Legislative Joint Auditing

That's the one. Yes. Everybody would take to say to any of this meeting started. The. The first order of business is we need and we need a motion to adopt the minutes from the last meeting may fourteenth meeting. We have a motion. The second. A second all those in favor say aye. All opposed. Next to the adoption the reports of the executive in standing committee I thank representative Walmart's gonna give that. Thank you Mr of the executive committee met Thursday June third two thousand twenty one staff reported to the committee the audit special investigative and shortage reports the scheduled to be presented to the standing committees in the full legislative joint auditing committee this month the committee approved two requests for staff to perform a review of the administrative functions and investment policies of the Arkansas local police and fire retirement system LaFee also staff will be updated we'll update information contained in a special report of what the issued by staff on July twenty third two thousand thirteen. review certain transactions relating to the potential sale of land by the university of Arkansas Fayetteville pine tree research experimental station in other business a motion was adopted approving the staff proposed transformation report format required by act one one one one of two thousand twenty one. The staff informed the committee of the process is used to notify members of the Legislative Joint Ording Committee of reports being presented with no additional business to discuss the meeting was adjourned the next meeting of the committee is scheduled for Thursday August twelfth two thousand twenty one Mr chairman for adoption this report all right. Without objection is for real doctor. Next we have the reports of the standing committees or for reed is standing committee on the counties municipalities. Senator Garner. About representative Hillman. Here you got that report how do you go and read that. Of the committee adopted a minutes of may thirteenth twenty twenty one the Committee reviewed twenty reports differed from the may thirteenth the meeting officials from ten entities were present or present to address repeat findings from those four letters reports twelve previously deferred reports were filed and eight were deferred to the August twelfth meeting the Committee reviewed a hundred and sixty current reports of these one was certified to the bond board and ten were referred to the prosecuting attorney's office officials from for entities were present to address repeat findings in their current reports the Committee filed a hundred fifty five current reports differed five so the officials could attend the August twelfth meeting to address repeat findings. The committee approved a motion that the Attorney General be invited by the Legislative Joint overtake Committee to the committee's December tenth twenty twenty one meeting to explain the status of the town of all ports charter revocation Mr chairman I move for adoption of this report our thank you. Jecheon is report stands adopted. Next committee is a standing committees on educational institutions represented very ever report. Thank you Mr chairman. Image June third two thousand twenty one yes which was yesterday the committee reviewed fifty eight current school district audit reports three open enrollment charter school audit reports and for current educational cooperative audit report for the year ended June thirty two thousand twenty. Officials with the Arkansas department Education Division of elementary and secondary education were present and answer questions from the committee related to repeat findings in the Southeast Arkansas preparatory high school of audit reports the audit reports of bone on school district Heber Springs and mineral spring school districts were per referred to the risk but respective of prosecuting attorneys the committee file sixty five current audit reports that were brought before. Mr chairman to stem. Moved up shin of this report. All right with that without objections report will stand is adopted. Thank you for standing committees on state agencies a representative lumped Lundstrum you have that report. Yes Sir I do. Five reports were on the committee's agenda yesterday to current reports in one referred report where the findings represented the the report differed from the may twenty twenty one meeting was for the Arkansas teacher retirement system ATR S. invested funds into entities without review from the investment consultant or approval or approval by the board in violation of investment policy. The Arkansas skews me the Southwest Arkansas consult counseling and mental health center did not properly record accounts receivable accounts payable and grant review revenues. The Arkansas department of corrections did not report really report the egg consumption and the annual farm consumption report various agency staff members were present to report how the agencies intend to address the audit findings and to answer committee questions during the meeting the committee adoption I'm adopted a motion to file for reports the Committee deferred the Arkansas teacher retirement system report to the August meeting to give a T. R. S. and their board time to update their policy regarding direct investments. I'll entertain any questions Mister chairman. What without objection this report will. Stand the next report we have heather lake it is going to read a report on. The pharmacy benefit manager. Thank you Mr chair. This report is being issued in response to a request that legislative audit review and analyze financial records and other documentation concerning state funding of pharmacy benefit managers. The objectives of this review or to provide an overall perspective on how PBMs are regulated in Arkansas. Identify state programs using PBMs and determine how state funds flow through PBMs pharmacies and insurance companies. Test PBMs for compliance with state laws and regulations. Compare Arkansas laws and regulations related to PBMs with those of other states. And review complaints received by state agencies and program management regarding PBMs. This reports primary focus for the flow of funds and testing of PBMs for compliance with state law was the for plans that encompass approximately ninety four percent of annual govern government funded pharmacy expenditures. Medicaid fee for service Arkansas Works. S. managed care program and the employee benefits division or EBT employee health insurance plan. The report provides limited review other plans including the Arkansas state police health plan and health plans offered by higher education institutions. Although the report contains no findings it does point out important issues for consideration. PBMs are the most commonly known intermediaries between third party healthcare payers and pharmacies. D. B. M.'s assist healthcare plans with prescription drug coverage by processing pharmacy claims maintaining pharmacy networks and providing expert knowledge regarding the benefit coverage in addition PBMs often negotiate rebates from drug manufacturers and remit these funds the third party payers. Federal statutory law and interpretation court decisions have significantly restricted Arkansas's ability to regulate the PBM industry in the state. The PCMA verse right ledge Supreme Court decision has recently impacted this ability however the degree of the impact is currently unknown. PBMs have come under increased scrutiny to potentially lucrative and little known practices for generating profits as discussed on page three of the report. The most common the most well known of these practices is spread pricing. In which a pharmacy is compensated less than the amount paid by the healthcare payer and the PBM retains the difference. Under certain circumstances pharmacies lose money on filling certain prescriptions. The second practice is post claim adjudication reconciliation. Related to spread pricing this practice Intel's adjusting the pharmacy reimburse claim amount after the initial payment of the claim. Profit or loss generated are generally not adjusted back to the third party payer originally reimbursing the claim. Third is drug rebate retention in which portions of the drug rebate paid by manufacturers are retained by the PBM. Alternatively PBMs can receive other forms of payment from drug manufacturers that are not included in the contractual definition of rebates. For copay clawback occur when an insured member pays a co pay to a pharmacy in an amount that's greater than the pharmacy is reimbursed by the PBM effectively causing the pharmacy treatment a portion of the copay to the PBM. The fifth profit generating practice is gag clauses PBM contracts with pharmacies sometimes prevent pharmacists from informing an insured member that paying for the prescription out of pocket would be cheaper than utilizing insurance coverage. Six PBS may select only high cost drugs for audit and then question them as being incorrectly filled based on what seems to be trivial errors the amounts paid with the question claims are then reimburse the PBM. Seven it's preferential pharmacy designations some PBMs have generated profits by requiring or encouraging the use of mail order or specialty pharmacies that are affiliates the PBM or by reimbursing affiliated pharmacies more than non affiliated pharmacies. Finally the PBMs have been accused of utilizing pharmacy claims data to steer patients towards affiliated pharmacies or of the identifying and selling claims data to unaffiliated third parties. The results of our review will be presented by objective objective one was to provide an overall perspective on how PBMs are regulated in Arkansas. PBMs are primarily regulated by the Arkansas insurance department which issues licences reviews reimbursement rate appeals and receives required reports from PBMs. The Arkansas attorney general's office and state board of pharmacy have a limited amount of regulatory authority over PBMs. All rights exist for pharmacist in Arkansas law when facing audits of PBMs there was a gap in any kind of enforcement authority to ensure compliance by PBMs with the statutory rights however ACT six six five of the regular session of twenty twenty one she did the purview of enforcing these rights to a ID. Thank you. The second objective of our review was to identify state programs using PBMs and determine how state funds flow through PBMs pharmacies and insurance companies. State funded pharmacy benefits can be grouped into two main types first public benefit plans include Medicaid fee for service Arkansas Works and pass. And second employee benefit plans include plans offered by EVD state police and institutions of higher learning education exhibit one on page six an exhibit three Page seventeen provide visual representations of PBMs in each frame type. The