ALC - State Insurance Programs Oversight Subcommittee
Video
Transcript
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- Whisper
- Model
- ggml-large-v3-turbo.bin
- Processing date
- October 4, 2026
Representative Robin Lundstrum
Unverified
0:30
Ladies and gentlemen, let's take our seat
and start our meeting. Representative Eads, let's move this show
Representative Robin Lundstrum
Unverified
1:00
All right, we're calling the meeting to order, and we're going to go right to B, consideration
for review and approval of actions by the State Board of Finance, and we're going to start with Exhibit 1. This is a rules review regarding independent vendors and data audit process. Mr. Wallace, do you want to come up?
we're on review of the rule regarding independent vendor data
Speaker 10
1:41
audit process good morning grant wallace director of the employee benefits division and office of property risk the proposed rule you have before you is in response to act 956 of 2025 and this just requires that indie vendor that is working with the Employee Benefits Division must subject their data to a data validation
from a third-party actuary. We have our actuary public consulting group. It was part of their contract to do this work, so we do have somebody identified to do this, and it's just essentially validating the data that they turn over for fiscal impact statements.
Representative Robin Lundstrum
Unverified
2:26
Thank you. Any questions from the members? All right. Without objection, this rule stands as reviewed. Next on deck, we have approval for June, July, and August EBD formulary recommendations.
Speaker 10
2:41
Okay. So we will start with June 2026 pharmacy formulary recommendations. Items are lines 1, 3, 12. This is all shifting from the currently covered medication to the new generic that has been released. Items 13 through 15 are new-to-market medications that we are not covering at this time until there's more efficacy or pricing adjustments.
Items 16 and 17, we are just re-tiering these. These are limited distribution drugs, so we are just putting them in the specialty tier. Items 18 is a new therapy, which is showing significant reduction, so we're adding that to the specialty. 19 we're adding there have been some adjustments on pricing that now makes it worth able for us to
add it on items 20 through 27 are new to markets that we are not covering at this point we need more evidence of efficacy item 28 is a new to market breast cancer drug that
Speaker 18
4:05
we are adding on at the specialty tier i'll pause there and answer any questions all right representative baity thank
Representative Howard M. Beaty, Jr.
Unverified
4:22
you madam chair my question just for some information for myself i was sitting here and and
ask a ask a question where do these recommendations come from and the process that you go through to bring those too it's just to enlighten me so that
Speaker 10
4:39
i better understand the process so they originate from our pharmacy benefit manager navitas health solutions and then we work with ebx who is out of the college of pharmacy at uams to review those and and come up with the recommendations that we bring to the ebd advisory committee the state board of finance and
Representative Howard M. Beaty, Jr.
Unverified
4:56
ultimately you all well i'm just
questioning that with some of the issues that we've had with navitas and that that there is some follow-up and review of their approval process and recommendations back to us and do they did they give reasons why outside of the generics available do they do they give documented reasons why
Speaker 10
5:18
they make that recommendation right so what happens is navigus gives all me and ebrx the proposed formularies that they have reviewed monthly ebrx goes through and does its own analysis
and review and looks at their science-based and evidence-based formulation that they have in their process. And then from there, where they agree and concur, we move forward. Where there's disagreements, we talk through those. And ultimately, I make a decision on what
Speaker 18
5:45
we bring forward for the review process based on the evidence that supports from both sides and kind of
Speaker 10
5:53
where, what makes the most sense for our population at that time. Thank you for that answer.
Representative Howard M. Beaty, Jr.
Unverified
6:00
It kind of clears that up for
Representative Robin Lundstrum
Unverified
6:05
me. Thank you. I have a question. Is there a way to track the coupon rebates with the drugs that we're deciding to put on,
Speaker 10
6:12
what the amount of that rebate is going to be? So there's two things. Yes, we do track the rebates and measure that, and then we also do track the coupons separately. This will make sure that there are two different things. So
Speaker 18
6:24
where there's a coupon available, we are tracking that utilization and the availability of that. but then we also track the rebates on a per-drug basis as well.
