ALC - State Insurance Programs Oversight Subcommittee
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We will call the state insurance programs oversight.
subcommittee to order for June 17th our the chair sees a quorum the first item is consideration for review and approval of the actions by the State Board of Finance and mr. Grant Wallace is going to present that so mr. Wallace if you would go through the drill and introduce
yourself for the record and you may
Representative Keith Brooks
Unverified
2:01
proceed Grant Wallace director of the employee benefits division and office of property risk so good morning we'll start with item B1 this will be the March and April employee benefits division formulary recommendations so if we will start with March you'll see item one is a generic launch and we're just removing
the brand the ingredient generic as well items two through six are lower cost options that we're just restructuring to make sure that we have the lower cost preferred on our formulary item 7 through 16 is a relook at migraine medications as a whole and kind of doing some maintenance work maintenance work around those particular medications the 7 through 11 or orals 12 through 16 are
injectables then you'll see items 17 through 22 are new to market drugs that we are leaving not covered until we can get some more evidence around efficacy and cost balance then items 23 and 24 we are moving towards covering the lower costs alternative with the strongest efficacy I'll be glad to answer any questions on March
see none you may proceed with April
Representative Keith Brooks
Unverified
3:57
okay going to April you'll see items one through three are going to be not covered we do have alternatives that we are covering already on the formulary then you'll see items four through six
we're just re-tiering and getting more in alignment with a price erosion adding in quantity limits to just make sure we've got appropriate containment on the dosage items seven through nine were not covered either they're no longer on the market or have been removed from the market or are new to market items 10 through 16 are using to cover the lower cost
generic and removing the brand then you'll see items 17 through 20 again we're just doing some maintenance work to prefer the generic medication in in these particular diabetes drugs any questions on april members any questions seeing no one
in the queue i would entertain a motion to approve
Have a motion. Second. All right. Any discussion? All those in favor of the motion, let
Representative Keith Brooks
Unverified
5:36
it be known by aye. Any opposed? Motion carries. Okay. The next item of B2. This is our cell and gene therapy policy. We have taken a different approach as we are looking at these particular treatment options. I kind of lovingly say this is the wild, wild west of medications right now.
There's a lot of work that is going on with cell and gene therapies. So what we are proposing to do is actually exclude all cell and gene therapies at this point so that they run through our prior authorization and approval process. This just gives us better insight into the ones that we are actually utilizing on our plan and gives us better control and appropriate utilization of these particular treatment options within our population.
As you can see, some of these medications run into the multiple millions of dollars, so this is just one way for us to make sure that we have better insight to when claims that are coming at such a high dollar are going to be run through the plan.
Chair
Unverified
6:46
Representative Cavanaugh you're recognized. Thank you, mr. Chair
Representative Frances Cavenaugh
Unverified
6:49
over here So my question is going through this process and I understand why you're doing it in this way is will it slow down?
How much will it slow down the approval of these because I know some of these Dealing with this type of thing. We need approval as quick as possible if it's really going to be effective So how slow is that
Representative Keith Brooks
Unverified
7:10
going to slow that process down? It should not slow the process down any it's just we're getting Earlier insight into what's coming through. We have no anticipation of taking you know more than 24 hours at most I would think to be able to review and get these processes. Thank you
Representative Cindy Crawford
Unverified
7:30
Representative Crawford you're recognized. Thank you. I Guess my question is from personal experience that you've quit paying on a lot of drugs and And it seems like we're getting less for our money. Still, the premiums are the same or they go up, but then we have to fight to get the medication we need. Can you help me with that? So
Representative Keith Brooks
Unverified
7:56
I will say when we have switched to a new pharmacy benefit manager,
yes, there was an overall formulary change.
The formulary is an active living, breathing document. We are always looking to try to figure out how to manage those costs, contain
those costs, finding the lowest cost alternatives, moving to generics where generics are appropriate. So yes, there is that kind of constant shifting that's going on. But in any case, if there is a particular medicine that is proving effective and a treatment that's been a long-term treatment, we always have the appeal process for our members to utilize to be able to maintain
coverage of that particular drug. Okay. Could you and
Representative Cindy Crawford
Unverified
8:37
I talk offline, please? Absolutely. Thank you. Senator Hickey, you're recognized. Right. Thank you, Mr. Chair.
Senator Jimmy Hickey, Jr
Unverified
8:47
And I know I can see that it's on here, but I think it might be prudent to say it. So we have no member that's going to be impacted by this, it appears like. Is that correct? That's correct, sir. Y'all have done your due diligence, and at this point we have nobody using these particular drugs. Correct, sir. Okay. Thank you for that.
Thank you, Senator Hickey. and and just to follow up to
that this is this is not an absolute exclusion it's just not an automatic coverage uh to allow for review and and and obviously you or i are not going to make that call you're going to have the professionals that are involved in evaluating the efficacy and the you know advancement of these uh therapies absolutely
sir thank you all right yes am i co-chair.