first public benefit plan reviewed was the Medicaid fee for service program its PBM as Magellan which received between eight point four million and ten million annually between state fiscal years twenty seventeen and twenty twenty processing pharmacy claims. Magellan has a unique role since no funds flow through it instead payments flow directly from the DHS fiscal agent to pharmacies rather than through the PBM. As shown in appendix D. three groups are appointed by the DHS director to serve in an advisory capacity to the Medicaid program regarding pharmacy benefits. A drug utilization review or do you are bored. The drug review committee or DRC and the drug costs committee. A second public benefit plan we reviewed was Arkansas Works since coverage in the Arkansas Works program is under a qualified health plan the plan must align with the essential health benefits of the affordable Care Act which include pharmacy benefits. Five carriers offering Arkansas works plans use three different PBMs in twenty eighteen and twenty nineteen and several change PBMs in twenty twenty. DHS pays the carriers premiums for the Arkansas Works recipients and the carriers through their PBMs paper the recipient's pharmacy claims there are no pharmacy services covered by Medicaid fee for service programs outside of the Arkansas Works plan. The third public benefit plan reviewed was passed which began on March first twenty nineteen for certain behavioral health and developmentally disabled dubbed developmental disabilities recipients. During the first four months of the program the three pass entities each utilize a different PBM. According to the agreements between each pass and DHS the past must cover all FDA approved drugs unless there is not federal funding for the drugs. A past must also cover all therapeutic classes of drugs on the preferred drug list for Arkansas Medicaid. According to the past agreement the past must develop and maintain a drug utilization review program in committee. We noted several issues related to the past program first pass entities are required to submit also contracts and propose delegation of responsibility to DHS for approval. Although DHS indicated that many of the subcontracts for him delivered for approval the agency was not able to provide documentation approval of any of the PBM contracts for the three passes and effect from March to June twenty nineteen in addition the agency was able to provide documentation of only one PBM contract for one pass entity. Second the pass agreement states that contracted health plans must report to DHS the actual amount paid to the pharmacy provider per claim. Based on our review of documentation available from DHS one pass entity indicated spread pricing which a LA calculated as total totaling two point one million the impact of the issue should be considered when addressing future capitation rate calculations. As previously mentioned review of employee benefit plans primarily focused on EVD EBT contracted with the PBM that impact beginning in February twenty sixteen and has the option to continue until December twenty twenty two for a total projected cost of twenty one million. EBV is billed on a per member per month basis which is currently one dollar and thirty eight cents. EBT also reimburses met impact monthly for certain services provided by Matt impact employees. EVD has a contract with E. B. R. X. a division of UAMS. For design of prescription drug program. The drug utilization and evaluation committee has full ownership of the formulary reviews drugs for formulary management and evaluates financial impact of any recommendations. Other employee benefit plans covered in the report are listed on the slide. Arkansas state police which has a self funded health insurance plan utilize cooperative purchasing to piggy back on to each ETC's health plan contracts in January twenty twenty. In calendar year twenty eighteen eight Arkansas universities had an insurance plan that utilize a PBM. Two operated on a fully insured model and the remaining six U. self funded or partially self funded plans. Also in calendar year twenty eighteen eight entities participated in a partially self funded multi employer healthcare plan administered by the Arkansas higher education consortium or a heck. Objective three other report was to test PBM compliance with state laws and regulations. The first area reviewed was reporting a pharmacy claims to the Arkansas all payer claims database. We tested the claims under the various state funded health plans to determine whether the amounts reported to a PCD which should be the same as the amounts paid to the pharmacy or compliance with state law. We noted some claim reported for incorrect amounts for Arkansas Works and claims not reported or reported for incorrect amounts by one pass entity and EBT. Additionally for higher education entities an Arkansas state police did not report any pharmacy claims information as required by Arkansas Code. For Medicaid fee for service all claims tested reported for the correct amount. The second area reviewed was spread pricing which Arkansas law prohibits both LA and actuaries contracted with a ID notice spread pricing by certain PBMs for the past in Arkansas Works programs additionally a heck utilize press spread pricing during calendar year twenty eighteen but switched to the transparent pricing model for calendar year twenty nineteen. Spread pricing was an allowable practice for to higher education plans both of which have switched to a different PBM. There is no opportunity for spread pricing in the Medicaid fee for service program and based upon our testing there was no spread pricing identified in EBT plan. The third area reviewed was copay clawback which is also prohibited by Arkansas Code. The actuaries contracted with a ID focused on overall clawbacks rather than just those associated with copays. Only one regional pharmacy chain could provide data for review for Arkansas Works and pass. And multiple PBMs had claims with clawbacks however multiple pharmacies stated that PBMs had locked them out of this information on their access portals. Since pharmacy claim funds do not flow through the PBM there is no opportunity for copay clawback in the Medicaid fee for service fee for service program additionally there was no copay clawback identified in EBT plan. The fourth area of review was not preferential reimbursement treatment of affiliated pharmacies the actuaries contracted with a ID noted preferential pricing for certain pharmacies by PBMs for the Arkansas Works and passed programs similarly LA noted preferential pricing I EBS PBM however many of these instances appear to be attributable to pharmacies dispensing different brands of drugs and the flag dispensing fee utilized in the EBT formular. LA did not identify any PBM affiliated pharmacies they're also Medicaid enrolled providers. The fifth area every you was not preferential cost sharing policies for select pharmacies. Arkansas Code prohibits an insurance policy I'm having preferential cost sharing provisions for different quantity limits for any subset of pharmacies due to the definition of insurance policy this code section is not applicable to any of the programs are plans covered by this report. However it should be noted that summary plan descriptions for two universities indicated mail order pricing prescription drugs. We also reviewed in Arkansas Works MLU and pass agreements under objective three. Based on an MO you carriers were required to provide historical data for Arkansas works directly to DHS I July twenty nineteen and subsequently submit data quarterly. We reviewed a total of one hundred twenty claims from for carriers and found that DHS received information required for one hundred and eighteen claims. It should be noted that although the amounts reported to DHS match the amounts reported to the Arkansas center for health improvement the amounts were not always the same as the amounts paid to the pharmacies. The past agreement state that contracted health plans must report to DHS the actual amount paid to the pharmacy provider per claim. Of the ninety four claims a LA reviewed ninety two were reported to DHS and eighty six of the ninety two claims had amounts paid to the pharmacy that match the amounts reported to DHS. These amounts reported to DHS are utilized by the actuary determined future monthly payments DHS will make to each pass on behalf of each covered recipient. The remaining side of the presentation will be presented by Kevin White. Thank you heather. Objective four by review was to compare Arkansas laws and regulations related to PBMs with those of other states Haley noted that many provisions from other states have already been enacted in Arkansas as listed on page thirty three of the report however a LA noted six areas concerning the regulation of PBMs that other states have addressed the legislation but Arkansas had not addressed during the review period as discussed on the following slides. First is a fiduciary duty in general terms fiduciary duty laws require that PBMs act in the best interest of the insurance plan in managing the funds as opposed to acting in self interest. The secondary noted was claim payment processing time some states require that payments from a PBM to a pharmacy for a person Gretchen claim be made within a specific time frame. The third area involves claims that uses a PBM is in a very unique position to acquire large amounts of information that could potentially be utilized to market to PBM affiliated pharmacies thereby increasing the PBMs earnings several states have legal provisions prohibiting the use of pharmacy claims data for marketing or other purposes. At four thirty AM noted is conflict of interest disclosures due to the vertical integration of PBMs in the pharmaceutical industry a plan sponsors should be aware of potential conflicts of interest when contracting with PBMs as a result some states have acquired PBMs to self disclose any arrangements that present a potential conflict of interest. Fit there involves drug manufacturing dates already addressed in Arkansas laws the reporting a rebate information to a ID while some states have enacted the same type of requirement for PBMs main recently enacted legislation stipulating that all compensation for manufacturers to PBMs be remitted to the covered person at the point of sale or remitted to the carrier to be applied to offset member premiums and rebates from manufacturers are considered part of that compensation. Finally many states have refined their laws and regulations relating exclusively to Medicaid managed care programs and PBMs and in Arkansas the past program is a managed care program the specifics of these laws of very among the states however one of the most common variances among state managed care programs relates to whether pharmacy benefits are