Representative Robin Lundstrum
Unverified
6:32
Okay. You don't have to answer this question. I'm just putting it out there. What keeps us or anybody from putting a drug on here
Speaker 18
6:41
where they get a better rebate? In some instances, that's what you would want to do because it would be the
Representative Robin Lundstrum
Unverified
6:47
lowest-cost option for the member in the plan at that point. Okay. All right. Thank you. Any other questions? All right. Without objection, this is approved. next number five we have colonial life insurance company contract amendment so we need to do do
Speaker 33
7:05
july and august oh i'm so sorry please do july and august
Speaker 10
7:09
okay um items one and so i'm now on july uh pharmacy formulary item one and two again this is well um we'll throw item one through three these are new uh generics that have come to the market so we are shifting that class to cover that one items four through eight are new to market that we're not covering at this time because we already covered the lowest cost alternative item nine I want to highlight that
one this is a administrative through an IV and kind of an emergency room setting so we're just making sure that the coding on that is appropriate and that there's no hold up in getting that particular drug administered in an er situation you'll look at item 10 is there's just some changes in the class so we are now adding that one on at a tier 2 11 is the same thing we're moving that to not covered due to the changing in the drug class there you'll see items 12 and 13
are related we're removing the PA on one particular just due to price erosion and utilization that no longer makes sense to have the prior authorization process in place item 13 we are adding an age restriction on that one because that one is specific for patients that are nine and under then you'll see items 14 and 15 we are moving those to not covered because we have better generic setups and 14 was a new to market that we need more efficacy around
going on to august you'll see item one is just adding that new formulation we already covered this particular drug this is just including a new formula formulization with the fda approval items 12 through 13 these are new to market or manufacturer has increased pricing so we're moving those to not covered item 14 we are removing the step therapy again it's no longer
necessary to have a step therapy to use this particular inhaler item 15 we're adding back on at the specialty tier this is there's drug shortages related to the targeted immunologulators i really bumbled that one sorry the tmis and we're adding this back on to make sure that there is appropriate drug mix for patients to access and item 16 we are this particular drug is no longer
available to Arkansas pharmacies so we are moving that to not covered there is an alternative that is available to treat growth to
Speaker 18
10:07
use for growth hormones so we still have that available I'll pause before we have to go to the medical any
Representative Robin Lundstrum
Unverified
10:20
questions from members all right we'll take that as reviewed okay going
Speaker 10
10:28
to the medical drug recommendations and again just to make sure these are drugs that are administered in a clinical
setting these are going to be your higher cost drugs you'll see items one through five are related we are going to a new biosimilar and excluding other biosimilars or we're going to a preferred biosimilar in that one and excluding the others items six through twelve we are doing the same thing there are new biosimilars that are coming out we're covering the lowest net cost items 13 and 14 we are adding with a prior authorization items 15 and 16 we are excluding
at this time one can be self-administered and one is new to market item 17 this was taken off the market and but we do have improved alternatives around the combination using it in combination with other drugs so that's where the prior authorization would cover it for that particular setup item 18 this again is one of the kind of
emergency room type setups and we're making sure that there are no restrictions that they would be able to cover that without any hiccups in the emergency setting 19 is a new to market that we're excluding at this time 20 again is the same covered through hospital charges an emergency type situation we don't want to make sure make sure we have any issues in getting that access items 21 and 22 are new to market that we are going to exclude item 23 we are going to add
for the IV formulation only through medical the subcutaneous is excluded on the pharmacy is already excluded the 24 and 25 are new to markets that we're excluding 26 we're covering for an emergent situation, items 27, this is a new formulation that we are covering at this point, 28, we're going to exclude the IV formulation, and 29 is new to market
that we're going to exclude, and 30 and 31, we are adding due to drug shortages in the market. Any questions? All right,
Representative Robin Lundstrum
Unverified
13:11
I think you're good. We'll
move that as approved. And number five,
Colonial Life and Accident Insurance Company contract. Okay, so this
Speaker 10
13:23
is a one-year extension of the Colonial Life Agreement.
They cover our accidental death and disability policy for all state employees. This is the base $10,000 policy that the state pays for. The employees can buy a higher level of coverages that they self-pay for. The rates are staying level from 2026 into 2027. And
Speaker 18
13:44
with that, I'd be glad to answer any questions. Members? All right. We'll move that as reviewed.
Representative Robin Lundstrum
Unverified
13:59
Number six is UnitedHealthcare contract.
Speaker 10
14:02
Okay. This is the one-year extension of the UnitedHealthcare agreement. They do our group Medicare Advantage plan for our post-65 retirees on the public school and state employee side. This extension includes the recommendation that Siegel made to decouple the medical benefit and the pharmacy benefit. So the change that the member will see is instead of one card, they will now have two cards.
They'll have one for the doctor's office and one for the pharmacy. This does have an increase in premiums. State retirees will increase from $280 to $390, and the public school retirees will increase from $200 to $352. Keep in mind that this is a 90-10 cost share between the state and the retiree, so the members for state retirees would pay $39 a month instead of $28 a month,
Speaker 18
15:03
and public school retirees will pay $35 a month instead of $20 a month. I'd be glad to answer any questions. Members, all
Representative Andrew Collins
Unverified
15:17
right, Representative Collins. Thank you, Madam Chair. So, and I remember reading something about this and being aware this was coming. Are you saying that the 280 to 390 and the 200 to 352 is essentially, collectively, that's the only hit, and it's going to be shared by the state and the beneficiary,
or is there anything else in this renewal that's going to be different, more of a burden on either the state or beneficiaries or other? No, this is it. This is the full extent of it, and this is for one year, right? Yes, sir. Okay, and do you anticipate any change? I mean, it's hard to anticipate changes beyond this coming year, but do you think this is the direction we're going, we're going to need to continue to do this in subsequent years, or is this just a one-off, rip the Band-Aid, and then hopefully things will stabilize?
Speaker 10
16:05
So I do anticipate there are going to be increases in the out years due to the underlying federal changes in the way that these programs are managed and reimbursed and run. Do
Speaker 18
16:17
I think the increase is now going to be more predictable and managed and not as sharp as what we're seeing in this particular renewal? Yes, I do think we'll be able to get to more of a levelized, predictable. Now that we kind of know how the reimbursement mechanisms and how the Medicare Advantage programs are going to operate,
we'll be able to better predict what those increases are, and it won't be nearly as
Representative Andrew Collins
Unverified
16:42
sharp in the out years. Okay, and last question, and then I'll get out. Do you think that we have the right setup here for our state and public school employees? Absolutely. Okay,
Representative Robin Lundstrum
Unverified
16:57
thanks. members any other questions all right without objection this contract amendment stands as reviewed let's go to number six okay now
Speaker 10
17:05
we're shifting over to the office of property risk
this is a new contract and this is with crow chesnick and they would provide the financial auditing services that we are required to do each year this is a three-year contract The projected cost is $55,000 per year and $165,000 over the three-year period. I'd be glad to answer any questions. I'm just impressed
Representative Robin Lundstrum
Unverified
17:35
you can pronounce that. We have one question.
