BERGEN MUNICIPAL EMPLOYEE BENEFITS FUND OPEN MEETING: JANUARY 24, 2013 SADDLE RIVER BOROUGH HALL 12:00 P.M.

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1 BERGEN MUNICIPAL EMPLOYEE BENEFITS FUND OPEN MEETING: JANUARY 24, 2013 SADDLE RIVER BOROUGH HALL 12:00 P.M. Meeting called to order by Chairman Charles Cuccia. The Open Public Meeting Notice was read into the record. ROLL CALL OF 2012 EXECUTIVE COMMITTEE: Chairperson Charles Cuccia Borough of Saddle River Present Secretary Peter Van Winkle Borough of Rutherford Present Executive Committee Members Linda LoPiccolo Twp. of South Hackensack Absent Robert Hoffmann Borough of Westwood Present Maureen Iarossi-Alwan Borough of Montvale Present Hugo Poli Village of Ridgefield Park Absent Victor Baginski Borough of Wallington Present Alternates Richard Kunze Borough of Oakland Present Kelly O Donnell Borough of Park Ridge Absent APPOINTED OFFICIALS PRESENT: Executive Director/ PERMA Risk Management Paul Laracy Administrator Services Emily Koval Attorney Huntington Bailey, LLP Russell Huntington Treasurer Joseph Iannaconi Joseph Iannaconi Third Party Aetna Kim Ward Administrator Dental Claims Delta Dental of NJ, Inc. Kim White Administrator Auditor Lerch, Vinci & Higgins Gary Vinci Actuary John Vataha Independent Consultant LaMendola Associates Clark LaMendola Benefits Consultant Conner Strong Brandon Lodics RX Administrator Express Scripts OTHERS PRESENT: Frank Covelli, PIA Glenn Parsells, Parsells Agency Carolyn Petrowski, Vozza Agency John Hansen, East Rutherford Robin Degenaars, PIA Tom Konkowski, Wallington 1

2 Tony Cianniamia, Moonachie Deb Ginetto, Burton Agency Greg Hart, Franklin Lakes Virginia Bello, Carlstadt* Donna Gambutti, South Hackensack* Virginia DiMaria, Rochelle Park* CORRESPONDENCE None APPROVAL OF MINUTES: October 25, 2012 Open. MOTION TO APPROVE THE OPEN AND CLOSED MINUTES OF OCTOBER 25, 2012: MOTION: Commissioner Baginski SECOND: Commissioner Kunze ROLL CALL VOTE: 4 Ayes, 0 Nays, 2 Abstains (Abstain Commissioner Iarossi- Alwan and Van Winkle) MOTION TO ADJOURN SINE DIE MEETING: MOTION: SECOND: VOTE: Commissioner VanWinkle Commissioner Iarossi-Alwan Unanimous Executive Director asked for a roll call of all 2013 BMED Fund Commissioners. 2

3 Executive Director said that a quorum was present. Commissioner Iarossi-Alwan read the Nominating Committee report and made a motion recommending the following slate for 2013: Chairman Chuck Cuccia, Borough of Saddle River Secretary Peter VanWinkle, Borough of Rutherford Executive Committee Members: Robert Hoffman, Borough of Westwood Maureen Iarossi Alwan, Borough of Montvale Victor Baginski, Borough of Wallington Hugo Poli, Village of Ridgefield Park Richard Kunze, Borough of Oakland Alternates: Kelly O Donnell, Borough of Park Ridge Gregory Hart, Borough of Franklin Lakes 3