supplied by the managed care companies referred to as Carmen's are handled separately from the medical claims and paid like to traditional fee for service Medicaid claims by the Medicaid administering state agency which referred to as carve outs in Arkansas the past program is a Carvin meaning the managed care companies also manage the pharmacy benefits. It is important to note that the regular session. Of twenty twenty one which is currently in recess contained several items of relevant legislation that are not included in this report. Will be the most significant changes session ACT six sixty five broadens a ID's jurisdiction under the PBM licensure act to include self funded health benefit plans whether governmental funded or privately funded additionally at nine twenty two sets additional standards that are applicable to mail order pharmacies and prevents pharmacies under vertically integrated insurance companies PBMs or drug manufacturers from requiring home delivered medications. Next act ten fifty three requires patient consent to transfer prescriptions from a pharmacy requires certain disclosures of ownership interest and possible conflicts of interest by PBMs and other entities and prohibits data mining of patient information. Finally ACT eleven oh four establishes certain guidelines and how rebates are offered by pharmaceutical manufacturer that sells insulin. LA's fifth and final objective. Mr review complaints or see by state agencies and program management regarding PBMs AID received a total of two hundred thirty seven PPM related complaints in twenty nineteen to twenty twenty with the majority being resolved as of the report date. The Attorney General's office received over five thousand complaints from pharmacies from twenty eighteen to early twenty twenty regarding low reimbursement rates by PBMs. The Arkansas pharmacists association received at least ten questions or complaints per week related PBMs. State board of pharmacy VHS and DVD receive fewer no complaints regarding PBMs DHS anybody have authority to address complaints they receive. In summary ALA's review focused primarily on the for plans that encompass approximately ninety four percent of annual government funded firms expenditures which are the Medicaid fee for service Arkansas Works past managed care anybody health insurance plan. For the Medicaid fee for service program funds flow directly from DHS is fiscal agent the pharmacies without passing through BBM. Funds do flow third PBM before reaching pharmacies for Arkansas Works pass any beat a pro funds for these programs are provided in appendices II through L. in the report. Alay found limited instances of non compliance with laws and regulations regarding reporting of pharmacy claims to a PCD. The actuaries contracted with that ID noted instances of call backs for Arkansas Works impasse. And both alien AID noted. both LA and a IT contractors notice spread pricing by certain PPL is for the past in Arkansas Works programs AID received more than two hundred PPM related complaints in twenty nineteen to twenty twenty Majority resolved additionally AG's office received over five thousand complaints from pharmacies from twenty eighteen to early twenty twenty regarding low reimbursements by PBMs based on legislation enacted in other states General Assembly may wish to explore further PBM related legislation. This concludes the presentation of the special work report covering pharmacy benefit managers representative from DHS EBT A. ID and the AG's office are present to help answer any committee questions thank you Mr chair. Thank you Kevin thank you have any committee have any questions on on these reports. Yes Senator Rapert you're recognized. Legislate there we go first of all thank you legislative audit for completing this and staying on task on it lot information in there I guess Mr chairman what. What I would be interested to know is if anybody would care to comment on the spread pricing of two point one million and what if anything the attorney general's office might plan to do related to that on Forsman. For face ID has anything to say on the other side of that would be why why do we have for higher education institutions in the ASP plan that is not been reporting so if there's anybody here Mister chairman it would speak to that I would be interested to know is there any Mr Benson is there Mr good to hear. Anyone from the AG's office if you wanna come for. We have we have a practice in audit that the if each of you will stand. Winds were you in okay. If you raise your right hand. And state your name your poor your position. thread Arkansas insurance department and managing attorney charged PVM compliance area. Generator Arkansas insurance department general counsel Jean Holly on the general. Sencillo the Arkansas pharmacists association. Shepherd after the Attorney General office of the Arkansas Attorney General all right if you repeat after me do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth nothing but the truth so help you god I do not thank you like John said you may. Thank you say it's an a if you want a response right away I want to address Senator Rapert questions you know When investigations of on the report by the legislative audit the Arkansas insurance department also did an examination audit of the PBMs from some of these categories and this was cited by the A. L. A. throughout the report one of the passes was engaged as spread pricing I forget the name of the actual a pass in the report that was express scripts prescription and at the time Senator Rapert at the time they were engaged in spread pricing was not prohibited at that time by statute in your local the legislature came back in and prohibited spread pricing later after they start doing the spread pricing we did not find significant material announcmenet spread pricing by the elf plans other than one pass and the passes start doing that so it was not prohibited exactly at the time they were engaged as spread pricing they switched over to transparency price I can't speak for the attorney general's office or spread pricing but we did not see material evidence of spread pricing except in one pass. Okay. Yes in the tourney general's office would agree with that assessment and we have not seen anything and that would indicate enforcement action was needed with with related to that particular instance. I think that would lend itself to the I guess you'd say reading the tea leaves on their part in the actions taken by the state of Arkansas on these matters the other side of that then it's four as the in this should be open anybody would want to comment and also would ask is there anything in that report that you do find actionable at all that they that they take took but the last thing that causes a lot of issues here to deal with but I would be interested in wine we have some of for higher educational institutions as well as a S. P. that is not reporting as use as the reports are required by law I can't answer that a hacker a Arkansas state police issues are we don't have jurisdiction over those plans so all deferred whoever else has jurisdiction over those two entities. The the Attorney General's office doesn't have jurisdiction over this either. Well that's interesting so we're sitting here and says nobody has any jurisdiction of Mister chairman would you have the staff comment on who they think might have jurisdiction. Thank you senator the institutions of higher education. so there's there's two very different laws are kind of applying to them as far as the reporting requirements so one of whom is this law firm back in twenty fifteen it's the eight setting the APCD up as a whole the all payer claims database eight HR which is Arkansas center center for health improvement which a ID works in partnership with them managing that function for them but so they're required to report their but as well as an extraordinary session of twenty eighteen the reciprocal requirement added in four eighty eight. My mind went blank on the rest of it and it's kind of split jurisdiction between a ID and AG's office and dealing with there's this required reporting by PBMs of pharmacy claims to a chi a PCD. Well we do have jurisdiction over health plans compliance with the all payer claims database I think that's what you're saying and so maybe I misunderstood Senator Rapert issue but we we obviously would have jurisdiction to ensure that the state police and other self funded governmental entities comply with a PCD. But I'm I'm referring to whether there is a PVM law that was filed those that and actually you did misunderstand it was related to the reporting yeah at the reporting and so I would love to maybe have some feedback and some follow up on that sure because first of all it's it's need for agreement for them to be reporting that to this and it may be the doctor Thompson Thompson this is with us as well and maybe give us some perspective because I'm sure they've had some conversation with them and trying to get that data I back and there's a lot to say on the issue with a I don't want to take it further in this committee but I would just ask at a general and saying is there anything else that you would like to say that you think is important is related to the audit well I I think one of the more significant findings of our orders and I think reference by the legislative audit is the our orders sample and try to compare compensation by PBMs to national chains regional chains into local pharmacist and to try to compare compensation and found that are quite often of many of the regional or national chains were paid more on prescriptions that were some of the local pharmacist and so our auditors found that that was the case however it date our orders found that it was not more than five percent and I know John Vince's here but I think that was the one of the more significant findings in our report that the pharmacy association as references service presentations in Germany one speak to that it's called differential pricing. I thank god added is just blatantly unfair but. I think our point was it was not greater than five percent Johnson John is made public comments that that's still one percent is still significantly impact for many of these pharmacists even though it's not about five percent. Jett Johnson from the Arkansas farm association I agree with what he just stated in our position would be the margins are razor thin and the dispensing fees have disappeared and the local pharmacies continue to be offered take it or leave it contracts there's no negotiation and they're very they're not able to collectively bargain the legislature's done a phenomenal job with with addressing many of the issues which is which is why I think the report that you heard today a lot of those issues we've even addressed this session which is very appreciative of that but they're