JBC-Employee Benefits Division- Oversight Subcommittee

We'll call this meeting to order. Uh, comments by the chair on Bee, welcome everybody appreciate you being here. Uh, it's very important committee and I look forward to us taking care of business quickly. Uh, my co-chair, uh, Representative Milligan, do you have any comments? Thank you very much. We'll move to item C review of the employee benefits division contract amendment, uh, Mr. Wallace, would you please come to the table and if you would please introduce yourself and then you have the floor. Grant Wallace, director of employee benefits division. So what you have before you is an amendment to the Naitus Health Solutions. Contract, uh, we are adding an additional 22 million, uh, in, in a authorization to spend on this contract, uh, to take a step back and kind of start at the beginning and kind of explain how we got here and kind of work flow this out a little bit for everybody. Um, with Navidis, we get 2 invoices. One is for the administrative services, so our per member per month base cost, and the other invoice is the claims invoice. So what we're actually paying for prescriptions that are filled throughout a month. We have a service with them, which is a coupon program. What the coupon does is it actually offers us a discount, so say the prescription costs $100. Manufacturers have a coupon program that Naviuss helps us take advantage of that would reduce that by, say, $10. So now the plan only pays $90 for that for that prescription. To administer that, there are fees that are associated with Navitis in administering that, uh, it's 20%, so of that $10 we owe them $2. What we thought was happening is that they were taking that $2 off the top when they were working the coupon. So instead of us getting the full 10, we would only get $8. What is actually occurred is that we are getting the full $10 reduction on the claims, but being charged the $2 administrative service on our administrative bill. What that did is what we authorize the initial amount that we um plugged into the contract. Did not take that into account, so therefore we have exhausted the administrative funds that we are were authorized to spend. So that's why we're before you today, is asking to increase that amount to get us through the remaining part of the contract and to take into account that now we know their billing system to take that amount into consideration there. Um We are not asking for any new or additional funding, we have the funding available to cover this. And. You know, I think as someone who used to be chair of EBD subcommittee through ALC. It's concerning to me that Natus was supposed to save us around 50 million, and now we're forking up another 22 million into the system. Um I mean, I mean, how do we get this far down the road. Where it just doesn't seem like we're, the savings that we were promised are not being produced. I'm very concerned that we're having to pump this money into the system again. And how do I know in 6 months, we're not gonna be back here again, pumping more money into this program, and we've got this seven-year contract with Navitis, and it's just gonna be a bleeding. Wound for lack of better word. and thank you for asking that so that we can kind of clarify everything that's going on here. The savings are still there in the program because of this coupon program, because of our rebates, none of that is impacted this. This really is looking at the administrative bill that we receive, uh, and, and it's just taking that fee that was associated for managing the coupon payment and associating it with the administrative bill. that we receive. Those overall savings to the programs, we are still realizing that we're still getting enhanced coupons. We're still getting enhanced rebates from using Navitis. So the overall cost to do the pharmacy benefit is not increasing. It's just making sure that we're aligning the bill and the authorization to spend the money that we have in the appropriate bill. We're just matching up. A to A instead of having part A over what we thought was in Bill B. It's actually all going to Bill A and that we have the appropriate money to spend and pay for Bill A. Well, so let me ask you this then. How long have we been doing this essentially the wrong way, that's what it sounds like because why was this not caught sooner? Yes, sir. I appreciate that. And we have, uh, enhanced our systems at TSS so that we are reviewing this more frequently and that we do not get into this situation. This was on the bill, and I do take full responsibility that I was not more involved in reviewing the bill. We have fixed that to where Now I do see the bills and we'll see the bills on a monthly basis so that I can monitor this and that we do not get in the situation moving forward. I, I've got more questions, but I see other members have questions, so I'll. Representative Graham much. Thank you, I guess my, my question is, OK, so we were confused about how we're getting billed in the first place. We didn't, so we got into a contract and we didn't know how we were even getting charged. Is that correct? Alright, so. I mean, are they, are they running it up? Is there anything we can do to prevent this kind of stuff from happening in the future, or do we think we know how it works now and everything's gonna be OK. Like I do feel very confident that I know how their billing system works. Navidis is working to roll out a new billing system, uh, that I think, uh, even they would admit would be a little bit more clear as we, and they can associate charges a little bit more clear than what they have with their current system, um, and we have, we have a very good communication around. this so that we can monitor and and be in control of this. I feel confident that I'm