ALC - State Insurance Programs Oversight Subcommittee
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We will call the state insurance programmes oversight subcommittee to order for June 17th. our the chair sees aorum 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 proceed Grant
Representative Keith Brooks
Unverified
2:14
Wallace, director of the employee benefits division and office of property Risk. so good morning we'll start with itemb1 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 itemtems 2 through6 are lower costs options that we're just restructuring to make sure that we have the lower cost preferred on our formulary itemtem7 through 16 is a relook at migraine medications as a whole and kind of doing some maintenance work
maintenance work around those particular medications the7 through 11 or are 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 and24 we are moving towards covering the lower cost alternative with the strongest efficacy. I'd be glad to answer any questions
on march. Sina you may proceed with April. OK
Representative Keith Brooks
Unverified
4:02
going to April you'll see items 1 through3 are going to be
not covered we do have alternatives that we are covering already on the formulary then you'll see items for through6 we're just retiering 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 items7 through 9 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 it be known by I. any opposed motion carries OK the next item of B2
Representative Keith Brooks
Unverified
5:44
this is our cell and gene therapy policy we've 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 win claims that are coming at such a high dollar are going to be run through the plan
Chair
Unverified
6:51
Representative Kavanaugh you're recognized thank you Mr Chair.
Representative Frances Cavenaugh
Unverified
6:54
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 it going to slow that process down? It should
Representative Keith Brooks
Unverified
7:15
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 and get these processes these
Representative Cindy Crawford
Unverified
7:37
processes 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 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
8:01
I will say when we have switched to a new pharmacy benefit manager yes there was a 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's a particular medicine that is proving effective and in a treatment that's been a long term treatment we always have the appeal process for our members to utilize to to be able to maintain coverage of that particular drug. OK. Uh, could you and I talk offline please thank you Senator Hickey you're
Representative Cindy Crawford
Unverified
8:42
recognized right thank you Mr chairir and I know I can see that it's
Senator Jimmy Hickey, Jr
Unverified
8:52
it's on here but I think it might be a
prudent to say it so we have no member that's gonna be impacted by by this it appears like is that correct that's correct siry'all have done your due diligence and you know at this point we have nobody using these particular drugs correct sir OK. thank
you for that thank you senator hickey and and just a follow up to that
this is this is not an absolute exclusion it's just not an automatic coverage 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 therapies. Absolutely sir thank you all right quick question Yes, I
my co-chair just to be clear we're not denying
Representative Robin Lundstrum
Unverified
9:38
people coverage we're just checking the process and we're going to get back to him in 24 hours to let them know
that they're either excluded or approved?rrect it's
Representative Keith Brooks
Unverified
9:48
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
treatment at that particular point in time if
Speaker 47
9:59
someone's denied what's the next step up there's
Representative Keith Brooks
Unverified
10:02
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 revo of appeal for this particular treatment and what's the
Representative Robin Lundstrum
Unverified
10:17
speed on those because some of these really do time is Right30
Representative Keith Brooks
Unverified
10:22
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. OK. all right thank you all right thank you any other questions if not, I need a motion to approve or have a motion second any
discussion on the motion if not all those in favor let it be known by eye.
any opposed motion carries Next up is the review of the UAMsfessional consultantervices contract amendment so this is just extending our current contract for
Representative Keith Brooks
Unverified
11:11
one additional year. it's at a value of 1.8 million for the year. be glad to answer what 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 request and help overall
manage and and help see how the pharmacy benefit is operating for our members'd be glad to answer any questions. Representative Kavanagh, you are recognized. Thank
Representative Frances Cavenaugh
Unverified
11:52
make sure how much is this contract for? This one should
Representative Keith Brooks
Unverified
11:56
be adding 1.8 million for the next fiscal year. are we
Representative Frances Cavenaugh
Unverified
12:01
looking at B3 because it's showing amendment is for 2.596 million. I think that
Representative Keith Brooks
Unverified
12:09
is also inclusive of some optional services that we may or may not 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 have a question
Representative Frances Cavenaugh
Unverified
12:40
for staff did this go through review yesterday? just for EBd
Representative Keith Brooks
Unverified
12:50
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 how my understanding has been OK because if
Representative Frances Cavenaugh
Unverified
13:07
he's saying it's 1.8 and we're going to approve a 2.5 we need to prove 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 so I'll go ahead and
Speaker 23
13:23
make the request to forget that I said 1.8 cause I was just looking at the raw services it
Representative Keith Brooks
Unverified
13:29
it will be for the 2.5 that is
what I'm asking for you all to approve
Representative Frances Cavenaugh
Unverified
13:34
because that's why'm trying to make sense because what you're saying's not matching what's
Representative Keith Brooks
Unverified
13:38
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 for the 2.5 and it's increasing
Representative Frances Cavenaugh
Unverified
13:49
because you're adding scope. there would be two new items