4 MOTION TO ADOPT 2013 SLATE OF EXECUTIVE COMMITTEE AS RECOMMENDED AND CLOSE NOMINATIONS: MOTION: SECOND: ROLL CALL VOTE: Commissioner Van Winkle Commissioner Iarossi- Alwan 13 Ayes, 0 Nays Attorney swore in the Executive Committee Commissioners. EXECUTIVE DIRECTOR S REPORT PRO FORMA REPORTS The Agenda included the Fast Track Financial Report, as of November 30, 2012; the Indices and Ratios Report, as of November 30, 2012; the Budget Reconciliation, as of January 2012 and the Regulatory Compliance Checklist, as of January 15, Executive Director said the Financial Fast Track shows the Fund breaking even for both 2011 and 2012, with help from the MRHIF dividend. ADMINISTRATION REORGANIZATION RESOLUTIONS- PROFESSIONAL SERVICES AGREEMENT - Enclosed in the agenda were Resolution 1-13 establishing appointment of Fund Professionals for Fund year 2013 to be adopted in consent. REORGANIZATION RESOLUTIONS - Included were Resolutions 2-13 through for adoption. Executive Director said that Resolution 9-13 needs to be completed with the 2013 MRHIF Commissioners. Last year Commissioner Van Winkle and Hoffmann were the Commissioner and Alternate Fund Commissioner to the MRHIF. Commissioner Van Winkle said his mayor and council are not pleased with the increase and are encouraging a change. He said he is unsure if Rutherford will continue to be a member for the entire year. He said he will continue to serve until a decision is made, at the discretion of the board COMMITTEE APPOINTMENTS - The Nominating Committee met prior to the meeting to prepare a slate to be elected. Chairman Cuccia said that Cash Management plan has been amended to include Wells Fargo Investment in the event that all investments are transferred from TD Bank. This new cash management plan will produce more liquidity among the entire Fund system. The MRHIF has already smoothly transferred its assets. In addition, the Fund has received some interest from outside groups, which can be up for discussion at a later time. COST SAVINGS STRATEGIES - At the prior meeting, the Fund discussed multiple cost savings strategies that the Executive Committee requested further evaluation from the Fund Professionals before acting upon. The Fund Attorney will have his review and additional comments at the meeting. A list of these plan modifications was included for further discussion. 4

5 Executive Director described the cost savings strategies outlined in the agenda. He said there are two items that could be challenged as a change in benefits: non facility medicare reimbursement and Step therapy. Fund Attorney said recent cases have loosened the statues of what can be provided and what needs to be negotiated. He said the Fund should have more leeway in instituting these programs. He said he is concerned with doing all programs at one time. He suggested starting with Radiology Management, Physical Therapy Care, Management, Chiropractic Care Management including Triad, Subrogation, Medicare Advantage and Mandatory Mail order of Prescriptions. Then slowly add the Medicare reimbursement levels and the Step Therapy. Chairman Cuccia said that the State Health plan already mandates Step Therapy with no grandfathering of current prescriptions unlike this proposal. In response to Commissioner Kunze, Executive Director said currently the Fund has a very generous out of network schedule. This change would change to 150% of medicare for non facility and 175% medicare reimbursement for non facility. This may cause some balance billing. Fund Attorney said there may be some pushback, but the savings may be worth it. Ms. Ward said the Chiropractic, Radiology and Physical Therapy management are already in the plans, but this would be a more strict enforcement. These changes can be done by plan or by member. Chairman Cuccia said he has integrated both the Step Therapy and the mandatory mail order, of which the step therapy had very little push back. Board Advisor said there will be an increased awareness from the employees now that there is some financial interest. The plans as they are now are not sustainable and would advise to do it all and not a segmented approach, which all seem to be reasonable changes. As Chapter 78 triggers, we will see increasing demands from the members themselves. He said there may be an issue with out of network surgicenters that are very expensive and may leave members with a large balance bill. Fund Attorney suggested that if there are any claim appeals to these specific changes, the small claims committee can handle and notify the Executive Committee. Executive Director suggested a reasonable start date for these programs on April 1, mailings will prepared for the next meeting, with the exception of the out of network reimbursement which would be June 1. Commissioner Kunze said he would prefer not to pass these changes until discussed furher with his broker. MOTION TO APPROVE RADIOLOGY MANAGEMENT, PHYSICAL THERAPY CARE MANAGEMENT, CHIROPRACTIC CARE MANAGEMENT INCLUDING TRIAD, MANDATORY MAIL ORDER OF PRESCRIPTIONS OUT OF NETWORK SCHEDULE TO NON FACILITY 150% AND FACILITY 175% OF MEDICARE AND GRANDFATHERED STEP THERAPY. MOTION: SECOND: ROLL CALL VOTE: Commissioner Van Winkle Commissioner Iarossi- Alwan 7 Ayes, 0 Nays REGULATORY UPDATE - A few weeks ago, PERMA sent a request to all HIF members to pass the enclosed resolution opposing the recent Chapter 78 proposed regulation. To date, we have received one member s resolution from the BMED. The comment period for this legislation ends 5