still significant challenges and price the free initiation and and government funded plans of up to five percent is enough in some cases to lay off of pharmacists or for pharmacy to close those are significant numbers in fact some of the chain pharmacies recently have. I had some errors before the state board of pharmacy where they were understaffed even with their current reimbursement model where they didn't have enough staff to safely fill the prescriptions under the the market where they're being pressured to provide the services below their cost operate not the cost about the drug but the cost to operate to actually safe we feel the prescription council call the doctor when there's an error and correct their work with the physician if an error was made either and Seigner accidental click of a wrong button that doesn't happen very often but when it does it can be deadly and we need an adequate reimbursement model it's fair to to be able to protect our citizens thank you Mr chairman you've been very gracious I want to yield but I do want to say that we often talk about all of the bad things which we've been trying to correct but I do want to make mention of the U. M. S. program and what they've done and that they've absolutely been beneficial that sometimes isn't highlighted enough and I think that's also why we didn't find issues in the Medicaid fee for service side of things so thank you Mr chairman. I think Senator Rapert representative Womack your question. Your question. A representative speaks. I'm sorry thank you Mr chair my question is because I get so many phone calls from paid from our constituents crying because how much their insulin has gone up that if they can afford it and I'm wondering the is is going to help in any what do we need to help our constituents without their medical. Prescriptions. I don't know who I am asking the question can anyone ask answer. Well you know we don't governor control regulator throttle the insulin prices in the insurance department and I know that there has been recent alleged ledges legislation this session addressed insulin I believe it's now under the jurisdiction of the attorney general's office to try to make sure that people get manufacturer rebates for insulin to help reduce the cost of insulin so there has been legislation passed this session to try to address insulin try to give people more credit for rebates at the point of sale for insulin but we don't we don't actually regulate the price of its that the interest or. One other question yes. Thank you who is it then that we need to go after who do we need what do we need to fix this Fortner constituents you might want to visit with the pharmacy or the pharmacy pharmaceutical manufacturers to set those prices we don't regulate or throttle those a referee that now so we do again you did pass a law this session which allows people to get a credit or a rebate for insulin at the point of sale which will help reduce some of these anxieties that many of your constituents or having with insulin and I know it's it's very volatile and very severe for many consumers. Thank you. Thanks to everyone of the president provisions that we enacted from other states was the preferential treatment for PBM affiliated pharmacies versus those that are not PBM affiliate it is that determined. Well we have to get an axe ready going to compare pricing your prescription compensation between an affiliate what they paid affiliate what they pay a or local independent pharmacists we were just talking about that we found that when we did the data analysis bar actuaries that there was some differential pricing between the affiliates in the actual local pharmacist but we did not believe it was over five percent and that would be material. Okay I think John just explain that he feels like any percentage would be mature so. It's something that we're looking at the department and we're paying that happens yes are we are looking at that right now and if we are actuaries believe that five percent differential was not material enough to just do your concern. Our. Senator Hammer Senator Hammer. Thank you Mr my question maybe for Attorney General's office or anybody at the table for that matter for some reason I was thinking it back in two thousand nine there was law that was passed that gave the AG the authority to be able to investigate and go after those that are doing The spread pricing my wrong on that or was there a law back in two thousand nine that would be giving you the authority to go after them. I can address that the answer is to senator Malone senator personal loan passed the law it was called the state funded disclosure act and it required for state funded health plans the pharmacies actually pay what they're actually charging the State Plant and it was under the jurisdiction of the attorney general's office you have to talk to them about their particular force position on that but it's not a gray Audi jurisdiction. So that would be the same thing is giving you forty to go after for that is a two totally different things that we're talking about here. Well yes it would be under the Terry Jones offices out that it's under their jurisdiction not a ID so I would that's that's there backyard. And with respect to any enforcement action we haven't seen anything yet that would warrant it we've got over five thousand complaints from pharmacies and so we're working through those through that data but with respect anything else we've not we've not seen anything yet we continue to look at it I guess one tried to get my mind around the answers Senator Rapert about the laws were not in place of understood the question answering that the laws were not in place to go after you know the two point one million or to give you the basis to go after them if there was something on the books in two thousand nine a what if we go after him before B. why aren't you going after him now and I know this is like a cat mouse gamer chess game with PBMs we moved here they move there till finally we get a check mate but if that laws on the books since two thousand nine why why have we done something before now why can't we do something now my understanding was that they'd stop spreads pricing that that that the as statutory stop spread pricing the PBMs then complied with it after after that period after two thousand and one my understanding two thousand nine after twenty sixteen they did And I think Senator hammers question is well the there's laws been in effect since two thousand nine the jurisdiction of the Chargers Office. Why was that not enforced I think it's yes that's my question because the law I'm trying to time table in my mind the law that you said you needed in order to be able to go after these companies which did the sayings I guess the timing of which is two point one million in question occurred after two thousand sixteen is the law that you said you needed the two thousand fifteen law that till it was in place you can go after preferred pricing or and I try to get that time table in my mind. I have to go back and look at the two thousand and nine law and and look at our dad and see exactly what complaints that we had during that period and of course now that would be after passer statue limitations but I can get that and get back to you. Well I wish you would give it at a okay I wish you would because this audit report covers something's happened in the past immediate past future since two thousand nine since the two thousand fifteen law and I want if you would go back and look and see if we don't have the jurisdiction or you don't have the jurisdiction to go after him based on whatever was done in two thousand nine the two thousand fifteen that that's why I'm asking you to do thousand ninety two thousand fifteen yeah sure we can get you can get that information and get that back to each member yes of order we appreciate that Mr Obama Q. but like the SCHS question program time please. Are to recognize Senator Hammer. We get DHS the table in. What you want to stand. State your name and who you represent. I'm Fred Hayes I'm the chief of securing compliance DHS are dishonest word to affirm that the testimony you're about to give to be the truth the whole truth and nothing but the truth so help you god I do are to be seated. Analysts in in the Director of the division services. I also. Senator Hammer you're recognized thank you more welcome I'm looking at page fourteen and a couple of issues that are identified with the H. S. as far as of it would appear the handling of the subcontracts that were hand delivered but it appear that they were never signed a just like to hear you all's response to because or issues that are identified in red and it's page fourteen of the report have you had a chance to look at that and would you all just give us an explanation or responsibilities. In Senator Hammer your friend to the the contracts that were not provided to the legislative audit. says although DHS indicated many of subcontractor hand delivered for approval the agency was not able to provide documentation of approval of a the PBM contracts for the three passes in effect March first two thousand nineteen through June third two thousand nineteen in addition the agency was able to provide documentation on signed contract for only one PBM contract for one of the passengers to ease yes so we we did in fact have those contracts when they requested but due to oversight on our part as an agency we do not provide those when they were requested by legislative audit we're working through a process to ensure that that won't happen again and that to ensure that we have reviewed and approved all subcontracts. Okay and then the second issues based on a a staff review documentation available DHS and power Arkansas total care did not identify any spread pricing their submission DHS however documentation for some of past which utilized the script express scripts as its PBM indicated spread pricing were you aware that spread pricing was going on especially in view or in light of all the attention has been put on this matter and did you and why did you not if you didn't do anything addresses with the company. At yes senator Hammer all only answer that and we were aware that some it was engaged in spread pricing when the law changed in July of twenty nineteen as the AG's and the A. ID has testified about we contacted summit because we were aware of that practice and some indicated that they would put a stop to it effective July twenty fourth that they had changed the system we have been monitoring it since that time and had not seen indications as read pricing since July of twenty nineteen. I guess part what I'm wrestling with with all the controversy around spread pricing how it is not in the best interest of anybody other than the PBMs. Why would why would something not have been done sooner maybe you inherited