ALC-Employee Benefits Division Oversight Subcommittee

Division oversight committee of our culture today is a representative Richmond you have a comment sir let's get started sounds good okay so the first first item that will have his B. is going to be the consent consideration of the adoption of the draft rules for this committee these are the same rules that we've use there's nothing that has changed so. Thirty is there any questions in regards to these rules. C. among the C. N. under I have a motion for approval I have a motion I have a second all in favor say aye. Any oppose your none those rules will be adopted. The next item is going to be C. Mister Wallace miss land you all want to come forward. And whenever you get there if you would just introduce yourself and you'll be recognized to begin. Grant Wallace director of the employee benefits division and Mister chair may also have our chief legal counsel come up as well that's fine if you would just introduce yourself also. Sure Shannon Holly on. Amanda land deputy director of the employee benefits division okay it's great to have you all here today who's going to begin Mr Wallace you're going to begin yes Sir okay well you're you're recognized to begin with the first item okay the first sign that you have before you are the formulae recommendations going back. To February March April and may there was one amendments that the advisory commissions and the state board of finance made to the may formulate recommendations we removed the second drug on the list. Primarily if I'm saying that correctly we just wanted to take a little bit further evaluation of that drug before we brought it forward to add on to the formula very so with that out attempt to answer any questions on the formulated but that's the presentation on that part. Sure three members on this particular item they have any any questions. K. C. and then this is a this is an approval item I have a motion for approval. Motion I have a second all in favor say aye. Any oppose that carries. You're recognized to present the next one or this land I guess you're presenting it is that correct. It doesn't matter you just on the agenda I yeah I'll just I'll take a stab at the okay Mister Wallace okay so the next item on the agenda is the update to one of our benefits around the ambulance. Coverage right now there is a maximum of two thousand dollars and as we did the analysis and we're reviewing those that's extremely high. So what we are we're recommending and what the advisory commissions in the state board of finance of approved is reducing that to fifteen hundred with the goal of continuing to reduce that and bring it more in line with the current industry standards so right now it would just be reducing it from two thousand to fifteen hundred per trip. Any questions on this. Senate Calwell you're recognized Sir sure thank you for being here what is industry standard it's worth roughly around seven hundred and fifty it may range a little bit below that like five hundred to up to fifteen hundred so that's where we were starting kind of at the top to get just continue to ratchet down the goal is to get it about seven fifty thank you. Thank you senator any other questions. Okay this is also. UV light on have a motion for approval I have a motion we have a second. I have a second all in favor say aye. Any oppose okay that motion will also carry. You're recognized to. last was going to be the review of the PD yes Sir its the Okay let me tell the members right here of members and I know this group right here looking out across water people here very detailed and focused what this is of course most of y'all may remember that we totally agree worked are a way that we you know that are. Your employee benefits division did all the legislation. We've been putting out the contracts of course for for our medical and then also the of the pharmacy the medical is done and then the pharmacy to come through we had in our of P. originally that we got pulled back and everything was rebooted in this is the second one. Just to let you know there are been some protests that have been it been involved Of Mr arms aren't strong with the our procurement department has looked at it some of them did not go through another one he said was not filed in a timely fashion. One thing that we're going to get discussed in here because we want to make sure that we're doing everything that we are supposed to do. Because we've been trying to get this through in mid year because it it amounts to probably and these are rough numbers about thirty million dollars for half a year if we get these if we get this contract passed. The there was a mistake in the way that scoring was done on the R. F. P.. That A. B. D. at call although it was with them that that you know it was done wrong and I will let him go into the details on how to do that. What we've also got is we received a email this morning from one of the companies how they're showing that what that would have done if it would have been scored correctly they're saying that they believe that that would have changed. Who the winning bidder would have been. So it's going to be up to this committee to look at to look at whether or not we review this contract or not so again I know all of you normally would do it or what have full focus on this. So at this time we're going to pass out the. Email that we receive from the company because I believe this committee you know needs to have that. We have provided that with the to Mister Wallace so he he does have it also. So we may just want to try to go over and then if the members have questions on that will go go like that so