6 January 18, but the MRHIF Lobbyist has requested that resolutions continue to be passed and returned to PERMA, so please add this to your next agenda and forward to Emily Koval as soon as possible. MUNICIPAL REINSURANCE HEALTH INSURANCE FUND - The Municipal Reinsurance Health Insurance Fund met on December 12, 2013 at 2 pm at the Saddle River Borough Hall. The MRHIF held its annual public hearing and adopted the 2013 budget in the amount of $11,503,283. A report from Commissioner Van Winkle on the MRHIF meeting WAS included STATE EXAMINATION - In early 2011, the State completed an examination of all Funds as of 12/31/2009. The final report has been received and the results were very clean. The report is attached in appendix III. The total cost for all Funds was $42,000 that was paid by the MRHIF in FINANCIAL DISCLOSURE STATEMENTS - PERMA will be mailing Financial Disclosure forms for each Fund Commissioner. We would encourage all Fund Commissioners to complete these forms and provide two copies with original signatures to the Fund office on or before April 1, In accordance with State regulations, the Fund must file these disclosures with the Department of Community Affairs. INCLEMENT WEATHER REPORT - A procedure has been instituted for Commissioners to confirm whether a meeting has been cancelled. The Executive Director will talk to the Chair to determine if a meeting should be cancelled. In the case of an early morning or evening meeting, PERMA will leave a message, which can be obtained by dialing the Fund s main number of (201) For meetings that occur during normal business hours, meeting status can also be obtained by dialing the Fund office. PROGRAM MANAGER Executive Director's Report Made Part of the Minutes. ENROLLMENTS - All enrollment and billing questions should be directed to our dedicated enrollment team. The BMED/Gateway enrollment team may be contacted via at BMEDenrollments@permainc.com or by facsimile at STATUS OF JANUARY ID CARDS - All members who made changes during open enrollment have now received their new ID cards from the carriers. PLAN / ENROLLMENT CHANGES:1/1/2013- The Borough of Montvale has added the BMED/Gateway low cost PPO Core Plan. Prescription and Medical 1/1/2013- The Borough of Saddle River has added the BMED/Gateway low cost PPO Buy Up and HDHP plans. Prescription and Medical HEALTH AND WELLNESS with the termination of the OnLife HIF contract, it is important that we do not lose sight of Health and Wellness moving forward. The Benefit s 6

