ALC - State Insurance Programs Oversight Subcommittee
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- October 2, 2026
Representative Robin Lundstrum
Unverified
0:35
Ladies and gentlemen let's take our seat
and start our meeting. Representative Edees let's let's move this show
Representative Robin Lundstrum
Unverified
1:06
we're calling the meeting to order and we're gonna 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 one this is a rules review regarding independent vendors vendors and data audit process. Mr Wallace do you want to come up
we're on review of the rule regarding independent
Speaker 10
1:46
vendor data audit process. Good morning Grant Wallace, director of the employee benefits division and officef of property Risk. The proposed rule you have before you is in response to Act956 of2025 and this just requires that indie vendor that is working with the employee benefits division must subject their data to a data validation for my 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 turnover
Representative Robin Lundstrum
Unverified
2:31
for fiscal impact statements Thank you. Any questions from the members? right. Without objection this rule stands as reviewed. Next on deck we have approval for June, July and august EBd formulary recommendations.
Speaker 10
2:50
so we will start with June 2026 pharmacy formulary recommendations items or lines one312 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're just retiering these these are limited distribution drugs so we're just putting them in the specialty tier items618 is a new therapy which is showing significant reduction so we're adding that to the specialty item 19 we're adding there have
been some adjustments on pricing that now makes it work able for us to add it on items 20 through 27 are noodle markets that we're not covering at this point we need more evidence of efficacy itemtem28 is a new to market breast cancer drug that
Speaker 18
4:10
we're adding on at the specialty tier. I'll pause there and answer any questions. right Representative beatty
Representative Howard M. Beaty, Jr.
Unverified
4:28
thank you madam chairir. my question just for some information for myself I I was sitting here
and and and ask a ask a question where do these recommendations come from and and the process that you go through to bring those two is just to enlighten me
Speaker 10
4:44
so that I better understand the process so they originate from our pharmacy benefit manager Navidus 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
Representative Howard M. Beaty, Jr.
Unverified
5:00
the Ebd advisory committee, the state board of finance and ultimately you all. well I I'm just questioned that with some of the issues that we've had withavvitas and that that there is some follow up and review of their approval process and recommendations back to us and did they did they give reasons why outside of the a generics available do they do they give documented reasons
Speaker 10
5:23
why they make that recommendation right so what happens isnavidus gives all me and EBRx the
proposed formularies that they have reviewed monthly. EB R x goes through and does its own analysis and review and looks at their sciencebas and evidencebased 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
Speaker 18
5:50
a decision on what we bring forward for the review process based on the evidence that supports from both
Speaker 10
6:00
sides and kind of where what makes the most sense for our population
Representative Howard M. Beaty, Jr.
Unverified
6:04
at that time thank you for that answer it kind of clears that up
Representative Robin Lundstrum
Unverified
6:10
for me. Thank you. have a question is there a way to track the coupon rebates with the drugs that we're deciding to put on what the amount of
Speaker 10
6:17
that rebate's gonna be so we so there's two things yes we do track the rebates and and measure that and then we also do track the coupons separately. Those this will make sure that there are two different things. So where there's a coupon available we are tracking that
Speaker 18
6:32
utilization and the availability of that but then we also track the rebates on a per drug basis
Representative Robin Lundstrum
Unverified
6:37
as well OK 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 where
Speaker 18
6:46
they get a better rebate in some instances that's what you would want to do because it would be the lowest cost option for
Representative Robin Lundstrum
Unverified
6:52
the member and the plan at that point all right thank you any other questions? all right? without objection this rule is this is approved
Next number5, we have colonial lifefesurance Company contract amendment.
