Joint Budget Committee

Logged on. Our members, we're gonna go ahead and get started. Like we're going to have a busy day across the board, uh, so. Let's see if we can work through our business. Alright, um, members, first up we have today is the, uh, report from the EBD oversight committee. who's gonna What's happening here? Eruption of Milligan. I don't know, maybe I'm not. I don't know. Hold on. You're recognized to present the report. Thank you, Mr. Chair. The employee employee benefits division oversight subcommittee met on Tuesday, January 28, 2025 at 8 a.m. in room MacB. The subcommittee heard the employee benefits division's request for ratification of the novice Health Solutions LLC contract presented by Grant Wallace director EBD Department of Transformation Shared Services. The subcommittee reviewed the ratification contingent on legislative audit review, the subcommittee approved the contract and made a contingent on legislative audit review. All right, thank you, Representative, uh, Representative Wootton, you're recognized for a question on the report. Yes, if I may, how much money are we talking about? Uh, there was. Uh, 205,000 that wasn't fully able to be. Uh, that, that was attributed as a difference, uh, EBD indicated that was a timing difference, I believe in just brief conversation I had with audit, they would also agree that that is most likely the case. But again, we didn't ask audit to do an audit. We asked them to take a look and that's what they did. Mr. Chairman, could, could we have Mr. Wallace come forward. Would that be appropriate? I mean, I, I've got to 3 different stories of, I'm told it was $11 million that was Misrepresented uh And then they're asking for 22 million, and I understand that the committee has approved it in waiting for uh legislative audit review, but If you could director just recognize yourself for the committee and then, uh, I'm not sure if you just kind of walk through the scenario and I think that's what Representative Wooton was asking for. Right, Grant Wallace, director of the Employee Benefits division, um, and yes, Representative Wootton, it, there are a lot of things at play, so let's just start from the very beginning. Um, there are 2 bills that EBD receives for the services that Navitas provides. Bill A is our administrative fee, or per member per month. Bill B is our claims. So, um, the thing that layers in in this, and I think what Senator Dismay was looking at is our coupon payment program. That is related to the claims, so when one of our members goes and gets uh a specialty drug. The manufacturers do offer a coupon program for that that reduces both the member pay and the plan pay. There is an administrative fee that we owe Navitas for administrating that program for us. Our impression from the beginning was that they were going to take that fee off of the top of the coupons that the plan. Was owed They did not. They added to the administrative bill, so Bill A, they added that fee too, which led to a miscalculation of the original 11.5 that we had requested authorization for for this contract. We have spent that faster because they added this fee on it that we did not anticipate that would be on Bill A. We thought it would be on Bill B. That's what we're here before and have asked to rectify that as well as have enough appropriation to get us through the end of the term of this contract, which is December 31st, 2026. So how much money are we talking about 11 million, 11.5 million was the original. What we are asking for is 22 million you're asking for 22 million. Well, how much was the mistake? Or the mist of applying it to a, uh, 11 item when it should have been applied to something else. How much was involved in that. So our total. coupon has been. 5 million James Caldwell, CFO for TSS. So what do we spent on the coupon program. The total for the admin bills has been 11 million of that. I think about. For about 6 million of that's been for the coupon program. Well, the chairman of the committee said it's 205,000 so that was a that was a separate issue, so just to back up so and y'all can explain this better than I can. There's not a request for an actual spin. It's not costing the plane anymore. It was, uh, maybe a misunderstanding or whatever about how the contract was gonna work in regards to coupons you originally thought it was just gonna, the way that I, I don't know how else to say, but it was kind of behind the scenes in the wash. In fact, you're going to have to pay for that and then get reimbursed essentially. So it's, it's a wash. And then there was a request by there was. But, but we, we misappropriated and misused or didn't understand what we were doing with a $22 million request additional money. I mean, that's not a war to me. That's a, that's a complete, what was the original contract for, for a full term. The full term would have been $33 million when the original paperwork was filled out to send over that calculation was not done correctly. It did not take it out all the way to the full term. So that is what is part of this as well, the reason we are having to come at this point is because with the coupon, it's spin it down even faster. Because we thought it was going to be applied to the other bill. so