7 Consultant is dedicated to offering insightful and helpful health and wellness guidance in 2013 for members of the BMED/Gateway Health Insurance Fund. Each month in the Benefits Consultant s report will include one topic of interest pertaining to health and wellness. JANUARY- INFLUENZA EPIDEMIC - The US is now in the midst of what healthcare professionals are calling an epidemic, following a major influx in flu cases nationwide. The US Center for Disease Control counts New Jersey among 41 states with widespread influenza activity. Since October, The NJ Department of Health has been tracking the influenza activity level throughout the state reports Bergen County s levels ranging from moderate to high in the last five weeks. The flu access people of all ages, doctors say this year s particular strain is most severe in children and elderly. Englewood Hospital offers and educational public service announcement on health tips to protect yourself and others against the flu. Dr. Rich Lather recommends: 1. Wash hands with soap and water or alcohol-based sanitizer for at lease 20 seconds, 2. Avoid touching your face, specifically your eyes, nose or mouth, 3. Cough or sneeze into a tissue or into the crook of your elbow. SOURCE: BMED/GATEWAY FLU SHOTS - Beginning in January 2013 BMED/GATEWAY Employees and their dependents enrolled in prescription benefits will have access to free annual Flu Shots at their local Express Scripts participating pharmacy, who offer this service (CVS, Rite Aid, Target, Wal-Mart, and others). There will be no charge to the employee or their dependents at the point of service. The Express Scripts system has been updated to process Flu Shot claims with a $0 copay. We recommend that each group encourage their employees and dependents to consider receiving annual flu shots to prevent loss of work productivity and possible further, more severe illness. In our report we have included some suggested communication pieces. With the Executive Committee s approval,perma will distribute approved communications to HR contacts who s group has prescription in the Fund. Attached you will see: 1. Flu Shot Payroll Stuffer- To notify all employees that they and their dependents are now eligible to receive the free flu shot. 2. Stomp that Flu Bug Before it Starts! To inform employees that their best defense against the flu is vaccination. 3. Flu Shot Facts Flyer- Information about the Flu Shot. 4. Children s Health Influenza Flyer- Information about children being more susceptible to the virus SUMMARY of BENEFITS & COVERAGE 7

8 SBC- PLAN FOR ACTION - Carrier compilation of preliminary SBC- AETNA and Express Scripts has agreed to assist in this project. Rough, SBCs for each group will be forwarded to the Benefit s Consultant. 1. Upon receipt, the BC will conduct a benefits audit for accuracy and compliance to bring SBC to finalization. 2. PERMA will be distributing the SBCs via the BMED/Gateway eligibility & enrollment box and posting on the Benefits Express System. 3. Provide status update to Executive Committee (ongoing) Moving forward all group health plans will have to provide at least 60 days advance notice of midyear material plan modifications that could affect the content of the most recently issued SBC. (CREATE CHANGE IN HIF PROCESS) Chairman Cuccia suggested that these SBCs be included with open enrollment. Program Manager said they will begin the process to be in compliance and distribute at that time. INDUSTRY NEWS TAXES TO INCREASE COSTS IMMEDIATELY - Healthcare Reform includes four new taxes that are expected to have a definite and immediate impact on plan sponsors costs. (2013) Patient-Centered Outcomes Research Fee (the Comparative Effectiveness Fee ) (2014) Transitional Reinsurance Program Contribution (2014) Health Insurer Fee (2018) High-Value Plan Tax (the Cadillac Tax ) Early estimates have stated the anticipated increase will be around a 4% increase in premiums that employers see in order to account for these taxes and fees. Below is a brief description on each of these taxes. Patient-Centered Outcomes Research Fee: This fee is being imposed in an effort to establish a fund for clinical outcomes effectiveness research. This fee will be $1 or $2 per covered life and is subject to increase in accordance with national healthcare expenditures. This fee is set to expire in Transitional Reinsurance Contribution: This is established to fund reinsurance entities in order to finance the cost of high-risk individuals in the individual market. Over the course of three years ( ) an aggregate fee of $25 billion will be collected. Health Insurer Fee: As the name implies, this will be paid by insurers beginning in 2014 and is intended to offset a portion of the expense related to premium subsidies and tax credits. In 2014, there will be an industry fee of nearly $8 billion which is applicable to nearly all lines of coverage. 8