in a better place today than I was a month ago to know how to manage this and make sure that we do not have this situation moving forward, OK, and is there, I mean, is there any fault on Navitas? I mean, it makes it, you made it sound like that they weren't really clear to us even how we were going to be built. I always have liability here? I always hesitate to, to place blame because ultimately I am the one responsible. I am. the one, that, that has to take full responsibility of this. Um, but yes, could they have been a little bit more clear in the rollout and in the explanation, absolutely. Have we asked them to do that more in the future? Yes, and they have agreed to do that. And is there language in the con like the because I think all this was done before I was here, is there a language in the contract that we can see like uh where is that document so we can, I, I'm just curious what it even says there around it, and I think that's where maybe Yes. Do they associate the fees that are with the coupon as an administrative charge, yes, that's why they're placing it on the administrative charge. As we understood it, it was, we didn't really grasp on how they were deviating administration. We thought it was wrapped around in the basic coupon payment itself and that they would just take that fee off of the top of the coupon. um, thank you. That's all for now. Representative Shepherd, you're recognized. Thank you, Mr. Chairman. Uh, I think you just answered what my question was. I wanted clarity on what, what was our understanding or, or what did, uh, what did TSS believe was happening. It sounds like. Uh, TSS thought that ultimately that would be netted out and we would get an invoice for the net amount owed and what actually was happening is we're, we're getting, um, We're getting the credit. But we also are having to pay back the fee and so it's just a question of how we, um, allocate those charges and whether we're actually having to pay for that or whether it's already being deducted from a credit that we otherwise receive. You've just walked through it, sir, and that's absolutely, we understood it to be a reduction in the credit that we were owed and not necessarily a, a straight up fee that would, we would be billed for. OK, and just to follow up to that, given that Your belief was that it would be netted out of that and that we would be dealing with a net amount. Are you confident that the amounts, whether it was netted out on the front end or whether it's as, as apparently is the case where we get credits, but we have to pay then pay back. Are you confident that those amounts, uh, match up and, and you, you essentially answered it to say all the savings is still there, but are you confident that they match up and so whether it was netted out or whether we're having to pay it back, it's It's, uh, it's the amounts that we negotiated and we expected. Yes. Yes, sir. OK. Thank you. Senator Hickey, you're recognized. Thank you, Mr. Chair. I hate to be redundant, but I'm gonna ask basically the same thing, maybe just a tad different way. So our original contract with Navitas. Did that specifically Require that administrative fee to come out of the coupon? Did it, was that language, what is that line? That was in there. Does it does with, I understand if their system can't build, that's one thing. But did the contract itself actually say that it would come. From the coupon. No, sir. It, it says that there's an administrative fee that is associated with managing that program. Fair enough. I'm gonna go ahead and ask this question because I've been And then you and I talked yesterday, but I've been thinking about this overnight. So, I'm gonna use your example. So, we had a $100 prescription. A charge that was coming to us, and then there was a $10 coupon on it. So that left $90. All right? So at that point, Or what we've been doing is, is. is we have paid that provider $90. OK. When it all I'm sorry. Go ahead. Well, and I don't because I know the sensitivity around this contract. The provider is getting the $100.10 of it is coming from the manufacturer coupon 90 is coming from the plan. From the, from the plant itself, so in your, this is where I'm gonna lead into my question because I can't get my head on this either around this either. So, OK, so we pay, we, we were liable as the plan for $90. The way, the way it's been done. But if it had been done the way that you all thought it was, were that that $2. For the administrative fee have come out of there, we would have actually been liable for $92. OK. So it appears like that they're That, that, that's where, that's where that's at. But this, this is my question. Whenever we say that the plan itself is now liable for that. Would that have all been on the state or would the members themselves had to pick up part of that, because my question here is this. I want to make sure that the state That the state itself has not actually been harmed because the members themselves would have picked up that because by putting it under this administrative fee that we're going to be doing just in this line item. That's all state funds there. Does that make sense what I'm trying to, trying to say, OK, sir, no, the state would have owed the 90 or 92, that, that there's no member share that was, that is part of this issue that's going on, OK? So that particular I don't right there. So that's where either we're paying the 90 or 92. That's coming out of our claims, is that right? Right. OK. So, according to what, to what you're, what you're telling, telling us, it appears like a wash because if the state themselves through through the plan was totally liable between either the 90 or 92, it appears that the, the $2 we, it should have just come out of that line item, whereas you're saying that. we've