Speaker 33
7:08
so we need to do do July and august as well so sorry do July
Speaker 10
7:14
and August OK. items one and so I'm now in July pharmacy formulary item 1 and2 again this is well we'll so item 1 through3. these are new generics that have come to the market so we are shifting that class to cover that 1 items4 through 8 are new
to market that we're not covering at this time because we already covered the lowest cost alternative item 9 I I wanna highlight that one this is a administrated 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 holdup 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 two 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 9 and under then you'll see items 14 and 15 we're 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 they should just including a new formula formulation with the FDA approval items 1el through 13 these are new to market or manufactureer has increased pricing so we're moving those to not covered itemtem14. we're 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 immunomodulators I really bumbleled 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
Speaker 18
10:12
available to treat growth to use for growth hormones so we still have that available I'll pause before we have to go to the
Representative Robin Lundstrum
Unverified
10:25
medical any questions from members all right well take that as reviewed OK go
Speaker 10
10:33
to the medical drug recommendations and again just to make sure these are drugs that are administered in a clinical setting these are gonna be your
higher cost drugs you'll see items 1 through5 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 items6 through 12 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 se7 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 and emergency type situation we don't want to make sure make sure we have any issues in getting that access items 21 and22 are new to market that we're going to exclude
item 23 we are going to add for the umivV formulation only through medical the subcucu subcutaneous is excluded on the pharmacy is already excluded the 24 and25 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 gonna exclude theivV formulation and 29 is new to market that we're going to exclude and30 and31 we are adding due to drug shortages in the market any questions right
Representative Robin Lundstrum
Unverified
13:16
I think you're good
we'll move that as And number5 colonial
life accidents life and accident insurance company
Speaker 10
13:28
contract. OK so this is a one year extension of the colonial lifefereement 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 higher level of coverages that they selfpay for the rates are staying level from
Speaker 18
13:49
2026 into 2027 and with that we'd be glad to answer any questions. Members all right
Representative Robin Lundstrum
Unverified
14:01
we'll move that as reviewed Number6 is
Speaker 10
14:07
Unitedhealthcaretract this is the one year extension of the United Healthcareg agreement they do our group medicare advantage plan for our post65 retirees on the public school and state employee side this extension includes the recommendation that Seegal 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 not 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 to390 dollars and the public school retirees will increase from $200 to352 dollars. Keep in mind that this is a 910 cost share between the state and the retiree so the
members for state retirees would pay39 dollars a month instead of $28 a month and
Speaker 18
15:08
public school retirees will pay35 dollars a month instead of $20 a month.'d be glad to answer any questions. Members are atpresentative
Representative Andrew Collins
Unverified
15:22
Collins thank you madam chairir. So and I remember reading something about this and and and being aware this was coming are you saying that the the 280 to390 and the 200 to352s essentially
collectively that's the only hit and it's gonna be shared by the state and the beneficiary or is there anything else in this renewal that's gonna be different more of a burden on either the state or beneficiaries or or other no this is it this is the full extent of it and this is for one year right yes sir ok 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 where we're going to need to continue to do this
in subsequent years or is this just a a one off rip the band-aid and and then hopefully things
Speaker 10
16:10
will stabilize 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 I think
Speaker 18
16:22
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 gonna operate we'll be able to better predict what those increases are and it won't be nearly as
Representative Andrew Collins
Unverified
16:47
sharp in the out ears. OK and last question and then and then I'll get out do you think that that we have the right set up here for our our state and public school employees thanks members
Representative Robin Lundstrum
Unverified
17:02
any other questions all right without objection this
contract amendment stands as reviewed. Let's go
Speaker 10
17:10
to number6. OK, now we're shifting over to the office of propertyrisk. this is a new contract and this is with crowezesnick 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 is55,000 per year and 165,000 over the three year period. be glad to answer any questions
Representative Robin Lundstrum
Unverified
17:40
I'm just impressed you can pronounce that we have one question senator hickey you said you put
Senator Jimmy Hickey, Jr
Unverified
17:46
this out for like a RQ is that correct that mean responses did we get back from different vendors on this? Do you remember? or was this a sole one? I think this
Speaker 18
17:56
was the only one that responded to this RfQ. We put it out twice ok thank
Representative Robin Lundstrum
Unverified
18:06
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 Seegalroup 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 can you hear me yes you're up on deck.ect
Speaker 62
18:42
right. great. well thanks for having us today ummpatrick Klein with the Seegelroup and we're gonna present our analysis of the public school plans funding reserve all that good stuff so we presented this a couple of weeks ago we're here for the subcommittee to present it again. One thing that I wanna make sure that it's 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 the any expense projections here other questions that came up on 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 forth this fund to increase revenue or even decrease revenue historically going back a couple of years there was a300 dollars that it dropped down to 23,450 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 to350. as of January2026 and then most recently as of July2026 it increased again to400. 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 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 and25. 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 cost 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 the 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 the way the rates are set at400 dollars 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 that increase if we don't have revenue that increases that coincides with that expense increase the fund