Senator Jimmy Hickey, Jr
Unverified
17:38
Senator Hickey? Okay. You said you put this out for like an RFQ. Is that correct? Yes, sir. How many responses did we get back from different vendors on this? Do you remember?
Speaker 18
17:51
Or was this a sole one? I think this was the only one that responded to
Representative Robin Lundstrum
Unverified
18:01
this RFQ. We put it out twice. Okay, thank you. Members, any other questions? All right, this contract stands as reviewed. Next, we're
going to discussion of insurance funding and medical price estimates.
This is Siegel Group. Unfortunately, the PowerPoint will not be there, but the audio will. so I need you to pull up and make sure you have in front of you your PSE adequacy review the forms are right there at your desk so if you'll follow along they will take
us through on audio mr. Klein are you there all right yes you're up on deck
Speaker 62
18:38
all right all right great well thanks for having us today. I'm Patrick Klein with the Siegel Group, and we're going to present our analysis of
the public school plans, funding, reserve, all that good stuff. So we presented this a couple weeks ago. We're here for this subcommittee to present it again. One thing that I want to make sure that is clear here is that we're attacking this on the revenue side. We're looking at what the funding needs to do to make sure that the fund's solvent. So all the expenses are coming from EBD's current actuary. That's the public consulting group. We reviewed the expenses. We
deemed them reasonable. But we're not doing any expense projections here. Other questions that came up on savings, I want to be clear that the numbers don't include any plan design savings or program change savings. So anything that would help reduce the expenses, that would therefore reduce the increases needed on the revenue side through the rates. Just want to be clear on that. The minimum district contribution is the main lever that's been pulled for this fund to increase
revenue or even decrease revenue. Historically, going back a couple of years, it was at $300 Then it dropped down to $234.50 in fiscal year 2024. There was a surplus at the time. I think that was the main reason for the decrease. Since then, it's increased to $350 as of January 2026. And then most recently, as of July 2026, it increased again to $400. So that's where we sit today.
That's the current minimum district contribution. The other piece of this is the expenses. it has a huge, it's a huge piece of the fund balance and the reserves. So when we look back at two years ago, when we did the same analysis, the actuary was making projections for, for 24 and 25. Now those actual expenses have came in 17% above those projections. So we are seeing some high claims trend on the medical pharmacy, the MAPD, all across the board, we're seeing high
costs. And you're not alone there. Across the market, our other state clients, we are seeing higher trends than normal. But that's a big piece that goes into what we're about to present. But where we sit today, if we look at just 2026, the fund has a sizable surplus. And the way the rates are set at $400 and all the other rates, you're generating almost the same amount of revenue as the projected expenses. So you're in a really good spot currently. Just like any other
fund where we have expenses that increase, if we don't have revenue that increases, that coincides with that expense increase, the fund is going to become, that fund balance is kind of drop, and it could be jeopardized. So if we don't do anything for 2027, we're projecting a $31 million deficit that would cut into those reserves. If we don't have any funding changes out to 2029, the reserve will be completely gone. So we did run some various scenarios just to
illustrate what are some funding options to make sure those reserves align with the target reserve that we've established. So before we get into the scenarios, as I mentioned before, we did see this sharp increase in expenses. So I wanted to share a slide. Up top, we've got the expense numbers from Milliman that were used back in 2024 when we did this analysis. We compare that to the bottom.
That's the actual expenses for 24 and 25. And then we've got the current projections for 26 through 29 that are provided by PCG. So you can see down below the increase over those periods We're at that 70% over the expectation. And then those losses or those high trends also impact the future year projections.
So you can see those are up in the 22% to 27% range. All right. So we're going to show a couple slides that look similar here. Just to orientate you with the slide, we've got the minimum district contribution. That is that top row. And then we've got all the funding components or the revenue components. Below that, we have a breakout of the key expense items and then the total.
And then that orange row, that's your net income loss. That's how much we're projecting how much money will be added to the fund or subtracted out of the fund. And then you have your assets. So, that's your fund balance or the money in the fund. And then the last row is the target. So, that's what we're trying to get to. We don't want to fall below that target there. And this first baseline scenario is just if you do no changes at all. So, that $400
minimum district contribution is held flat throughout the projection period. What happens of the numbers. Obviously, we're going to eat into that fund balance pretty quickly. And again, at 2026, we're in a great spot, $188 million in assets, where our target is $73 million. But without that funding growth, we have sizable losses that start to snowball. And in 2027, you're still above the target, but it's starting to come down. You had a $33 million deficit there.
Going out to 2028, you start to fall below that target reserve, and in 2029, your fund balance goes negative. So, again, we're in a good spot here, but things can get out of hand pretty quickly if we aren't looking ahead and planning on making some changes to
Speaker 80
25:17
the funding. So, this slide shows the three key pieces of the funding for the
Speaker 62
25:23
plan. So we've got our employee contributions. We had an increase for CY 2027. Before that, we
Speaker 80
25:28
had a couple years where the rates were held flat, and then we had a decrease. We
Speaker 69
25:34
were trying to get to, or EBD was trying to get to a set subsidy percentage.
