Meeting called by: Mark Langdorf Type of meeting: Advisory

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1 MINUTES: SUPERINTENDENT S INSURANCE ADVISORY COMMITTEE (SIAC) February 21, :30-4:30 p.m. Location: ESF Superintendent s Conf. Rm. Meeting called by: Mark Langdorf Type of meeting: Advisory Facilitator(s): Mark Langdorf Note taker: Sandra Rodriguez Members: Absent: BPS and Guests: MINUTES Dawn Butterfield (Board); Anthony Colucci (BFT); Jo Ann Clark (Accounting Services); Patrick Darville (Local 1010); Mike devaux (Board); Dominick Lauretta (Board); Chris McAlpine (Board); Victoria Hickey (School Administration); Amy Norton Williams (BFT); Dan Bennett (BFT); Bruce Cotti (Board); Sharon McNichols (Non-bargaining); Carol Tavella (WTW); ), Lisa Schmidt (BPS); Bonnie Doss (BPS); Brian McNeil (Cigna),); Joe Logan (WTW); Deborah Lucas (BPS); Rivers Lewis (BPS); Welcome and Introductions. We welcomed two new members Anthony Colucci (BFT) and Leslie Lawter (BPS) as well as a non-voting member, Rivers Lewis, who is the Director of Professional Standards and Labor Relations. Approval of December 2017 Minutes. Mike devaux approved the Minutes and Patrick Darville seconded. The Minutes were approved unanimously. Mark showed samples of the Office of Insurance Regulation letters we received in 2015 which show our finances were not acceptable. Under their requirements, in order to be self-insured we must have 60 days worth of claim payments in reserve. The board attempted to correct that by taking infusions and making some plan design changes. At that time, we were underfunded by $4M. We made changes at that point with the board making some infusions and plan design changes. Financials Joe Logan reviewed financial data for full calendar years 2016 vs Based on 2017 actual claims, both medical and pharmacy cost increased more than 11% on a PEPM (per employee per month) basis. Some of the 2017 increased costs has to do with catastrophic claims. Looking at fixed costs, there was a 6.5% increase. These costs are expected as they are negotiated in contracts. The total cost for 2017 was $69.1 million; estimated employee contributions (based on the rates and enrollment data we got from Cigna) amounted to $18.9 million, leaving the net total cost at $50.2 million. After accounting for the Board contribution total of $47.9 million, there was a $2.3 million shortfall. In 2016 total claims less than $150K amounted to $49.6 million; for 2017 that amount jumped to $52.1 million on a PEPM basis. For claims above $150K, costs jumped from $84 PEPM to $130 PEPM which is a 54.7% increase in high-cost claims. In 2016, we had $6.6 million in catastrophic claims and in 2017 we had $10.2 million in catastrophic claims. The count of those claims over $150K increased by 14, the average claims per claimant stayed about the same but those 14 people generated about $3.6 million in costs. We also had a 6% PEPM increase in typical non-catastrophic claims costs in Mike asked how many claims were still active vs. shock claims. Carol responded that only 3 or 4 have carried over from 2016 to Some have passed away and the majority of these are new claimants. Revenue Assessment: For the current policy period January 2017 through December 2017, we look at total costs being $69,113,016 vs. revenue at $66,781,587. For 2016, costs were $62,571,620 vs. revenue of $65,839,933. 1