Representative Robin Lundstrum
Unverified
9:33
Just to be clear, we're not denying people coverage. We're just checking the process
and we're going to get back
to them in 24 hours to let them
Representative Keith Brooks
Unverified
9:43
know that they're either excluded or approved? Correct. It's just giving us insight and making sure that we know everything that's going on with that case and that this truly is the most effective
Speaker 47
9:54
treatment at that particular point in time. If
Representative Keith Brooks
Unverified
9:57
someone's denied, what's the next step up? There's an appeal process. There's actually three layers of appeal that they can go through with our third-party administrator then it comes over to the employee benefits where they have another two layers of review of appeal for this
Representative Robin Lundstrum
Unverified
10:11
particular treatment okay and what's the speed on those because some of these really do
Representative Keith Brooks
Unverified
10:17
time is right 30 days is probably inappropriate but on some of these cases if there is a medical emergency they are expedited in the review so i would expect any of these particular if we're at the point of looking for these they would be the expedited review that has happened as fast as a week okay all right
thank you all right thank you any other questions if not i need a motion to
approve or enter have a motion a
second any discussion on the motion if not all those let in favor let it be known by aye any opposed motion carries next up is the review of the uams professional consultant services contract amendment so this is
Representative Keith Brooks
Unverified
11:06
just extending our current contract for one additional year it's at a value of 1.8 million for the year be glad to answer well
this is our pharmacy benefit consultant they help us manage the relationship with our pharmacy benefit manager they
provide insight and expertise on the formulary design the appeals that run through for pharmacy related requests and help overall
manage and and help see how the pharmacy benefit is operating for our members be glad to answer any questions representative kavanaugh you are
Representative Frances Cavenaugh
Unverified
11:47
want to make sure how much
Representative Keith Brooks
Unverified
11:49
is this contract for this one should be adding 1.8 million for the next fiscal year are we
Representative Frances Cavenaugh
Unverified
12:00
looking at b3 yes because it's showing an amendment uh is for 2.596 million i
Representative Keith Brooks
Unverified
12:04
think that is also inclusive of some optional services that we may or may not um engage in so i think when the accounting staff filled this out they maxed it out so that's why mine is at 1.8 and this is at 2.5 because that's a substantial difference yes ma'am so that they have offered to do some things
around coupon and rebate management that we're still evaluating but i would come to you all if we do decide to engage in those optional services i
Representative Frances Cavenaugh
Unverified
12:35
have a question for staff did this go through review yesterday
Representative Keith Brooks
Unverified
12:45
the just for EBD the the way that the rules and everything are set up with state insurance you all act as all the other committees for the purposes of the employee
benefits division and office of property risk this is how my understanding has been
Representative Frances Cavenaugh
Unverified
13:02
okay because if he's saying it's 1.8 and we're going to approve a 2.5 we need to approve what it is and then if you have to come back and make another amendment the way this is we don't have we're approving it and you don't have to come back well
Speaker 23
13:18
so I'll go ahead and make the request to forget that I said 1.8 because I was just
Representative Keith Brooks
Unverified
13:24
looking at the raw services it will be for the 2.5 that is what I'm asking for
Representative Frances Cavenaugh
Unverified
13:28
you all to approve okay because that's what I'm trying to make sense because what
Representative Keith Brooks
Unverified
13:33
you're saying it's not matching what's on the paper and i apologize for that confusion i was looking at just the the standard services i i apologize for saying that and confusing we are asking
Representative Frances Cavenaugh
Unverified
13:44
for the 2.5 okay and it's increasing because you're
Representative Keith Brooks
Unverified
13:47
adding scope there would be two new items of scope
Representative Frances Cavenaugh
Unverified
13:50
if we decide that's not listed on here it doesn't show that
Representative Keith Brooks
Unverified
13:54
you're adding any scope and so that kind of the unfortunate way that you all get the information the underlying contract that goes with
this does have some of those additional items where that scope options for us around coupons and rebates were in
that are included in that document okay
Representative Frances Cavenaugh
Unverified
14:13
enter in this verbiage for us to look at that's entered in we don't enter that in I think that's stuff that y'all enter in but I just want to make sure that we know what we're yes ma'am willing to approve yes ma'am okay
thank you so so just to clarify your you are asking for the
approval of amendment four of 2.596 yes million yes sir uh which includes some uh elements of the contract that you may or may not implement and if if you do implement them you don't have to come back if you don't implement them then the contract is just under the budget right all
right Senator Hickey you're recognized so and I'm on the same
Senator Jimmy Hickey, Jr
Unverified
15:00
thing so this is just a summary the contract itself what it does it actually have a
dollar figure in it that that's where the money okay so the
the contract you have has a 1.8 million and the optional services are the difference between the 1.8 in the 2.5 okay
and and I don't and I don't know maybe this is something for staff or Miss Garrity or somebody so if you've got 1.8 in the in the written contract and we're going to approve two point two point six basically do we need to have give him some authorization to to amend that written contract is that
what we're going to be doing here I don't want to get into a situation where the vendor, although I know it's the University of Arkansas, UAMS, so that
they come back and say, no, no, that committee approved them for a higher number than what we're doing. If
Speaker 75
15:58
you want, they can resubmit it, and approval can do that submission, and we'll be part of
Senator Jimmy Hickey, Jr
Unverified
16:07
the report on Friday. Okay. I think that, personally, I think that
would be best if you just resubmit it, and then And we approve that on Friday at the correct number.