Speaker 62
25:42
This Department of Education funding, that has historically been $142 million, so that's been held flat for several years. And then we have that minimum district contribution that I called out before, and that amount does vary quite a bit. That seems to be the lever that's been pulled to generate more funding for the program. But if we only generate funding from one of these pieces or even two of these pieces, those pieces have to pull the weight of another piece that's fixed.
So those increases are going to be much higher than they would be if all three pieces were increasing at the
Speaker 62
26:32
potential option on how you could right the ship. So, going out to 2031, our assets align with our target reserve. You can see those numbers highlighted in green. And the way we are getting there is just increasing the minimum district contribution.
So, this $400 would need to become $485, then $589, then $714, all the way out to $867. So, that's a 21% increase annually starting in 2028. And, again, that's one approach to get your assets balanced with your target reserve. And, again, that assumes that your total expenses hold true and there's no benefit changes or program changes or any savings that could help make these numbers lower.
And then the last scenario is what happens if we spread that increase over those all three buckets? So your minimum district contribution, your employee contributions, and that district funding amount that was $142 million. So if all those pieces go up together, what increase do we need there? And the answer to that question is 12.5. So that's a more moderate increase if we spread the increase over those three buckets. But again, you get to the same position, this $118 million target at the end of 2031.
that is all i have prepared to present if there's any questions i'd be happy to take them
Representative Robin Lundstrum
Unverified
28:16
yes we do have some questions first up on deck is senator
Senator Jonathan Dismang
Unverified
28:21
dismay thank you thank you for the presentation and this is it's kind of on what we're going
to do on the future and how y'all will project and how it maybe should tie in so there was announcement, CMS has changed the way that they look at our 1115 waiver. We're going to have to
move from our current model, which utilizes health insurance plans and their rates. So that's going to have an impact on the entire market and how our providers are paid, which then will ripple through, I think, most likely to plans like this with an increased potential cost on medical, which then drives into your formula what do you need from us as we are discussing how we move forward with the expanded population um and what that should look like so we know what the impact of
our decisions would be for our state employees and teachers and others impacted yeah i'm not i'm not super familiar
Speaker 62
29:23
with um the changes that you're you're mentioning but yeah We would be happy to do some analysis on what the impact is if we're provided the information, and we could take this offline. I could connect with Jill on what we would need. I'm not sure if EBD's done any analysis or their actuaries done any analysis so far.
We could definitely review and help collaborate on that analysis as well. Yeah, I mean, at this point, just to be
Senator Jonathan Dismang
Unverified
29:51
clear, we're still in the discussion, or we haven't even really started the discussion, of what direction do we move in. And there's no reason to get into the weeds, I think, on that here. I think EBD shook their head that at this point they have not. But I don't know how they would because they don't have enough information to probably get there or to know what kind of to assess. But, again, I would like to know what y'all will need as we move through the process to kind of get this global look
at what the changes will lead to.
Speaker 62
30:23
Just if you guys could send us some more information, and then we can take a look and let us
Speaker 61
30:30
know what kind of data requests we would have or how we'll go about attacking the analysis. That's yours.
Representative Robin Lundstrum
Unverified
30:38
That's a good request. Thank you, Senator Dishmayne. Representative Gardner. Thank you, Madam
Representative Denise Garner
Unverified
30:43
Chair. I've got a quick question just on the calculations, and I'm not a math person, so I may just be wrong.
But on the slide, the third slide where we're talking about the prescription drugs grew up, the claims grew 45%. If we're looking at the claims, projected claims, it looks like that's about 18%. And if it's actual, then it looks like it's about 23%, unless I'm just doing the math wrong. Where did the 45% come from?