our administrative bill, we always knew all along, it was going to run for the full term, $33 million. They did not fill out the SRV one, the form that comes over for the contract. They did not fill it out to go out to the full term. So that, that's problem number one and problem #2 is that we did not pay attention enough to the admin line that had this coupon admin fee on it to catch to come before y'all sooner and get all of it corrected. And that's what the 22 million does. It gets everything corrected and it takes us to the full term of the contract, which is December 31st, 2026. OK, so are you asking for $22 million more. It's not really more, it's just the author. authorization to spend that money to the end of the, the contract term. They this contract was always gonna cost that when everybody we knew that. We're, we're just needing the authorization to spend to the end of the term. So what action have y'all taken to prevent this in the future. So we have implemented a new review process where there are multiple layers that are reviewing each of the bills that are presented to EBD and ultimately every bill that EBD is responsible for. I review and sign off before it's paid. And the committee has asked for a legislative audit review. So there was a review, uh, during the subcommittee, there was a conversation and just a verification that we weren't being double billed or that everything that I was saying was actually true. And I think that's what's the chair is alluding to is that that has done, there was a difference of about $205,000 which was attributed really to the timing of the coupons. Sometimes the months don't line up right. Sometimes. The coupon gets called back because that member really wasn't eligible for it. Uh, so that was everything that was in play for that amount is controlled by the PBM. Navitis is our PBM, yes. Thank you, Mr. Chair. Thank you, sir. Thank you, sir. All right, Senator Hickey, you are recognized. Yes, sir. Uh, thank you, Mr. Chair. I want to shed a little more light on this and I wanna definitely talk about leg audits role right here because I don't want anybody, uh, at a later date to come back and, and not fully understand what we ask of leg audit and what has transpired. So during the subcommittee meeting, of course, if And, and let me say this, I heard you say that you were telling the truth, and I'm gonna say this, I, I'm, Not had any issues with you, Grant, or something like that, just business is business, and, you know, I wanted to make sure that we haven't hadn't missed anything. So I was never accusing you of not telling the truth. So, but what, what Mr. Wallace is saying is true. This, this would just be a wash because it's. It if it was coming off the coupons, which it, which we don't think it was, uh, then the claims side would have been different. So there will be a wash there. Where the issue is, is, is this, and this is very complicated and myself and, uh, the chairs of Leg Audit. Leg audit and EBD have been sitting down and they've been working over on this for the last few days. What we wanted to make sure Because the PBMs are in actuality are the one, they're the one that's telling us Navitas, the PBM is the one that's telling us that they didn't get paid. We always thought they were going to get paid from the coupon side. Now, here's, here's where there's still a little bit of a wrinkle and if they all it needs to come talk about this, they can. The only way for us to 100%. Be to verify that the PBM had not been paid for the coupon would be to be to go back and reconcile every one of the coupons. That were on there and to make sure that that, that money went all the way back to the pharmacy itself. And I've been thinking about this overnight and as you all know, that's probably millions of claims. I mean, I don't, maybe it probably is millions, but Anyway, our millions of coupons. So the thing is, There is no way that leg audit, of course, can, can do that or even do a large huge sampling of this within this time that's needed. So And granting them, I believe, are gonna. Restructure their process so that they can look at this better just to be blunt. You've not been doing it exactly the way you you should. I think that was unintentional and, you know, hadn't been enough thought process as far as these coupons go. Overnight, it come, just come to me that the only, the only way that I would, at this point, would know, would be that I believe that if the pharmacists were not getting reimbursed on the coupon side. That they would have probably already told us I'm not getting paid on the coupon side. Um, you know, cause if I had a $100 bill and the coupon was for $10. You know, the PBM only give me $96 back on that side or something. I personally have not heard that. I'd like to ask Mr. Wallace if he has. And, and Mr. Chair, I, I really would kind of like leg audit to come down there because again, I don't want anybody later to think if this was to come a different way, uh, you know, where it was showed that they were double-billed at some point or something to that nature. We could always claw back our funds under the current contract someway, somehow, I think. But I, I would don't want anybody to think that leg audits went back and