Because it would probably be better, I think, if
you were to decide to do that, that you just come back and bring that before us to up that. Would that not be
correct? However you all want me to add. Mr. Chair, I think that would
be more wise. Okay, and I also have a clarification question for staff. So the underlying contract that we're referring to refers to the 1.8 for the basic services that Mr. Wallace was talking about, they don't have the authority to take that 1.8
and then spend another whatever $700,000 or whatever that number is on those basic services. You could only spend the $2.596 million on the contract if they did the additional services per the underlying contract. Is that correct?
I'd need to look at it. Okay. you are correct though yes sir that's
how it is written okay so would you restate what your would you like to well I mean if I think that I think
Senator Jimmy Hickey, Jr
Unverified
17:24
personally I believe that whatever our approval is should match up with the written contract so and if the written contract has the the
Representative Keith Brooks
Unverified
17:35
1.8 in there it It does, I think if we were to resubmit, we can clear up the objective language. We wouldn't necessarily have to change the amount. We would just clear up this, as Representative Kavanaugh pointed out, what we wrote in here. We could break that out. The initial scope would be for the 1.8, and then the optional services, which is the difference, would be more clearly outlined that equals up to the 2.5.
If you would allow us to do that, would that help address the concerns? I guess the only
Senator Jimmy Hickey, Jr
Unverified
18:09
thing is, I guess if the committee is comfortable with just giving an approval for that or if we think
it would be better that if you brought those back, you know, if you did decide to do them. You know, it kind of takes all of that off of you at that point and at least puts the committee process back in place for that. Yes, sir. The flip side is
Representative Keith Brooks
Unverified
18:28
that I would have to take them away from our PBM in order to do that. So there is kind of the other side of the shoe that would have to fall.
Representative Robin Lundstrum
Unverified
18:37
Okay. Don't follow that. What do you mean take it away? What
Representative Keith Brooks
Unverified
18:46
do you mean take it away and then come back? So the services that are considered optional, that were proposed optional around the coupon program and the prior authorization and kind of that work, currently Navitus Health Solutions is doing it. So it would be taking it away from them and moving it over to EBRX if we were to engage the optional services.
We went ahead and had EBRX added into this because their contract is up at the end of the month and we didn't want to get into a part of the year and get slowed down in having those services covered for our members. So we went ahead, put it in here as optional services while we continue to negotiate with Navidus on their particular scope of work for their renewal that is coming up at the end of the year i'll interject
here and then senator boyd is in the queue yeah he's over there um so
had this been written the way you're proposing to revise it i don't
know that we would have necessarily had the question. And my concern was the contract as it was written. And it sounds like you've confirmed that the contract's written. And just because we approve an amendment for $2.596 million doesn't mean you can spend the full $2.596 million unless you come back to us and wanted to change it from basic services, I mean, from coupon service or whatever you call it,
to basic services at that point but if if it was presented today as the 2.596 uh including the correct language or the the more accurate language we probably i'm thinking would have approved
it at that point uh anyway so and had i not stumbled over my figures
Speaker 89
20:39
i probably would have clearly explained it earlier so i apologize for
Senator Justin Boyd
Unverified
20:48
that senator boyd you're recognized Thank you, Mr. Chair. Thank you, Mr. Wallace, for bringing this up. I'm excited to hear that you're actually looking at this. Our per member per month has gradually increased about $30 or more over what it was when the process changed.
One of the concerns that I've had, and I don't want to speak for Representative Aker, but what he's relayed to me is one of our biggest concerns with how the original contract was structured is Navitus keeps 20% of those, and that wasn't happening before when UAMS was doing it. So $30 per member per month, if we can rein that back in, we're going to recover $700,000 very quickly, wouldn't you agree?
Representative Keith Brooks
Unverified
21:33
I think there are great opportunities that we can contain the growth in that particular spend.
