ALC-Executive Subcommittee

I under in front of you this binder is going to include a copy of the RFE it's gonna have the contract was Siegel as well as copies of presentations from each months report staff will update these binders at each meeting I would say each month but going for will have multiple meetings for months or be each meeting. it also has a timeline in there the time line is behind the August tab in your binder shows remaining meetings for the study that are on the schedule to date presentations or reports for ale C. for October fifteenth beginning in September we will be receiving recommendations and working draft legislations as well as we have so that public comment meetings so if anyone contacting a commemorative committee members and would like to speak to the committee about any of the recommendations please have them comment on those public comments set days so with that I'd be happy taking questions on the binders are the timeline. This. Very relaxing here. Mr chairman is today the twenty fifth of August. thanks. It would be your birthday you could be all right. We. Leding. Represent Ladyman you're recognized for a question. No I didn't have one okay. All right so with that members will go and get started. You guys would introduce yourself a record you're recognized art with the first part. Patrick Lang with seal. Matt Kersting would single. Kirsten Chapman with Segal and can be here with single. Okay. Good morning everyone. So I our first. I present Asian today is gonna be financial financially related so first we're gonna go through the some of the history the last couple years where some of the stresses came from and then we did do a multi year projection on the current status quo C. can see you know with kind of close the gap for twenty twenty two but what that looks like through twenty twenty five. And then we've also looked at some other states and how they target reserves what their policies are we made a recommendation for your for a policy that you guys could put into place. And and that's really it so I'm gonna turn over to Matt to walk you through the slides. Thanks Patrick. So the first line you're just gonna give sort of a brief overview what we're talking about an executive summary as Patrick mentioned we provided some some funding claims review and and projections of the program we look both historically at what the the plans of looks like since twenty twelve and then projected forward through twenty twenty five under number scenarios to give you a sense of what that looks like We are projecting some deficits in this program to twenty twenty five I don't know if that would be a surprise for anybody in the room are the reason we're here is to help sort of close some of those funding gaps there's some some funding deficits that were projecting in this program for the in twenty twenty four for PSE and twenty twenty twenty four for S. C. in twenty twenty three four PSC and we have some some suggestions in terms of ways to to close those close those gaps in addition to that we're going to recommend a reserve structure that would be put in place for this program to give the a a more proactive way to deal with some of the the changes in funding that need to happen or changes in the plan design of the program in order to to fill some of those gaps for the longer term projections or a mac recommending that to be within twelve to sixteen percent of the overall claims expenditures that we would expect to see over the course of the period and that's gonna be a moving target over the course of those projections so we'll give you a sense of what that looks like if if claims experience changes over that period of time and and this recommendation is based on some benchmarks that we've seen for other states so there is some historical context in this some some peers that you have in in other states throughout the country they're doing something similar particularly ones that that we work with. so I I think without that sort of coverage most of most of it one one other thing on which we'll get into on the historical piece we don't see anything necessarily. Significant that occurred over the course of the the peer to time from a claims perspective what it seems like for from our perspective is that it's more of a short term planning perspective more reactive approaches to funding this program and and we think that that some of these changes that we're recommending today to help alleviate that and give you a more proactive way of dealing with this call for. This first line here and I give you a sense of historical financials this was provided by U. B. D. we look at this and and compared to some of the the funding reports that we've seen from them back to twenty twelve so this gives you a sense of of what you're seeing from a funding perspective through through the state two employees and and other income other income being reserves and mostly reserves are excuse me rebates for pharmacy and RDS subsidies for the Medicare population that's coming through there are other sources of income that are and more detailed financial statements that are provided in some of the reports that you get those numbers tend to offset from the claims an expenditure perspective so they've been excluded from this and then it from an expenditure perspective medical claims expenses are exclaims expenses and then planning administration so one of the things that we see or is as we look at this early on from twenty twelve to twenty fourteen you did see some deficits with with finding shore of expenses in the program that was that was moved out over the course of a period of time but what what started to happen here is as claims be continue to trend forward as as the population grew and and medical costs are more expensive are there weren't really any changes to the to the funding of the program so the the funding became short of the expenses that we're projecting to see and that started to deteriorate the overall level of of reserves that you have placed in the overall assets to fund the program. Yeah I mean when I see the slide and I look at the state funding for twenty fourteen hundred seventy two million I mean that's higher than. What we have for twenty twenty so you know we all know that medical claims yeah the trend higher than than CPI by we see you know a couple points so I think that's that's really been the major issue on on why we see those red numbers at the bottom. Okay. Next slide is a a similar review of the the PSE or public school employees financials a similar story here there's there's different sources of income that come through for this program but again on the similar basis funding is been relatively slow moving it overall from a claims expenditure perspective on the overall trend although volatile from year to year that we're seeing and the the overall trend in the program from expense perspective is not very high and it's it's it's likely means pretty much below what we see in the market so it's been Sir good transmit claims perspective in this program but you know it's funding sort of stagnated over the course of the the the period that we're looking at here expenses started to outpace what you're pulling in from a funding perspective that starts to dip into reserves and and as part of the reason you started to see some required changes in the program. And the public school programs you need because the district in the employee funding that's pretty stable the district funding I guess for the for this last year was up three percent or so so it's really the department of education lump sum money that comes into the program and that varies quite a bit from year to year and it seems like it's gonna solve our at the at the very end so if you look at twenty fifteen hundred four million dollars in the year before us fifty million so that swings quite a bit from year to year so you don't have since is not based on raids that piece of it it's not super predictable and it does bounce around quite a bit from year to year. Can. That that that cover some of the history of the program these next set of sliding Sturch from a more forward looking perspective I said this we put together is amended but together projection for the program this is for the the state employees this is a production under the status quo structure incorporate some of the changes that you've already approved for twenty twenty two and some of the additional sources of funding through contributions that'll be coming into the program but from twenty four twenty twenty three and beyond we've kept those numbers flat so is this this takes into account the state funding fix that the five hundred dollar maximum it's been legislated so that'll that'll carry through for twenty twenty two through twenty twenty five and expenses are based on that The New the the excuse me a play funding is based on the new employee contributions that were incorporated in and and the changes to the wellness program that were put in place and again those numbers are projected to stay flat over the period of time so this is soon as no increases to funding from twenty twenty two and beyond I just incorporate the changes that were put in place as as part of this this most recent period that you looked at and then projections for the program since no plan as I changes but to give you a sense of what claims should be expected to be under the the the current program based on based on historical experience I see what you see here as we look at this net income twenty twenty one shows a loss of a million dollars twenty twenty two is is basically been close to we were showing a shortfall of two million dollars for twenty twenty two slightly different claims assumptions that we have in place from what you've seen previously but relatively that close the gap for the most part in terms of the changes that you've made up of beyond that I would funding remaining static those claims are expected to increase over time we start to see a shortfall in in income and what happens over the course of this period is that the total assets for this program are projected to go below zero sometime between twenty twenty four and twenty twenty five this is pretty much a realist. The projection given the trends the reasons or not using super aggressive trends or not use and you know really now hi Senate rates and or use is actually slightly less than the market which is what you've proven to have in the past so it the. Fairly reasonable projection where we'd expect the claims to be. Okay. So before we get into some of the scenarios in terms of what we're seeing for how close is one of the things we wanted to touch on was the impact of the overall budget positions we know this is something that's being looked at and potentially eliminating or or reducing the overall budget positions in the program so the the current positions that we're assuming in the funding projections that we have in place is based on thirty four thousand positions are funded at a level of of five hundred dollars per position there is a rough split and this varies by position but between federal and state of twenty five percent federal seventy five percent state to quit so roughly a hundred twenty five dollars for the the Federal piece in three hundred seventy five for state but that's that's pulling up to the two hundred four million in total that you saw on the previous slide from the state funding project perspective but if if if you move over to the middle column this is what it would look like if you were to reduce those positions and make no changes to that five hundred dollar level that's being funded preposition so in the as soon situation where the the funded positions dropped from thirty four thousand twenty five thousand that funding remain the same at two hundred four million would be reduced down to a hundred and fifty million and in an overall funding for the program. Which is a loss of fifty four million dollars that we needed to be filled or I will go through it on the next side to show you what that does that that lack of fifty four million just accelerates the need for additional funding at an earlier point in time so we've we've solved for what that number would need to be in order to us fill that gap of fifty four million so if there is a change to the number of budgeted positions in order to keep the same level of funding that's five hundred dollars would need to be increased to six hundred eighty dollars in conversations