Representative Keith Brooks
Unverified
13:52
of scope if we decide on it doesn't show that
Representative Frances Cavenaugh
Unverified
13:55
you're adding any scope and so that kind of the unfortunate way
Representative Keith Brooks
Unverified
14:02
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 re b ate s
were in that are included in that
Speaker 19
14:15
document but I think if I'm not mistaken
Representative Frances Cavenaugh
Unverified
14:18
y'all 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 in in. but I just want to make sure that we know what we're willing to approve ma'am thank you
so so just to clarify you're you are asking for the approval of amendment4 of2.596 million which includes some elements of the contract that you may or may not implement and it 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 all right Senator hickey
you're recognized so and and I'm on the same thing so
Senator Jimmy Hickey, Jr
Unverified
15:08
this is just a summary the contract itself what it does it actually have a dollar figure in it that that's where the 1.8 ok so the the contract
you have has a 1.8 million in ital services are the difference between the 1.8 and the 2.5. OK. and and I don't
and I don't know maybe this is something for staff or Miss Ggarrity or somebody so if you've got 1.8 in the in the written contract and we're gonna approve 2.
2.6 basically do we need to have give him some authorization to to amend that written contract or is that what we're gonna be doing here? I don't want to get into a situation where the vendor although I know it's University of Arkansas UMs so that they come back and say no no that
committee approved them for a for a higher number than what we're doing
I I think that personally I think that would be best if you
just resubmit it and then we we approved that on Friday at the at the correct number. because it it would probably be better I think if you were if you were to decide
to do that that you just come back and and bring that before us to up that would that not be correct how y'all want me to that that's Mr Chair I think that would
be more probably and also have a clarification question for staff so the underlying contract that that we're referring to
refers to the 1.8 for the for the basic services that Mr. Wallace was talking about we could they could they don't have the authority to take that 1.8 and and then spend another whatever700,000 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 OK.'m, I don't
you are correct though yes sir that's how it is written so would you restate what your would you like to well I mean
Senator Jimmy Hickey, Jr
Unverified
17:27
if if I think that I think personally I believe that whatever our approval is should match up with the written contract. so if the written contract has the the 1.8 in there it does
Representative Keith Brooks
Unverified
17:40
I I 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 aspresentative Kavanaugh pointed out what we wrote in here we could break that out the the initial scope would be for the 1.8 to 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 thing is I guess
Senator Jimmy Hickey, Jr
Unverified
18:15
if the committee is is comfortable with just giving an approval for that or if we think it would be
be better that if you brought those back you know if you did decide to do them you know it kind of takes 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 the flip side is that I would have to
Representative Keith Brooks
Unverified
18:33
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
18:47
what do you mean take it away? What do you mean
Representative Keith Brooks
Unverified
18:51
take it away and then come back so the services that are considered optional that we're proposed or optional around the coupon program and the prior authorization and kind of that work currentlyavvius Healthlutions 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 EBRxx 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 Navidas on their particular s co pe 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 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 and my concern was the contract as it was written and it sounds like you've confirmed that the contact's written and just because we have prove an amendment for four or $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 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 including the correctlan or the the more accurate language we probably I'm thinking would have approved it at that point. anyway
so and had I not stumbled over my figures I probably would have clearly explained
Senator Justin Boyd
Unverified
20:50
Senator Boyd you're recognized thank you Mrir. Thank you Mr Wallace, for bringing this up I'm excited to hear that you're actually looking at this hour per member per month has gradually increased to about30 dollars 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 forpresentative Aker but what he's relayed to me as one of our
biggest concerns with how the original contract was structured as Navitis keeps 20% of those and that wasn't happening before when UAMs was doing it so 3 $0 per member per month if we can rein that back in we're going to recover700,000 dollars very quickly, wouldn't you agree? I think there are great opportunities that we can contain the
Representative Keith Brooks
Unverified
21:38
growth in that particular spend. yes sir I would agree with you let me say I am proud that you were
Senator Justin Boyd
Unverified
21:44
looking at this. I feel like this is the first time in this conversation
where I've really felt listened to in 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 Kavanaugh, you are recognized. Thank
Representative Frances Cavenaugh
Unverified
22:10
you. Something you said also had a question come up. you already have a contract in place to do these optional services,
correct? Rightnavidus is currently managing those these
Representative Keith Brooks
Unverified
22:21
particular services that would be opt that are currently at listed as optional with EBr when did that contract end? It will end in December of this year. so why do we need two contracts
Representative Frances Cavenaugh
Unverified
22:34
so we're not we that's why they're
Representative Keith Brooks
Unverified
22:37
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 Navidus. I have a vendor ready
and able to take that up in mid stream and we're not gonna disrupt the processes that are in place to take care of these particular services for our members then