looked at every one of those coupons, and we're 100% sure that they're all correct. No, I understand, and, and, and to be we can bring legislative audit up, but also EBD has a vested interest in doing some of those that spot checking themselves, uh, I mean, you can talk to that if you'd like, but that would. That review is not the responsibility and should not be the responsibility of legislative audit that would be the responsibility of EBD. So if you can, before legislative audit comes up, can you kind of address maybe some of his concern. Right, so, and to the point, yes, we have not heard pharmacists come and complain about coupon reimbursements or anything along that line, uh, that has not been brought to my level, um, absolutely, uh, they have brought many a thing to my level and uh it it would have, they would have. So I, I fully trust that if that had been a problem, it would have come up, um, and to the review that we do undertake. Um, we do check the coupon program. We look on a, on a monthly basis of what the coupons that Navitas is reporting that we owe, we are owed, and then we balance that out to the 20% that they're owed and all of this kind of flows through. So we're checking at what the failure that happened is that we were not balancing that. against the bills that we receive and, and again I have taken ownership of that. I will continue to take ownership of that. We have fixed that. That will not be the case moving forward. All right, thank you. I'm not sure who all we have from legislative audit for questions All right, thank you all. If you can just uh recognize yourself for the committee and then Senator Hickey, do you want to hit your mic for a question or? I think, uh, here we go. Oh, I hate this. Hold on. All right, you recognized, glad to have y'all here, I guess, uh, you heard what I said, and I guess what I'd want you to do is just to verify that that's the truth and maybe, uh, expand on that some because again, I don't want, if in the future we were to see that some of these coupons were not fully reimbursed all the way back to the pharmacy. I don't want any of our members to think because of the motion we made the other day that leg audit has, has looked at each and every one of those, and we're that we are guaranteeing that. They're all correct at this point. We hope they are, but there's no guarantee on that many. Thank you, Senator Hickey. Kevin White, Arkansas Legislative audit. What Senator Hickey stated is correct. What we did in a short matter of time on the request of as well our chairs as well as Senator Hickey is. We went in and we compared these monthly spreadsheets that Grant Wallace is talking about that they looked at and we compared those monthly spreadsheets to the invoices, um, that EBD had paid related to the coupon fee. And that's where we noticed a $200,000 discrepancy on that side, um. And, you know, there was no reconciliation between those two type items. Um, I will say that the $200,000 was showing as the state of Arkansas could have potentially needed to pay more as opposed to what was paid was $200,000 less. Uh, the other procedure that we performed in a quick manner is that we looked at these monthly monthly spreadsheets and we selected a couple of claims from each one, and we traced those back to the claims data that EBD has and receives, um, and that we had tested back in. in the fall. Um, again, what we, so what we looked at and what we compared again is the information that the PBM was being providing to EBD and like they provided to us and traced to make sure the numbers went, you know, from one point to another. What we did not do is we did not go all the way back to the pharmacies to verify that that's the amount they received at the end to do that type of work is outside the normal scope of what we do in legislative audit and it's a time-consuming process as well for us to do that. Thank you, Representative Wooton. The question I have goes to Mr. Wallace, Mr. Chairman, if it's all right, and it also involves the audit. You said some of the coupons. Or are not honored or not paid. But yet they're turned in, correct? Why, why were they disallowed? There could the reasons that have been described to me are maybe the member didn't meet the full criteria to participate in that plan. Um, it could be that, uh, they exhausted them so. A member may be eligible for a certain dollar amount in a 12 months in a year. They may have exhausted it, um. Earlier than. And then the next month they tried to use it and it ran through the claims system, but when the manufacturer reconciled all the records with Navitas, they saw, oh wait, we paid them a month too much. We need to pull that money back. So there are a variety of reasons why. Those are the two kind of top examples that come to my mind. OK, does that go back to the pharmacist? So it actually the plant, well, no, uh, the plan makes that up. So it, because it's a discount to the. plan So whether the um the plan would make up that difference to the pharmacists. It would not impact the member or the pharmacist. We do make that whole from Mr. White was the 205,000 on coupons that had been kicked back. Represent to and that's a question I can't answer again, what we saw is that there was a