Senator Justin Boyd
Unverified
21:39
Yes, sir. I would agree with you. Let me say I am proud that you are looking at this. I feel like this is the first time in this conversation where I've really felt listened to and an opportunity to make a contract that had some concerns much better. So I applaud that, and I mean that as sincerely as I can. And so please keep up the
good work. Thank you. Thank you, sir. representative
Representative Frances Cavenaugh
Unverified
22:05
kavanaugh you are recognized thank you something you said also had a question come up
you already have a contract in place
to do these optional services correct
Representative Keith Brooks
Unverified
22:14
right navidus is currently managing though these particular services that would be option that are currently listed as optional with ebrx okay when does that contract end it will end in december of this year So why do we need
Representative Frances Cavenaugh
Unverified
22:29
two contracts? So we're not, that's why
Representative Keith Brooks
Unverified
22:32
they're optional. We're not trying to get two vendors doing the same work. I just want to make sure that I have a safety net in case we decide and negotiate doing
something different with Navitus. I have a vendor ready and able to take that up in midstream, and we're not going to disrupt the processes that are in place to take care of these particular services for our members. Then
Representative Frances Cavenaugh
Unverified
22:59
why would you not go through the process of RFP, get your contracts, you've got until December to do that, rather than doing it now as an optional that does not match what the dollar amount is on the contract that you're signing with the UAMS?
Representative Keith Brooks
Unverified
23:17
How come we're not doing it that way? Because you're either going to continue to have them with your pharmacy benefit manager, or we would utilize the resources that are at UAMS to do these services. There really isn't kind of an independent coupon management program or prior authorization program out there. So the RFP, really, that process wouldn't work. You would do a sole source? We would end up doing what we're doing with UAMS.
We would go back and say, hey, we don't want to do the pharmacy benefit manager process. you're capable and really the ones that would
Representative Frances Cavenaugh
Unverified
23:56
be in state. So are you saying that you don't want to renew the contract that's coming
Representative Keith Brooks
Unverified
24:01
up in the end of December with your current provider? Absolutely not. I am satisfied with the services that Navidus Health Solutions is providing. I want to continue. They just may not continue the full menu of services that
they're doing right now. To Senator Boyd's point, we want to try to, like, figure out areas that are driving costs of that particular contract.
How can we either rein them in or put some caps and contain the growth in the spend in those
services? And this is just one avenue that we have to be able to do that overall.
Representative Frances Cavenaugh
Unverified
24:32
Okay, I guess I'm just confused because if your contract's for 1.8 and these are optional services you may never use, but you already have a contract in place that's already doing those, if you're wanting to negotiate that with that provider, I guess I'm confused why we're doing two contracts, to be honest with you.
Senator Jonathan Dismang
Unverified
24:50
Sorry about that. Senator Dismaine, you're recognized. Bear with me. I've lost my screen here. There we go. Now
you're good. Thank you, Mr. Chairman. I just want to make sure that I'm following, because I think if I'm going to maybe read between the lines of what you're saying is you have these optional services in
place. You have a contract coming up in December that you're negotiating right now and to Senator Boyd's point maybe there's percentages that we don't like or things that we don't like and so having this optional services over here allows you to create leverage as you're negotiating the next contract to get the best rate for those that are in the program. Yes sir. And so really and if If you have to can or scrap whatever's working over here with your current provider, then
you have this backup. But before you can implement that backup on those optional services, you'll be coming before us saying, hey, look, we're not going to use this entity anymore, and we're going to use these optional services, and we'll need this amount of money to do that, in which you'll have to make the case that that's a better deal for the clients than or the program than what you were getting under Navidus. Yes sir. And so if we take this away in some way if we I mean you I
think it's really important that you structure the wording that it needs to be structured because I don't want to take away your ability to negotiate the best rate in this program yes sir okay and am i missing anything and so that was just as i'm listening to the conversation and that's the way that i understand things regardless of what i may have been stumbled over earlier on at the end of the day this optional services lets you drive down the cost for the contract that's up for renewal in december or at least it gives you a leverage point
to help create a more competitive situation yes sir okay thank you senator hickey you're recognized thank you
Chair (Senator Jimmy Hickey, Jr)
Unverified
27:09
mr. chair well i guess that's where i'm i'm struggling a little here and i appreciate that we're going to bring this back
Senator Jimmy Hickey, Jr
Unverified
27:15
before us but if we approve the whole point the whole 2-6 today so we've already approved the whole 2-6 and you decide you want to do this and you bring it back to us what are you going to be asking us
to do at that point because we've already approved the 2-6
Representative Keith Brooks
Unverified
27:33
it would be canceling the services provided for from the old vendor and acknowledging that we're going to move those and engage the optional services under this particular vendor okay and if we were to which i
Senator Jimmy Hickey, Jr
Unverified
27:44
wouldn't suspect we would but if we were to decide not to do that then at that point we
just although we've approved the two six we would stick at the one eight or whatever it may be right if
Representative Keith Brooks
Unverified
27:57
y'all tell me no i can't do it from either one and then i would have to go back to the starting blocks and
Senator Jimmy Hickey, Jr
Unverified
28:04
figure something else out i think mr chair that where we where we've came from from where we started was this is is that we weren't for sure that you were going to come back to do that that you were just going to do it on your own so it sounds like to me that that's the difference right here than whenever we first started this contract that if we went ahead and did the two six you were just going to negotiate it all yourself not bring it back towards the committee and if your