this I don't know okay by the department to act in the best interest of our Kansans and also the best interest of trying to keep the rates down. Yes Sir I understand the question I'm as you know the past program started in March of twenty nineteen and we were looking at all pharmacy practices at that time we were looking at pricing I'm at that time it was our understanding based on the law that there was not really a clear prohibition against spread pricing what's that law was passed in twenty nineteen and it became very clear that there was a provisional spread pricing we immediately contacted some it to ensure that it would cease and we continue to monitor their their pharmacy impact and pricing practices what did you look back at that two thousand nine law were you familiar with that the one I am not familiar at outside of this report the two thousand and nine law I really wish shall we get together look at that and see if that's not a mechanism that is spread pricing was not allowed back then it was something I was just getting away with if that gives us leverage for you to do is the AG what you've got to do I'd like you to take full advantage of that and go after thank you our. Center center right. The taking your questions thank you thank you Mr up since it was referenced in this this report and all of your here I'd like to get some information I know that we a past the the insulin rebates it was referred to earlier however I received some information as we've been going through this issue with the B. D. that that was possibly going to cost. I'm operate off of memory I think it was about eight million dollars annually that you be do you because we've done that won't I mean because we've done that legislation. I want to know if that is true and then also I would have to assume if it is that that is also going to call this the private carriers or that's going to cause them to increase so can someone give us a little more information on that since it was reference in this report and representative speaks brought that up because I don't know like I say that's a big hit as far as the what I've heard towards the B. D. that you know the state would have to pick up. Or or the employees. Senator Hickey we we did not the insurance department study that particular question so I can answer it I do know that the insulin legislation is under the jurisdiction right now the attorney general's office so they might wanna speak but we do not have any I didn't study that questions about the cost okay and I'm but I'll be glad to research that for you if you would like me to do so well with and again this is just information that you know due to due to everything that we've been trying to deal with with the B. date right come up then that that's going to be huge cost toward to plan again I hate to say the number but I think it was eight million and I think it was annually so I think it's definitely worth looking at and then I don't know Mr Bentsen if you know something but anybody that could tell us something as as to what they've learned of that I would appreciate it. I'll say with respect to the enforcement yes the attorney general's office does have Enforcement under that particular statute but it would not be related to the Kosti EBV we did not and review that or would have any jurisdiction over that particular question. Senator Hickey yes Sir we have a really coming up. Yes whoever whoever needs to speak to it or if you want if you want to stand right to write in. State your name who you're with. You songs word from the testimony you're about to give me the truth the whole truth nothing but the truth so help you god. Our German your committee said. Nine one. Senate take you're recognized yes same same thing go to whoever wants to or or everything again I believe that we received some information that there was gonna be cost EVD hoping numbers right against everyone of you all can correct me if if that was wrong with them additionally if that was our intention during the legislation that because I assume that if the B. D. is is is going to have a calls then all the private carriers would probably also have a cost on that which is going to increase premiums you know across the the constituency also so again it's just one of those things is and so you are all are here and that was referenced in the audit report I thought it was prudent that we talk about it yes Sir at the number is right it's a it's right around eight million dollars for the plan we did rebate contract that's annually correct any less okay so as far as the plan I don't know that I can speak to other plans because we do utilize or formula or you the lower cost alternatives are available and I don't know that every other plan does that but for or plan it would be the right around a million dollars for EBT and and if I can add to that that's just for the state in the public school employee plans that the two primary print yes that's correct so if you add in as you system state police Municipal League and some of the others that use the B. R. X. programs or be additional costs there the total on that cost together around eight point seven million dollars. Okay. And was at the pharmacy association with that was I chose legislation. I was not okay it was. They have. That legislation was not the pharmacist association bill I was asked or are association was asked about the bill by the bills sponsored by representative Payton and then ultimately Senator Solomon and we provided testimony about that bill there's some additional details with that with this particular program with the employee benefits division because the rebate contracting is done not by the PVM but by the UAMS evidence based prescription drug program they have a hundred percent of those savings a hundred percent transparently past three to the planned so then it's a policy decision of the share those across the entire plan to lower premiums for all of the employees or do you provide those savings directly to those individual patients who utilize the insulin the other thing is you you Sir Clark a reference that there are some lower cost generic insulin products now and there's a lower cost long acting product that's on the market now that is less expensive than some of the options that representatives speaks was referring to earlier that some of the plans are not covering and the reason they're not covering them is because they there's a middle man involved too once the brand name products to be covered so that they can get a big chunk of that rebate for profit rather than lowering the price for patients so the legislative intent was to stop that and drive the market share and provide options and coverage for the generic or lower cost instance anyway that's what that's what the bill was trying to do. Book however. It may it may not be that way is it appears like to me because it appears like that the of the cost is going to come back for and I would just say you B. D. again it seems like to me it would be and Mr a ranking I guess as he does the study can figure that out but it just looks like to me that that that that cost is going is going to be passed back to our employees in this case and is going to be passed back to the constituency the other way so again if it's if it's eight million dollars a year for you B. D. or across the state I would think it's a huge number so again I guess we'll just continue try to research it again with their with all you here I thought well maybe somebody could shed a little more light on it but the. Yeah but from what from what you're saying if in our what the words in your mouth Mr Bentsen but it was closed it was supposed to be make it more competitive however it does not appear that a initial that initially that that's what's happening is that your understanding also I think they're still ongoing conversations and due diligence I don't wanna speak for Jake but I know that in a meeting we had last week they're still working on their conversations too with the manufacturers and their current contracts to see if that is the case that fair yeah we had a very constructive meeting with some the sponsors the bill earlier this week we walked away from and I think with a good understanding on both sides of what what we're trying to accomplish in the impact it's gonna have on DVD what we do is we work three B. R. acts and then we also work to our PBM to negotiate rebates and the average wholesale price will be set that's a price that we have very little impact on that second globally so um we're a small small fish in that equation they can come down off of that wholesale price by offering us rebates which because of the B. R. acts we get a hundred percent of it's been a very effective program for us it's a great way for us to realize a lot of revenue back through the system because of that process this bill is going to would prevent us from really utilizing that and as a result that's where that eight million dollar it would come from so may be. During the during your analysis or whatever I assume that you'll talk with Mr believe in them To kind of make sure we were corporation all that together because I'm not for sure that legislation in the and may need some tweaking so Mr I appreciate the latitude thank you thank you senator. Representative Bentley and question. Yes chairman thank you Mr Vincent you're there on a referring to you page twenty nine of the clawbacks that were reported here specially one percent teen the three million dollars can you shed some moderate Mr bush is a modern how that affected our independent pharmacists there on these clawbacks that will reveal. About it. When I just what were you looking that up I want want to say how important is for independent pharmacists to exist and this as a small business owner five percent is a huge amount so I think we made a real look at that that thought there Mr thank you. The better. Turn off. All. Okay. Thank you. All right I don't have the I couldn't bring a report of that I just a quick comment on that there are two types of clawbacks one is at the point of sale on the individual claim and then we also view effective rates or D. R. as a call back over the aggregate of claims months later and so what does that Page referred to the aggregate claims or does it refer to the individual claims. I just gave a final amount for what okay a six month period what the men's club acts were for each program so if for impair five hundred thirty six thousand percent right the presenting was three point three million so curious if you had any comments on how that affected our independent pharmacists across the state if those clawbacks are extraordinarily difficult to manage because they're not part in and oftentimes not predictable or and under no control of the local pharmacies and those clawbacks have resulted over the last three years a significant