is gonna become that fund balance is gonna drop and it could be jeopardized so if we don't do anything for 2027 we're projecting31 million dollars deficit that would cut into those reserves if we if we don't have any funding changes out to 2029, the reserve will be completely gone so so we did run some various scenarios just to illustrate what what are some funding
options to make sure those reserves align with the target reserve that we've we've established 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 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 and25 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 where that 17% over the expectation and then those losses or those those high trends also impact the future year projections so you can see those
are up in the 22 to27% range right so we're gonna 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 the a breakout of the the key expense items and then the total
and then that orange rowe 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 that's your fund balance or the 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 that target there. and this first baseline scenario is is just if you if you do no changes at all so that400
dollars minimum district contribution is held flat throughout the projection period, what happens to the numbers Obviously we're gonna eat into that fund balance pretty quickly and again at 2026 we're in a great spot.188 million dollars in assets where our target is73 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 a33 million dollars 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 can get out of hand pretty quickly if if we aren't looking ahead and planning on making some changes to the
Speaker 80
25:22
funding this slide shows the the three key pieces of the of the funding
Speaker 62
25:28
for the plan so we've got our employee contributions we had increase in for
Speaker 80
25:33
Cy2027 before that we had a couple of years where the the rates were held flat
Speaker 69
25:39
and then we had a decrease we're trying to get to or EBD was trying to
Speaker 62
25:45
get to a a set subsidy percentage this Department of Education funding that is 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 gonna be much higher than they would be if all three pieces were increasing at the same
Speaker 62
26:37
a 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 there's400 dollars would need to
become485 then589 then714 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 your assets balanced with your target reserve. and again that assumes that you're 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 that district funding amount that was $142 million to have 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 that's $118 million target at the end of 2031. that is all I had prepared to present if there's any questions I'd be happy to take them we do have some questions
Representative Robin Lundstrum
Unverified
28:21
first up on deck is senator Dishmain. thank you thank you for
Senator Jonathan Dismang
Unverified
28:26
the presentation and this is it's kind of on what we're going to
do on the future and how y'all were project and how it maybe should tie in so there was announcementcms has changed the way that they look at our 1115 waiver we're gonna have to you know 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 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 Yeah, I'm not I'm not
Speaker 62
29:28
super familiar with the changes that you're you're mentioning
but yeah we would be happy to 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 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 on that analysis as well. Yeah I mean at this point just to
Senator Jonathan Dismang
Unverified
29:56
be 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 but or to 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 what the changes will lead to if you guys could send it send
Speaker 62
30:28
us some more information and then we can take a look and and let us know what what kind of
Speaker 61
30:36
data requests we would have or how we how we'll go about attacking
Representative Robin Lundstrum
Unverified
30:43
the analysis that's a good request. thank you to Senator Dismay.
Representative Denise Garner
Unverified
30:48
umpresentative Ggarner thank you madam chairir. 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 grew the claims grew45%
if if we're looking at the 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 where
Speaker 80
31:22
did the45% come from what what sure yeah so we were we were looking at
Speaker 62
31:28
back in 2024 what was projected for for the current year 2026 versus what the current projection is so it's really the 175 divided by the 121
I believe that should get you45%. OK
Representative Denise Garner
Unverified
31:46
great thank you just need to know where that calculation came from.
Representative Robin Lundstrum
Unverified
31:55
thank you. right thank you Representative Ggarner. 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 mess you expect 2 or3 or4% but seventeen's a lot so how do we know these next ones are gonna be on point and not another 17%
Speaker 62
32:26
question 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 Milllman's projections back in 2024 versus
the actual that came through
Representative Robin Lundstrum
Unverified
32:45
so walk me through yeah I mean if if you and
Speaker 80
32:49
that's why you need a sizable reserve and that's why we're you know we're we're trying
Speaker 62
32:56
to get a fund balance that's around that $100 million threshold 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 where trends are higher than expected and you can be in a financial bind if you don't have
Speaker 100
33:26
those reserve s properly funded all right senator hickey
Representative Robin Lundstrum
Unverified
33:28
will be for Wallace after the after this 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 of31 million projected by year of 2027 unless
we make some decisions is that the bottom line
Speaker 80
33:53
of this I'm just trying to grasp the full so you have a
Speaker 62
33:58
deficit 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 2028 but that33 if you don't do anything in 2028 or 2029 that deficit snowballs and then very quickly the the fund is gonna be under some serious
Representative Robin Lundstrum
Unverified
34:29
pressure OK we actually lowered the expenses in 202223. 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
Speaker 62
34:51
in this situation. it looks like the minimum district contribution was reduced from300 dollars to34 dollars50 cents in fiscal year 2024. that's correct right senator Irwin thank you madam Chair. I
Representative Robin Lundstrum
Unverified
35:02
know I'm not on the subcommittee. I I
Senator Missy Irvin
Unverified
35:06
was previously on the subcommittee and and we d we did a lot of work and dug in my
question thank you madam chair for letting me ask a question but toegegal 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 we made some important steps and then we did important work but we're back here
again talking about the same problems that we were facing then.