Representative Keith Brooks
Unverified
28:31
intentions were to do that. No, no, no. I would always, I, right. I, I'm sorry if I wasn't speaking very
clearly. Right. I would always have to come back because we would be amending the existing vendor and what they're doing. Sure. So there would be acknowledgement that we removed their work over here and we're engaging it over here now. And the, the acknowledgement that we would be then engaging the optional services as we had previously discussed as long as it's coming back before this committee
Senator Jimmy Hickey, Jr
Unverified
28:58
mr. chair then I'm okay with
it up it's more like a contingency I guess we're gonna go ahead and approve the whole thing
which I don't know if it gives you leverage or not I mean maybe it does or whatever I mean I think that any of these vendors have a contract that's gonna come up know that they're subject to something else transpiring but I'm okay with it as long as the the motion is with the contingency that if we do utilize that that it'll be brought back before the committee thank you thank
you senator Hickey anyone else madam co-chair just a quick question how do we audit
Representative Robin Lundstrum
Unverified
29:37
these you talked about coupons and a lot of other moving parts how is this audited to know we actually got the information PBMs tend to act as a shell game i rarely trust them um so how
Representative Keith Brooks
Unverified
29:51
do you audit this so this particular not only does ebrx audit all of these particular services that navidus is doing legislative audit is auditing 100 of the claims that are running through on the pharmacy benefit side so it is audited quite extensively okay thank you all
right I don't see anyone else in the the queue I would say
without objection stands reviewed but since we had such extensive discussion I'll ask for a motion to review oh motion to review with that contingency in there that that if he was to
Senator Jimmy Hickey, Jr
Unverified
30:29
utilize the additional money that it'll be brought back before this committee is approval if all right well Senator Boyd or whoever made the motion think so that that
is your motion Senator Hickey did somebody already make a
motion I only heard yours yes I'll make that motion all right do
we have a second I have a motion in a second any discussion on the motion if not all those in favor let
it be known by I any opposed a motion or the motion review passes next item is the review of the
Representative Keith Brooks
Unverified
31:09
us able mutual insurance company contract okay so i will
try to do a better job on this one um this is for our third party administrative services we issued an
rfp that had three particular modules this is module one for the health insurance and
medical management administration of our program the anticipated awardee is us able or otherwise known as Blue Advantage. So we will be moving from Health Advantage to Blue Advantage, but still under the Blue Cross and Blue Shield umbrella. This is an estimated seven-year cost of $418,578,000. I will say the initial contract term, the first three years, we were able to hold for a 1.4% increase over what we are currently spending. So I think in this space that is tremendous.
work. We were able to add in an enhanced maternal health program that is in line with the governor's maternal health recommendations. We've added in a wellness program for our employees, and we've added in a telehealth network that runs alongside the traditional network, but it is telehealth specific it is not like talking to your doctor in a telehealth visit with that I
will pause and answer any questions thank you
members any questions are we ready for review and approval okay so with that without any conversation I'll without objection I'll consider that item reviewed next item
is the review of of the comp stack contract so
Representative Keith Brooks
Unverified
32:56
this is for the second component of our third party administrative services this is
the employee assistance program and i will pause just a second we
took advantage of the office of state procurement's statewide contract and procurement specialist we use boston consulting group to help us work on this particular rfp and this really highlights not only the 1.4% that I just spoke about, but this particular contract highlights the extraordinary effort that went into and being able to use their expertise in drafting. This service, you'll see the seven-year contract is estimated at $7.2 million.
One thing that you're not seeing, we currently pay $1.31 per member per month for this particular service this contract took it down to 55 cents per member per month for the full seven years there's no escalation in the out years that's resulting of a savings of 1.3 annually or 9.5 9.6 over the seven-year term of the contract additionally we were able to add in 500 hours which are inclusive for crisis response manager training and team development for our state
employees so with that I'd be glad to answer any questions
okay yeah I don't see anyone in the queue if you are through Mr. Wallace without objection we will consider that item reviewed next up is the approval of the proposed Arkansas State employees and public employees 2027 rates okay what you
Representative Keith Brooks
Unverified
34:42
have before you it's laid out a little differently we do have public consulting group as
our actuary so the format's a little bit different than what Milliman presented in the past
but what we are proposing for you today is a 9.8 percent increase in the rate and thus it goes down to a 9.8 percent increase in the contribution that our employees will pay on the state employee program additionally when you're looking at the public school we will see a 4.9 percent increase in their rate and thus a 4.9 percent increase in their contribution per employee and be glad to
answer any questions seeing no one in the queue with I will need a motion to approve this though I have a motion to approve
have a motion do I have a second have a motion and a second any discussion on the motion if not all those in favor led to be known by aye any opposed motion is approved and then the last item for mr wallace
is an update on the united health care rebid
Representative Keith Brooks
Unverified
36:06
so we are in the final stages of negotiation with united health care on their
renewal what i will say is we did accomplish what the committee and siegel had kind of recommended and looked at which was splitting the coverage between medical and pharmacy so we're putting on the final touches of that particular proposal and we'll have that
Speaker 19
36:24
to you all in august for review and approval all right thank you mr wallace any
last questions for mr wallace on those all
right next is the uh items 8 through 14 on the office excuse me just
as oh sorry i didn't i didn't catch you there mr representative steel Thank you, Mr.