if you don't mind it let's get this passed out and we'll see. Question Rapert you're recognized Mr just looking at it membership of the committee either I think everybody knows this but I just it in in fairness for everybody no it's not abnormal to have a protest over a contract so you know the in the director could address that I'm not saying one way or the other just won't members know that that's not abnormal. Thank you Senator Rice. Okay miss Wallace you're recognized proceed thank. Thank you Mr chair all right I would like to kind of start out and just walk through a time line of this second round of the R. F. P. around this just so that everybody can kind of understand how we got to where we are today. On October the twenty eighth of twenty twenty two the R. F. P. was posted with proposals due of November thirtieth of twenty twenty two we received five proposals from elixir Magellan met impact navis an Optum. Evaluations were completed on December the thirteenth of twenty twenty two. The discussions were completed on February the fourteenth of twenty twenty three. The anticipation to award was posted on February the fifteenth of twenty twenty three that just so happened to be the same day the state board of finance blessed me with the privilege of being the director of the B. D. I started on February the twentieth and met impact filed their protest on the first round on March the second twenty twenty three. Our director Armstrong announced his determination on March the twenty fourth which there were three parts of that original protest he agreed on one part which was that the A. L. allowance of exemptions to be taken during that discussion phase should not have occurred that would and it allowed for an unfair cost. Decision to be made I think that's occur okay So that then triggered on March the thirty first our best and final offer was released we decided to go that route rather than completely scrap the R. F. P. and start from New because we did have a July first of twenty twenty three start date. So the Baffoe was sent out of March thirty first twenty twenty three was just so happened to be the same day as the tornadoes that went through wind and Little Rock they were due on April the seventh during this process there were there were three sections to the Baffoe section eight was the administrative the base cost that the state would incur section B. was a slice of life experience for the plant. And what we were trying to do in that section because keep in mind the formula Terry and the cost that are associated our points in time. The formula Terry is always evolving and therefore the costs associated with that formulate is always evolving as well you have rebates that are constantly being negotiated your pricing with pharmacies that are constantly being negotiated and the drug manufactures themselves are constantly negotiating those drugs so we were taking just a moment in time snapshot slice of life comparison for what the plans real experience would be related to our claims. we asked for a variety of for a variety of numbers in that section because we have a grandfathering provision in the R. F. P. from July first to December thirty first of this year or four military is in essence grandfathered so the drugs that you're receiving today you will continue to receive at the same cost sharing except for a for the remainder of the year with the goal of moving to a new quote unquote New formulaire eight come January first of twenty twenty four so we were trying to get kind of a snapshot look a comparison of what that experience would be for the plant section see is where we focus strictly on rebates we took our top twenty five drugs and we ask for a rebate comparison amongst the vendors. We found that that section C. there was a mistake when it went out and it was asked to have the lowest value would receive the highest points that was not the intention of EBT that was just an error when it was when the costs worksheet was produced and sent out we corrected that to appropriately award the most points in section C. to the end to the company that had the highest rebate value we sent that correction out we gave them a five additional days to make any adjustments that they needed to make and there are worksheet between the original baffle being released in our correction we gave time to answer questions as well and we did answer two rounds of clarifying questions during that process. So the correction was sent on April eleventh the amendment responses were due on April the fourteenth. We had the next anticipation to award a notice on April the seventeenth. Matt in packs protest to the best and final offer was on April the twenty eight. And then Director Armstrong's response to that second protest was on may the tenth and that is where we are right now I think I'll pause right there unless there's any additional information you would like for me to go third that's that's fine. The the last protest that you just said of Mr Armstrong what what what was his decision on that would you like to committee no matter for to Shannon Holly agents of that. The director Armstrong did say that the last one was untimely the protest was filed in and timely manner Director Armstrong was doing so in doing so he drafted the response in response to section nineteen eleven two forty four the statutory scheme provides that any actual perspective better he's agreed to in connection with the solicitation of a contract has to protest by presenting the written notice at least seventy two hours before the filing deadline so that the the protest on this the last one it will call it the amended back though it should