discrepancy between what was paid in these monthly spreadsheets, there was no reconciliation between those two to identify what the variances were, um, that is my understanding is what EBD is going to be doing moving forward as they're going to be reconciling those on a monthly basis. I'm not, I can't speak for ABD. I'm not sure if they're gonna go back and look at that 200,000 and try to figure out that item as well. I cannot explain to you the reason for the OK Mr. Chairman, on, on the, uh The wars then or you you saying that they had 11 million somewhere else to be applied. I don't believe you felt like you need an appropriation because it was something that was happening, you believed behind the scenes and so on the side there we go, yeah. So, so that's correct. So, so it is 205,000. No, the, the 205,000 I think is, there was a reconciliation done. We've asked them to do it in a short period of time. And then the only difference in the, I don't know how much was it in the total reconciliation to be reconciled? Was it the, yeah, $6 million. So of the 6 odd million dollars and I'm rounding probably more than the 200 million. Um, there was a $200,000 discrepancy which EB David would indicate came from timing differences in when the Huons were utilized or warrants in transit or whatever the deal is, I don't know. Um, and so, Again, I'm, I'm not saying that 200,000 is immaterial, but for a spot check that we did, I I think we did prove out that the, even though they weren't being reconciled. You mean it everything checked itself out pretty well. OK. Thank you, Mr. Chair. Thank you. If, if I may, Mr. Wallace. Again, I want to be sure. That your staff and your folks understand now how to handle these situations. They misapplied it to one account when it should have been to another account, and y'all didn't catch that. And that that's concerning because while this is a war. It could be a situation where, where it's in the wars. Yes, sir. And y'all are talking about several million dollars in the and and I guess the concerning fact to me is the control, and I don't, and this is a Washington problem and there's a lot of problems up there, but the PBMs. Can kick stuff back on their own whims. And that puts y'all in a bind, and it sure puts us in a bind because we're responsible to the taxpayers of Arkansas. Yes, sir. So I just want you to be sure, Senator Hickey pointed out that y'all are correcting the problem and have oversight within your uh section. To catch these situations. Yes, sir. Thank you, Mr. Chairman. Thank you, Mr. Wallace. Thank you, Mr. White. All right. Thank you, members. Do we have any other questions on B1. No other questions. You know motion To adopt the report, we've got a motion. We've got a 2nd. All those in favor signified to saying aye. All those opposed? Motion carries, as you're aware, this means we've approved that contract. All right, that's going to take us to members at your desk, I believe. You have a list of the reappropriation bills. What I would like to do is, uh, vote those out as a batch and so we're gonna do kind of if you're in the Senate, you're fairly familiar, uh, but I'm gonna read these line by line, and if there is one that you have a question about or one that you would like to have pulled out for a separate vote. Hit your mic then. But I'm gonna ask you to do is if I say 1309 or 1390, and you have a question about Senate Bill 198, wait until I say Senate Bill 198, please, so we can kind of move through the process and that's just so we're, you know, not pulling people up at different times. So with that, that reappropriation list that you have in front of you. House Bill 1390. House Bill 1391. House Bill 1392. House Bill 1393. House Bill 1394. House Bill 1395. 1396. 1397. 1406. Senate Bill 190. Senate Bill 191. Senate Bill 192. Senate Bill 193. Senate Bill 194. Senate Bill 195. 196 197 198 Or 199. I'll just go back through. Senator Caldwell. What um recognize you, what is the, is it on 19999. We're gonna pull uh, Senate Bill 199 out for a separate vote or a question. No, I just have a question. Question, OK. If the department act here, yes, absolutely. So this is the reappropriation for Department of A Bill 199. There is no amount of funding available for this. This is a pure reappropriation. I'll, I'll catch them after meeting. We, we can hold it and, and come back to it. There's no rush right, so we're gonna pass over and we'll, we'll hold Senate Bill 1 199 for a later date. Um, All right, so members, do we have any other questions on any of the bills, seeing none. All right, so this is on your list, every bill, but Senate Bill 199, and a motion to. Motion do pass. I've got a motion to bass. I have a second in discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed. Motion carries. All right, so then those have. And passed and that we're we're gonna start with Senate back at our house. All right, we're gonna start with Senate packet. We have several bills that we can go ahead and let out. We go ahead and start working on the agencies. I think there's progress being made on the pay plan, and hopefully we'll have a, a bigger announcement on that soon, but I think we're comfortable in moving forward with some of these other bills, uh, yes sir, that