Representative Tracy Steele
Unverified
36:53
Chairman. I was a little late. Just before we get out the subject, Mr. Wallace, I wanted to ask, if I could, about is there any shift or any change in preventive care that we're looking at, I guess, across the board?
I was trying to figure out exactly where it would fit under what you're covering today. And well, instead of having a follow-up, let me just ask another question. And maybe interventive care as well, specifically, I get a lot of calls about the shots, the Ozempic shots and so forth, that utilizing those shots actually reduce a lot of health care costs. And I know there are a few states around the country that are already approving that at the state level.
Speaker 128
37:42
Is there any interest in any dialogue in that? There have been a lot of dialogue on both of those
Representative Keith Brooks
Unverified
37:49
particular topics. And I think, as you'll see over the next year, now that we've kind of got the underlying agreement with for our medical management, that we can now go out and start looking at offerings around preventative health care. And how do we layer in some of those targeted point solutions that you're referring to? On the Ozempic and kind of the weight loss conversation, yes, we have looked at and we have been watching and monitoring the movement all across the country with that particular medication.
The unfortunate aspect is, and I think North Carolina is probably the best example of a state that reversed their decision because it nearly bankrupt their program. These drugs, if you don't have the appropriate guardrails and kind of controls on utilization around them, can really increase your spend exponentially very fast. So I think that's where I'm taking more of a cautious approach when we're looking at that and wanting to make sure that if we ever go into a weight loss management program that is a very robust program, that we're not just giving somebody a shot and sending them on their way.
I want to make sure that their behavioral health is addressed, their mental health is addressed, that their nutritional health is addressed, that their physical health is addressed, and that we've got a very
Speaker 19
39:11
holistic program to walk them with them through that journey to a better living. Thank
you, Mr. Chair. Thank you, Representative Steele. I'm sorry I got ahead
of you there. All right. Next up, the Office of Public Property Risk.
Mr. Wallace, would you continue on with
Representative Keith Brooks
Unverified
39:34
item number eight? So I know they're looped as two separate items, eight and nine, but generally, just to explain both of
them at once, these are the permanent rules that make permanent, the temporary rules that you have already reviewed and approved around the operation of the property insurance program and its coordination with the Department of Education property programs. I'd be glad to answer specific questions around these, but really we've taken the code, mirrored the rule to the code, and have been operating under these because you've already approved the temporary rules.
This is just making those permanent. Any questions? I have a motion to pass, or it only requires review, but since you made the motion. Motion to review. do i have a second all right we got many seconds uh any discussion if not uh all those in favor for approval of review of items eight and nine on these rules let it be known by i
any opposed motion carries all right would you proceed
Representative Keith Brooks
Unverified
40:49
with number 10 okay number 10 this is
the the contract for deninburg toughly this is legal services they would act as our subrogation firm for the property insurance program there it is on a contingency fee structure of 20 of any claim recovery obtained pre-suit and 25 of any recovery after litigation is initiated i'd be glad to answer
any questions. All right, any questions? If not, without objection, we'll consider that
Representative Keith Brooks
Unverified
41:27
item reviewed. Number 11. Okay, this is the Sedgwick Claims Management Service. This is our claims manager, kind of the third-party administrator on the property insurance side. They go out and Adjudicate any of the or just any of the losses that the program incurs
this is for a Three-year extension of the original contract, which was one year that we assumed from BLR last year And I'd be glad to answer any questions on it Representative Brooks you're recognized. Thank you. Mr.
Chair. Appreciate a lot of two tasks is not a member of the committee Grant, do we have an expectation in terms of time frame on adjusting currently? Obviously, this is very fluid and new, and we're trying to create processes.
I was with a group of superintendents this morning, and they communicated that there have been some challenges as far as time frame and understanding exactly what their responsibilities were. And so do we have an expectation set of what that looks like from an adjusting standpoint? Yeah. And if you'll give me
just a little bit to go into kind of a backstory and kind of explain how we got to
where we got things as far as the claim administration and adjusting were rocking along very well until we got to the winter storm.