got a higher line item over here. So, so it's what you're asking for, you're, you're just asking for the, uh, You're just asking to spend that money extra out of the claims, correct? Out of the administrative. OK, you're asking to spin it out of the administrative, but in all actuality, You didn't spend as much out of claims as you should have. So should you, should we just be allowing you, do we, and maybe this is a question for staff. Should, should we just be somehow doing something that says, well, we're just allowing you to take it out of this other line item instead of increasing this one because if we give you full authority to spend under the claims side. And we're not taking that away. But now we're giving you additional. Authorization to spin out the administrative side. I just want to make sure that we're not giving you more than we should. And I know we've got the per member per month is, does this in any way affect that? That amount because we allow, what is it? 660 or something. What, what's our current per member per month is 229. OK, um, and no, this does not impact because again, that's a different. Uh, invoice line, uh, you know, that's. I don't know how to describe it, um, but that, that service A, this is a service B. That were being built for. OK. I think I've got, I think I've got a good feel for this. Whenever, whenever we get down to the end that this committee would, of course, we're just going to approve it here and then I guess full approval will be in JBC. Is that the correct way this will work? Person, personally, again, I think it's all OK, but I wouldn't mind because they audit watches you all the time. I wouldn't mind that if we did an approval contingent. Upon them looking at this just to make sure that they are just to assure you, yes, they look at this, they are currently auditing all of this activity, um, and, and at the end of it, it's the same fund, it's the same pot of money that all of these bills are being paid out of. So I know we had kind of talked yesterday, well, all right, uh, do you need some approval over here for this different? No, sir, this is all coming out of our cash fund and it's all the same pot of money again, whenever it's appropriate time, I'd like for the emotion, you know, if, if this body wants to approve it in here, that we do, we do the motion, but it's contingent with with the it's contingent upon the leg audit to make sure that they verify everything that's been said here today and kind of look through it themselves before it goes to JBC. So That'll be kind of what I think we should. Do just to make sure we're being prudent with all this because it is complicated. Thank you, Senator. Senator Bryant, you're recognized. Mr. Chair. And I, I, I too, um, Not sure what questions to ask. I'm still trying to gather it, but when I hear the conversation about these little coupons, and we're using I know we're using small numbers. But, if we approved a seven-year contract for 11 million. And 2 years in the contract, it's 300, 300% more than that. So that's a big number going from 11 million to 33 million. I, I guess I don't, where, where is that bulk, if we're just talking about administration costs, where, where's the bulk of that going? Some of the administrative costs for those out years was not included on the original as well. So there, that there is some of that that's going on, that per member per month needed to be extended out to the life of the contract. And these coupon, uh, administrative fees needed to be added into that. So it's not purely the coupon, it's not 100% of the coupon that's driving all the full increase. There is some Mad men just based per member per month admin that needed to go into the out years of the contract, OK? And then do you recall in 2023 when this was approved and the other applicants on the, um, solicitation where they comparable or they, were they this high? I'm just curious, was there not a flag on the play back in 2023. OK, this is too cheap because our contracts are coming in higher, but we're gonna go with this. Because we're gonna save money and then at the end of the day, we're not. Right? So I, when I came in, um, I was able to do like the best and final offer. So kind of the end part. Um, I did not start this particular RFP, but I did end it. Everybody was comparable when they were looking at the per member per month, the distinguishing factor for Natis was its rebate program. And that's what differentiated it from the other, uh, applicants at the time. All right. Thank you. Representative Shepard, you're recognized just to follow up on Senator Hickey's question. And I think I heard you say that essentially the money is coming from the same place. It's our cash fund. Yes, sir. The, the EBD Trust, that's where all our bills are paid out of. So whatever, so theoretically because it's a wash, we've been saving money over time. We've been saving over time because we've not been paying the $2 or, or it's, it's paid on the back end as opposed to being netted out throughout the, throughout the contract and, and sorry, so. It is a wash, it's just what bill are we paying this fee off of and, and the crux that we get in is that the administrative bill has a cap on it because that's the contract that you all review and you approve a certain dollar amount for us to spend within that contract. And that's the cap that we have hit. OK, but it seems like to me that if, if that, if we believed that there should have been savings elsewhere if we thought that was being netted out, at least in some other. account or if you're telling me it's all coming from the same place, then I guess it, it doesn't matter, but I, now I'm not sure how do we, how are we hitting a cap if The amounts are, uh, the, the net amounts are the same because there