have been presented if any problems were found with this actual solicitation and that argument should have been presented seventy two hours before the response was due but instead it was filed almost two weeks later so under this statutory scheme Director Armstrong didn't have a choice he had to to present it that way sure and personally I wonder percent agree that that he was followed in state law with that. The the protest that you're talking about it was the same item though it was just in a different section as far as as the scoring was in. A reverse of what it should have been is that correct. But I'm not sure I understand the question okay so this this last protest that we're talking about though it was the same it was the same item that you ought found in the other section is that correct or not no no and he was the protest was done in response to table B. and if the argument was what this state intended I believe that the argument he that met impact was making was all. It was a red herring I mean it it was about what that impact I believe that states intent wise with table B. which was completely misconstrued director Wallace has described what he intended I table B. two B. which was a slice of life because those numbers changed okay numbers change okay that will will get and all that I mean is there though the company they're not gonna be able to come forward you know or anything like that because that's not the way we do but will it will lead to members are there any questions up to this point member's own on what Mr Wallace said. Okay. Seeing no questions you want to continue. I guess at this point navis it is the one the entity that has been announced to be the winner we are in the in the midst of rolling out the implementation and having discussions with them on that we are on track to have a July first start date and things seem to be going smoothly on that side of things at this point okay and that's all of all fair but I'm gonna ask you as I did before the meeting this the sheet that was sent out where somebody's trying to say that would that would have changed the bitter I would like for you to go through that I'd like for you to go through that. To to invalidate it for lack of a better word because I want to make one or percent sure because I think is the responsibility of this committee you know just to make sure that we looked at that done our due diligence so if you don't mind let's just go through that and you just say we're we're it's wrong and why that the correct there was was selected okay the again the document that you have before you the bulk of it is questioning the scoring in section B. and I firmly believe that there is just a complete a disagreement on Easter Mr Wallace map we have members that would like to have a copy of your time table do you have that in a form that one of our staff could do and I apologize for interrupting you. Sorry about that. Thank you Mr Wallace we just have members it is one of the want to see that so that they can kind of study. So you can continue okay so that again the crux of the matter is in section B. and it is just a misunderstanding of the intent in section B. I am not going to pretend to get into. What they're arguing because I quite frankly I don't understand the argument that they're trying to make the intent behind section be was a slice of life getting what the plan would experience and trying to understand not only the disruption that the member could have but the costs wing that the potential for the plant to inquire as we grant rolled from a grandfathering on to the new formula airy again I firmly believe that the least disruptive candidate won by somebody that is going to be able to produce no I'm not a huge swing and the cost of the plan while providing the member a smooth transition okay and you have to take that in conjunction with section see where the rebates were scored and we were able to see that navis would be able to provide the state the highest rebate amount okay. So just just to make sure so that slice of life that's what we were using for the RFP process though yes and I want to make sure that we're a hundred percent clear here. If that had been done correctly what EBD is stating what anybody is stating is that that would not. If that had been done exactly. As as it should have been if it would been done the correct way in the scoring that would not have have the do you have to miss I miss lane. I believe that it was and that's with that would that help with that have changed who the winning bidder was. To my knowledge no in here some complexity to that question senator in that had we changed and state and used what made impact is arguing how we change the criteria the definition of that section that's not to say that any of these three entities would not have changed the values that would have been in that section so it is it's complex decision and say you're for absolute certainty one way or the other we can't use the existing values that were plugged in there and change the criteria but with those numbers are measured because you're not getting the same apple to apple comparison between what we're asking. Okay I have to two other committee members I let them go of first you're gonna be Senator Irvin and representative Wardlaw you'll be next. Senator Irvin you're recognized ma'am thank you the criteria and the definitions other criteria are set by you or us the state of Arkansas correct yes ma'am it is not set by any definition of criteria is not set by a response from any of the bidders yes that's correct that's where I see there is an issue because from this read of my read is changing the