Speaker 80
31:17
sure yeah so we were we're looking at back in 2024 what
Speaker 62
31:23
was projected for for the current year
2026 uh versus what the current projection is so it's really the 175 divided by the 121 i believe that should get you 45 percent okay once 75 to 121 okay great
Representative Denise Garner
Unverified
31:41
thank you just need know where that calculation came from thank
Representative Robin Lundstrum
Unverified
31:50
you all right thank you representative garner um i had a question on the overview can you walk me through the actual expenses came in 17 above
projection how did we miss that that's that seems like a big miss i you expect two or three or four percent but 17 is a lot so how do we know these next ones are going to be on point and not another 17 that's
Speaker 97
32:18
a little scary yeah no it's a great question
Speaker 62
32:21
and we we didn't again we didn't do any of the expense projections we're not ebd's actuary so if you look at slide three you can see where
that 17 comes from so that's millman's projections back in 2024 versus the actual that came through okay um so that's
Representative Robin Lundstrum
Unverified
32:40
a great point because yeah i mean if you and
Speaker 80
32:44
that's why you need a sizable reserve and that's why we're you know we're trying
Speaker 62
32:51
to get a fund balance that's around that 100 million dollar threshold um because you can have adverse claims experience there's a lot of
volatility in the numbers and we're seeing that across the board with other state clients we're trends are higher than expected and you can be in a financial bind if you don't have those reserves properly
Speaker 100
33:21
funded. All right, Senator Hickey. Mine will be for
Representative Robin Lundstrum
Unverified
33:23
Mr. Wallace after this. All right, I'll hold on that. Mr. Wallace, you may want to make your way towards the table. So as it stands right now, we have a deficit of $31 million projected by year of 2027,
unless we make some decisions is that the bottom line of this
Speaker 80
33:48
i'm just trying to grasp the full yeah yeah so you have a
Speaker 62
33:53
deficit um that's how much the fund balance would decline we're still projecting that ending 2027 fund balance to be around 155 million which is still over your target reserve of 82 million so in 2027 if you do nothing you're
still fine um 2028 but that 33 if you don't do anything in 2028 or 2029 that deficit snowballs and then very quickly the the fund is going to be under some
Representative Robin Lundstrum
Unverified
34:24
serious pressure okay um we actually lowered the expenses in 2022 23 is that correct did i catch that there was a lowering we we cut the rate in 2022 23 instead of probably raising it gently so we're not in this situation
Speaker 62
34:45
yeah it looks like the minimum district contribution was reduced from 300 to to 234 dollars and 50 cents in fiscal year 2024 so that's correct all right um senator erwin thank you
Representative Robin Lundstrum
Unverified
34:57
madam chair i know i'm not on the
Senator Missy Irvin
Unverified
35:01
subcommittee i i was previously on the subcommittee and we did we did a lot of work and dug in my question thank you madam chair for letting me ask a question but to seagull i feel like we've been here and had this conversation before
So could you just articulate for me what the difference is between what we did do and where we are now, and maybe we didn't act as intentionally as we could have or should have, but what's the difference between where we were a few years ago and where we are today? Could you just go through that? Because I felt like we made some important steps and we did important work, but we're back here again talking about the same problems.
Speaker 62
35:47
we were facing then yeah and you know in the past there was times where the fund balance got extremely low and there needed to be sizable increases or one time money that was added so part of our analysis was our recommendation was that we need to do a multi-year projection look far out so there's no surprises and that's what we're doing today right now your fund balance is well above your target so
you have a sizable surplus so it's much it's much different than where we were years ago but to your point i think if nothing is done we are going to be in the same position that we were a couple years ago and there are going to be some sizable increases needed if we don't act in the near term so um you know we made some recommendations on the medicare advantage plan and the pharmacy and we were able to generate some savings for the program um there was some low hanging fruit that
we were able to take advantage of so now that's that's gone and your expenses are are trending higher um but yeah that's that's really hopefully i answered your question that's that's the difference between where we are today and where we were before and i think we are in a much better spot we just need to have a plan and stick to the plan um where things could get you know bad fast
Senator Missy Irvin
Unverified
37:18
okay no i just i wanted to make sure that it was noted that we did have you we did have
recommendations we did follow several of your recommendations which did result in the fund balance that we have and the surplus that we have there but that next steps are taken to maintain I guess the program to make sure that it's solid and stable and healthy and perhaps it might be good to review the different things that we did do then and then what we need to do looking forward thank you thank you Senator
Senator Clarke Tucker
Unverified
37:54
Tucker thank you thank you madam chair as we mentioned this
question is probably from Mr. Moss although
I'm not sure exactly but as you mentioned you know we're going to have problems unless some decisions are made and I'm just asking about the process for that does does EBD come up with some recommendations or the Segal group and it and and you'll make a recommendation based on the raise in minimum district contribution or how much should come from ADE or employee funding? And then you'll bring that to this committee.
Speaker 10
38:22
Is that just how that process works? So it's kind of both processes that would go on. One, we're going to bring you all cost containment measures. I dare
Speaker 18
38:30
say we're not saving money in this space. We're only trying
to contain the growth by which we're going to experience. So we're looking at ways that we negotiate our contracts to make sure that we're sharpening the pencil and getting the best deal for the state possible. We're also looking at ways that we can layer in programs within our existing relationships to offset or divert costs. We would rather prevent a disease than treat a disease. But at the same time, we are also coming up with recommendations on here are the funding and that we think this is the target that we need to be hitting in order to maintain appropriate
cost share between the state as an employer and our employees, as well as maintaining the overall retiree coverages and those kinds of things. Um, and like has been mentioned, Siegel obviously is your consultant. They work for you all. They're going to be doing and recommending things as well. We work well with them and trying to figure out, yeah, these are things that are actually actionable and doable, or here are the things that we would need to do in order to make that happen. Um, so it's kind of all of the above. Okay. That's great. That's,
Senator Clarke Tucker
Unverified
39:34
that's exactly what I was looking for. And I guess the follow-up is what's the general timeline for that?
Speaker 10
39:40
It's between now and January, honestly, to figure out what we need to do, funding levels to bring you all to consider during
Speaker 18
39:46
the general session, and then what other kind of policy recommendations or program changes it may need. There's a lot we can do without legislative action, but things that we may want to add in and do either from a contracting standpoint that you all would review or going in and layering in because we already have them and we just need to turn them on. That's kind of the work that we're doing now. Thank you.