And it was a very unique and widespread winter storm for the state. I think that did stretch Sedgwick and their staffing capabilities, which kind of has slowed down the ripple effect. now that we've gotten into convective storm seasons and we've had some hailstorms it's kind of just bogged the system down to be quite blunt we did add in some performance guarantees around response times we have expressed our concern that they are not appropriately communicating with the right individuals in districts to make sure that these claims are adjusted
and that superintendents specifically are updated as the process has gone along so we are layering those things in we are increasing our expectation that they improve their communication as they work these claims and have a quicker initial kind of reaction time to when a claim is filed and that they're getting out there and at least taking that initial look at what the damage is every every property claim is going to take its own journey
so i would hesitate to put a specific point in time that all claims would be settled in but at least the initial communication and that constant communication is done with the appropriate parties within each of the districts agencies colleges
and universities any of the entities that we cover all right
any other questions senator hickey you're recognized so
Senator Jimmy Hickey, Jr
Unverified
44:24
this is a one-year contract so it was the initial one year
Representative Keith Brooks
Unverified
44:29
we're extending it to three because we want that consistency with these claims and making sure that we're not going in and out with particular adjusting firms that are
Senator Jimmy Hickey, Jr
Unverified
44:42
overseeing the claims process. That's my fault. I've seen 7-1. I thought that said 7-1-26. 7-1-29.
Yes, sir. Okay. I'm sorry. Thank you. Thank you. Any other questions? If not, then the item number 11 will, without objection, be considered reviewed item number 12
Representative Keith Brooks
Unverified
45:01
okay this is for the actuarial advantage this is our actuarial
provider for the property insurance program again this was
a contract that we assumed from blr at the start of last year we are extending for two years on this particular contract there are no changes in the base hourly rate that was already agreed to and just we've added in performance guarantees but everything is as it was
thank you any questions seeing none from the members
without objection this item will be considered
Representative Keith Brooks
Unverified
45:40
reviewed item number 13 this is for uh stevens capital management they are the
investing firm again this was a contract that we assumed at the start of last year this is a two-year renewal of those particular services and be glad to answer any questions on that thank
you any questions from the members seeing none without objection this item will be considered reviewed and last oh sorry senator hickey i missed you there no it's
Senator Jimmy Hickey, Jr
Unverified
46:13
my fault here and i know we've already reviewed this but on b11 could could we back up my
ask another question of that i am fine with that okay yeah you said that and i think there was some conversation that you know this is what's said we okay yes sir you know that we've you know had a little bit of issues hope hopefully it's it's been fixed but we are doing a three-year contract you don't think it would be better if we just went year to year on this to make sure they and i understand you've got those performance uh items in there but would we be but would we
be better have we had enough issues that we should
Representative Keith Brooks
Unverified
46:51
just do do a year and thank you for the question i mean that is some of the thought process that we had kind of going
into this renewal i don't really think the question like the concerns have bubbled up to there's this huge problem and we've got to switch
vendors i do understand and appreciate it was their first year taking this on we're all building and growing we did have some kind of freak unexpected winter storm that kind of bogged the system down i think they have made the appropriate adjustments
and are doing what we've asked to improve the communication and management of the claims but i think overall as as i kind of alluded to earlier the important part of having the consistency in who's starting the claim managing the claim and ending the claim is important for the integrity of the program and that we're not having to just constantly be going back and transferring notes and
Senator Jimmy Hickey, Jr
Unverified
47:46
and your performance language that you put in uh does it hurt does it have certain contingencies before you could cancel
the contract or is it pretty much that you if you're not if you don't like the way things are proceeding you
Speaker 57
47:59
could so we maintain different yeah we maintain the standard language at any point in time for any reason the state wanted to cancel we could cancel
okay thank you sir that's right Representative Brooks? And if it's okay, Mr. Chair, it's a point of discussion for Senator
Representative Keith Brooks
Unverified
48:15
Hickey. And I think the primary challenge that I've heard, and I hear a lot of things from superintendents, is around just the communication side of it.
And so I look at it more as a function of a growing program that we're trying to develop. And as Mr. Wallace works on team members within his office and then just what those communication things look like, it's probably a function of that more than anything else. And I agree that consistency really, really matters because trying to bring another adjusting group in midstream to learn the system, to learn how we approach things would probably take us a step back. So I think the consistency matters as well, yeah. And I thank you for that, Representative Brooks.
Senator Jimmy Hickey, Jr
Unverified
48:55
Actually, whenever we had set up this committee and with the way we do it, I heard that Representative Kavanaugh, the way we do our procurement in here without going through review, I think that was really part of the reason that we wanted this committee so that we could be more
hands-on and hear that stuff and hear it directly in here to make sure that we didn't need to navigate, you know, certain ways. So actually I want to commend you for even bringing that
up and saying that there might have been an issue because that was something that I had not heard about. So thank
you, sir. And just as we go to item number 14,
as anybody that has worked in this industry and this business and dealt with insurance knows it's a very complicated industry to begin with. And then when we add the captive like we did on a very short schedule, it was quite an undertaking. And I personally think that Mr. Wallace and his team and all of the folks that we engaged have done a really good job. And fortunately, it has worked like we had anticipated. But when he says freak storm, it literally, if you look at,
And I'm not going to get too deep in the weeds. But if you look at the weather pattern, it was way down the list in terms of risk and the things that they were really focusing on. And so I think we've done a good job as a whole and Mr. Wallace's team and the
professionals that we have. And item number 14, I think, will be a reflection of
Representative Keith Brooks
Unverified
50:26
that. Thank you, sir. And for taking on a first-year program, I think within like the first two hours, I got a burst pipe in the middle of summer, and then we had the worst winter storm.