decreases in staff decreases and ability to attract talent to the pharmacy and also many pharmacies to close in fairness that this legislature have is have addressed both of those issues and legislation in the Supreme Court ruling is going to help us with that as it relates to compensation and in two thousand and fifteen members of a law passed that prohibits call backs at the point of sale and then after most of this report was studied there is an additional law passed that Senator Hammer was the primary sponsor on in twenty nineteen that made those callbacks illegal across the aggregate of claims that's now been implemented I don't know if it's a big help thank you thanks. Senate. Senator Hammer you have a question thank you this was gonna be for both placed. Yes Sir you Mr while gone I just missed it but on the cover of the report were says report highlights a ID received a total of two or three seven PPM related complaints in nineteen twenty with the majority being resolved as of the report date defined resolved would you Margie R. PVM director coordinator we'll get a adjustment made the correct the approve the compensation payment by the pharmacy after they make an appeal to us we have we typically take a that there's the most common of those complaints of the two hundred are what we call maximum allowable cost of complaints and it's where the pharmacy has been paid less than what it costs them to actually buy the drug in under your law of pharmacies or or they are they are allowed to be paid at least what they're invoice cost is so what they a lot of these qualities complaints these two hundred are from pharmacies who have gone below their cost if they want the insurance department to intervene a referee and get the reimbursement up to the level of their of their acquisition costs and so I would say Marge's back there but about eighty five to ninety percent of those two hundred twenty seven our complaints about pharmacies going below cost in the insurance department getting an adjustment up to their cost all right so my my question though is you found the PBM at fault not the pharmacy at correct you you substantiated the pharmacist complaint correct by waging the and what was the total dollar. okay I'm not sure what I I would be yeah I would have to get I don't know what the she would know but I don't know what the total amounts of that it would be it's it's in the hundreds of thousands of dollars which is significantly independent pharmacist yep absolutely are you in in in the pharmacists of have gotten to know Margie well in a will and will and and we're developing a relationship with local pharmacists now that we've had jurisdiction over PBMs were we can make adjustments for pharmacies and I think they're satisfied with their ID right Senator Hammer I think we have those numbers. Yeah are they in the report Senator Hammer they are yes Sir they are indeed I was looking at what we have the report looks like in one year there's two hundred and eight thousand nine hundred. Dollars recovered as well as there's a fifty thousand dollar fine received in the subsequent year there is sixty eight thousand it's on page thirty eight of the report is where it's at senator if you will look at it okay I'll take a look at thanks for draw that to my attention do you feel that the PBMs or get the message then that a ID is going to be aggressive in I think so the the daily report the Arkansas Insurance Department audit I I really am confident that spread pricing no longer exists in this state okay but some of these other practices are going away as we talk so and we're doing better more more legislation is being helpful and we're getting there it's just going to take a couple more years before we have the stable thank you. Part any other Senator Elliot. Your question. You're recognized. I thank you Mr chair I I don't know maybe Mr Benson or somebody else but do we have any kind of data on the number of pharmacies that have closed because they just could not may get based on reimbursements of or whatever particularly regarding reimbursements. I do not have that report with me it's available through the state board of pharmacy and I can bring it in present that information as well as their some statistics in the attorney general's the there. The court briefings through the US Supreme Court in their case the there's very specific statistics on that but what I can say is in addition to the numbers that have closed or may have re opened in some cases depending on the market whether it was of the friends that closed and maybe one pharmacy back fill another areas they didn't there have been communities and Arkansas act Plainview Marvell strong I think Gillett was mentioned actually in the Supreme Court oral arguments were in the last decade the the only pharmacy in that community Cedarville is another one where the only access to health care is now gone like there's nothing back filled so in a lot of there are in our state thousands of pharmacies that have closed hundreds of pharmacies of closed and state closed there's been fat I thanks thanks to many of the bills and legislation that this assembly has passed it's made the market more fair and and those pharmacies to have a chance like I think the laws of are effective but they're not perfect and there still an ongoing like booth talk about tweaking or getting the enforcement right there's still work to be done to protect access in rural areas and also communities of color and low income even in places like rose city for example right there's a single pharmacy there there's no change it's one pharmacy in that entire community and there are lots of pharmacies south of the interstate that have closed in the last year here in Little Rock so there's still work to be done yeah I I'm familiar with this but some of those of closed would you report also include of pharmacies that were maybe bought out by a larger entity would show that as well yes we have that John Curley has that information that would that would be terrific to have and I I would really appreciate that okay because I really think it's important for me you know trying to get beneath the surface a Peavey and. And it's it's a grind there's no question about that but I think it can be made more real and people see the urgency of this when we know specifically they're real people and real places who have been affected by by what's been happening over all these years thank you for that thank you. And Senators Elliott we don't have the report with us today that Mr Bentsen and because you in the three things that we can get that to you as well okay thank you very much. Like Senator Elliot center representative wrote Lundstrum your question. Yes chairman Stubblefield given the gravity of this report and the number of questions that we still have outstanding could we hold this report over to the August twelve meeting to give us time to digest everything and also could we ask A. S. P. in the universities that didn't seem to feel the need to comply or answer questions to come back at that time. Do you want to put that in the form of a motion. I guess I'd like to make that motion to hold this report over and give us time to digest this and have some more folks come back and answer questions. If the it will this body committee we have a motion on the floor to hold this report. And a second holders report any discussion. All those in favor. Senator Hickey. It says we're going to do that could we could we also that gives you enough time from the insurance department we hear a report back on that insulin that they were going to look into force also could we include that in the motion yes please if you want to put that in your motion and. And Senator Hickey suggestion of including the insurance department on insulin. Thank you all right you want to go ahead and state your motion representive luncheon. that we hold this review report over until April excuse me August the twelfth. and as the Arkansas state police the two and hi institutes of higher ed that did not report all these folks that are here and including the insurance commission and get some information on diabetes all right we have a motion and a second. It Hammer. Muddied up even more but I don't think anybody from the passes here today it are they are if I missed a. Anyone. What you get what Jett the passes to your motion or just share. Bring in the kitchens all the above. But this is in here thank you our representative Lundstrum you want. Draw your motion stake your new motion anyone else have anything to add before we. All right representative Lundstrum you're recognized. I'll do my best if we could hold this report over to August twelfth and include the attorney general's office to put DHS A. pay higher ed Insurance Department. And state police the passes. Everybody let's have a party August twelfth and and review this report again please are we have a motion and a second any discussion on the motion. All those of favour say aye aye All opposed the motion carries thank you thank you ladies and gentleman. We'll be seeing you in August again. When we You will get this report yes Sir. Our committee we have once one of the. Final report. Mr lease is going to give it on the Arkansas state public school employees health benefits. Thank you Mr. Arkansas Code requires legislative audit to conduct an annual review of the employee benefits division EBT and performance of the health and benefit plans. The primary objective of this report was to analyze the fund balance both the state and public school employee and health benefit plans a June thirtieth two thousand one. EBT administers the health and benefit plans for both the state and public school employees. The benefits are provided their self funding a method by which the state takes in contributions from both the employee and employer. Separate funds are set up for each plan to pay health and pharmacy claims and to serve as reservoirs to prevent dramatic rate increases for subscribers. This exhibit which is found on page two of the report shows a plan enrollment for both subscribers and members for each plan. The term subscribers refers to both employees and retirees who are enrolled in the plans while the term members refers to not only the subscribers but also their qualifying dependents who are enrolled in the plants. As detailed in this exhibit the net number of subscribers for both plans is increased just over twenty two hundred for fiscal year two thousand nineteen to two thousand twenty. With a decrease of two hundred twenty one subscribers for the agency plan an increase of over twenty four hundred for the PSC plan. The first plan I'm going to discuss is the Arkansas state employee or the agency plan. As shown in the exhibit on slot and on the slide in on page three of the report the AC plan had just over two hundred ninety three million in fund revenue for