Speaker 62
35:57
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 multiyear
projection, looked 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 a sizable surplus so it's it's much different than where we were years ago but to your point I think if if nothing is done we are gonna be in the same position that we were a couple of years ago and there are gonna be some sizable increases needed if we don't ask in the near term so
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 theres 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 but yeah that's that's really and 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
where things could get you know bad bad OK no
Senator Missy Irvin
Unverified
37:23
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
Senator Clarke Tucker
Unverified
37:59
do looking forward thank you Thank you Senator Tucker Thank you thank you madam chair. as we mentioned this question
is probably from Mr.alss although I'm not sure exactly but as you mentioned you know we're gonna 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 theegal group and and and you'll make a recommendation based on the raises and minimum district
contribution or how much should come from AdE or employee funding and then and then you'll bring that to this committee is
Speaker 10
38:27
that just how that process works so it's kind of both process es that would go on one we're going to bring you all cost containment measures I I dare say
Speaker 18
38:35
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 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 kind of things and like has been mentioned Seegal obviously is
your consultant. they work for you all they're gonna be doing and recommending things as well we work well with them in 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 so it's kind of
Senator Clarke Tucker
Unverified
39:39
all of the above that's great that's that's exactly what I was looking for and I guess the follow up is
Speaker 10
39:45
what's the general timeline for that? so it's between now and January honestly to figure out what we need to do funding levels to bring you
Speaker 18
39:51
all to consider during the general session and then what other kind
of policy recommendations or program changes that 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 y'all would review or going in and layering in because we already have them and we just need to turn them on so that's kind of the work that we're doing now thank you Thank you Senator Dissmain you're you're in the queue all right senator hickey you can go for it
Senator Jimmy Hickey, Jr
Unverified
40:26
ator uck er may have may have hit around it but and that was my thing and
Senator Irvin 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, 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 reserve's gonna drop out in two years from now or3 years from now that you need to go ahead and bring that plan and based on what Senator Tucker said is that your intent to go ahead and and bring us a plan and what you're going to recommend as EBd to this committee so we can go ahead and start hashing that out before we get into session
Speaker 18
41:20
Right I'm working on that now and hopefully my intent is to be able to have that turned into you 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
Senator Jimmy Hickey, Jr
Unverified
41:35
have it inoctober. OK, well that's great and again it may be and I hope we cant 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 we made 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 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 it's 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 funn 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 for sure that we don't need to look at that to try to I I just don't know that Department of Education is 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 and no
know what the increases there are and exactly how much it is because if I remember right
they do have a large fund balance so I won't speak for their money
Speaker 18
43:38
but I think what 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 number4 and I think at the end of the day we just need to make sure that we get to4 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
Speaker 11
44:00
figure out how we do that and what makes the most sense so that I just want you to know that
Senator Jimmy Hickey, Jr
Unverified
44:08
yes willing to to have those conversations 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 edd and then they're sending those to you
Speaker 10
44:21
all is that the way is that the process so there was a change in this past session and as of July1st the department of Education is sending us directly the district minimum
Speaker 18
44:32
contribution so that money is it's not sent to the district. it comes out of some of the money that the department has that I 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. OK I'd also like to know from the department of
Senator Jimmy Hickey, Jr
Unverified
44:56
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 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 click it later and somebody's 20,304,060 days
behind and stuff like that without us knowing so we were having that issue with the districts I
Speaker 27
45:22
think this actually solves that because the districts
Speaker 18
45:25
are not involved it's coming off the top straight to us from the department. so they're just taking they're taking it
Senator Jimmy Hickey, Jr
Unverified
45:32
out of 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 what you think I believe that's how it's working'd like to get a
Representative Robin Lundstrum
Unverified
45:49
little more information I wanna make sure that's exactly correct. OK, thank you sir
Speaker 122
45:52
would you send him that information and share it with
Representative Robin Lundstrum
Unverified
45:55
everybody else. I will reach out to the department of Education and understand that thank you for reaching out.
Senator Jonathan Dismang
Unverified
46:00
Senator Dimain and so that really that was one of my questions is how much more money is Ebd receiving because we're direct paying versus lying
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 people basis assigned a dollar value to how much we were paying for health insurance and so the district's 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 signed 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 it 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 as 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 you're 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 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 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 I've been concerned for a long time about not doing wellness viss visits and the fact that we eliminate the incentive for that 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 away with 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 bef 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 gonna let that
snow bowle on snowballing 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 who's utilizing and and who's not and because if it's low then we're kind of going to be flying blind. So
Speaker 10
48:56
I think in response to kind of both of those one it's kind of too new on the department funding you
Speaker 18
49:01
know they just took that over in July. 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
Speaker 10
49:14
as the wellness visits and thank you for bringing that 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
Speaker 18
49:28
we're starting here and we were able to get to here that is something that I've been strongly focus ed 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 programme that was at the department of health has 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 lu e advantage that will go affect 11 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 rewardbas 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 healthcare costs thank you Senator Petty, I believe
Representative Robin Lundstrum
Unverified
50:42
you had a question and then we'll go to Senator Irwin.