9 High-Value Plan Tax: Set to begin in 2018, this fee will be assessed on high-premium health plans. The thresholds that will serve as the determinants of Cadillac status are plans that have an annual cost of $10,200 for single coverage and $27,500 for family coverage. Any and all amounts in excess of these established amounts will be subject to a 40% excise tax. Source: Conner Strong & Buckelew Legislative Update January FEDERAL SIXTH CIRCUIT COURT RULING - Employer May Make Reasonable Modifications to Retiree Health Care Benefits A recent federal court ruling offers clarity and potential for employers with retiree benefit plans that have been subject to collective bargaining. Recently the Sixth Circuit court has ruled that an employer was entitled to make reasonable modifications to its retiree health care benefits (Reese v. CNH America, LLC), reversing a district court s grant of summary judgment to the retirees. The district court originally found that the employer lacked the ability to modify any benefits except with the approval of the union that once represented the employees. The appeals court majority concluded that, whatever else vesting in the health care context means, it does not mean that beneficiaries receive a bundle of services fixed once and for all. In their 1998 collective bargaining agreement (CBA), the parties imposed managed care on all retirees, which represented a reduction in the effective choices of coverage available. Pre-1998 retirees saw their coverage downgraded because they generally had to pay more for choosing an out-of-plan doctor. In view of the distinction between vesting of eligibility for a benefit and the scope of that commitment, and in view of the parties 1998 CBA altering health care benefits, the appeals court concluded that the employer could make reasonable changes to the health care plan covering eligible retirees. The Sixth Circuit concluded that the retirees and the district court misread a prior ruling of the panel. In holding that the employer could reasonably alter the retirees benefits, the appeals court recognized that the employer could alter them on its own, not as part of a new collective bargaining process. In answering the question what does vesting mean in the health care setting?, the appeals court rejected the suggestion that the employer could make no changes to the health care benefits provided to retirees. Unlike pension obligations, health care benefits cannot readily be monetized at retirement, explained the court. Thus, vesting in the context of health care benefits provides an evolving, not a fixed, benefit. In this instance, the appeals court observed that past changes to retiree health care benefits had not been collectively bargained, which comes as no surprise because a union does not represent retired employees when it bargains for a new contract for its employees. Thus, the district court erred when it disregarded the appeals court s holding that the company may make reasonable modifications to the retirees health care benefits. In remanding the decision, the appeals court noted that to gauge whether the employer has proposed reasonable modifications to its health care benefits for retirees, the district court should consider whether the new plan provides benefits reasonably commensurate with the old plan, whether the changes are reasonable in light of changes in health care, and whether the benefits are roughly consistent with the kinds of benefits provided to current employees. 9

10 Any information provided by Conner Strong & Buckelew is for informational purposes only and does not constitute legal advice. If the topics addressed in these Updates have legal significance, you should review your options and your ultimate course of action with your legal counsel. EMPLOYERS EXPECTED TO CONTINUE OFFERING BENEFITS; PLAN OFFERINGS TO CHANGE - According to a recent survey completed, employers of all sizes polled around the country have cited that employee benefits are still an integral part of their effort to attract and retain competent employees. This is not to say that employers will not be toning down their coverage levels in anticipation of the Cadillac Tax that will take effect in Rather, it is indicative that employers increasingly are recognizing the need for increased cost control measures that will stem rising costs. Additionally, there has been a steady increase in CDHP enrollment over the past few years and researchers at Aon Hewitt have stated it is now the second most common plan design offered by U.S. employers. So, while employers will not be dropping coverage anytime soon it is important that employees anticipate a substantial change in plan design strategies. Source: Kathryn Mayer, Reform isn t impacting employer-sponsored coverage. Benefits Newswire December PAY-FOR-DELAY CASE WILL BE A HUGE CASE TO WATCH FOR IN For years the Federal Trade Commission (FTC) has tried to stop pay-for-delay agreements between brand and generic drug manufacturers. These arrangements essentially result in brand manufacturers making payments to generic rivals to keep their competing products of the market for a certain number of years. Both drug manufacturers win as this arrangement is more lucrative than litigating their case or settling on alternative terms. The FTC has brought numerous cases against these drug manufacturers in the past but the courts have not upheld any of their cases. The FTC estimates that these deals result in generics reaching the market 17 months later than normal and cost consumers approximately $3.5 billion per year. The removal of these pacts would obviously be welcome news for plan sponsors as the ability to move patients to a less expensive treatment will yield cost savings. Finally, the FTC has appealed all the way to the Supreme Court and it is expected that they will make a ruling in June. Source: SCOTUS Review of Pay-for-Delay Case Could Be Big Boon for Plan Sponsors. Drug Benefit News 13, No. 24 (2012): 1,7. MONTHLY REPORTING COMPLAINT REPORT as of January 15, 2012 No written complaints were received during December. CLAIM APPEALS There no Appeals or Small Claim Appeals to be heard. PLAN DOCUMENTS Attached please find the status report for Plan Documents. 10

