AGENDA

State and Public School Life and Health Insurance Board Benefits Sub-Committee

July 01, 2016

10:00 a.m.

EBD Board Room – 501 Building, Suite 500

I. Call to Order .......................................................................... Jeff Altemus, Chairman

II. 2017 Rate Discussion ......................... John Colberg & Gaelle Gravot, Cheiron, Inc.

III. Director’s Report .......................................... Chris Howlett, EBD Executive Director

2016 upcoming meetings:

July 8, August 5, October 2, November 4

NOTE: All material for this meeting will be available by electronic means only

ethel.whittaker@dfa.arkansas.gov

Notice: Silence your cell phones. Keep your personal conversations to a minimum.

Observe restrictions designating areas as “Members and Staff only”

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State and Public School Life and Health Insurance Board

** Special Benefits Sub-Committee** Minutes

July 01, 2016

The Benefits Sub-Committee of the State and Public School Life and Health Insurance Board (hereinafter called the Committee) met on July 01, 2016, at 10:00 a.m. in the EBD Board Room, 501 Woodlane, Suite 500, Little Rock, Arkansas.

Members Present Members Absent Becky Walker Susan Gardner Shelby McCook Jeff Altemus Claudia Moran Carla Haugen (teleconference) Ronnie Kissire

Dan Honey Janis Harrison

Chris Howlett, Executive Director, Employee Benefits Division (EBD)

Others Present Dr. John Kirtley, Bob Boyd, Board Members; Dwight Davis, Sherry Bryant, UAMS; Janna Keathley, Marla Wallace, Ethel Whittaker, Eric Gallo, Cecilia Walker, Terri Freeman, Stella Greene, Lori Eden, Carroll Astin, Matt Turner, EBD; Kristi Jackson, Jennifer Vaugh, Com Psych; Pam Lawrence, AHH; Sylvia Landers, Minnesota Life; Ronda Walthall, AHTD; Scott McRae, APSRC; Stephen Carroll, Allcare; Takisha Sanders, Jessica Atkins, Health Advantage; Karyn Langley, B.J. Himes, Qualchoice; Liz Tullos, WageWorks; Marc Watts, ASEA; Dwight Mankin, Communitas; Steve Althoff, MTI; Erica Gee, Attorney; David K., AEA ; Donna Morey, ARTA; Drew Crawford, SEBCO; Jennifer Smith, ASU; Martha Hill, Allison Drennon, IA; Andy Davis, Arkansas Democrat-Gazette; Elizabeth Whittington, ACHI

CALL TO ORDER The meeting was called to order by Jeff Altemus, Chairman.

APPROVAL OF MINUTES The minutes will be approved at the July 8, 2016, meeting.

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Wellness Program Approval: by Chris Howlett, EBD Executive Director Howlett proposed the Board approve the wellness benefit as is; maintaining the $75.00 discount. Kissire motioned to approve the wellness discount of $75.00. Haugen and Harrison seconded.

Discussion: McCook would like to know if the plan will be able to determine

what benefits are the result of the discount. McCook would like to know the extent of the benefits to which, funding the wellness program is providing versus the benefits received. Howlett will provide the information at the next meeting. Honey requested to examine the claims for those who had their wellness, and that additional diagnosis was found that could have resulted in better health for the member. McCook agrees with Honey. Howlett will provide the information at the next meeting. McCook motioned to postpone the wellness discussion until after the Cheiron presentation. Harrison seconded. All were in favor. Motion approved.

2017 CONTRIBUTION RATE CHANGE PROJECTIONS: by John

Colberg, Cheiron Inc. Colberg reported that ASE is likely to see a significant increase in 2018. PSE is likely to see a significant increase in 2019. A favorable trend experience could delay an increase; unfavorable trend experience could magnify the increase.