Senator Jim Petty
Unverified
50:48
thank you madam chairir. So this is more of a a a request and a question I I tried to to recreate what the reserve balance was when we made the decision to lower the premiums or the minimum contribution really doesn't matter but but based on what I'm seeing based on projections and so forth. I'd like to see us and the actuary a Seeggull 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 we're we're in a lot more aggressive mode of of riding the ship whereas if we looked at the you know the targeted reserve balance and we had a little more runway to to to fix this that would be but as volatile as the the actual results have been and and what the projected growth is going to be I think, I think we need to revisit that targeted reserve balance and and maybe
not err on the on the lower side
Speaker 34
51:52
of that andir I am aligned with you. I know where the range is is s
Speaker 18
51:57
statutorily I actually and if you kind of back into the math that's about3 months of operating I more err 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 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 actct and other federal policies and just global markets 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 everybodydy was wondering what is the rebound of off of people that have put procedures
off or that have put healthcare 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 OK if inflation continues to run a 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 Seegal 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 it goes negative immediately and we have to make changes and start collecting funds now in order to prevent crisis in the future. Thank you Senator Irvin thank you madam
Senator Missy Irvin
Unverified
53:40
chairir 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
grew45%. that is incredible. I mean and I know that medical claims increase 15% medicare advantage premiums doubled but why why did they grow45% and then I I guess that's my first question and then secondly is there any kind of a link between what senator Dising 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 costs 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 segal question it could be a question also to you but I just want to know why it was45% increase in prescription drug claims and number 2, are we doing anything to control that
that is a significant significant increase.
Speaker 33
54:57
so the only question I just want to make sure before I kind of
Speaker 10
55:03
dive into that the45% growth. I just wanted to confirm the start point versus the endpoint and and how that45 was grown. Patrick, can you
Speaker 62
55:14
remind me of those dates absolutely back on slide three what we were comparing was the 2026 current projection from PCG
we're comparing that withillmann's projection from two years ago for 2026 so it was 121 million and now it's jumped up to 175 million so I think I think a lot of it would be like if if this table went back to 2023 and2022 that's where you probably saw high trends and that's what impacted future forecasts but yeah grant you would know more on you know is it rebate related is it you know certain high costs drugs that have
utilization like what what's really driving that I don't have that level of detail I just
Speaker 127
56:03
am'm seeing the change in in the forecast there. yeah thank
Speaker 10
56:07
you for that because if I just think that's where some of the projections were wrong to begin with I think
Speaker 18
56:13
that's gonna 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 GOP one has been tremendous and it's a tremendous cost driver of our
prescriptions currently with our our memberships. So yes I do think if we're doing more on the wellness in and and the annual visits and those things weu we would be able to intervene more instead of just jumping automatically to the GOP one. and 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 treat them.ggre and thank
Senator Missy Irvin
Unverified
56:54
you follow up 2022 and2023 you said it 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 can more cancer more treatment that's very expensive with medication but I I just would love to see some trends
there because I also know like auto ma tic refills sometimes when you have elderly parents they had 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 it's costly. So I'm just curious if there's any kind of 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 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 the story of this anyway, a person that's on 14 different anti-anxiety and depression drugs and they're all from different people I mean that's not we don't have one big system and doctors can't be held responsible for not knowing what somebody else has prescribed that person but we can look at that as a plan and 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 Seegalll to look at to see if other states have kind of looked at that because it's 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 behave medications for those type of things really should be looked
Speaker 10
59:39
at and itpatrick can correct me but I don't think the rebates are calculated in the the pharmacy spend is that correctpatrick? have you offset that Rxxx claims with the rebates just the the claims yeah so that that is something we're not seeing the revenue side so there may be some offsetting there as far as kind of the cost containments that I spoke to I mean we are
Speaker 18
1:00:05
doing more work now 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 taking4 different dosages of GLP1s from five different providers what's going on here that that 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 I mean we are working with all of our partners to be able to catch these things
faster. I think technologies even with like blue advantage andnavauss 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 a quicker once the claim turnaround process happens thank
Representative Robin Lundstrum
Unverified
1:00:55
you great discussion this discussion will continue. I don't believe we have any other
business I know 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