definition of a criteria. That they are in certeon verses the state of Arkansas setting the definition of the criteria through the RFP process which you did it correct thank you. Representative Wardlaw. You're recognized Sir. Thank you Mr. From from looking at this thing and grant you and I've had multiple meetings and I appreciate your openness and willing to meet on all this so my understandings probably a little better on some of it what happens on July first if this committee today doesn't review this contract I think that needs to be the first question is answered the every state employee in every public school employees would lose their pharmacy benefit okay and if they lose that benefit but we're obligated to. Given pharmacy what's that cost the state on July second. I would not even under know how to even calculate that number because we have no buying power we have no rating in that market correct so all the costs would go to the members I mean they would have to hundred percent pay for their prescription because we would have no underlying coverage so also in remembering and I know you wouldn't here last year but when this when this went out last year as a bit and I know you look back in history because that's part of your job and you should know what you're what you're playing with. Net impact a year ago did the exact same way they had always done business the first time correct to my understanding yes it will. Just for giggles what why would they do that. I would speculate that they would assume that they we're just guaranteed the contract and then you would also assume that it was very lucrative for them in that setting correct I would have to assume that yes okay and when they did this time of the first time of. How did their bit compared to the other on the first round one RSP came back to the first round let's don't talk about now that we've been to the baffle right let's come from last year to this point so bring us to that are iffy and what it looked like on the first round and Shannon you may have to do in it to my recollection that it didn't adjust very much but they did come in second on the arm. Forgive me that first round before the baffle they came in second so why did we agree to the Baffoe walk me through that process and why we agreed with that so did we agree to go through that process I guess would be the proper way to ask that question so we did want to correct and remit the that decision that director Armstrong made around the scoring of that we did want to remedy the cost aspect of it that's why we only looked at the cost section there we immediately made a mistake and we want to look back to make sure that we were right and we're we right I believe so we I believe we were yes in and that's the reason about four was awarded to Navitas verses anyone else correct yes Sir and when we look at those rebate dollars we're actually going to achieve the savings that Siegel said that we would by changing this model to a. A more rebate type model than the one we had with the B. R. acts and Mehdi back a program of first right correct and what I've learned about the rebates is it's. Pretty well known that met impact is not able to participate or is not participating in the same national rebate that nav it is and art and others are so therefore they have an inherent disadvantage when it comes to the rebate that they are able to provide for the plant and I do believe that that was reflected in section C. if you look at the values that were represented and even our own experience we I I went back and had the same time period pulling the rebates that we achieved during that time period and they were half of what was reported by navis it in some of that was due to the fact that our gear was geared more around Near X. in genetics Dotson give the rebates that the name brands give is that not correct correct our plan currently has over ninety percent generic utilization and generics don't have the same rebate ing mechanism attached to them that name brand drugs to. Thank you Mr I I'd appreciate to latitude and I I just think it's important and I want to come in director Wallace for this that we have made this such a sunlight process and that he is willing to sit here and walk through every step of this process and make sure that the committee members are comfortable and where they're reviewing and what they're seeing and I can't tell you how much I appreciate that the previous administration were or not is apple to sunlight is almost like they got some burn every time they walked outside so I appreciate you and I appreciate the chair. Thank you representative Wardlaw okay members are are there any other questions Senator Irvin Europe ma'am just final question and I appreciate what we've gone through a appreciate the explanation but at the end of the day Arkansas state law was followed you you stated The the code section Arkansas law was followed so there really is no basis for for any of this even though it was a good exercise of explanations Act yes Irvin I'd I wholeheartedly believe that Arkansas state law was falling into the sea even when there was a mistake made at the very beginning we fix the mistake with using Arkansas law it's to have this document it presented to this body is somewhat inappropriate I mean is the legal process was followed there's that protest scheme that set out in the statute in the statute director Armstrong has the final say the claims commission could be involved that would be the next step right it would not be an anonymous argument presented to this body yes Sir but I do appreciate us being able to go through it because that way we're public