Representative Frances Cavenaugh
Unverified
23:04
why would you not go through the process of RFP get your contracts you've got till 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 how come we're not doing it that way
Representative Keith Brooks
Unverified
23:24
because you're either gonna continue to have them with your pharmacy benefit manager there's 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 we would we would end up doing what we're doing with UAS 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 be instant that you don't want to renew
Representative Frances Cavenaugh
Unverified
24:01
the contract that's coming up in the end of december with your current provider. not I
Representative Keith Brooks
Unverified
24:06
am satisfied with the services thatnavi du s Health Solutions is providing. I want to continue they just may not continue the full menu of 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. OK I
Representative Frances Cavenaugh
Unverified
24:37
guess I'm just confused because if your contracts for 1.8 and you're 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 so sorry about that
Senator Jonathan Dismang
Unverified
25:01
Senator Dismayne 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 gonna 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 then if you have to can or scrap whatever's working over here with your 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 gonna use this entity anymore and we're going to you know 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 then or the program then what you were getting under navidus yes sir and so if we take this away in some way if we 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 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 it might 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 ok thank you Senator hickey you're recognized. Thank you, Mr
Chair (Senator Jimmy Hickey, Jr)
Unverified
27:14
Chair. Well I guess that's where I'm I'm struggling a little here and I I appreciate that we're going to bring this back before us.
Senator Jimmy Hickey, Jr
Unverified
27:20
but if we approve the whole point the whole 26 today so we've already approved the whole 26 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 26. It would be canceling
Representative Keith Brooks
Unverified
27:38
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. OK and if we were to which I wouldn't suspect we would
Senator Jimmy Hickey, Jr
Unverified
27:49
but if we were to decide not to do that then at that point we just although we've approved
the 26 we would stick at the 18 or whatever it may be right if y'all tell me no I can't
Representative Keith Brooks
Unverified
28:02
do it from either one and so then I
would have to go back to the starting blocks and figure something else out I think Mr Chair
Senator Jimmy Hickey, Jr
Unverified
28:10
that where we've where we've came from from where we started with this is is that we weren't for sure that you were gonna come back to do that that you were just gonna 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 26, you were just going to negotiate it all yourself, not bring it back towards the committee and if your intentions were to do that
Representative Keith Brooks
Unverified
28:36
no no no, I would always I right I I sorry if I wasn't speaking very clearly. I would always have to come back because we would be amending the existing vendor and what they're doing so there would be acknowledgment 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 Mr
Senator Jimmy Hickey, Jr
Unverified
29:03
chairir then I'm, I'm I'm OK
with it it's more like a contingency I guess we're gonna go ahead and approve the whole thing which I I don't know if it gives you leverage or not I mean may 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 ok with it as long as the you know 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 cochair
Representative Robin Lundstrum
Unverified
29:40
just a quick question how do we audit 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. so how do you audit
Representative Keith Brooks
Unverified
29:56
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 benefits side so it it is
audited quite extensively thank you right. I don't see anyone else in the the queue
I would say without objection it stands reviewed but since we had such extensive discussion. I'll ask for a motion to review motion to review with that contingency in there
Senator Jimmy Hickey, Jr
Unverified
30:34
that that if he was to utilize the additional money that it'll be brought back before this
committee is approval possible Sen Boyd or whoever made
the motion so that that is your motion Senator hickey? make a motion I only heard yours yes I'll make that motion do we have a second 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 motioned review passes. Next item is the review
Representative Keith Brooks
Unverified
31:11
of the USA Mutual Insurance Company contract. OK so I
will try to do a better job on this one 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 Man Administration of our program the anticipated awardee is US able or otherwise known aslue advantage. so we will be moving from healthalth advantage tolue advantage but still under thelue
Cross and BlueShield umbrella this is an estimated sevenyear cost of418,578,000 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 a 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. OK. So with that without any conversation I'll without objection I'll consider that
item reviewed. Next item is the review of the Coack
Representative Keith Brooks
Unverified
33:01
contract. So this is for the second component of our third party administrative services. This
is the employee assistance programme and I I will pause just a second. we took advantage of the office of state procurement's statewide contract and 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 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 at7.2 million one thing that you're not seeing we currently pay 1
dollar31 cents per member per month for this particular service. This contract took it down to55 cents per member per month for the full7 years. there's no escalation in the out years that's resulting of a s savings of 1.3 annually or 9.59.6 over the seven year term of the contract. Additionally, we were able to add in500 hours which are inclusive for crisis response man training and team
development for our state employees. so with that I'd be glad to answer any questions OK.