So, yeah, it's been a great learning experience. Moving on to the captive insurance program's rates for the 26-27 year, we
are proposing no change to the minimum deductibles for participants. Obviously, those are minimums, so if any particular entity wanted to go above that, they absolutely can. What we are presenting to you, we are trying to get more aligned with the particular participants, so you'll see that we have bucketed this based upon the occupancy or the type of entity that's being covered.
So our K-12, you'll see our proposed rate is $0.18 for 26-27, which is an 11% decrease from the previous year. Colleges and universities are at $0.15.6. That's a 6% decrease year-over-year. State agencies are at $0.14, which is a 13% increase year-over-year. On the whole, you'll see the bottom line.
We were able to see a 10% reduction in the overall rate that the program is going to have to charge. That is really exemplary of the success of this idea. The work that you all put into designing and passing this particular piece of legislation, it is working. That is more money staying with the participants and fewer tax dollars that are needed to do this particular services. We have seen over the past year that the program has worked.
It's doing what it is supposed to have done. We have been able to contain and control that first $50 million aggregate in the loss. That's what the state takes on with property damage. And we've been able to negotiate very favorable rates and develop good foundations to relationships with our excess carrier loss. So I just wanted to highlight that the program is working and doing as you all intended it to do. And this is kind of the first reflection of the success of that work.
Chair
Unverified
52:52
Thank you, Mr. Wallace. Representative Brooks, you're recognized. Thank you, Mr. Chair, and I apologize for hijacking the
Representative Keith Brooks
Unverified
52:57
committee I'm not on. wasn't the intent uh grant again you and i've talked a ton offline so i want to maybe you can just articulate a little bit relative to the rates because i think a lot of members are going to get questions from their individual schools when you see that we've got a base rate decrease as well as an overall premium dollar decrease uh you're going to get questions as okay well does that mean that my premium is going down by 11 so if you can maybe articulate some of the
dynamics around that so that sets good expectations for the individual school
district no thank you for that question um and no this is an average this is not going to go all the way down to the entity level um we are trying to get as contained and tight to where we have that standard across all entities in that particular bucket but there are various aspects all over the place this will not be a one-size-fits-all type of program that you typically see in state government There are, for example, earthquake risks that happen in northeast Arkansas that are not in southwest Arkansas.
There are flood issues that you have to rate for and factor in. And specifically for this upcoming year, the valuations, the total insured value of the properties, we have been working and improving that as well. Some of these properties have not been evaluated in 20 some odd years. Schools that haven't been evaluated in three or four years. So those are things that we're all trying to leverage up and get the standard right and across board. But this particular reduction is not going to flow all the way down to every particular participant because there are those variable factors still at play on the entity level.
So thank you for that question. And just to kind of follow up to that, it was not consistent and concise to begin with, not only among merging basically three different programs, but within the individual programs themselves, there were some inconsistency in the application of rates and total improvement values and so forth. So you're working with moving parts or started with a lot of disparities to begin with.
Representative Keith Brooks
Unverified
55:14
And thank you for bringing that up. What we were finding when we worked with the actuarial advantage is that there was no actuarial base to justify the outputs that the three individual programs were producing. Now we have that base. You can all take comfort
that there is that very transparent, very solid actuarial foundation to what is deriving the rates and premiums
Speaker 143
55:38
for the program moving forward. And as far
as the overall program, not only do we have the rate decrease, but we have the benefit of managing the claims.
We had a good year, knock on wood. But where
that would normally go to an insurance company, the program is further solidified by the gains or the successes that we've had. So I'm very pleased with the results. I don't see anybody else in the queue. This item does require approval, so I would entertain a motion. Motion to approve. Do I have a second? I have a motion and a second.
Any discussion? All those in favor of the motion, let it be known by aye. Any
opposed? Motion carries. All right. Seeing no other business before us, we're adjourned.
Agenda
A. Call to Order
B. Consideration for Review and Approval of Actions by the State Board of Finance - Grant Wallace, Director, Employee Benefits Division (EBD) and Office of Property Risk (OPR), Department of Shared Administrative Services
C. Other Business
D. Adjournment
Documents
No documents posted.
Speakers
Senator Jim Petty Chair
Unverified
Representative Keith Brooks
Unverified
Chair
Unverified
Representative Frances Cavenaugh
Unverified
Representative Cindy Crawford
Unverified
Senator Jimmy Hickey, Jr
Unverified
Representative Robin Lundstrum
Unverified
Speaker 47
Speaker 16
Speaker 23
Speaker 19
Speaker 75
Speaker 89
Senator Justin Boyd
Unverified
Senator Jonathan Dismang
Unverified
Chair (Senator Jimmy Hickey, Jr)
Unverified
Representative Tracy Steele
Unverified
Speaker 128
Speaker 57
Speaker 143