was initially what was entered was the $11.5 million that was authorized to spend on the administrative services for the Navidus Health Solutions contract. So once they added this amount and, and that 11.5 million did not go out the full term as it should have been initially when the paperwork is filled out. But now that they've added this extra line on Our administrative bill, it has exhausted that fund that authorization faster than what it should have, and I guess our authorization was not enough because we believed that it was going to be netted out of what we actually received. It just looked at the per member per month. It did not look at the fees associated with running the coupon and it did not go out the full term of the contract. All right, thank you. Representative Pilkington, you're recognized. Thank you, chair. Uh, one point just that my curiosity, our previous vendor before Navis, how much was it to administer their coupon program. Uh, it was, it, the coupon was managed through EBRX, so it was not managed with Medd impact. It was managed with another vendor it cost us? How much did we have to pull from that savings fund to pay for that. It was wrapped into their monthly fee, and I don't know the exact amount that was for that particular service. I did not review those bills, and that's not a service that I have them do that I negotiated with. So I don't know this, the charges that were associated with that. Well, if we could, I would, I would like to kind of out that, um, you know, we are only 2 years into a 7 year contract, but I'll be curious to know about that. But, but my other question is, um, You know, obviously, we're saying it's not cost us anything because we're pulling from the savings fund. I mean, how many times can we pull from that fund until we're going to the General Assembly and asking them to add money to it, I guess, because how far until that pot gets dry is, that's my concern is we're, you know, like I said, 7 year contract, we're 2 years in and we're having to go back to it and I've seen increases on that already before. Or talks of it and so I'm just I'll I'll be honest, I'm just really concerned that this is the canary in the coal mine and pretty soon is, we're gonna have to be. Go in and pulling from general revenue, which is my very, very big concern in all of these are calculated into managing the program. The these dollars are already cooked in and our actuaries have already run it out. So we do have all the appropriate safety nets and, and watching the funds of this. This is not adding additional money. This is not money that was not already projected within our calculations and our actuarial analysis of where the perme like where are employee contributions need to be or where the state contributions need to be all of those numbers, these numbers are calculated into those figures. So this isn't, um, going in and saying, hey, let's add in a coverage for XYZ benefit that was not calculated in. These numbers are calculated in. Sure, I get that, but I mean, we didn't, I mean, we wouldn't be here today unless this was something new that came up that now we're having to approve and so I, that's what concerns me is these other things popping up. up I, yes, I do understand your concern. I just I fear I'm not explaining it for you adequately in that this is just the authorization. We're not asking for additional money. We're not looking to get new money. We're just getting authorization to pay them. I mean, we should have been monitoring this earlier and coming and getting the authorization to pay pay this particular service out of the correct invoice and that is something that I take full responsibility for that we did not catch this sooner and. to you all sooner. But I do want to reassure you that this is not a, a growth in the expense of administering this benefit. This is something we knew about. It was calculated in this is part of our overall calculations and administering the EBD's funding. Um, so we do have adequate funding to take care of these services. It's just getting the authorization to pay for it out of the correct invoice that this is the. Administrative invoice that we need to make sure that we're paying this particular line item I'm out of. OK, so one more, one last question. So when this fund, which is where the money should have been coming out of originally. When we saw that increasing because it's a savings fund, that's why I believe you stated. Was there any, I mean, Any sort of alarm bells going off that this fund was higher than what we expected it to be, um, the appropriate alarms did not go off and, and we have fixed that at TSS OK. Representing the grandma you recognized. Thank you. I guess the last couple of things. So, uh, what's the total amount that we give y'all for to do this. around just rough. Um So, The administrative side has been 11.5 million are claims side is probably Uh I I guess I'm trying to look to do the math real quick. We probably I, I guess honestly, like when we do this, you're not gonna come back to us asking for money again. Like you're not asking for us now, you're asking for an authorization, but we're not gonna come back and external buns and be like, hey, no, we did this wrong, we're gonna need more like you think it's, this is gonna fix. Yes, sir. OK. OK. Yes, sir. I'm prepared to make the motion. I do want to Make sure that I'm not gonna put you in a spot with this though. So you, you need this, you, you're, you're not. You're not just going to pay all these funds, of course, to the. To Nevus right as a as soon as you get them. This is, this is actually for the whole plan year. So I guess this is my thing. I don't know how long it's gonna take like audit, you know, to, to kind of take a look at this. I mean, if it takes them, 2 or 