don't see anyone in the queue if you are through Mr. Wallace without objection we will consider that item reviewed. ex t up is the approval of the proposed Arkansas state employees and public employees 2027 rates. OK, what you have before you it's laid
Representative Keith Brooks
Unverified
34:47
out a little differently we do have public consulting group as our
actuary. so the format's a little bit different than whatilliman presented in the past but what we are proposing for you today is a 9.8% increase in the rate and thus it goes down to a 9.8% increase in the contribu tion that our employees will pay on the state employee program. additionally when you're looking at the public school we will see a4.9% increase in
their rate and thus at4.9% increase in their contribution per employee and'd be glad to answer any questions. seeing no one in the queue with I will need a
motion to approve this though so I have a motion to approve have a motion do I have a second? 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 motion is approved and then the last item for Mr Wallace is an update on
Representative Keith Brooks
Unverified
36:11
the Unitedhealthcare reidd so we're in the final stages of negotiation with United Healthcare on
their renewal what I will say is we did accomplish what the committee and Seegal had kind of recommended and looked at which was splitting the coverage between medical and pharmacy so we're putting on the final
Speaker 19
36:28
touches of that particular proposal and we'll have that 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.ext is the adams 8 through 14 on the office excuse me just
to oh sorry I didn't I didn't catch you there misrepresentative Steele. thank you Mr. Chairman. Now was
Representative Tracy Steele
Unverified
36:58
a little late just before we get out the subject Mr Wallace want to to ask if I could about is there any shift are there 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 under what you're covering today and 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 healthcare costs and I know there are a few states around the country that are already approving that at the state level there any interest or been
Speaker 128
37:47
any dialogue in that there have been a lot of dialogue on both of those particular topics and I think
Representative Keith Brooks
Unverified
37:54
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 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 guard rails 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 a kind of weight loss man 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 they're 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 holistic
Speaker 19
39:16
program to walk them with them through that journey to a better living. youpresentative Steele and
sorry I got ahead of you there. All right, ex up the office
ofublic property risks Mr Wallace, would you continue on with item
Representative Keith Brooks
Unverified
39:39
number 8. So I know they're looped as two separate items 8 and 9 but generally just to explain both of
them at once these are the permanent rules that make permanit the temporary rules that you have already reviewed and approved around the operation of the property insurance program and it's coordination with the department of Education property programs I'd be glad to answer specific questions around
these but really we 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 have a motioned to pass or in we only requires review but since you made the motion, motion to review have a second. right we got many
seconds any discussion if not all those in favor for approval of review of items 8 and 9 on these rules. let it be known byi any opposed motion carries. All right would you proceed with number 10? OK, number
Representative Keith Brooks
Unverified
40:54
10, this is the the contract for Denenberg Toughley.
This is legal services they would act as our subrogation firm for the property insurance programme there it is on a contingency fee structure of 20% of any claim
recovery obtained presuit and 25 of any recovery after litigation is initiated. I'd be glad to answer any questions
right, any questions if not without objection we'll consider that item reviewed
Representative Keith Brooks
Unverified
41:32
Number 11 this is the Sedgwicklas Management Service. This is our claims manager kind of the third party administrator on the
property insurance side they go out and then adjudicate any of the or adjut any of the losses that the program incurs this is for a threeyear extension of the original contract which was one year that we assumed fromblr last year and I'd be glad to answer any questions on it. Representative Brooks you're recognized. Thank you Mr.
Chair. appreciate the latitude to ask is nonmember of the committee
uhgrant is there do we have an expectation in terms of time frame on adjusting currently obviously this is a very fluid and new and we're trying to create processes. I was with a group of superintendents this morning and and they communicated that there have been some challenges as far as time frame of understanding exactly what their responsibilities were and so do we have do we have an expectation set of 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 we're 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 hail storms 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's superintendent 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 gonna take it's own journey so I would hesitate to put a specific point in time that all claims would be settled and 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.
right. any other questions Senator hickey you're recognized so
Senator Jimmy Hickey, Jr
Unverified
44:29
this is a one year contract so it was the initial one year we're extending it to3 because
Representative Keith Brooks
Unverified
44:35
we want that consistency with these claims and making sure that we're not going in and out with particular adjusting firms that are overseeing the claims process that's my fault I've seen71.