we don't miss one. Yes, sir. On, uh, page one in the Senate packet. We're on Senate Bill 19, liquefied petroleum gas board. That's ready, Mr. Chairman. Any questions on Senate Bill 19, seeing none. We've got a motion to pass. We've got a second. Any discussion on the motion, seeing none, all those in favor signified by saying aye. All those opposed motion carries. Senate Bill 21 post prison transfer board. Any questions on Senate Bill 21, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying aye. All those opposed? Motion. Mr. Chairman, on page 2. Senate Bill 24 Game and Fish Commission. Members, we have any questions on Senate Bill 24. Game and Fish Commission. Seeing no questions, we've got a motion to pass. We've got a second in discussion on the motion. Seeing none, all those in favor signified by saying aye. All those opposed? Motion carries. On page 3, Senate Bill 27. This is Health Department, minority Health Commission. This is general revenue one. Alright thank you members. Any questions on Senate Bill 27. Seeing none, we've got a motion to pass. We've got a second any discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed? Motion carries. Senate Bill 29. That's also minority Health commission, but that's a tobacco settlement funded. Any questions on Senate Bill 29, Seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed motion carries. Center Bill 30, Tobacco Settlement Commission throw you off. All right, Senate Bill 30. Any questions on Senate Bill 30? Seeing none, we've got a motion do pass. We've got a second in discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed? Motion carries. Mr. Chairman, that takes us to page 8 in your packet. That's Senate Bill 43 assessment coordination department. All right, Senate Bill 43. Do we have any questions on Senate Bill 43? Seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signified saying, all right, all those opposed? Motion carries. Mr. Chairman, on page 9, Senate Bill 66, teacher retirement. Any questions on Senate Bill 66, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed? Motion carries. Uh, uh That was great, yep, all right. to our house bill packet members. First ones will be on page 2. Yes, sir. How spelled 1088, child support enforcement. Members do we have any questions on House Bill 1088, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signified by saying I. All those opposed? Motion carries. House Bill 1089 Waterways commission. House Bill 1089. Do we have any questions on House Bill 1089, seeing none. We've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signified by saying aye. All those opposed. Motion carries. chairman on page 3, House Bill 1093, Health Services Permit Agency. 1093. Do we have any questions on House Bill 1093, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying aye. All those opposed. Motion carries. House Bill 1094 tobacco prevention and cessation. Members, do we have any questions on House Bill 1094, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying. All those opposed. Motion carries on page 4, 1098 disability determination. All right, House Bill 1098. Any questions on House Bill 1098. Seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying aye. All those opposed? Motion carries on page 6. House Bill 11:20. public employee retirement. Page 6 House Bill 1120. Any questions on House Bill 1120, seeing none, we've got a motion to pass. We've got a second in discussion, seeing none, all those in favor signified by saying aye, all those opposed motion carries on page 7, House Bill 1123, Martin Luther King Jr. Commission. House Bill 1123 when me questions on House Bill 1123, seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying I, all those opposed? Motion carries, page 15. Go to page 15 members. House Bill 1201, Transportation Department. House Bill 1201 transportation department. Members to when having questions on House Bill 1201. Seeing none, we've got a motion to pass. We've got a second. Do we have a discussion on the motion, seeing none, all those in favor signified by saying I. All those opposed? Motion carries. Mr. Chairman, the last three are all for the bioscience Institute program. It's House Bill 12. 59 on page 20, UA Fayetteville. All members, turn to page 20 and the next one will be on 21. These are the bioscience, like I said, House Bill 1259. Do we have any questions on House Bill 1259. Seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying aye. All those opposed. Motion carries. House Bill 1262 AU Jonesboro Biosciences. We have any questions on House Bill 1262. Seeing none, we've got a motion to pass. We've got a second in discussion on the motion, seeing none. All those in favor signify by saying I. House Bill 1267 UA Medical Sciences, biosciences, do have any questions on House Bill 1267. Seeing no questions, we got a motion to pass. We've got a second in discussion on the motion, seeing none, all those in favor signified by saying aye, all those opposed, motion carries, and I think that. That brings us to a conclusion. Members, thank you for your time and questions this morning. Uh, we are not going to meet until next Thursday that will be members own, uh, so get your things ready. Representative Johnson. slow pace. We adjourned.