2 2018 and 2019 projections. We focused on the best-estimate scenario first. Joe said we are projecting approximately $70 million in total costs for 2018, which includes rebates, change in reserve, and expected savings modeled from various programs that are currently in place. Assuming roughly the same employee population for the next couple of years, we are looking at approximately the same revenue of $66.7M. Based on these assumptions for 2018, a $3.3 million deficit is projected which will reduce our fund balance from $15.3 million to about $12 million which just covers the projected 60-day claim reserve of $11.5M by about $500k. For 2019, we projected about $72.5 million in costs, same assumption for the revenue of $66.7M which results in an estimated $5.7 million deficit. That would drop the fund balance to about $6.3 million. However, the required 60-day reserve amount is set at around $11.9 million leaving a shortfall of about $5.6 million. That $5.6 million deficit translates to needing an 8.4% increase in revenue in order for the year-end fund balance to cover the 60-day reserve amount. To clarify, the fund balance at the end of 2018 will be $12 million but by the end of 2019 the projected year-end fund balance will be $6.3 million. As such, we need to make up $5.6 million in revenue in order to cover the required 60-days of claim cost. To cover the 2019 projected $5.6M shortfall, we need to decide now on what changes will be implemented in There are two areas to contemplate: plan design changes or rate increases. Mark wanted to spend the bulk of the meeting on possible plan design changes as we don t know what funding the legislature will give us. If they gave us between $6-$7 million over what we had last year, much of that would be used for pay raises which wouldn t leave much cover health plan deficits. Mark again stressed the need to work with the modeling tool Willis presented to determine what works best and where consensus can be found. Expenditures: Mark described what is happening with our funds. In , revenues exceeded expenditures in 2015 by $5.5 million. In 2016, revenues exceeded our expenditures by $5.3 million, in 2017 medical increased by $7 million and pharmacy went up $1 million. Most of that increase is from claims related to cancer or chronic conditions that have gotten worse. Some claimants were not getting medical treatment resulting in hospital admittances, which drive our costs up. We also added clinics, which was an additional $1.5 million cost. One year wiped out two years worth of revenue. Last month, over a three-day period, Mark received a $1m claim from August, another one for $500k, and a third one for $470,000. He thinks the increase in Specialist copay (from $35 to $50 made years ago) is contributing to these high claims because employees with chronic conditions are less likely to seek proactive/continued care, due to the increased cost, so their conditions worsen. Since 2013, Primary Care Physician (PCP) visits have been relatively stable year-to-year. We had 2,188 per thousand members at that time, and in 2017 (Jan. through Sept.) there were 2,117 visits. This would indicate the PCP co-pay is fine, people are still going to their doctors. However, after the Specialist co-pay was raised to $50, those visits went from 2,190 visits per thousand members in 13 to 1,799 through September Now that we have Well-Care Centers (WCC) and Tele-Health, Mark wants to increase the Preferred Health Care (PHC) centers co-pay and reduce the Specialists co-pay to encourage more people to see Specialists for help with chronic conditions. Amy Williams indicated that increasing PHC co-pays would not work, as accessibility to immediate care is a huge problem. She was concerned that we are at the height of flu season and people cannot get into our clinics. She hears from coworkers that no one is answering the phone, their online portal shows available appointments, but when someone goes to the clinic, no one is at the front desk forcing one to go to a PHC. Carol explained that we are steering people to the most expensive point of care and we need to stop doing that. Amy responded that is why we need to have clinics more accessible. Carol said only 25% of our visits to PHC are weekend visits. Mark reiterated that we need to focus on chronic conditions. Amy countered that his solution of increasing rates was a punishment to all employees because of the 40 people with chronic conditions; that raising rates will deter people from getting immediate care when they are sick and need a PHC. 2

3 Mark said the reality is that 50% of our population has chronic conditions and some are not under control. His preference is to reduce the Specialist co-pay to encourage people to see Specialists, and offset that by raising the PHC co-pay a bit. He asked for input from everybody. This is the one thing we think we need to change in plan design that will affect 90% of the people on our plan. Dawn Butterfield feels we need to look into care management and thinks perhaps we have maximized all the programs we have in place now. She also wants to know if Cigna has told the WCCs who the chronic-condition people are and if the WCCs have reached out to them. Carol and Mark both confirmed this is presently happening. Dominick Lauretta asked what the engagement rate is when we reach out to those who need to get into a disease management program. Carol responded getting them on the phone is tough. People screen their calls, calls go to voic , and they do not call back. We only have between 30% to 40% of our employees engaged. Dawn feels we need Marathon to help change that since they are notified of the claims as we are paying the WCCs. Brian McNeil clarified Cigna s role in health maintenance vs. health improvement: Health Maintenance Examples Completed preventive/wellness service Speaking with a coach or nurse phone, online or onsite On-site wellness campaigns 100% compliance with Cigna Gaps in Care Called into EAP program Called the 24 hour HIL (health information line) Health Improvement Examples Set a Goal with a coach or nurse phone, online or on-site Gaps in Care credited closure Pre/Post admission counseling Case Management engagement Treatment Decision Support participation Health Pregnancies Healthy Babies participation Onsite lunch & learns Cigna identifies a gap in care, e.g., a diabetic not having their blood sugar checked in 6 months. Cigna sends a reminder out to the patient and their doctor. When the patient acts upon it, they ve engaged in health maintenance. Cigna stated 16 chronic conditions are being looked at and tracked. Most of the care gaps are in diabetes. Chris McAlpine said there are over 650 agencies in this county that support all manner of different diseases. Whether it is assistance with transportation, meals, etc. you can access them for free by calling 211; they have had 29,000 referrals in six months. Mike Devaux pointed out that our leverage areas are limited to plan design and premiums and in order to fix what is happening, we will probably have to make changes in both areas. Amy feels that if we raise copays it is going to stop people from going to the doctor. Carol moved on to review plan design considerations for 2019, affecting only those who use the plan: Medical Increase member coinsurance 5% savings of $362,000 Increase brand pharmacy copay $25 savings of $403,000 Increase out of pocket max by $1,000 * savings of $852,000 Increase deductible by $250 savings of $882,000 Increase out of pocket max by $2,000 savings of $1,231,000 All of the above changes ($1,000 OOP Max)* savings of $2.1 million 3