Senator Jimmy Hickey, Jr
Unverified
44:47
I thought that said7126 its7129 sir ok I'm, I'm sorry thank you
thank you any other questions if not then the item number 11 will without objection be considered reviewed. itemte number 1el, he this is for
Representative Keith Brooks
Unverified
45:06
the actuarial advantage. this is our actuarial provider for the property insurance program.gain this was a contract that we assumed
fromblr 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 reviewed. itemdam number 13. this
Representative Keith Brooks
Unverified
45:45
is for Stteens 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 oh sorry senator hickey I missed you there no it's my fault here and I know we've already reviewed this but on B11,
Senator Jimmy Hickey, Jr
Unverified
46:17
could could we back up may I ask another question of that I am fine with that yeah you
said that and I think there was some conversation that you know this is whatedwick sir you know that we've you know had a little bit of issues 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 items in there but would we be but would we be better? Have we had enough issues that we should just do do a year and thank you for the question. I mean that is some of the
Representative Keith Brooks
Unverified
46:58
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 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 and go through
Speaker 57
47:48
that process and your performance language
Senator Jimmy Hickey, Jr
Unverified
47:51
that you put in 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
48:04
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. OK thank you
sir that's right Representative Brooks and if if it's ok Mr Chair it's your point of of discussion for Senator Hickey and I
Representative Keith Brooks
Unverified
48:20
think the primary challenge that I've heard and I hear a lot of things from superintendents is is around just the communication side of it and so I look at it more as a
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 it's probably a function of that more than anything else and I agree with the cons ist ency 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 and I thank you for thatpresentative Brooks.
Senator Jimmy Hickey, Jr
Unverified
48:58
Actually whenever we had set up this committee and with the way
we do it I heard that Representative Kevinauh the way we do our you know procurement in here without going through review. I think those that 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 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,
this is is anybody that has worked in this industry in this business and dealt with insurance knows it's very complicated industry to begin with and then when we add the captive like we did on a very short, schedule it it was quite an undertaking and and I I personally think that that Mr Wallason is his team and all of the the folks that we engaged have done a really good job and and fortunately it has 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 of risk and and and the things that that they were really focusing on and so I think we've done a good job as a as a whole and and Mr. Wallace's team and the the professionals that we
have and item number 14 I think will will be a reflection of that. thank you sir and for
Representative Keith Brooks
Unverified
50:31
taking on a first year program I 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 captives insurance programs rates for the 2627 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 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 through 1el you'll see our proposed rate is 18 cents for 2627 which is an 11% decrease from the previous year collegeleges and universities are at $15.6
that's6% decrease year over year. state agencies are at $14.2 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 a 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 first50 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 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. thank you Mr Wallace Representative
Chair
Unverified
52:57
Brooks you recognized. thank you Mr. Chair and I apologize for hijacking committee I'm not on
Representative Keith Brooks
Unverified
53:02
wasn't the intent grant again you and I talked a ton offline. so I want to maybe you can just articulate a little bit relative to the
race because I think that a lot of members are going to get questions from their individual schools when you see that we've got a a base rate decrease as well as an overall premium dollar decrease gonna get questions as OK 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 and no this is an average. this is not going to go all the way down to the entity level. 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 happened 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 valuated in 20 some odd years of schools that haven't been evaluated in3 or four years. so those are things that we're all trying to leverage up and get the standard right and across board but they're this particular reduction is not gonna 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 to 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 in the application of rates and impro total improve values and and so forth so you're you're working with moving parts or or started with a lot of
diss disparities to begin with and
Representative Keith Brooks
Unverified
55:19
thank you for bringing that up there what we were finding when we worked with the actuar advantages that there was no actuarial and a base to justify the outputs that the 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
55:43
for the program moving forward and and
as far as the overall program not only do we have the the the rate decrease but we have the benefit of of managing the claims we had a we had a good year knock
on wood. but where that would normally go to an insurance company the program is is is further solidified by you know the the gains or the successes that we've had so very pleased with the with the results so any I don't see anybody else in the queue. This item does
require approval so I would entertain a motion motion to approve to have a second have a motion in a second any discussion all those in favor of the motion let it be known byi. any opposed motion
carries. all right seeing no other business before us we 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 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