we've had with the B. D. our understanding is that any changes to the to the federal portion of this we need to be negotiated with them but generally the the budget positions that you the the same number needs to be funded by the federal government as it would be by the state for each position so that six eighty is the number that you need to get to in order to get back to you two hundred four million dollar overall funding for the program and just one other thing on the the twenty five thousand so that's that's the number of positions that are currently filled so you know we didn't pull that number out of a hat but that's a C. F. thirty four thousand the budgeting for the twenty five thousands when you're actually filled so that gets trued up you know and we keep that five hundred dollar per funded position obviously we have way less revenue but the expenses stay the same because that doesn't change the underlying claims. In the big picture is you need to fund the tool for a so if if you change your method of higher calculating the tool for you gonna change one of the factors so if the head count drops you getting Chrissy of the one to get the same number on the expense side your expenses are based on the twenty five thousand people so that number doesn't change so you can change the budget positions but the expensive one doesn't change the actually fill positions so that's the question we're talking about so This ramifications downline if you drop that funded level than we did talk about the federal match so that's that's an additional component in there about how much money the state gets back from the fed that that impacts the whole you know Annales. Yeah and not to the extent that a hundred twenty five that we're assuming for the federal government portion of this if that doesn't increase up to the one seventy that we're assuming of that twenty five seventy five relationship doesn't hold that would potentially be additional dollars that we need to be funded by the state to get back to to that two hundred four level but our understanding is that relativity based on our conversations with the B. D. would state would stay in place. So this this site here just goes through it would look like so we we look at the funding project if that reducing you didn't move that number from from five hundred up to six eighty this just paints the picture of what that would do to the overall funding perspective of the program obviously that's going to accelerate the the level in terms of where assets would be depleted would project here that if if that number does not getting Cree's back up to two oh four assets would be depleted go below zero during twenty twenty three so it's a much shorter time horizon and you would have in terms of filling that gap in there would be other other avenues that you need to use that to fill those dollars to get backed up so I you know I think. It's just something to keep in mind so if if the budget positions does get adjusted as part of this any any of the programs that you're looking at I need to keep in mind the impact on the medical program. Okay so. This site here tries to fill the gap in in terms of of the program here and we looked at it if you were to put it on the shoulders of employees so if federal funding or state funding stayed the same over the course of the five year period what would you need to do if you made no changes to the plan what would you need to do to employee contributions in order to get the the income level down to zero over the course of the five year period and what we're we're projecting here is that on top of the an additional contribution changes that you put in place recently they would need to be an additional thirteen percent increase each year an employee contributions in order to close that that the income gap to keep assets at a consistent level over the five year period so this is a fairly significant year over year increase that would be required by employees in order to to to to fill that gap in order to to keep things in a in a steady state going forward this is not a recommendation by any way shape or form so it's really a scenario based off your at your current limit right so legislatively as a five hundred dollar cap on the state funding so if that holds true. The only way we can increase findings to the employee and and this is what it would look like so it's more just a hypothetical. Okay so now we want to start getting into more of the the recommendation aspects of what we would we would like to see the state do you want to talk a little bit about reserve policies we we've done this with many states and work with many states to have formalized reserve policies in place generally these consist of all I've been our reserves are incurred but not reported these represent claims that are encouraged so people have gone to the doctor they've they've seen their position they've been treated for whatever it is that the country to for but those claims have not had bookshops you haven't paid I'm you over them because the services have been provided but the claims of not hit yet so generally that's somewhere in the neighborhood of a a month plus worth of claims that you might need to have a reserve for for your program and then the other piece of of this that that plans generally hold in reserve our claims fluctuation reserves or solvency reserves and and this generally relates to it shocks to the system so in in areas where you are projecting claims to be higher than they were so that some some issue comes into play and there is no significant increase in claims in an area or a one year over the last you might might hold some extra reserves to ensure that your your your funding with you you would have adequate funding to deal with any shocks that come to the the overall system in the program and then you know that that so from I've been our perspective anywhere between seven and nine percent of overall expenses is generally held and what we seen from various states is somewhere between three an additional ten percent of of claims expenditures are held from our claims like to Asian or solvency reserve perspective so from up from a recommendation perspective as we look at this we would we would recommend that the state hold somewhere between twelve and sixteen percent overall claims expenditures in reserve I will be seen from an I mean our perspective is that your right around eight percent it seems like in reserve there are some additional assets. but no formal policy that we can see in terms of an overall reserve policy to where you should be targeting to over a of a five year save period in terms of total assets to to cover expenses from an overall reserving picture perspective. And we also have a internal model that we we ran you through so that faces you know and it takes into consideration the size of the group you know the claims level you know whether you have stop loss or not those kind of things and it's just there to try and figure out what's a good target for a group your size based on based on the risk and you know what kind of confidence interval that you want to be at so we ran that and it came out to to eight percent so that's kinda on the higher end of the range that we would recommend but that was another data point that we looked at. Is this next I just give you a sense of and we need to go through each one but this gives you a sense of some some benchmark states in other states on what they're doing from a total reserve perspective again including both I've been are and claims fluctuation reserves you know some of you know it Alaska's holding a hundred fifty to two hundred fifty percent of of I've been are some some other Mississippi as a CFR of one half of one half of a month on top of I've been R. seven four percent range on top of any representative in our so that this varies from state to state but generally what we see is is somewhere and and the overall neighborhood of ten to fifteen sixteen percent it's being held by states at a total reserve perspective for their programs. Anyone I can. All right so. The next few slides get into this now if we were holding a reserve inflation targeting for a reserve how would you go about planning over the five year period to to meet that target reserve towards the end of that five year period and how would that change if there's any changes to the claims expects experience over that same period of time so this is this first site here on financial projections the funding target is settings your projections to hit a fourteen percent reserves we we took the mid point of your overall reserve of your role of the overall I reserve range at fourteen percent and and worked our way to twenty twenty five to see what that would look like and what what increases would need to be made to overall funding in order to reach that target over the five year period based on the projected claims expenses that were we're seeing over that five year window I'm in this case what we're doing here starting in twenty twenty three based on the projections here we're we're working towards a a reserve a fifty eight million dollars which is forty five fourteen percent of the overall claims expenditures in twenty twenty five I so in order to hit that from the total asset perspective right now you're starting assets that are at seventy million which is above the reserve target so you have a surplus in the program currently based on this overall reserve target and reserve range I with this as we saw will deteriorate over the five year period so they are gonna be points in time where the need to be increases the program and in order to hit that fourteen percent by twenty twenty five starting in twenty twenty three we recommend we we we need to see an increase of five point four percent overall funding in order to hit that target so in twenty twenty three and three twenty twenty five there's a five point four percent increase that's that's hitting our state funding an employee funding in order to to reach that target so as we work our way there there are some years where the sum that losses but it you're you're depleting semi reserves over this period since you are a surplus position to. Our but it it smooths the way down to get to the overall asset target by twenty twenty five so as you see the surplus position relative to the to the midpoint Reserve in our reserve range is at zero by twenty twenty five if there's a five point four percent increase from twenty twenty three two through twenty twenty five. And so the key is in a steady increases along the way and you know when you're going out to twenty twenty five multiple years even if you have a year of experience that deviates a little bit from trans all that's moved over that period so you know even if the claims were up one percent and five point four is not gonna change a lot so you kind of know what to expect and there isn't as much you know massive swings on on what that percentage level is and I guess even even more so than like end of the five point four percent is that it's a planning to have you looking over five years so if you want to go zero zero ten at least you know what they're at ramifications are that but it's it's better to have a smoothie level because you know if your attention employee contributions that same percentage they're getting moderate increase instead of zero zero zero bighead you know so it's it's really to be used as a planning to also after year after two thousand eleven or two thousand twenty one's done you extended another year and then you look at or not you keep looking five years me and you plan it out and so you know if you have a certain year the you know you want a lower increase for a number of state fiscal financial reasons whatever the revenue looks like you could you could keep it zero but you don't know the impact that we would have to do so that that's the overall plan that and then Patrick will go through a scenario where you know you have a negative year how does that impact everything so and and this. Also you know assumes no changes to any plan designs are program changes so in the X. expenses are locked and but as we go through the rest of the project we're obviously gonna have recommendations to kinda curb that expense line as well and thank you later this afternoon Christians got. Some great ideas to share so. We're just sort Centerton okay this morning this man on that it just added to ship back to when we look at the status quo