hearing the chair to the right thing and let it allowed it to be for brought forward but at the end of the day our job is to ensure this state laws following state law was followed and process needs to go through thank you absolutely thank you sure and that was that was totally my decision on the document was passed out I heard what you said it was inappropriate I thought since nope that's fine you're not offended me the you know since since that was received by myself and our staff here. And that this committee you know of this is their job to do and because there was a mistake that was made I do feel that that was the most transparent and appropriate way to to move forward so that decision was mind one way or the other so it and I do just wanna clarify the mistake that was made was made on section seat not on B. and the bulk of this document is focused on section be. Yes Sir and as you stated and I know you said not to your knowledge but you know as long as the the the better would not have changed because in my in my opinion the credibility of the State of Arkansas is is you know with that because the one thing is is although the protest period may have may have passed and I understand that if there was a mistake made by one of our agencies and it was solely their mistake that were was made and that would have changed who the awarding who was awarded. You know the winning bid then I believe that that's what this committees for so that's why I want to be on record with that and Senator totally appreciate and understand that and if there if the director would have found a mistake that was made in that section we prove that we would have gone back out and we had the ability to do a second Baffoe and we could have corrected that error and we would have done that that's good thank you Sir centreboard your question Sir yes thank you Mr chair so I have like two or three quick questions but they're not related to the process I just don't want to miss my opportunity and go to a vote for review so I don't just now it's time to ask the last king if I need to wait away okay let me get the one other member that's currently there and then I'll come back to the unit that's okay. Eighty six center Hammer is yours gonna be and in regards to what we're discussing right now. Okay Senator Hammer why don't you go ahead then I'll go back to center board. Since you're already on right Mike my question is going to be this the a whole lot of the ward is based around the rebate and the value of the rebates they're gonna come back to the state correct yes Sir okay. What is the procedures what are the procedures that you have that we are about to make an award it could be any one of the companies that we got all this other stuff cleared out to make sure that the underlying cost is not going to be eroding the value of the rebate what do you do to monitor that along to make sure that once we get this contract to a company is just not going to be you know the shell game moving things around yes Sir thank you for the question what we've done is we've involved our relationship with EBR acts to be more of a consultant to help us do exactly that to be our watch dog when it comes to making sure that the rebates we are getting are valid and that the underlying formula airy is not shifting us away and shifting us to increasing overall cost unnecessarily we all acknowledge that there's going to be right now it's an eight percent increase in pharmaceutical expenses year over year were we have a B. act or acts to help us monitor that and watch that they're still going to be our adviser when it comes the formula Terry creation and drugs that are approved or not approved as well as our watchdog when it comes to the rebate amounts that we're getting to help us hold navis accountable to those both ends of the spectrum okay so that relationship is going to continue they're going to basically be a third party verifier that you're going to use to keep everybody honest yes Sir okay thank you they Mr yes Sir Senator hammer Senate board you're recognized Thank you and senator Hammer did take care of one of my questions so I appreciate that you acknowledge there's a plan to compare what where we've been and where we're going since the way we're going to go about it is different so that this next which is simple and it's it's confirming what I think I know is that it is going to be held to the same oversight of that PBM as other PBMs and commercial plans you know the state of Arkansas by the Arkansas insurance department thank you yes Sir it's my understanding that they still have to fall under all the same laws and regulations that are set forth with anybody else are there to my knowledge and and there are no special it quote unquote exemptions EBT is afforded when it comes to this work. Thank you there's no no other questions I just wanna make one other comment as far as in Committee impact of heard their name used a little bit I will have to say that as far as they were concerned they did on their own enter into the State on like a short term contract members so that we could get this for a try to get this all through so that we could save this of money by starting in mid year they did a short term contract in and whenever we had looked at that months ago we felt that that was a fair pricing on it so I do want to I do want to at least recognize that. No other questions so this is a review item do we have a motion to review. Okay we got a motion review is our second. All in favor say aye. Any opposed. The motion carries so it is reviewed. Is there any other business account to come before the committee. Hearing none were adjourned.