Senator Jimmy Hickey, Jr
Unverified
40:10
thank you um senator dismayne you're you're in the queue all right senator hickey you can go for it well senator tucker may have may have hit around it
but and that was my thing and senator ervin she she mentioned we might need to review this it was minor if i remember correctly whenever we did it if we were not going to meet the target reserve uh that you're supposed to bring us a plan before this committee to kind of discuss it now what i don't remember is is if the legislation itself said
in that current year or whatever but based on this information which i think is prudent and maybe we should have done the legislation that way we and again i can't remember but maybe we should have said well based on the projections if it seems our reserves going to drop out in two years from now or three years from now that you need to go ahead and bring that plan and based on what senator tucker said is it your intent to go ahead and and bring us a plan and what you're going to recommend is EBD to this committee so we can go and start hashing that out before we get into session
Speaker 18
41:14
right I'm working on that now and hopefully my intent is to be able to have that turned into you all in September that's hopes we kind of know where some of that goes but that is kind of my goal is if I don't get it in September you'll definitely have it in October okay well
Senator Jimmy Hickey, Jr
Unverified
41:30
that's great and again it may be and i hope we continue we operate that way because now looking back at it and trying to remember what what we did on that legislation it may have just said if it was in that in that particular year or something that you would bring it to us but right we may we we may
need to tweak that so if you don't mind looking at that legislation and possibly putting that in there so in the future whenever a lot of us are going you're going or whatever that somebody else okay tries to stay ahead of that and one other thing this may be something that's you know more more along our lines i see that one of the recommendations like has a district contribution employee funding and the department of education of course department of education is going to be the general assembly because we know i guess that that's just the state money part i would assume
that's going there so and again this may be part of our thing but i'm just not for sure that is it's prudent you know that we have all of that coming from the department of education because from my standpoint for us to be able to know exactly what's happening and everything i just don't know if that needs to be a line item that the general assembly has because here's my thing that if the department of education has a huge fund balance and they start using their fund balance much the same way that we've done with our medicaid trust fund and then a few years from now
you know they keep spending their fund balance down and then the General Assembly all of a sudden sees this is for our insurance that you know they kind of get that so I'm not sure that we don't need to look at that to try to I just don't know that Department of Education is where it needs to come it could be that we withdraw money from them and just make it so that it's kind of a direct contribution coming from the state so that we can keep an eye on it know know what the increases there are and exactly how much it is because if I remember right they do have a large fund balance
I won't speak for their money but I
Speaker 18
43:33
I think what I would the only response I'd like to make to that is I am more than willing there are many ways to get to the number four and I think at the end of the day we just need to make sure that we get to four and that we have the appropriate funding to make sure that this is a strong stable benefit for our employees more than willing to sit down and figure out how we do that and what
Speaker 11
43:57
makes the most sense um so that i just want you to know that yes willing to to have those conversations
Senator Jimmy Hickey, Jr
Unverified
44:03
and the district contributions and i think i've asked
you this before but the district contributions those are
coming directly to the department of ed and then they're sending those to you all is
Speaker 10
44:16
that the way is that the process so there was a change in this past session and as of july 1st the department of education is sending us
Speaker 18
44:24
directly the district minimum contribution so that money it's not sent to the district it comes out of some of the money that the department has that i think i don't know all the mechanisms by which
they're getting it but they are sending that direct to us on the district's behalf so we are now invoicing the department of education for xyz school district number of participants here's what that match would be okay i'd also like to know from
Senator Jimmy Hickey, Jr
Unverified
44:51
the department of education if you know nothing they have to come to the table they're not having any any problems with any collections with any of the district as far as getting that in other words i don't want to get into a situation here where they're automatically paying paying the money the money and then they're having to
collect it later and somebody's 20 30 40 60 days behind and stuff like that without us knowing so we were having
Speaker 27
45:17
that issue with the districts I think this actually solves
Speaker 18
45:20
that because the districts are not involved it's coming off the top straight to us from the department so they're just taking they're taking it out of
Senator Jimmy Hickey, Jr
Unverified
45:27
fun they're taking out of funds that they would normally have sent to them you believe before it goes to them is that is that I believe I believe that's how
it's working I'd like to get a little more information I want to make sure that's exactly correct okay thank you
Representative Robin Lundstrum
Unverified
45:44
sir would you send him that information and then share it with everybody else
Representative Robin Lundstrum
Unverified
45:50
education and thank you i understand that thank you for reaching out senator dismayne yeah and
Senator Jonathan Dismang
Unverified
45:55
so that really that was one of my questions is how much more money is ebd receiving because we're direct paying versus lying and go through the school district and so just as a the background is the way that i understand it you know we spend we on a per pupil basis assigned a dollar value to how much we were paying for health insurance and so the districts got that larger amount of money irrespective of how many teachers signed
up or didn't sign up for insurance and so then at the district level if you know they have 100 teachers and only 90 of them sign up for insurance and they were allocated x number of dollars for ebd that money stayed in the school district and it could be spent on absolutely anything so we'd actually created an incentive at the district level that they not encourage their teachers especially their young healthy teachers to participate in the health insurance program which is why you see such a discrepancy between how things are going on the public employee level