McCook reported the state contribution is greater than the school contribution. Due to the way in which the plan is funded; ASE receiving more funding than PSE is an indication that this is the prime issue. The following table represents PSE scenarios for the next four years: 2017 2018 2019 2020 2017 2018 2019 2020

Trend Scenario

6/10% 6% 6% 6% 6/10% 3% 3% 3%

1 No changes 0% 0% 27% 18% 0% 0% 8% 13%

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2 5% Min. Increase 2018

0% 5% 19% 19% 0% 5% 5% 8%

3 5% Min. Increase 2017

5% 5% 9% 21% 5% 5% 5% 5%

4 10% Min increase 2018

0% 10% 12% 20% 0% 10% 10% 10%

5 10% Min increase 2017

10% 10% 10% 10% 10% 10% 10% 10%

6 Classic/Basic Ded/OOP-2017

0% 0% 24% 18% 0% 0% 5% 14%

7 Combine 3. & 6.

5% 5% 6% 22% 5% 5% 5% 5%

The following table represents ASE scenarios for the next four years:

2017 2018 2019 2020 2017 2018 2019 2020

Trend Scenario

6/10% 6% 6% 6% 6/10% 3% 3% 3%

1 No changes 0% 30% 24% 19% 0% 21% 17% 13%

2 5% Min. Increase 2017

5% 22% 25% 18% 5% 13% 18% 13%

4 10% Min increase 2017

10% 15% 26% 18% 10% 10% 13% 13%

6 State Contribution to $425

0% 28% 24% 19% 0% 18% 17% 13%

7 Lose 1,000 unfilled positions

0% 36% 23% 18% 0% 26% 16% 13%

As an option, it could be possible that the plan would not cover pharmacy for ASE retirees in 2018. McCook questioned how do Medicare Advantage and the pharmacy work together? Honey reported it might be an advantage for the retirees to have the option to shop for their desired pharmacy as it may reduce the price they're currently paying.

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McCook reported the allowance for reducing rates if members purchase their own drug plan for retirees should be identified in the rate structure. Colberg stated eliminating pharmacy for ASE Medicare in 2017 could potentially save the plan $18 million, and $100.00 monthly savings to the members. Howlett reported EBD is analyzing analytics with EBRx for further education regarding specialty drugs. Howlett has concerns that the plan is reaching a timeline for 2018 discussion. McCook is concerned with increasing deductibles and rates for 2017 based on the information that was provided for 2017 and 2018. McCook feels reserves should be utilized to offset some of the cost to members. Walker is more engaged with a small rate increase instead of an increase in deductibles. Altemus is requesting information regarding revenue for the plans for the past three years. Harrison reported concerns regarding Medicare ASE retirees. The members have dedicated several years of service with expectations that they would be rewarded in benefits upon retirement. The members could view the projected change as a betrayal. Howlett believes the components of utilization and funding need to be reviewed to impact the plan positively for 2018, 2019, and 2020. Colberg reported the critical issue is should there be changes for 2017. Colberg would like the members to review the information for further discussion at the July 8th meeting. The deadline for a decision is July 12th. Harrison has received communication from members attempting to fill prescriptions with no results. The concerns are with the new pharmacy vendor. Kirtley reported there had been changes. Bin numbers have changed, no processing control numbers, etc. Eden reported the bin numbers have not changed they remain the same; the previous PBM used a six-digit member number, and the new vendor uses the entire eight-digit member number, which includes the family code. MedImpact has communicated with the pharmacies to re-run claims that were denied. There are additional reasons why claims are being denied, but the main issues are the member numbers and a few of the specialty medications processing. EBD communicated with the Health Insurance Representatives to educate the

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members regarding the issues, and also sent emails to all members with email addresses on file. McCook recommended EBD communicate with the Pharmacy Association regarding the outcome. Eden reported Dr. Bemberg has communicated with the Pharmacy Association on more than one occasion during the morning. Colberg asked the committee what additional information would be helpful for review at the next meeting. Honey would like to examine trends that are below 6%. Colberg suggested considering state contributions as well.

EBD DIRECTOR’S REPORT: by Chris Howlett, EBD Executive Director

There was no further discussion.

Harrison motioned to adjourn. Haugen seconded; all were in favor

MEETING ADJOURNED