3 weeks or, and I hate to even talk for them, may take them 6 weeks. And of course we could always back this out in JBC and say, well, we're gonna go ahead and go forward with it if, if we're putting you in a bind, but if, if it were to take, take that, is that gonna put you in a spot? Yes, sir, because we would not be able to pay the administrative. Bill that that is due. OK. So do you think Navus because of the confusion that may have been caused, whether it's on us or on them is gonna be, you could get with them and possibly say, are you OK with this waiting an additional month or something like that. Is that a, is that a possibility or have you, have you asked them about that? I've already asked them about that. They understand the situation that they're in they're willing to work with us a little bit, but I, I mean, with all due respect, I, I don't wanna not pay our bill for an extended period of time. As I, as I would not, it's just, you know, if, if there was some confusion because of this contract and it should have been, you know, maybe it's on us that we should have been more specific, but maybe it's on them also that, uh, they should have made that more specific that it wasn't gonna come out of that because if our conversations, although it's not in the contract where that is going to be that way and it didn't happen. It's kind of on both of us. I appreciate you taking full credit, but But so as long as, as long as you don't think that they're gonna try to charge us any penalty or something like that. And you already discussed it, I would like to make the motion, Mr. Chair, that we go ahead and approve this contract, but that we ask, uh, leg audit to look at it to make sure that the testimony here, you know, uh, all winds up, not that I think granted in any way would, would misrepresent it. I'm not saying that, but what I'm saying is, is I just want to make sure that we have some eyes on it to look at this all the time. Uh, can I ask you to change that to review the contract. We're not approving it. We're just reviewing it for. to go before uh review the ratification of the amendment, OK? I thought, I thought with our, we're gonna do two motions, 1 to review the ratification and 2, to review the contract, which, as you requested, would ask Le audit to review that. Just, just one thing, Mr. Chair. I thought that, I thought that, uh, under our current statute, that in this particular committee that we actually had to approved the contracts, of course it had to be contingent upon it already being approved by the state Board of Finance, which have you, have you taken this before the State Board of Finance yet. This was the money, so we did not. This is not adding new services or it was just a lining up state accounting. If, if our, if our staff's 100% sure of that. Again, I thought whenever we Whenever we had the special session and we actually, uh, reworked all of our EBD programs that we actually did approval on those contracts. Senator Kevin's going to address that point. OK, thank you. Go, if you'll get a mark and. You can come up here, you can have mine. And I guess just to be clear, the question is are we approving or are we reviewing the, the, uh, ratification. Yes, sir. Well, there's two parts. We have a ratification letter which does require a review by the committee. The ratification letter says that they messed up and that they need to go back in time because they didn't have enough authority for their expenses that they've incurred. OK, let me, let me break that down so we're gonna have 2 motions. The first motion that we reviewed the ratification which you just described. Yes, sir. OK, then the second motion would be what? and then the actual, we have the actual contract, which provides their spending authority, that's that that we've talked about the, it was 11 million to start with. That is approval of that contract. So we're going to have a review and then we're gonna have an approval. Yes, sir, and then that gets reported back to the full committee and none of that action is final until that report is adopted by the full JBC committee and that will probably be next Tuesday. Senator Hickey was right. Uh, yes, sir. So like I was just part right. I think you were half right for me to admit, but I, I appreciate it. OK. Are we good then? Anybody else have any questions? I don't see anybody else on the board. Uh, Senator Hickey, would you make that first motion to review the ratification? Yes, review the ratification, uh, I'm, I'm struggling here that I also want to say that. That the, uh, that that approval or that review is also, uh, contingent upon us getting the report back from the audit, so I'm gonna throw that in there so that it takes, so on both motions that we'll have them to. Uh, that both of them would go away if we find something different, OK, and I understand that that won't hinder our Processes To what I understand, it shouldn't. Um, I, I think we're both in agreement that if we're, if we get into a bind that it's really looking like 6 weeks or something like that, um, that we wouldn't want to delay paying the bill because of that. OK, so we need to prove we got a motion. We have a second. Got a second. All in favor, say I opposed. And Senator Hickey, could I, uh, call upon you to make a second motion that we approved the contract, I'll make a motion that we approve the contract in the same way that we'll have uh leg audit to do the review, uh, the review of it to make sure that, uh, uh, everything is as explained. OK, I need a second on that motion. He got a second, Senator Rice, all in favor say aye. All opposed All right, thank you very much. I think that any other I don't see any other business before us, and that concludes our business here today. Thank you very much. We are adjourned.