project and if if if no changes are made to the program that we need to be large infusions of money that we need to come of the program and say twenty twenty four twenty twenty five so you know having this funding target this long term picture release or a alleviate some of the needs for that those sort of shocks were all of a sudden you have fifty fifty million dollar hole you know twenty twenty four under status quo projects the assets to protect the ten million dollars in in this situation here with with a a more moderate increase your per year and and and the planning tool that you have here your twenty twenty four you know assets right sixty sixty two million relative to ten so you know if you want to get back to even at the target reserve fifty four million you need a forty four million dollars fusion of cash to get back there in twenty twenty four so this is just be a way for you to you know have eyes on that and see where the program's going and what might need be needed over the course of of those those five years. So this next light a similar concept similar reserve strategy but this this just keeps employee contributions flat so if we were just focused on state funding and what we need to change from a state funding perspective starting in twenty twenty three in order to reach this this fourteen percent midpoint Reserve target as part of the recommendation state funding we need increased by eight point six percent as opposed to the five point four percent that we're looking at so if you didn't want to put as much yes this any number of ways to get there as Patrick said you can do it through state funding if you do actually contributions you can potentially do it through plan design changes but if you just want to look at it by from a state funding perspective this larger increases that would need to be made in order to to shelter the employees for some of those increases that they would need to in order to get there and we would lean more towards this recommendation then the prior slide and and the reason why I say that is that we go back to the last meeting we did the benchmarking we looked at how your con employee contributions stacked up against other groups And that was before the the increases for twenty twenty two they were there in line they may have been a little bit high so I mean if we look back in history. It feels like the employee contribution someone up much more than the state funding so we do feel that you know based on the benchmarks and and everything else that we do think you know it's in the future revenue should come from the state as opposed employees if that's possible to keep you in line with the benchmark. Okay. Okay so this this shows are a bit of a different set of circumstances so everything's not flat here right so it's not our our normal projection what we're looking at what we did here was increase claims by two percent each year over the course of of the the projections starting in twenty twenty two so if you start to see adverse experience materializing the program how does this tool give the eyes on what might need to be done in order to fill the gap so rather than and part of the reason we give the ranges in reserve is that the sort of allow you to stay within a corridor of total reserve in order to get to a relatively comfortable overall reserve for the program overtime so that what we're showing here now is no longer the midpoint of the the overall reserve but the the lower and lower bound of the reserve at twelve percent and and where you would sort of fall out of of bounds of that and what might need to be done in order to avoid any any a falling below the overall court or in terms of your reserve so stay in starting here what we see is that in twenty twenty four if claims are increasing by two percent per year are they would need to be additional funding that would need to start to come into play and twenty twenty four to fill that gap because we're showing here that circle area at the bottom of the the bottom right corner of the chart is your assets without any additional funding in twenty twenty four twenty twenty five would fall below the twelve percent bottom and of the court or preserve if no additional funding is provided so and this would allow for an opportunity to sort of look at things either through plan design changes or additional funding in this case we fill the gap with additional funding for employee at State employee contributions I see see increases in funding that would come into play in twenty twenty four and twenty twenty five to get you back to that overall minimum funding target from a reserve perspectives to this this allows for that that trigger to be seen that things need to change over the course. The period nothing's gonna fall in line over a five year projection but is this this model is fluid and and allows you that the the planning tool to make changes or moderately over the period of time and and and working ways to sort of plan for for things that need to be done in order to keep within that reserve target over the long term period. So we always want to target the mid point but if things start going south the goal is really to to keep you within that range so well especially in the the low and because that's when things can get you can get get bad right so you know here we show two percent higher claims through twenty twenty four and then you know you're projected to fall outside that range in twenty twenty four so that would. That would execute a trigger so you have a one time increase the funding to get it back to that forty seven million keep your within that that reserve range. Okay. Right so that that covers the the scenarios that we we put together for state employees of the next two sides go into some scenarios for and really just the the public school employees gives you that the status quo and and give just not sure what things could look like from reserving perspective same concept would apply for the public school employees is what we're we're talking about for state employees so we can go through the same amount of scenarios I would also want to talk to a little bit more about all of the sources of funding seems like some of the funding that's coming to play here is a bit fluid and and there's there's some areas where from year to year that some significant infusions of funds that happened so you know from a longer term planning perspective we want to talk about that a little more but we did incorporate changes that have been put in place for twenty twenty one twenty twenty two and the status quo projection what we're seeing here is is an escalation of claims going forward and. Section of assets falling below zero between twenty twenty three and twenty twenty four and and at a fairly significant level so there's that there be a fairly large deficit projected out to twenty twenty four if if the the funding stays consistent with where it is today contributions they consistent with where they are today and claims project as we would expect them to to to increase over the course of the five year period our show and a total deficit of a hundred four million starting in twenty twenty four with with no assets there so this is something that will need to be planned for and and look that additional funding or some changes that might be made in order to keep this this program for. And the real. Important piece here is the department of education funding so as you can see it went from one thirteen at one forty eight and twenty twenty two to close the gap and you know we're assuming that that one time money goes away in twenty twenty three and beyond but if that level one forty eight is maintained throughout those three years it's a it's a brighter picture for the projections but you know this is just the status quo insures yen and yeah just to on that point the the one forty does include the thirty five million and twenty million dollars of additional passed or put into the program from from various sources that's and that the we line that we have here and again it's Patrick said we're we're projecting those a one time dollar amounts that are coming into play I've there if they're coming in in the future this is a a Rosier picture them over showing here but we need additional funds. And I think a one point time to arrest of a if we combine the two funds together what would that do would have any impact and I think in general given your size you're almost to the confidence interval so I think merging the funds together. Theoretically would lower your range you might not need twelve to fourteen or twelve sixteen but it's not significantly different you probably still want eleven have to fifteen after some some way reduce a little bit but is given that you're already big it doesn't change the size and the metrics that much so it's the same philosophy. And that this this next like this goes through the the reserve target that's while fourteen percent that we've talked about the twenty twenty three to three twenty twenty five per projection that were showing here does assume that the DOE funding remains in place so we didn't show that big reduction in twenty twenty three and beyond if those numbers come down there would be additional increases that we need to be made at the the PPE an employee funding levels in order to fill the gap but in order to get to a target reserve of fourteen percent over the course of this five year period again with this group you're starting with the surplus in twenty twenty one but it's projected to be reduced significantly over time so in order to in order to fill that gap and and get to your target reserve fourteen percent by twenty twenty five we we need to C. six point three percent and increases the program your year starting in twenty twenty three. That's the end of the presentation like to take any questions. Senator Hickey you're recognized for a question yes just on a just smaller note not in here you all say this what I see the light and I'm going to use page twelve. We will be the simplest we have other income and we're showing the other income on the revenue side to be increase in all the way up to twenty five. Of course whenever we go back to like page four we see as you all said it's been all over the place from ten to eleven up to seventeen dollars and twenty twenty. However you all accounting for that revenue growth what are we are we going to make that better so that that's consistent or whatever we need to do. I'm sorry what which which revenue growth the result their income other. So are I mean that's really mainly pharmacy rebates that were shown in there and then there's a the subsidy right back with. Are not a what yes it is the already on for additional other income that gets thrown into the program from other sources are there is some some other income there is there is this fake money that's coming in that generally covers of the programs I would be clear I'm afraid okay let's just look at page twelve on page twelve on other income. Which would you be using your projections you've taken it from eighteen dollars all the way up to twenty five dollars yeah and if we go back to page for actuals. We can see that that's been at. Twenty twelve eleven dollars ten dollars eleven dollars twelve dollars so. Somewhere another I. see that we're showing those and I hear what you're saying that there for rebates or whatever but. Somehow some way that's got to get from the eleven twelve to seventeen all the way up to twenty five does that happen do better management I mean or how how does how does that income still source that we're counting on the projections going to increase you know so one of them is is your RDS subsidy that you get for the retiree programs that's generally what is that so the for the your Medicare retirees their their prescription drug plan receive subsidies from the government side. For being a plan that's equivalent with the standard Medicare plan you get money back to the program so that's roughly five million dollars a year we're assuming that will increase your year with prescription drug trend so that's that's that's a portion it's just going to increase year over year as part of your program and could potentially increase more as your Medicare population grows in the prescription drug plan assuming you make no changes there the other piece that's in the other income is pharmacy rebates so we're also projecting those increase with pharmacy trend over the period of time comparing that