and the public teacher level is my understanding and so the remedy to that is what you were just talking about which is we're no longer going to send those dollars to the district for them to have full discretion how they utilize them they're going to be going to ebd which will actually create more money available for ebd directly to pay for health insurance and not for other things at the district level and if you have any questions you mean your your superintendent will probably tell you that they're going to have some shortfalls in certain places where they were
spending this ebd money not on ebd issues but in other places in the district um they're pretty open about that so that was really my question is have we done the math to see how much the underutilization was for the amount of money that we were sending over and what that's going to be an impact and that's not anything that we can answer today i don't think and my other question i don't think we can answer today is um i've been concerned for a long time about not doing wellness visits and the fact that we eliminated the incentive for that um so what that does is
take away some of the year-to-year ability for us to know what's coming I am guilty right I mean once we did wait the incentive I stopped getting my wellness visit and I think I had my first one in six years a couple of weeks ago and I don't think I'm alone in that so what I would really like to know because I think we can dive into the numbers and see is how many of the members both on public school and in public employees are utilizing wellness visits now versus when we had the incentive in place because if we're at a very low percentage of people utilizing wellness
business it's going to be really hard for anybody to predict what's happening I mean because we're going to let that snowball snowball and all happen at one time which may be part of what we're seeing in these numbers but again I would like to know the percentage of who's utilizing and who's not and because if it's low then we're kind of going to be flying blind so I think in response to kind of both
Speaker 10
48:51
of those one it's kind of too new on the department funding you know they just took that over in july
Speaker 18
48:56
i think give us a little bit and we can still kind of put some markers down and study
that it's still based on per participating employee so there's still that factor that's in there as far as the wellness visits and thank you for bringing that
Speaker 10
49:11
up because we are taking a concerted effort to really revamp that i think the shortcoming of our previous kind of wellness visit is that there was no outcome goal, there was no measure, there was no we're starting
Speaker 18
49:23
here and we were able to get to here. That is something that I've been strongly focused on is what is the goal
that we want to achieve so that when we're doing these and investing these resources in that way we're actually making sure we're moving the needle in the direction we want it to get to. The second thing is the Healthy Lifestyle Program that was at the Department of Health that's now been moved under EBD so we're studying that and working on figuring out ways that we can revamp that and I do I do know with our current relationship with blue advantage that will go affect one one there is a new wellness component to that that we'll be able to kind of really
revamp that program I don't think it's going to be something that is kind of reward based in the sense of dollars but hopefully you know we're finding other ways to meet people where they are and really incentivize them to go and do the things they need to do not just doing the annual visits but making sure that we are changing a lifestyle and getting them the supports that they need to become healthier and more active because at the end of the day that's the only thing that's going to move the needle on health care costs. Okay thank you. Senator Petty I believe
Representative Robin Lundstrum
Unverified
50:39
you had a question and
Senator Jim Petty
Unverified
50:42
then we'll go to Senator Irwin. Thank you, Madam Chair. So this is more of a request than a question. I tried to recreate what the reserve balance was when we made the decision to lower the premiums or the minimum contribution. It really doesn't matter, but based on what I'm seeing, based on projections and so forth, I'd like to see us and the actuary or Siegel or whoever, revisit the targeted reserve balance because right now I almost
feel like we're, I don't want to say panic mode, but we're in a lot more aggressive mode of riding the ship, whereas if we looked at the targeted reserve balance and we had a little more runway to fix this, that would be. But as volatile as the actual results have been and what the projected growth is going to be i think i think we need to revisit that targeted reserve balance uh and and maybe not err on the on the lower side of that and sir
Speaker 34
51:47
i am aligned with you i know where the range is
Speaker 18
51:51
is set to statutorily i actually and if you kind of back into the math that's about three months of operating i'm more air on the six month side just because it takes that long to be able to get stuff to you all to be able to write any kind of crisis situation what I would say is that the experience and Patrick can probably speak to this a little bit more than eloquently than I can is we're in a different spot than we were when probably some of this analysis start the inflation
number and the tracking that we've experienced as a result of the inflation reduction act and other federal policies and just global markets. I was not baked into any of these analysis back in 21 or 22. That's not what we were experiencing. At that point in time, everybody was wondering, what is the rebound of people that have put procedures off or that have put health care off, and is that just a momentary bump? Well, yeah, we saw the momentary bump, but we've also seen the inflation sustain over a longer period of time than what I think everybody originally anticipated.
So now we're having to reset our models and really look at, okay, if inflation continues to run and trend this way, these are the things we need to do. I think the urgency that at least I'm bringing, and I do sense from Siegel as well, is that we have to look at this now. That's not something that you can kind of wait to look at until you get there, because you need to start doing and building the runway now to make sure that you're not getting in a situation where it goes negative immediately. And we have to make changes and start collecting funds now in order to prevent crisis in the future.
Senator Missy Irvin
Unverified
53:33
Thank you. Senator Irvin. Thank you, Madam Chair, again for the latitude to give me the opportunity to ask a question. I appreciate it very much. Just quickly, and you may have covered this and I was out of the room, but prescription drug claims grew 45%. That is incredible. I mean, and I know that medical claims increased 15%. Medicare Advantage premiums doubled, but why did they grow 45%? And then I guess that's my first question.