fiscal year two thousand twenty. Stay contributions provided fifty eight percent of total revenue. Subscriber monthly premiums made up thirty four percent while other revenues accounted for eight percent. Other revenues include performance guarantees penalties investment income pharmacy rebates Medicare part D. subsidies in fact the tax savings. Exhibit three on page four of the report and on the slide shows how the AC Fund bounce was affected throughout the year. In fiscal year two thousand twenty the state contributed one hundred and seventy one million and subscribers paid ninety nine million in monthly premiums. The reimbursement of claims expense amounted to just over two hundred and two million for providers N. ninety million for pharmacy claims. Administration cost to the plan decreased slightly to just over twenty one point six million. Subscribers paid an additional thirty seven million to healthcare providers and just under twenty million two pharmacies for copays coinsurance and deductibles. This exhibit which is provided on page five of the report shows the changes in claims an administrative cost as well as premiums and other revenues for the AC plan over the past five years. As shown in exhibit five on page five and on the slide the AC Fund balance decreased over ten million to sixty five point two million at the end of the fiscal year. The fund had a declining rate in fiscal years two thousand nineteen of negative six point seven percent compared to the negative fourteen percent the declining rate in fiscal year two thousand twenty. The decline in the fund's growth in fiscal year two thousand twenty was primarily the result of an eighteen million increase in health and pharmacy claims paid directly from the esee Fund. The next few slides will contain information regarding the public school employee or PSE plan. The exhibit on the slide in on page six of the report show that the PC plan had almost three hundred and twenty eight million in fund revenue for fiscal year two thousand twenty. Legislative funding provided twenty seven percent of the total contributions from school districts amounted to thirty two percent and subscriber's monthly premiums made up thirty seven percent. Well other revenues delivered five percent in other revenues include performance guarantees penalties investment income pharmacy rebates and fight the tax savings. Exhibit seven on page seven of the report and on the slide show how the PSE Fund bounce was affected throughout the year. In fiscal year two thousand twenty the state contribute just over eighty eight million premiums from the school district provided almost one hundred four million loss of drivers paid a hundred twenty million in monthly premiums. The reimbursement of claims expense amounted to two hundred and sixty one million to providers and sixty four million for pharmacy claims. Administration costs decreased slightly from the prior year to thirty point five million. Subscribers also paid an additional seventy four million to healthcare providers twenty four million to pharmacies for copays coinsurance and deductibles. This exhibit which is provided on page eight of the report shows the changes in claims an administrative cost as well as premiums and other revenues for the PSE plan over the past five years. As shown in exhibit nine on page nine and on the slide the PSC Fund balance decreased over twenty seven million two just under one hundred twenty million at the end of the fiscal year. In fiscal year two thousand nineteen the fund had a growth rate of four point eight percent over fiscal year two thousand eighteen. The rate of growth declined in fiscal year two thousand twenty two negative eighteen point seven percent. The funds declining growth was primarily the result of thirty eight million increase in health and pharmacy claims due to increase in plan members. Schedule three on page fourteen provides a list of the individual health claims exceeding two hundred fifty thousand during the fiscal year two thousand twenty from both plans. The AC plan had ten members with claims totaling four point seven million a slight decrease from the previous year. The PSC plan had nineteen million nineteen members with claims totaling just under thirteen point six million an increase of almost six million for fiscal year two thousand nineteen. We tested these claims for accuracy and timeliness in eligibility covered procedures payment amounts and case management services and noted no discrepancies. We also reviewed the nine members of the AC plan and the nineteen members of the PSC plan with cumulative claims exceeding five hundred thousand. We tested these claims for accuracy and timeliness of case management services and noted no discrepancies. The two thousand twenty total cumulative health and pharmacy claims exceeding five hundred thousand increased almost ten million to thirty point five million from fiscal year two thousand nineteen. For fiscal year two thousand twenty EBT entered into various contracts with outside vendors to assist in providing insurance benefits for plan participants. Schedule for on page fifteen of the report and on this slide. Shows the administrative cost by provider in a brief description of the services provided. Administrative costs totaled over twenty one million for the AC participants and over thirty million for PSE participants. Finally scheduled to on page thirteen the report provides the monthly premiums for each plan available to subscribers shown on the slide is a portion of the schedule related to the A. C. plan. In this slide contains a portion of schedule to that shows the premiums for the PSC plant. As noted at the bottom of each section of the schedule premium cost to subscribers increased if members did not receive a wellness visit. Our report contains one finding as noted on pages nine and ten. Media again made numerous accounting errors during fiscal year two thousand twenty that extended across multiple funds including duplicate entries in asus. Understated pharmacy rebates. Entries recorded in the incorrect fund. Incorrectly recorded cafeteria fund deposits. Thank you saving funds not transferred. Improper classification of administrative expenditures. Bank reconciliations not performed in review timely. Six monthly entries not recorded in aces until after the fiscal year end. And upon notification of these potential misstatements DFA made accounting entries to correct majority of the heirs. Mister chair this concludes my presentation agency representatives are here to answer committee questions thank you Mr. Thank you thank. We have a quote Committee have any questions feel portion. Senator Breanne. Yes ma'am if there is. There is a seventy five dollar discount for wellness participants if if the subscribers participate in the wellness check from their PCP or through catapult Health. And that is reflected in. In the schedule for the premium plans and classic plants at the bottom AS the plans without wellness range from seventy five dollars for the basic employee only where the basic plan member only would pay nothing if they participate in a wellness plan. But if. If they do not they must pay seventy five dollars monthly. Okay. So. So the cost has to do with the fee or the cost has to do with the fact that. They would have fewer. health problems if they were if they had the wellness plan I'm confused on that. At. The cost us to do whether they participate in the plan if they go to the doctor and get an annual wellness check up from their doctor and. That is to ADD and that they are a discount is applied to their premium for seventy five dollars if they do not participate they do not receive that discount and therefore they pay the full amount okay so we're talking about the premium costs not their health care costs correct yes I miss the premium cost thank you. Our representative rye. Is an owner okay of only eighty on ninety two. Prior to joining in on a two. it mentions. Of the understatement of the pharmacy rebate. Of A. S. A. P. and P. A. P. A. S. eighty five eight hundred and eighty nine thousand. And then also three million four hundred eighty two seven thirty two is that right there. Is that the portion that actually could affect the amount of money that the local. People that are pharmacies are receiving Sir. I'm sorry representive I cannot hear you very well okay Sir okay it's on page eighty two Sir. Yes Sir okay and there's number three image speaks of that nine eighty nine thousand and three million four eighty two seven thirty two and that's relating to I guess rebates would that. With that have an effect on the local. But the local pharmacies as far as the amount of money that they would be rebated that could actually make that a little harder for them to compete and at the same time what could that have an effect on the for the folks that are paying for the medication and and ranks or represented by I think the agency may be better able to answer that question for you. representative from the BT are here. You're recognized. Gigli to the V. D. is so if I'm understanding correctly the question you're asking about how rebates affect the competitiveness of the local pharmacies is that right. So the way that we work are and and I this is only to speak on how easy the process is its business is we use the B. R. acts of course they're here in the audience to set our formular which is the drugs that we we reimburse at and then they work with Matt impact our pharmacy benefits manager to distribute those that impact than that has the relationships in the contractual relationships with the individual pharmacies so that's a relationship that were not necessarily involved in Mr Vinson from the pharmacy association might be a little better able to answer that question as far as rebates go we negotiate our or EVR actually go sheets with the of PBM to to maximize those rebates for the benefit of the plan so we can keep costs low and everybody. Yes yes Jake the court what are one trying to get to your is this amount of money could this have an effect on isolated. pharmacies that they we've been speaking about earlier in the meeting no I don't believe so Sir thanks. Okay thank you. Representative Mayberry of questions. Thank you actually I don't think it's really for you all to answer but I mean you can continue just to sit there but thank you Mr chair I just. Trying to look a little bit closer Page thirteen where it lists the public's at PSE health claims exceeding two hundred fifty thousand and I guess I'm I'm just kind of noting to make sure that we as legislators are are looking at this there are seven listed there seven newborns with complications two of them are pregnancy related complications and then three were at pediatric. Related situations I don't really know the ages there but how can we get more information on what those are I mean those