number back to twenty ten probably isn't a great comparison because that's something that rebates have become more prominent in the sort of the pharmacy market so we've we would expect to see them go up and potentially higher than what they're going up here if there's other changes they get me program here what you're saying however let's just go back to page four sure. If you fall that if the all that is true. Why was that not true from twenty seventeen when it was sixteen dollars then it jumped to twenty ten to twenty three but then it fell all the way back to seventeen. Yeah them and in this this may be taken into account some additional dollars that are that are we might that we might have sort of pulled out of this from the the long peace to the projection for I have to go back and and look at what pieces if there's additional pieces in the other income that are in the the projections. Okay because I just wanna make sure that we're not to overestimating yet in that space and I understand that's a smaller piece of it then of course we're gonna be able to control the the funding for yeah but I want to make sure that's not going to get us into the. Eight to ten million dollar if anything you know we're conservative because the other on income we're projecting we can we can point to and say these are real numbers so you know maybe in the past and twenty nineteen there is a couple million dollars for some you know one off some special Money that was contribute in that bucket but you know ours is all based off real numbers so if there's any extra money then now that will be good but. Russia is looking back at that just little bit to make sure we're with wrecked on that thank you. So. Jake you may want to come to the table for this We have a few members not here today and they sent me some questions so I wanna make sure questions get asked. Of the first question was. What is the federal government put twenty five percent or a hundred twenty five dollars for state budgeted positions. Yes you can ninety five and and J. can touch on that but that the one twenty five is an estimate based on an average of the overall federal government funding they can get into the variation that occurs sessions. So we are still out on per budget position regardless of the the money that's being used to fund that position and we have to do that under federal rules of the feds do not want us charging them at a rate that is different and we're charging ourselves with they don't want gays us to be overbilling them and indirectly subsidizing state government as a result. So we get audited regularly where they make sure that whatever we're feeling to the state is exactly the same amount that we're going to the agencies so if it's five hundred dollars a position that we're billing to general revenue funded agency with state dollars they might be sitting right next to a federally funded positions somebody works on federal dollars we're gonna charging the same amount five hundred dollars the one twenty five number I think is an estimate that they drew out of the numbers of based on their information. Yes I guess it's it's really the proportion of federal positions you know I think that's what and give us that it was about twenty five percent so when you break that twenty five apply that twenty five percent of the five hundred that's that's how the one twenty five came about so the one twenty five is basically an average an average right it's sort of an artificial number and for every federal position it sounds like they're paying five hundred dollars but they're funding twenty five percent of position could follow question would be If if you eliminated a ball number of positions you you may be eliminating more than one twenty five depending on the type of position is being eliminated yeah correct assumption if more positions that are eliminated or federally funded and state funded they might need to be an additional amount of state funding that we need to be come into feel that overall gap right to get that fifty four million dollars. Funded additionally by the state to get to that six eighty that we're right we're assuming might need to go out. That the so we and we look talked about this but the when we look at that when we bill out to the agencies the amount that they have to pay on that per budget position we do it we break it out by agency obviously so you can see which agencies are growing in positions in which agencies are trying to. there some agencies that are hundred percent state funded if that's where the positions are decreasing that's going to be a loss of state funding coming and EBT if there are agencies out there that are a hundred percent federally funded in those positions decrease that's a loss of funding that will come out of the federal portion of that it really just depends on where the positions are cut from you know if we as a state go out and cut proportionally across the board then the you would see even decrease but I think we're a lot of times what we're seeing is where we're cutting in state funded positions because we want to save state dollars the federally funded positions not always the same thing DDS essay is a good example where you're seeing really strong growth of positions over there that's a hundred percent federally funded they're paying the same rate into the EBT. So you referred to you have this report it shows the agencies and and that's something that could easily be put on a spreadsheet for the members yeah I can email that out to you soon as I get back to the office just wanted senator Marty and then we'll get it out to of council members sure and all that is is you know when we do our budgeting the agency's team to know how much they need to set aside for health insurance and DFA will do report we take what we call snapshot we look at one day because people quit jobs they move in and out. We just take a report we said okay this seventy budget positions you have right now based on your budget. And that's how much you have to pay us basically that's how much we're going to plan around having from the agency's anybody that's how much they need to plan around paying we can absolutely Senate. To represent Senator Irvin you're recognized. Maybe. At the turn off to turn you on sorry thank you a little bit a follow up from Senator Hickey if we could just get a list of other income a list of those search sources that would be helpful for me and then my on your pages and you're you're an. Presentation where you see where you have net income loss and you show a loss basically on every scenario here am I to assume that that loss within B. compensated from the research. Yeah so the it to the extent that there is an our expenses above five funding coming and that would reduce the overall assets and programs right and so this like on page twelve or Page thirteen so the eight the two three four four that's in the red would be absorbed or taking care of through the research is that correct yes so the way that that's flowing if you look at the total asset line you'll see there is there is a reduction in assets of the current year or a year based on the and this is and of your assets on page twelve as an example so if seventy million at the end of the year for twenty twenty one two million loss in twenty twenty two so that reduces the reserve down to sixty the after the sixty eight million right that that flows through over the course of and then when the policy be designed to adjust for that automatically every year to increase the reserve to compensate for the previous year loss. Yeah so it need it generally the the target and this sort of allows you for some some opportunity to follow your target reserve and targeting for the mid point but if you do fall below it gives you an opportunity to sort of work back over the course of five years to get back to that mid point target reserve so you know it's it's not quite self correcting you need to sort of put in measures to get there but it gives you the opportunity to sort of see where things are going based on changes you see year over year and he starts to fall out of your court or gives you the opportunity to correct for that records and this might look a little different if you didn't have a. In excess in the first year because right now you're you're seventy million but your target reserves forty six million rights you got twenty four million dollar kind extra I mean normally you're if you started out and you're already a reserve and you do a long term you have to build a little surplus rates you'd have positives in a couple years instead all negatives right this is just negative because the nature of having access money at the start action okay it's quite nice. The client that you're still. I think this. So what we're showing here is just a glide path to get you from the seventy million to the fifty eight million dollar target certain to do that there's just some small losses along the way based off of five point four percent funding okay yes thank you that appreciate the clarification. Senator Ingram you're recognized. Thank you Mr did we get it up I know we got a total number but of what is the number of the Arkansas state employees that we're talking about. Three twenty. Between retirees and everything. You got a run. Figure check know that off does it and why you're there public school employees. Yeah the difference is amended the total number of years retirees as well so we see this live action versus retiree. J. Scott. Okay well okay well he's looking at up of. Help me make sure I understand when we remove those of positions and they're being paid for all the there really to the state other than the federal there's no additional cost because if whether we're paying the agency for the ghost employee and that agency is the pass through to the health plan to pay it. The if we eliminate that and then we are the money that we would have had for it we're putting directly is a a subsidy into the plan. But will in lieu of put it through a an employee is it my mission that is that just money changing pockets there. Yes so I mean I think as long as you write if you bump down the number of positions you're going to get money for and if you don't do anything else you gonna have a deficit but if you increase of five hundred dollars to six eighty then you're gonna get back to the two hundred four million and yeah that's the same money that's being paid from the agencies I mean it jumps out at this because it's it's a subsidy of fifty million dollars but we're really paying it we're paying it through the ghost employees that that's there now that we've got back so I mean that's what gets is is is the the one time jump of money okay yeah I get that technically this paying a higher number it really brought me per head for actual that and that's all we're saying is that if you change that mask it changes they just were making you aware that the drop and you still keep in that multiplier of five hundred that obviously changes the the fund any got a better opportunity to see the the true cost of the the Bill pass what what are all right so now is it is it better to to set the resort up and get to it like you're talking about over five years or wow could you not look at setting you know of last year's expenses and budgeting a hundred fifteen or a hundred twenty or a hundred twenty five percent and budget to the Max in reach that that that reserve that you wanted to do based on your previous years claims. So if you whatever your claims were last year and you're projecting for next year you budget a hundred fifteen or a hundred twenty or a hundred twenty five percent of those planes to get to this this reserve or is it better to start with the reserve which would be a bigger shock to the system then then budgeting off your actual claims of the previous year. I'm not exactly following I understand if you're if you're claims just for if they were a hundred million dollars. Then the that for the for the previous for twenty twenty one for twenty twenty two you would budget a hundred twenty million dollars in in in in reserves to and then let that build up over five years instead of trying to do it all at once. Your I mean we're not right now so you're at seventy million dollar assets Ryan and we're saying that the target we recommends below that right forty six million so. We don't need the. You know over funds next year by by any stretch is really like just a smooth the increase your every