And then secondly, is there any kind of a link between what Senator Dismang, I share with him the wellness visit, but that it's meaningful. We've had those long conversations in previous meetings. We did the numbers, ran the cost to see how much that was going to be real expensive. but is there any link between a wellness visit where we review our medications annually and do you need this do you not need this and is there a link between that not having those visits to the increase in drug prescription drug claims so it could be a seagull question it could be a
question also to you but i just want to know why it was 45 percent increase in prescription drug claims and number two are we doing anything to control that because that is a significant significant increase so the only question
Speaker 33
54:52
I just want to make sure before I kind of dive into that the 45 percent
Speaker 10
54:58
growth I just wanted to confirm the start point versus the end point and and how that 45 was grown Patrick can you remind me of those dates
Speaker 62
55:09
yeah absolutely so back on slide three what
we were comparing was the 2026 current projection uh from pcg uh we were comparing that with millman's projection from two years ago for 2026 so it was 121 million and now it's jumped up to 175 million okay so i think i think a lot of it would be like if this table went back to 2023 and 2022 that's where you probably saw high trends and that's what impacted future forecasts um
but yeah grant you would know more on you know is it rebate related is it the a certain high cost drugs that have utilization like what what's really driving that i don't have that level of detail i
Speaker 127
55:58
just am seeing the change in the forecast there yeah
Speaker 10
56:02
thank you for that um because if i just think that's where some of the projections were wrong to begin with I
Speaker 18
56:08
think that's going to attribute to a lot of it but secondarily to that yes drugs are more expensive now than I think probably what they anticipated the growth in the
GLP-1 has been tremendous and it's a tremendous cost driver of our prescriptions currently with our memberships so yes I do think if we're doing more on the wellness end and in the annual visits and those things we would be able to intervene more instead of just jumping automatically to the glp1 um and um and those are the types of things that we need to be looking at how do we avoid and prevent diseases rather than wait to
Senator Missy Irvin
Unverified
56:49
treat them agree and thank you follow up 2022 and 2023 you
said was a bump are we are we accounting for that because i mean a lot of times the only way that you could at the time when COVID was hitting, not to go always back to that, but the only way you really were treating it
was a combination of medications. I mean, so I can understand like, if there's a significant event that's occurring with a broad majority of your population, you may experience something like that. Obviously cancer, more cancer, more treatment, that's very expensive with medication, but I just would love to see some trends there because I also know like
automatic refills sometimes when you have elderly parents they have they're on like an automatic refill whether they need it or not and a lot of times that's unless you call and stop it from happening and being refilled at the pharmacy they just continue just to refill it so I which is I guess convenient but also is costly so I'm just curious if there's any kind of in I know that we're talking about funding and the need for additional funding to secure the trust fund and to make sure all we need to talk about that but we also need to talk on the flip side about
controlling some of these areas of growth that we're seeing and then making sure that any projections are really based on real data versus like some sort of an event that occurred that's then going to mess up the future projections i think that's really significant for us to really kind of look at more closely um and then to the to the wellness visits i i really i do think that we should revisit that because it really is important. I'm just seeing more and more. The other thing too, it just has caught my attention in the story of this. Anyway,
a person that's on 14 different anti-anxiety and depression drugs, and they're all from different people. Um, I mean, that's not, we don't have one big system and doctors can't be held responsible not knowing what somebody else has prescribed that person, but we can look at that as a plan and really should, especially on those type of behavioral drugs that are perhaps being prescribed. I just think it's important for us to really, if we can, look at that and maybe emphasize, and I'm not sure if other states have done that,
but that may be a future thing for Siegel to look at to see if other states have kind of looked at that. Because it's, number one, yes, it's about saving money, but two, it's dangerous. It's really, really dangerous for people. And the doctors can't be held responsible if they don't know and the person's not being forthcoming to them or whatever. So I just think medications for those type of things really
Speaker 10
59:33
should be looked at. And Patrick can correct me, but I don't think the rebates are calculated in the pharmacy spend.
Is that correct, Patrick? Have you offset that Rx claims with the rebates? just the the claims yeah yeah um so that that is something we're not seeing the revenue side so there may be some offsetting there um as far as kind of the cost containments and i
Speaker 18
1:00:00
spoke to i mean we are doing more work now um than i think has ever been done on negotiating these contracts we are making our vendors sharpen their pencils we are looking at tools to layer in like post
prescription checks making sure that we are going through and figuring out hey wait a minute This person's taking four different dosages of GLP-1s from five different providers. What's going on here? That's not right. And we're putting in the appropriate measures to prevent those things once we're able to identify them. So we are working with all of our partners to be able to catch these things faster. I think technologies, even with like Blue Advantage and Navidus, they're getting more and more technologies that they're able to layer in
to help us do that work on the front end or quicker once the claim turnaround process happens. Thank
Representative Robin Lundstrum
Unverified
1:00:50
you. Okay. Thank you. Great discussion. This discussion will continue. I don't believe
we have any other business. I know you want to stay longer. I can tell. We're seeing no other business. We are adjourned.
Agenda
A. Call to Order
B. Consideration for Review and Approval of Actions by the State Board of Finance
EBD- [Exhibits B1 – B6]
C. Discussion of Health Insurance Funding and Medical Price Estimates [Exhibit C] - Patrick Klein, Vice President and Consulting Actuary, The Segal Group
D. Other Business
E. Adjournment
Documents
No documents posted.
Speakers
Representative Robin Lundstrum
Unverified
Speaker 3
Speaker 10
Speaker 18
Representative Howard M. Beaty, Jr.
Unverified
Speaker 33
Representative Andrew Collins
Unverified
Senator Jimmy Hickey, Jr
Unverified
Speaker 62
Speaker 80
Speaker 69
Senator Jonathan Dismang
Unverified
Speaker 61
Representative Denise Garner
Unverified
Speaker 97
Speaker 100
Senator Missy Irvin
Unverified
Senator Clarke Tucker
Unverified
Speaker 11
Speaker 27
Speaker 122
Senator Jim Petty
Unverified
Speaker 34
Speaker 127