4 All of the above changes ($2,000 OOP Max) savings of $2.7 million Pharmacy Plan only Mandatory generic savings of $56,000 Voluntary 90-Now (Remove Walgreens and Publix) savings of $150,000 Brand Rx Coinsurance w/min-max (brand Pref: 20%, $50/$100 min/max Brand Non-prof: 30%. $125/$300 min/max) savings of $182,000 Brand Rx deductible ($300/$600 ind/fam*) savings of $344,000 Brand Rx coinsurance (20% Pref, 30% non-pref) savings of $368,000 All Rx Tiers coinsurance w/ Min-Max (Generic 10%, $20/$40 min/max Brand Pref: 30%, $50/$100 min/max Brand Non-prof 30%, $125/$300 min/max) savings Dawn asked Carol to explain how pharmacy A chain is more expensive than pharmacy B chain if the end cost charged to the plan is the same amount per the contract. Carol said the end cost charged to the plan is not the same amount. She went on to explain pharmacy claims are adjudicated at the lesser of usual and customary actual costs or the negotiated rate between the carrier and the pharmacy, not your contractual rate. The contractual rate is a minimum savings guarantee. Dawn then said that the cost of Publix is $7.50 for usual and customary Carol said she s focusing on fairly cheap drugs that are cheap no matter where we go. Dawn continued that we need to look more at pharmacy and wants to know about transparency. Mark indicated, and Brian confirmed, that our current contract has all rebates coming back to the district. Carol verified full, past-through pricing at the retail level but not currently at the mail order level. Mike said we have a high pharmacy spend. Dawn wants to look at combining plan management, copay structure, and plan design. She said if we had specific programs, for example, one for COPD, if an employee enrolls in the program, then their copays would be reduced. It works for the patient by giving them incentive to be enrolled, and it increases adherence, which helps prevent hospitalization. Mark feels most of the things we are recommending are going to affect those that are driving the costs. Mike devaux asked about Local Plus. Brian said they had to bring in more doctors which deleted a lot of the savings. Mike asked for a disruption report of how many people this would affect, how many will be excluded off their drugs, are we playing for PPIs on the plan, lifestyle drugs, etc? Mark provided an update that we might not put out an RFP as Cigna is offering more savings if we continue our current 5 year agreement through For 2018, they are offering a total of about $1.7 million savings from our current contract comprised of increased discounts off our current drug pricing, additional rebates that amount to $1.2 million as well as a two-month premium holiday which is the other $500,000 savings. For 2019, they are offering another $1.3 million savings and for 2020 an additional $1.2 million in savings. We are not sure that putting out an RFP would net much better than that. Dawn stated that all those concessions from Cigna tell her there is more money on the table because this all came up after the threat of an RFP and potential business disruption for Cigna. She mentioned a press conference referencing how much money certain entities are making per prescription. Mark said he understands but three years ago, Cigna won our business by offering the best pricing at that time over other competitors. Cigna now wants to make it more attractive for BPS to maintain the contract so is offering better pricing. Dawn then said let s have Cigna be a part of the RFP against the other people, their money wasn t at the last meeting and all of a sudden it is here today. Amy also thinks we should do an RFP. Mark said he will take it into consideration. Joe Logan moved on to discuss a tool used for modeling 2019 plan changes. Committee members were asked to make suggestions so we could look at the resulting numbers. Anthony Colucci commented that, although we say there have been no changes for four years, we have to step back and look at the bigger picture. From the employee perspective, he said, there have been changes, not 4

5 necessarily financial ones. He noted that we changed the health care plan with the WCCs, with biometrics, etc. so any further change is going to hurt as far as increases and plan changes. Dawn went on to talk about full medical change. She asked whether we had ever looked into using a TPA (a claims administrator with no insurance carrier affiliation) instead of a carrier (such as Cigna). She thinks we should look at that. Carol and Mike responded that TPAs discounts are typically much lower (less deep) than an insurance carriers. Therefore a TPA would not help BPS save money. Dawn asked, what about direct contract? Carol said direct contracting is only done by employers in areas that only have one hospital and they have bad discounts with carriers. Direct contracting isn t productive in major areas. Dominic Lauretta said we need much more detail on exactly where dollars are being spent, e.g., for outpatient services. We need that data to create education and steerage. He has quizzed some school board employees and they aren t all educated on the cheapest place to get procedures done. We need to formulate a plan to educate people. Cigna s done a great job but we need to consider steerage. Mark again tried to draw people back in to focus on, and get input for, the modeling tool Joe was showing. Some ideas included raising emergency room fees, urgent care fees, preferred health centers fees, inpatient hospital. As to education and where the best pricing is by service, Lisa mentioned that Cigna s website and cost estimator tools are underutilized and educating employees about using them could be helpful and lead to self steerage. With Cigna s tools, if you have to go for any kind of procedure, you can use the website to find the best outcomes and related pricing. Mark said we will have the modeling tool available again for the next meeting in March. encouraged everyone to continue to think about options for Mark 5