year to kind of get down to that to that target so I guess if we're behind that and I think that would that would be like an interesting argument if you want to do it all in one year to get you back above you know to bump up your reserve but because you're you're currently above it we just want to see that now just so I mean I think I think we're almost talking the same thing you're saying take a percentage of the year in which we're saying it is because it is very very easy to look at the reserve thank we're going to pass you know we're not pass this year is we have the last few weeks you know we don't buy anything and so I think there's got to be some trigger put in there for your you know your loss reserve of budgeting above what your loss was for the previous year and and that'll help keep rates down in my opinion I don't know let me ask you this one other thing and I'm sorry sure I have a list I'm I noticed on this of the plan administration cost you all have a flat number of of of two of I guess that's two million dollars up but we have seen fluctuations in previous years of of of you know four to five to either eight or nine million dollars of the own on what we've already paid for what are the changes in why do can that be budgeted is that but history tells us that we spent more than I. I don't know that I saw history historical plan administration costs that were at that level well I thought on your your on page thirteen on your funding target you me I just got to up million across the board but if you go back to the yeah I resigned I see you in twenty fourteen to twenty sixteen in the public school yeah I mean I don't have total line of sight and turned into what some of those costs were it's possible there's some additional expenses that are rolled into the plan administration costs back in twenty fourteen through twenty sixteen with those higher numbers but that number is sort of stabilized in recent years and based on this and some of the projections that we've seen from Milliman from a plan to ministration cost of the overall administration costs that we have on record for what you're paying we found it from a production perspective that these numbers are reasonable expectations for the the five year period it would be below anything we've ever paid for for plan administration from if if the numbers that I'm looking at our correct of you know of did you give me the number of Jake on public school employees versus Arkansas state employees yeah so that the public school employees around twenty five thousand employees total members if you include retirees is up to thirty eight thousand four the public school employees it's forty seven thousand eight hundred employees and sixty five seven for total total participants when you include retirees. Twenty five thousand thirty eight thousand for it for a for a state employees and twenty five and thirty eight total with retirees thank you Mr. Senator Hickey you're recognized yes just a couple couple other things. Of course I hope that we develop the legislation where it will you know is this as is needed there just be automatic so that the somehow we can get there that you one thing I do want to point out and I will pour will ask you this question as far as our assets and our reserve right now those would not be near where they were if the stated not dropped in the was a fifty five million last month. Correct so I think that's a very important part that everybody here needs to remember that the only reason that we're showing that that's over and above what your target is is because we actually just dropped and had that big cash inflow so also back to the other income port we passed legislation one of my of course was an insulin Of doing away with the some insulin or whatever school is supposed to be costing a large a large amount did we factors that bill in or did we not factored in whenever we were calculating that other income going up to twenty five dollars did you all look at look at that was you made aware of that. I don't think we have. Yeah I mean we're we're aware that there's an insulin bill and I think the estimate was eight million dollars on the impact so that wouldn't go on other income I guess if if anything that would. You know caption by expenses medical I guess I guess it would reduce the rebate so maybe read that's that's why address where I was hit man you may be right maybe it's under the expense where there's under the expense that or whether it's under the reducing the rebate side which would reduce the other income the way I was looking at it the I was just wondering if we had actually factored in had not factored in now we we didn't okay I mean we're kind of doing more of a status quo I know it's effective in twenty twenty two but I know there's been some talk about. Looking at that closer I think we're we're gonna have some follow ups on that okay Maros meeting thank you. Senator Hammer you're recognized thank you Mr on your page five of your hand out historical financials. I'm I'm years thirteen through seventeen if I'm interpreting this right. We had net income instead and it lost my correct on that correct. Do you know what significantly happened in those years that we had net income and when I look up to the state employees on page four years fifteen through seventeen also had net income do you know what contributed to why those were net income years. in in both cases we look at it from the the claims experience both of those pockets and and relatively favorable claims experience that turned a bit for a twenty eighteen and beyond specifically what drove that good claims experience relative the other years I I couldn't I couldn't say. Well and then you have a twenty fifteen if you look at the public schools your department of ed funding went from fifty million to one oh four so in twenty fourteen at a five million dollars net income gain yeah at fifty four million in revenue and now you're fifty seven. Okay and on the. On the on the expenses on the medical claims. The did it have a contributing factor to that I'm trying to compare the two charts together did the change in expenses as far as pay out how much did it influence the. The net income. Yes you had a dropped there from two twenty five to two oh one so yeah that that obviously helped drive some of that they can as well. Okay and did you have to look to see if that was because of I read seem like a member couple years we had a you know some preemie babies we had some major cancer hits D. all get down in the weeds as far as the the lifestyle for expenses associated with the events that that would have driven does it cost we didn't have we don't have access to any large claims or detailed claims specifics dating back to twenty fifteen okay all right thank you. Any further questions remembers before we move on Senator Teague. You're recognized thank you Mr chairman I apologize for asking questions I was in pain but my mother's got to say so I've been having to run out talk to her for two minutes and not follow as well as I should do we talk about. The doesn't the money that goes to K. twelve of for the teachers if the teachers not in the plan that they get to spend that money elsewhere that we talked about that at all our is that still true. Because it is is that right if the if the teachers not in the plans in the school district is to spend those dollars elsewhere. That is true that is true that I had had a discussion at all not not at all. Well today yes Sir do you want to Jake or do you want to hear from the consultants I don't I don't matter to me but but in that part of that as part of this money that we're spending and we all know I've always sought to school districts on active. Spend it on healthcare So I'm not a great would be the N. eighty would be the official on this but we bill or the eight the districts pay out for subscribers so they only pay per budget position that minimum amount if the employee signs up for the insurance but of course we fund the districts for each of the positions regardless of whether or not that individual signs up so my assumption is based on that yes then they would have that extra money line the available at the district for other purposes. You say yes. It depends you very careful will let him. Regenerate his yes yes Sir I did say yes. So so it seems to me those dollars have to be accounted for somehow issue moved to this too in it we could just go back to where we were talking about The employees. The the the positions that work field. and We use those dollars to subsidize rest about it isn't that accurate now if there's a positions field we still pay it. Not a position it's not ever going to be filled by position is open maybe a better way to put it no we use those dollars that we pay for that to subsidize Services system and you guys want to do away with that and just put it into the and you want to put it in there the words six one half dozen the other I I couldn't make a cake make your numbers work the the consultants didn't have anything to do and doing away with that there was a legislation during the session it was passed to look at all open positions and there is a group of legislators that actually wanted to address some of that so we asked the consultants to look at the effect of that on the system so I wouldn't blame him for it okay well I might have been it. I didn't want to be clear where it came from. So is there a consensus among them the body that we shouldn't do that I mean I don't I'm trying to understand how we got there. As you may know Senator Hickey did it didn't. There there is there is a good senses of the body to look at it by the pass legislation I can't tell you what the consensus is going forward yet when we finish the study I'll get that news to you I appreciate brother thank you thank you. Senator Hammer you're recognized. Thank you Mr back to the questions Senator Teague gassed do we have a way to find out. How many employees are not. Taking the school employees are not taking the insurance and what the dollar amount associated with that decision would be. Because of this bill should be going to school school supposed to be used for insurance and they're not. I know they do it but. So I can say again again this is a question I think eighty you would probably have to answer but in one of the big challenges that I'm sure that sequel folks have been wrestling with and we've been wrestling with is the school funding adequacy formula and the peace that the health insurance plays and all that adequacy does provide specific funding force some positions teachers for example but this school insurance policy covers all kinds of school employees whose salaries and benefits may not necessarily be specifically laid out in the adequacy formula so I don't I don't know how we could necessarily do that I do know that inadequacy there are targets for salary and benefits for some positions and that could be something that eighty look at that I think you'd be pretty complicated. Barclays give me look it be it be too complicated to have them contact the schools and say you've got five hundred employees four hundred of them have insurance the other hundred don't so we could identify what that number is I have no doubt that we could do it and I'm sure that the the district financial system what these call asking they got a different name for now could come up with could get your real close to that number. the the the issue is mandating that districts to use that money for that purpose I thank so senator I am morning hour just discuss and some of the history and and twenty thirteen there was some discussion on that funding having to be spent on some insurance and there is a reason we didn't do that and I'm thinking tomorrow morning right after regular business we can have great from eighty here and we can go through some of that history and why but I think if we're giving it to offer health insurance they are to be spent on health insurance which I think is what Senator Teague was alluding to all right now the participation do we know is participation rate is on PSE I do not have that in front of me do you guys know not offense would have to look it up with the participation rate to my memory is lower than the state participation rate. So there was a push back then to to increase that I think it's be better for you the department here in the morning and we can ask all these questions and probably get. Better answers it Mr I realize it may be a