are pretty high dollar amounts and also looking at there's only nineteen listed here and twelve of them or all You know a pediatric or newborn related and I just wonder how much you know are we doing what we need to do to help pregnant women and if some of those newborn complications could have been prevented had we had a little bit better health care for the pregnant woman how do we get more information on those. Anyone like. Representative Mayberry is is that it is kind of an unusual population when you're talking about public school employees to have a lot of teachers that are women they're all in their child bearing age so you may see a significant increase in these type of claims just because of that population in in and of itself but we will be happy to look into that and I know that we do have some healthy baby programs and all those kind of things that are kind of wrapped up the we do have those services available so it may just be the uniqueness of this population that's this is very much female and child bearing age so we'll look into that for you okay it's just you know really high number and I know that there's lots of us here who are concerned about it and we want to know what we can do to help improve those outcomes and it would be nice to have just a little bit more information than just newborn with complication could that. Have been prevented is it something that the mother didn't get good health care in advance. All right thank you to my record represented one. Thank you I had a question also on the opposite column we had three collapse longs to heart disease but then malnutrition it I don't know if you can answer it or not but we have nine hundred thousand spent in malnutrition. Does anybody know there to see staff know what that encompasses representative will have to get into the to the details of that particular patient of course we can't share some patient information but just it normally just like the first is actually sometimes a condition of either HIV heart failure the wasting disease so something that probably something like that so we'll look into it all right thank you. Senator Johnson. Someone in. Our representative like even. Thank you Mr chairman I'm not on the committee I appreciate you let me ask questions but up I have a question when you look at the charts on page five. The end this is a five year chart there and things are pretty normal but in twenty twenty there's a drastic increase almost looks like an out liar and that's for the Arkansas state employees and then if you look at page eight. Which is the public school employees. It's even more of an ally there's a drastic increase in the last year and then when you look at the numbers the number of US subscribers is gone up significantly especially in public school and the number of claims has increased significantly much more in over the past four years ago is there a reason that the you know what reason for that wire that dramatic increase in the last year. So the couple a couple reasons COVID being one of them I obviously COVID probably increased a lot of health care costs on a plan just for folks getting tested folks getting vaccinated there's also a phenomenon where in twenty twenty folks of course a lot of doctors offices shut down for a little while a lot of folks delayed getting healthcare they're not getting back and getting into it so whatever they didn't do whatever elective stuff may not have happened it will the board quarantine they're catching back up on that is is one of the things that's going on there a lot of it also is just routine and I hate to say that routine growth in healthcare which is just expenses it keeps going up. Why did the number of subscribers go up during the pandemic. Some might. My guess resumption on that would be and you see a lot more growth on the public school so I'd like and said you've got a lot of kids you got a lot of families you've got a lot of growth there a lot of particularly in public schools a lot of people or or in that role so that they can provide insurance coverage for their families think of farmers whose wives might work in the public school system also I think that there might have been a little bit of during the economy's crash when we saw unemployment go up course we maintain a policy where if you've got a man and a wife and one of them is on our insurance the other one is on there lawyers insurance we make we make the spouse who's on that private sector insurance going to that insurance plan but if that person gets laid off we allow them to come over on our plan so that might have also been was going on. Makes sense Mr because one more question yes yes more up so and I know we don't have a crystal ball but I mean and we've got a big shortfall on public teachers that that program that we're going to have to deal with right now but I mean is this something that's going to continue is this line going to continue to go up do we know that is there any way we can. Look ahead on that. Well actually representative Ladyman I do think that just traditionally healthcare costs go up every year and so you know these numbers do kind of aligned better with our actuarial projections and we'd been receiving and so this is we we predict this being predicting that this will continue. Thank you. But if if I can follow up on our within I can assure you we're doing everything we can internally to flatten that obviously we don't want to restrict benefits we don't want to shift costs as much as we can but there we're looking at all our costs internally and trying to make some tough decisions to keep that curve down. Senate senator Hammer. Thank you share a and let me start off by asking the staff for questions please is it in the report somewhere. That shows that the wellness visit credit how many did not get their wellness visit as a result they're paying a higher a contribution into the plan is that in the report somewhere. No Sir it is not is there a way for us to find that out yet we can get that for you okay I'd like to know what the dollar amount is those that don't do that wellness visit and as a result they pay a higher. They pay higher costs for the insurance plan and the right on that they do yes they would pay a difference on it we we can do is give you the the break out for both the State and Public School planned by the different types the premium basic classic. By the plans of their on who got wellness and who didn't okay and then the follow up is do we have any really tangible evidence that shows that that wellness visit actually makes a difference in the person's health outcome. I'm not aware of anything that we've looked at as far as making a difference in their health Kerr outcome I I assume that it would I would hope that it would given the amount of money we put into it what we've looked at is is the plan seeing a return on a if somebody's healthy are they consuming less healthcare the cost in the plan last and the answer that we've gotten from our actuaries when we've asked that question is the national studies do not show a significant return on it if there is a return on it it's very very flat. I think that if you think about it it's hard to predict whether or not somebody got sick. Or didn't get sick whether that was avoidable because of a health a wellness visit and and to qualify for wellness in Arkansas all you have to do is go to a doctor in our under our current plan you don't have to. Be healthier you don't have to go to the gym you don't have to lose weight United to quit smoking necessarily have to go to the doctor if you do have some smoking you might have to some education some classes to go through. But isn't necessarily an indicator that somebody is healthier just because they get the wellness credit and somebody who is not. Yeah and that's I know we've hired consultants to maybe they'll look at that is part of what we do to curb costs but for my experience of the wellness check up it's it's a good friendly visit with your doctor but it doesn't really do anything substantive that really in my opinion alters the course of a person's contributing to the overall plan by becoming a healthier person as a result of it that's strikes me as a really hard number to calculate with any definitive as as far as do you want to your doctor every year for the last ten years does that mean you're going to be healthy and the plan will cost less I think that there's a whole lot of the variables in there that we can't control okay I agree your point and then to the staff left last question the if and I'm asking because I don't remember so forgive me but the school matrix has a percentage that we contribute to the schools I think that's designated for health plans is it in the report somewhere or where is in the report that shows that we monitor that all that money that goes to school actually gets used to offset the healthcare plan and how much each school may add to show the disparity maybe that occurs between a school in area acts from a school in the area see and what they add on top of that is that the reports are more. Senator in the report there is the eighty eight million eighty eight point one million that the legislature funds that is the number in the report there is additional testing done within the work papers for the school contributions for the amount of ridges and some of the individual work papers within the engagement. Is that number in the report server we've got we've that number The New the school contribution number is the total school contributions. What were said in the report. What page. Page seven of the report. Has the premiums paid by school districts for FY twenty which was a little over a hundred four million. And do we show with the break out of where because if you go to school in one county that's paying more toward their employees insurance in a school in another county do we have that detailed of any information or can we get that that is not detailed in this report we can get that information out of like to get that to see if there's disparity between where you live. How much you receive in additional compensation for your school may be based on geographical location with the intent of time that into health outcomes to see if there's a connection between the the financial investment of the school and the health come outcomes where people live in access to care I know that might be deeper than because I'm getting of deer in the headlight look but that if I get that please but like to chase that rabbit thank you. All right members any other questions. Saying none. Your your excuse thank you thank you. All right in it. Any other questions from committee members. Without a doubt without objection with this poll report will be adopted. Members of the next joint auditing committee will be on August the twelfth and thirteenth. And if there's no other new business. We're germs.