11 FUND ATTORNEY no report AETNA - THIRD PARTY ADMINISTRATOR Ms. Ward reviewed the claims report and high claimants for September, October and November. In addition, there are no major network negotiations in this area going on right now. St. Baranabas entered a new two year contract. TPA's Report Made Part of the Minutes PHARMACY NETWORK (Express Scripts) No Report DELTA DENTAL Ms. White said there are new fee schedules set starting in January for the premier providers. Only 8 providers in NJ have opted out. Currently Delta Dental s trend is 2%. TREASURER - Fund Treasurer said his report was included in the agenda and the bills lists were included in the consent agenda. FUND YEAR NOVEMBER 2012 AMOUNT 2012 $231, TOTAL $231, FUND YEAR DECEMBER 2012 AMOUNT 2012 $234, TOTAL $234, RESOLUTION JANUARY 2013 BILLS LIST FUND YEAR AMOUNT 2012 $ $214, TOTAL $216, Treasurer's Report Made Part of the Minutes BOARD ADVISOR: Board Advisor said that Westwood and a few other towns had attended the supervisor training on the JIF side. He said the approach is very innovative. This training can have an impact of this on the health side. Chairman Cuccia asked that this training be done prior to the next meeting. CONSENT AGENDA: 11

12 The following Resolutions listed on the Consent Agenda will be enacted in one motion. Resolutions Subject Matter 1-13 Professional contracts 2-13 Designation of Service of Process 3-13 Designation of Secretary as Custodian of Records 4-13 Designation of Official Newspapers 5-13 Designation of Regular Meeting Times and Place 6-13 Designation of Bank Depositories & Cash Management Plan 7-13 Designation of Authorized Signatories 8-13 Approval of 2013 Risk Management Plan 9-13 Appointment of MRHIF Commissioners Service Contract Approval\Chairman Signature Authorization of November & December 2012 and January 2013 Bills Lists Certification of Claim Payments/Imprest Transfers Resolution for Executive Session - For specified purpose of Claims discussion MOTION TO APPROVE THE CONSENT AGENDA, AS DISCUSSED: MOTION: SECOND: ROLL CALL VOTE: Commissioner Baginski Commissioner Iarossi-Alwan 7 Ayes, 0 Nays OLD BUSINESS: None. NEW BUSINESS: Commissioner Hoffmann thanked chair for have the Treasurer attend today s meeting. He also asked for the reason for the Fund s policy that employee is eligible after the second day of the month, that they are added in the next month. Executive Director said if we add someone without that delay, we could take on a big claim, but this was a local decision, though that most members include. Chairman Cuccia said he is also very interested in going out for an RFP for the Fund s Prescription program as the costs have increased significantly this year. He said this is good for due diligence if no change is made. If not, the Fund should be included in the State Health Benefit s Express Scripts discounts. Executive Director said the Fund is looking at the current contract and will advertise an RFP. PUBLIC COMMENT: 12

13 Mr. Covelli asked if there was a way to make open enrollment with the finalized rates earlier since employees need to know their contributions. Executive Director said for the past two years, the budget process has been pushed ahead one month for this purpose. MOTION TO ADJOURN: MOTION: SECOND: VOTE: Commissioner VanWinkle Commissioner Iarossi-Alwan Unanimous MEETING ADJOURNED: 1:20pm NEXT MEETING: February 28, 2018 Saddle River Borough Hall 12:00 P.M. Emily Koval, Assisting Secretary Date Prepared: February 21,