question of you know we can't mandate it but I think at least it be good to the public and maybe to the teachers as a whole the note we make decisions going for that here's here's something you need to know if nothing else be fully open with but thank you thank you. For any other questions or membership. Swiss that will there is one more section correct that's correct yeah you guys are going to start. Senator and you have a question on that one. And just not a question does the statement though I mean you're recognized thank you Sir just as far as that discussion entails it also may be. Something that the bureau needs to pull as far as the history of the adequacy reports and studies specific to that time frame and not discussion and so I I think before we say whether we can or cannot do something we need to really understand that funding mechanism that funding formula and how it could or could not be adjusted but I've. I'm and I'm uncomfortable with stating that we can't mandate something I think it's just we're gonna have to dig into it we're going to have to coordinate these efforts. A particularly in light of where we are with the PSC plan that very very good points and I would tell you that Marty is already asking the appropriate attorneys to get that information and we'll try to have that at our next meeting hi possibly won't have it tomorrow but we'll have it at the next meeting. With that guys you're recognized to proceed. Sturch go ahead. Okay good morning again I'm Kirsten satin I was here last month and we did a deep dive into Medicare advantage and part D. just talking about those programs and since that time or after that meeting we are asked to go back and go to the market and see if we can get some estimates on savings so we did that and we're gonna talk about that at the beginning of the program on that date I'm going back through some of the high level just to make sure we're all on the same page about what this program is so. You want to get to the next page please. So just Medicare advantage this is the medical side just a quick review. Of a Medicare advantage plan is offered by private carriers it combines all the benefits into one plan so currently what happens is or Medicare eligible members they're getting covered by Medicare than those claims come over to Blue Cross blue shield and there's a coordination of benefits after Medicare pays its portion on which we call the rat benefits all those get combined into one and then pharmacy which is a part of the plan may or may not be included in the same plan. the way that the inmate carriers on the medical side get funded is they receive capitated payments from centers for Medicare and Medicaid Services the subsidize the cost of coverage based on benchmark which is at a capitated amount based on the county that you live in and risk adjustment which reflects the burden the illness burden of each member on these are fully insured products and anything and and then there could be other services that are above Medicare that is covered by the plans so anything that's not covered in the CMS funding is what comes to the plan as is the premium for the plan and then the minute and may carriers manage all the claims all the risk adjustment all the clinical programs all care management programs and customer service. So on the next page what is a group Medicare advantage that it's different it's similar in some respects and is different in other respects to an individual Medicare advantage products so you see Medicare advantage products sold on the individual market all the time there are some differences between that and what we see in a group Medicare advantage program geographically on the individual side it's usually a limited service area primarily H. IMO's with contract providers on the group's side is typically a national service area which includes all counties in the United states and territories it's it is typically done under a non differential quote passive PPO will talk about what that means a little bit more as come as compared to an HMO and providers you'll have some contracted providers for but it's more any willing provider that actually participates in Medicare is that willing to accept the plan In the individual side is typically higher retiree out of pocket costs in plan design but for group Medicare advantage you can make that a quick look to the benefits that you currently have in your program and over the last decade is just really grown in size and there's just been tremendous stability and significant savings for sponsors really important to note that difference of the individual product verses this group product so we're not talking about what you see in the market here's an individual product that you know somebody might take you personally my retiree personally might take this is a group product is completely different so as we go along Curzon talk about just remember that it's not the individual product so the group product. So one of the major things that we talked about there was provider access in the plan type so a passive PPO is a PPO but instead of having different cost sharing in network versus out of network the way this works is retirees pay the same cost year for services in network and out of network. The plan actually pays the in network providers according to contracts but anybody out of network will be paid typically under percent of Medicare so you can not be a contracted provider but still accepting members in this plan and this is set up on through waiver so employer group waivers are set up in the Medicare program to offset those things in the individual market that need to be more more flexible for a great product and that's how they do this so what it says is as a waiver. CMS allows employer group plans to provide coverage to members anywhere in the country as long as they meet the network adequacy adequacy requirements for fifty one percent or more of the members in the plan so that's how they're able to do this seven no PCP. Selection required no referrals to see a specialist this is really members going anywhere they want to go. and this just shows. You know the traditional approach on the left this is the way it's done today we're Medicare pays primary and then it comes to Blue Cross blues BlueShield there's no coordination of care there there's no nothing there and then when you go to a group Medicare advantage PPO you have everything under one planned so If the plans really looking out for the members to giving them incentives for health and wellness coordinated care and support provider collaboration incentives for those providers annual in home assessments and just making sure that members are getting screenings preventive care closures and gaps in care and helping them especially when they're in patient stepping out going to that second level of care you know should it be acute inpatient rehab said it be a skilled nursing facility should be in home care so when you think about your active plan with Blue Cross right now I mean you're active people are getting these kind of treatments right there getting coordination of care they're getting man medical management they're getting all that's also summer tires on the on the Medicare system. And it's not of coordinating more Medicare is very fragmented on the on the C. O. B. side so the goal of the is the Medicare group plan here is that when you go into their and I'm they continue the coordination again care management they're doing that well this is especially for a population that has a lot illnesses the very beneficial to them to have all these services. Yeah. So what are the benefits to members is a simpler approach approach right there is one plan no confusing coordination between Medicare and Blue Cross this one ID card single call center they can call in and understand the benefits what's going on again this is equivalent benefit design you can do a copay based design make it real simple we talked about the passive PPO they can see providers all over the country improves health and wellness you know home visits wellness programs clinical programs coordinated care like inside you go from the coordinated care at all said not having that coordination without this plan and there a lot of the distal benefits that come with this there's a lot of innovation in Medicare advantage plans so things like if you if you come out of the hospital discharged and you go home meal delivery non emergent transportation hearing and vision covers lots of things that can be added on here. And we looked at this map last time in this is just a map of the state health plans in retirement systems across the country that are offering Medicare advantage so you can see this is a very popular program one that has been implemented in many states we personally have implemented. It many states maybe ten at this point and even looking at this map I can tell you that are New Hampshire we implemented so that's no longer on the white and got a call yesterday from Maryland they want to implement that will be going and so continues to grow even in the state health plan space. And then if we take a quick look at part D.. and we're talking about employer group waiver plan this is a true Medicare part D. plan regulated by us centers for Medicare and Medicaid and again this this first bill it talks about how you have the waivers for the employer group waiver plan that makes it different from the individual plan so that you can customize everything about your program but it does allow you to receive different subsidies currently you're in the RDS program at what program provides different subsidies and the much greater than the RDS program and I think compared to the map Matt what was in every state except one is doing. That will. It was one state and so almost every single state by the Arkansas office of the states that offer prescription drug coverage or some states that don't. Right. so this said this next slide sort of outlines what are the subsidies that come through RDS verses and whip so in RTS you have a formula the maximum RDS subsidy is capped at twenty eight percent between two limits and and that's all the funding that comes in that was based on the original party program but the accountable Care Act put in more funding in the what used to be term the donut hole and we call the coverage gap and so RDS is not getting the benefit of any of that funding so if you look over at the at what column you're not getting the RTS but instead you're getting all the money in the coverage gap discount program you're getting money in the catastrophic reinsurance program as we continue to see more specialty drugs come on the market we've had. Thirty four new ones already approved this year and that just continues to grow is like fifty percent of drug spend at this point so the more you can get the catastrophic reinsurance subsidy that's a huge number that comes and also the party direct subsidy and also low income subsidies. We also talked about last time we went through a lot of this and and talked about the state program but in the public school program currently they don't have sponsored pharmacy benefits and one of the issues of putting in a Medicare advantage plan is you soon those retirees in the public school system have gone out bar bought an individual part deep plan and you can't put in a group inmate plan and have people enrolled in the individual part deep plan at the same time and this is designed to protect retirees so that they're not rolled into different plans so You know one thing we set here on the bottom is the only option for the public school members to have a Medicare advantage plan is if we could get rates to the point where it could cover medical and pharmacy and then we can maybe bring then you have the option of bring them back into the program had pharmacy coverage so we're gonna show what the rates are In what we got so market analysis. So just to talk about what we did the process so we reached out we had a pretty quick turnaround we wanted to get some some estimates within a month so we reached out to the two largest carriers in the inmate PT market and we ask them to give us twenty twenty two rates that would illustrate savings available for both the state program and the public school program if either were to move if they were to move to an inmate only or an MA PD and again that may only is only for the state plan we provided some enrollment and claims data at a level of detail