a little bit lesser amount. Those were those that are eligible. I apologize for that. That is the eligible number I was missing. I will get the exact count later. Senator Irvin, I thought for some reason, I was thinking that it was 13. It's somewhere between 13 and 17. Those the 32 were the number of eligible. I had the number incorrect. That's the number that was in my head. I apologize for that. The number that are actually Participating is around that 13 to 17,000. Right, I think, I think that's, it was just all in the way we were saying it, I believe, so I apologize for that. Representative Meeks. was. So, um, looking at this, it's a $300 million extra ask for the state is what this contract is correct? Well it would be an increase, uh, well, that's probably the total contract, yes, so, OK, and that's just for the remainder of this year for the, this fiscal year. It would be for playing year 2025, so it does cross to fiscal years. OK. Uh, and so there'll be an additional, when we get to session and we're doing the budget. You see what I'm saying? So it's 30 now and then we're gonna be looking at a 3 additional 30. Going into next year. The. Amounts have already been. Well, these are trust funds, so. It is a little tricky in that it's not the general revenue, so I want to be careful on how I answer that, that the values that we have put in there, the dollars are there to cover that. Right, right. OK. So this is not general revenue money. This is coming from the trust funds, correct, and that that I forgive me my ignorance on this. Does it, does it work on calendar year for your budgeting or do you do it like the state and it right it does follow the state year where it, I just have to make sure that. When we're talking about which year that we do acknowledge that a plan year covers 2 years, right? OK. And then, and then my final question is, since this was a little bit unexpected, evidently coming from these Fed changes. What does this do for the fund balances going forward as we project into the future. That's why we're asking for these changes so that we can manage that going forward at a more. Manageable pace not to overuse the word, but we are trying to make sure that we're balancing income with expenses and that we are doing that appropriately. Keep in mind that anybody that does participate in the UnitedHealthcare MAPD plan that is actually shifting the liability away from the state self-funded plan to the United Healthcare Medicare Advantage program, so in the long run it does reduce the liability for the state. OK, so we're not, uh. This increase is not going to put the fund in jeopardy going out into the future based upon the changes we're making today, assuming we approve this correct. All right. Thank you. Thank you, Mr. Chairman. Senator Boyd. Thank you, Mr. Chair. Just out of it, first of all, out of an abundance of caution, I'd like to make sure the committee, especially my Senate members, are aware that I sold Medicare plans recently in the last year. I no longer do that, uh, but in the last 12 months I have done that in United Healthcare was one of the companies for which I sold, um, so I just, before I have any dialogue, I wanna make sure the committee is fully aware of, of that relationship, OK. Thank you, Senator Roy. We appreciate that disclosure. I have a couple of questions here. Mr. Wallace too. So, Mr. Wallace, are you familiar with the Federal Trade Commission that came out recently regarding pharmacy benefit managers. Have you read that? I've not read it entirely, no. OK. Have you read the part related to pharmacy benefit managers? Uh, enough of it to understand what's going on and what the gist of what they were getting at, yes, so you understand that with some specialty drugs that it's been a 20 to 40 time Nyack cost reimbursement when they've gone to the affiliated pharmacies as opposed to brick and mortar or chain pharmacies. I don't know that that fact specifically. I do know that the FTC report did show where PBMs were paying themselves or they're affiliated companies more. OK, so I'll just bring that up because again, the plan is structured in a way to, with co-pays to incentivize. Clients, you know, our state employees to use the affiliated pharmacies, and I just want to make sure we're investigating to make sure that's not happening to our Kansans. We have, I have been aware that that has been a concern since I took this role and it has been something that I have asked and repeatedly gets uh reports on. I've not seen anywhere where it's significantly out of. Alignment or that that really was the case specifically with Navidis, um, but we continue to monitor it and it is something that I know is highly sensitive. So I'm, I'm not talking about Navis. I'm talking about optim RX because we're talking about Medicare. Advantage, right? So this is what specifically I'm asking about today because it's relevant to this discussion. We're talking about raising premiums and we have federally documented issues. And I want to make sure we're doing our due diligence to make sure that that's not happening to our Kansans because the taxpayers will be paying that. The ratepayers, the people who are paying premiums, and then the Arkansas taxpayers who are subsidizing the plan on the back end or paying that. So, can you assure me that you will look at it and you will get back to this committee. Absolutely. OK, um, within the next month. Yeah. Thank you. Is the insurance commissioner, Get that. All right, C Urban. Senator Irvin. Do you have a question? Yes, sir. You're recognized. With this being federal action. There's, I mean, they're in charge of Medicare. This is federal action. This is just something we have to accept. At this point unfortunately. I mean, this is nothing to do with the state taking any action legislatively or otherwise. This is all federal action. I just think that needs to be very clear. But then secondly, United Healthcare. Is they really They are just the administrator of the plan, so they're they're not taking, there, there's no excess administrative fees or anything like that. Is that correct? To my knowledge, that is correct because the way they're. Making money to use that phrase, uh, quote, it it is through the, uh, incentives that they get with administering a Medicare Advantage plan and getting the 5 star ratings and all of those things that come along with that. There are federal funds that come back to United Healthcare to reward them for administering a, a, a Medicare Advantage plan at the top level. OK, so, and, and unfortunately, that's all federally set. So it just, they get the financial incentives and rewards, but everything gets passed down to the policyholders. There's never, it never happens the other way around. OK, I just want to make sure we're super clear. Thanks. That's a, that's a good point, and I, I don't want to put you on the spot, but if I remember correctly, that contract actually has a, is it a 94%? So in other words, uh, Other words, I believe that the cost, if, if, if we, if we were to pass this. Or we pass this today and United Healthcare, if they were to make more money than 94% of this contract, if I'm saying that correctly, then that gets reimbursed to the state also. So there's actually, uh, kind of a failsafe in there to a certain point. And that's, and that's a good, good point to bring up for this committee. Yes, sir. And I think it's 94%, is that correct, 92 or 94 is sticking in my head, so it's 94 because I always get confused if it's 94 or 96, so I think it's the 94, but I could, I think that's correct. That's something else that we can check just to, so the the members have this knowledge. Are there any other questions? OK, this, do you have anything else, uh, Mr. Wallace? That's it. Thank you. OK, this is an item that I'll need to review and approval on both, so, uh, could I have a motion for that? OK, I have a motion from Senator Irvin. I have a second from Representative Beatty. All in favor say aye. Any oppose black sign here and none, that motion will pass. OK, is there any other business to come before the committee? OK, see and then we are adjourned.