that would allow them to provide estimates with a pretty quick turnaround. And they modeled medical and pharmacy plan designs to provide comprehensive benefits to be equivalent to the current benefits so that includes all non Medicare covered benefits currently in the program taking into account the coordination of benefits methodology that's currently in place which is a very rich coordination of benefits methodology we looked at what your members are paying and it's about five dollars per member per month so it's a very rich benefit also providing additional it may specific group benefits like the ones we were talking about fitness benefits all kinds of different benefits when we show this pricing the the pricing for the public school pharmacy benefits implant designs were based on the state benefit design and the rates that we received seem to be conservative and there's a few reasons that we would assume them to be conservative one this is not a formal procurement so is in the Leicester of look at what's the ability on the conservative side to produce savings to the program they know when they give us these numbers that if there is a formal procurement they need to come in under those numbers they never want to give a look that makes this a bait and switch type situation so we know they would come in better in a formal procurement and they would also have more detailed claims the tail end time for an analysis in a formal procurement so just keep in mind when we're looking at these that we expect these are conservative. So you just look at the state first and I'm gonna provide a baseline so what I did here just to walk you through this chart we're looking on the top part of the chart at the twenty twenty one. Rates so first we have enrollment there on the top I'm showing this as a PM PM number how much is this rate per member per month on the bottom portion I'm multiplying everything out by current enrollment for twelve months so you can see the premium equivalent at the top so medical is two hundred thirty eight dollars and twenty four cents per member per month medical and pharmacy is four hundred eighty nine dollars and twenty cents per member per month that part that that is current for twenty twenty one. That get split between the state how much is funded by the state and how much as rich is funded by the retirees so if you look over at the retiree contribution that's how much the retirees are paying today for that coverage and then you can see over there on all the way to the right the state contribution percentage. I don't have the premium equivalents for twenty twenty two currently saw projected those forward down the bottom part of this graph on using the same. Trends that we used for the other projections which is about five percent for medical six and a half for medical and pharmacy combined to project what we would expect that funding premium equivalent to be for twenty twenty two so I'm using this as the baseline as we walked through some scenarios just keep in mind when we look at savings the this is the baseline that I'm using. And this enrollment by the way is based on June twenty twenty one number so we're we're just projecting that going forward. So the first scenario is a full replacement MA PD all I'm doing here is I'm saying currently your rates are at the top and and again there's the baseline that I pulled over from the previous page and then in the middle section here the rates that we got now I they were pretty close to each other between the two carriers and I took an average straight average of the two of them so currently where the the premium equivalent projected for twenty twenty two would be two hundred fifty dollars. The PMPML on a Medicare advantage plan came in at one twenty five says really fifty percent. For the medical and pharmacy which is currently at five hundred twenty one dollars the M. eight P. D. P. M. P. M. that was estimated as two hundred fifty seven dollars so again pretty close to fifty percent. down on the bottom you can see the the change from baseline again I do it on a PM PM basis and then the total amounts of savings is shown on the bottom line so save forty five million dollars per year in twenty twenty two and the only real difference that I've made here was currently the medical program which only has the inmate the medical only is two hundred eighty seven people and I don't know where they're getting their drugs I don't know if that if they're on and go into the individual market I don't know if that could be a try Kerr member something like that it is very few currently the state contribution is set at thirty three percent there and what both of the. It may carrier said is the state the contribution would need to be more than fifty percent sap change that thirty three to a fifty one percent state contribution which still on the medical side saves the state twenty dollars PM PM but if you even look at what someone's paying medical currently the retiree contribution is a hundred sixty six dollars and eighty seven cents if we went to this program to roll in the pharmacy program it would drop to ninety six dollars and sixty two cents with that same contribution split so they'd be saving a hundred dollars a month in the retiree contribution moving from a medical only to medical plus drug. Program. Okay let's look at scenario number two. So now I'm going to look at what we did a full replacement on the medical side and kept EBR acts on the pharmacy side so. Same set up but you can see that the premium equivalent instead of the of the. Two hundred fifty seven dollars. We have an a plus EBR acts would just be that pharmacy portion plus the MA only rate so in this scenario savings goes from forty five million dollars down to twenty one million dollars over overall the state portion then dropped from twenty eight million dollars to thirteen. So that's just another scenario for Medicare advantage only and leaving the pharmacy with EBR acts. The third scenario that I'm going to show is what if you made it an option what if you continued to have the Blue Cross blue shield coordination of benefits in EBR acts as an option and you had the inmate PD as an option and fifty percent of the members enrolled. Then your savings would be about half of the full savings so instead of the forty five million it dropped to about twenty two. Just to tie this back to what we talked about earlier this morning we were projecting from twenty twenty three through twenty twenty five the state employees wanted to fund this to the target reserve that we talked about a five point four percent increase your year starting in twenty twenty three full replacement MA PD under that same scenario if that were implemented in twenty twenty three that five point four percent would actually be a negative number of the one point seven percent negative also funding can put actually reduce we wouldn't recommend reducing funding you would keep funding flat actually build extra reserves if you went with either the fifty percent M. A. PT so fifty fifty enrollment or an M. A. only those numbers work out to about the same the the increase would go from five point four percent a year to two point five percent per year so it has implications on the overall funding from a longer term perspective is that you can say that so just like any other planned changes that would just translating it back to what we talked about this morning thank you to the next thirteen the seventy no did and duties so I think the seventy five percent get you close to zero which is the next scenario thing right in yes so the next an area code is the same as the one before but it just assumes that seventy five percent and roll instead of fifty and we've seen different plans where it if you auto enroll people in the MA PD but give them the option to opt out we think we'd be closer to a seventy five percent scenario where if you gave them the option alongside and didn't auto enroll them with the opt out on you you might get more close to fifty percent. So you can just see that in the seventy five percent scenario even if you will gave them the option You still have some savings there now the only cabbie ought that I put on the bottom here is that these rates had stipulations that came with them and they did say that these rates are based on full replacement so they may be higher if you put them alongside an option but given that these are conservative rates were not in a formal. Procurement we just don't know what you know how much these rates could be the same potentially and the full replacement rates be lower. But just want to make sure that we have that understanding. So you member that I mean the auto enrolment features and an important differentiator because you know it's all communicated well in the get go and you make it a recent of reasonably good benefit which will being with equivalent benefits I mean the member retiree would be paying about a hundred dollars less than they would pay in their companion plan next it's with the significant financial advantage Senate North Carolina actually has this in place they have it right next to their the Medicare supplement plan similar benefits structure they do not enrollment they do have people go back to the base line C. a B. plan but they got eighty five percent participation level so we think seventy five percent conservative with that even if you're closer to fifty so get a good good savings off of that so. And if you rolled a plan like this out the the big carriers that provide these products they will set up in Rome they will set up educational meetings all over the state so that people have the chance to understand the products come to the meetings ask their questions all of those things so would be a big communications On the product so the next sheet I'm just putting I'm just bring all of these in side by side so you can see the savings so scenario one that we provided here and this doesn't mean these are the only scenarios full replacement total savings forty five million there's the state savings and the retirees savings based on the contribution splits that we showed on each of the pages scenario two full replacement in may with EBR acts and then the scenario three and four with options retiree options based on fifty percent seventy five percent. Very conservative assumptions right we talked about that we think this is the high high end of what would rate expectation be with and wouldn't be unreasonable to think you know another fifty dollar reduction in the rates could be achieved and fifty dollars on a full replacement is nine million dollars more statements so if you think the fifty percent participation that's forty five million more a year we talk about that over for five years that's you know twenty five million dollars so it's a big number. Okay now we're gonna look at the public school financials so on this first sheet same thing just making a baseline twenty twenty one they're currently paying two hundred and the premium equivalent is two hundred seventeen dollars and seventy six cents with the retiree paying a hundred dollars so projecting forward same trends fifty four St contribution fifty four percent state contribution there. So. Scenario one again it's gonna be full replacement again remember that we've we've got on the top line the baseline is based on medical only when you look to the middle line this is medical and pharmacy and the difference in this conservative rate is twenty eight dollars per member per month. So if that was the rate. It will cost five point two million dollars to add pharmacy benefits back in. The state would pay two point eight retirees would would pay thirteen dollars more per month for this coverage. And remember this or explain design is based on the state plan design which is far more rich is a far richer benefit design than anything that they're going to be a this going to be available on the individual market so. Well we'll go through some scenarios let's get a number to. So number two is full replacement MA PD with a lower state contributions so if we were trying to get the state peace lower than what percentage wise that it is yep we could just drop that state contribution from fifty four percent down to the fifty one percent minimum and that would only cost the state one point five million dollars more the retiree contribution be twenty dollars more per month to cover drugs as well with this rich benefit design. Scenario three we go back to. Scenario one and instead of dropping the state contribution leave that fifty four percent let's change the benefit design a little bit to take out that twenty eight dollars so if I take twenty eight dollars times twelve that's three hundred forty dollars you could put a three hundred fifty dollar deductible on it you'd be back to that point but you still have far richer benefits than they have today in a standard part D. plan the current benefit is four hundred and forty five and then they're paying twenty five percent of everything after that so even if you put in a three hundred fifty dollar deductible it and there you can change copays you could do whatever but it be easy to get that twenty eight dollars down zero that's just the pharmacy thought the medical be the same. Right and the medical benefit because we looked at. the coordination of benefits we saw the members are paying five dollars per member per month the medical benefit that we gave to the carriers and said give us an equivalent benefit design is zero dollars there's no deductible there are no copays and and we may not want to have that but that's what this pricing is based on. Then scenario four we looked at an inmate PD option again so maybe put this MA PD out there so in this scenario if you take the current Blue Cross blue shield you have medical only if you took the M. A. P. D. you have medical and pharmacy and you could set it up so that there are those choices for the members to. And we so here still with the twenty eight dollars and they're not pledge not changing plan designs this is one scenario with fifty percent. And then we talked about a procurement that could result in a little better savings in you could theoretically have a little better procurement results and you can have the retiree contribution almost be the same so you could of the current plans acts you can go there and may be the plan for the same value right same contribution but you have pharmacy covered that could be the option. And then we did the same again with the with the seventy five percent and and the costs go up a little bit because there's little bit cost there. And then the next page just shows again a summary of all of these scenarios that we just walked through. What the cost would be for each one of those full replacement. Inmate PD for placement in my PT with the lower state contribution for placement MA PD change the benefit design a little bit. Retiree options if fifty and seventy five percent. But you can see that the cost to the state on all of these scenarios is is pretty low. so I wanted to on the next page just both of the carriers had some rating stipulations include included in the quote and they were very similar to each other so I wanted to put these in here so you understand them the rates are quoted on a full replacement basis they say in the state contribution is greater than fifty percent which I put into these scenarios it just seems utilization of each carriers group formula airy with additional non Medicare cover drugs and utilization management we have these these plans and all kinds of states these are these are good formula Aries Nathan no gotcha there there are richer than the ones that are on the individual market this would be a group product this would be what do you want covered and Based and they're all based on currently enrolled membership so it seems seems less than ten percent difference from the current per year I don't know if you have retirees there opted out of the program and if they do are they allowed back in that they would want to know that in a formal procurement situation so just so you know those. And then if you want to move forward with this just want to say next steps would be a formal procurement you could ask for multiple scenarios to assess your options you could ask for in a verses in a PD you could ask for give us a full replacement pricing give us optional pricing so you actually have that information any other flexibility she want to explore including what needs to be on your drug list what needs to be on your formulary any unique components of the plan you just go ahead and put that in an R. F. P. we always ask for guaranteed rates for at least two years because once you get through the middle of the first year you don't have enough data to actually negotiate a second year remember these are fully insured products but we have been very successful and asking for not to exceed Rick recaps for all years of a contract and then after the first after we have enough data we could negotiate those we also typically put into these some type of medical loss ratio guarantee because a fully insured products so we look at what portion of the total expenses are you spending on claims and if it gets below a certain percentage will have guarantees in place if it falls below this percent will share in that if it falls below another president we get a greater share so that they're not making money off this product and there are no commissions in this product just FYI you could ask for reporting and data you want to capture including all CMS reports that are specific to your members you want this you can get all of your data. Coming back to you and you want this for two reasons for your own information but also for future procurements you'll need this information if you go out for another procurement and just noted on the bottom there we have gathered many of these initial assessments for the same purpose over the years and we do expect the same to be greater than the ones presented in this report when when you come in with a a formal procurement. So. Those are the results of our market analysis and we'll open it up for questions and I just wanna add one other thing to tie back to the financial piece so when we were doing that target reserve. We're applying for Senators against yourself injured claims so if you flip to this product and you have a rate cap in place I mean you can I know it's fully insured so you don't have any risk on that piece so that can actually help lower that target on and and that's fully insured so you don't have an ID and are associated with either so that's a that's another benefit. It would be a windfall in the first year so you'd actually be paying that premium but you you'd still have the run out of the claims you still have RDS come in and you'd still have rebates coming in for a minute there which. It was a cash position as well the purpose of a couple years of RTS that tends to lack of it and that speed of RDS one of the things we mentioned last time we we talked about this is that reduction in this this cash cost of your your Medicare program also has implications on your retiree medical liability the savings estimates that we we provided last time the numbers that came through on the conservative side are more towards the higher end of those estimates so that the fairly sizeable reduction to your retiree medical liability for you programs while. Senator Rapert you're recognized for a question. Thank you back on page eleven just if you'll recap to me exactly why they're able to offer a lower premium with this group type medical plan is it because of what you've list on page eleven I just need a little more clear about. Why. We're able to offer the savings both to the individual and to the states in the reduction of the premiums and how that's all set based on what we're currently able to provide what we're currently providing okay. Sure so we're talking about the pharmacy program. When the pharmacy program was set up in two thousand sixteen I'm sorry two thousand six there was a standard part D. plan and it has a deductible and then it has an initial coverage limit where the member pays twenty five percent in the plan pays seventy five percent up to a certain total spent above that there was a coverage gap where the member picked up a hundred percent that was called the donut hole and then above that there was the catastrophic reinsurance and. Catastrophic reinsurance was not a big portion at that point it really was meant to be catastrophic the RT at the same time that that was set up. they set up the RDS program and because this was the first time they provided pharmacy benefits to Medicare eligibles and set this program up as a private you know it's not like Medicare that is funded through general revenues and tax revenues it was a private plan so so that carriers doing doing the programs they were estimating the cost of that program for the first time and they didn't want all the employers to get rid of their retiree coverage and put them out in the market when they were so much in security about what the pricing was actually going to come in as so they set up the retiree subsidy program so that states large employers could keep their retirees on their proper plan and get some benefit with the retiree drug subsidy program but it was it was set up to be equivalent to the subsidies that you would have received if you're out on the party market. In when the accountable Care Act was put in they changed what happened in the donut hole and they made the manufacturers Hey fifty percent of the cost of brand drugs they didn't change the RDS funding so now you have a much richer benefit design on the part decide then you do on the RCSI. So we're basically not taken advantage of the subsidies that are currently available that's correct okay thank you. In there I mean there's a reason why you know Matt mentions how many states are doing it that way you know there's one or two so. You want to take advantage of all federal subsidies. It is entering you're recognized. was part of y'all's charge two of. With peer groups to look at what our benefits are versus other states peer groups what are cost four of the drugs hospitals and and and and docks of you know I would like to know if we're in a peer group if if we're an alignment and then of course that goes back to benefits as well did you have to have to judge those was that party also charge. Yeah I mean we did that the benchmarking. Presentational last time and that was more geared towards the active populations okay go out I wouldn't hear delays meeting I guess I did I miss that see of how we compared of with with our with our fears of war are. Our costs. Out of line with our benefits that we're offering. Now I mean you're you're someone in the middle of the pack okay. Thank you I think that you mentioned earlier though that the one of the differentiator was there your employee costs were a little higher as a percentage compared to your peers but the overall cost for production we uh in line with everybody else we also looked at the types of benefits and we came to the sort of the conclusion that your types of benefit was similar appropriate you know the the spread between your plans the offering so Yes it was really at the the design and the costs fees we're at benchmark and then really was just like how who pays for it so the employees were little bit higher and the the state funding was a little bit lower than we see elsewhere. One of the big takeaway center last month was is that our state contribution compared across state you guys correct me where I'm wrong was really low so a lot of the other states are contributing more on that insurance portion then we are so I think that was the biggest takeaway from last month's meeting is is that correct yep and and just to add that because the funding comes in based on as we've been talking a lot this morning active employees when we look at the funding for the retiree program it's on those on based on that same funding so if we reduce the state portion of funding in the retiree program there's more for the active program. And. I don't want to reduce any of that funding to the detriment of retirees benefits but that's the beauty of a Medicare advantage plan and taken it taken advantage of all the federal subsidies you can actually reduce the cost here without reducing any of the benefits. One of the I think the one big takeaways from that side of it is that we're allowed to give back the teachers the pharmacy benefit at at no cost to the state by doing this because I think the difference is like eighteen Bucks or twenty four Bucks you tell Senator the exact but we're able to give that been have bags been taken away for over ten years now. So any other questions. Respect thank you guys a lot and we'll look forward to in the morning and see you guys in the morning with that we have no business we stand adjourned.