ALC Employee Benefits
June 15, 2022
Ladyman [00:03:43] The chair sees a quorum. We want to go and get the meeting started. We’ve got a number of items on here and I think there’s a meeting in here– isn’t that at 11, I believe? So we need to get started and move along. I didn’t have any other comments. Senator Hammer, do you have any comments? All right. So we’ll move, committee, we’ll move right into item C, approval and actions of the state Board of Finance. So, Mr. Bleed, if you would, come forward and please introduce yourself and who you represent.
Bleed [00:04:28] Jake Bleed with the Employee Benefits Division of the Department of Transformation and Shared Services.
Ladyman [00:04:34] You’re recognized to present.
Bleed [00:04:35] Good morning, ladies and gentlemen of the subcommittee. The State Board of Finance met earlier this month to discuss a number of different items pursuant to legislation adopted in the most recent sessions. Those items are now being brought before the subcommittee for consideration. The main items were twofold. First, was a Medicare Advantage contract, which we have reached after lengthy negotiations with UnitedHealthcare, that– representatives of UnitedHealthcare are in the audience today and are available to take any questions. The second was a proposal that we have developed in cooperation with our actuarial firm, the Milliman firm, on policies and procedures for the development of rates for our members, as well as the amount that the state would pay as an employer in a share. It’s kind of a different approach to how we’re doing business and how we raise revenue for the employee benefits division. Those two issues were brought before the Board of Finance. The Board of Finance approved them, and they are now brought to you all for consideration.
Ladyman [00:05:50] All right. We do have a question. Senator Hammer, you’re recognized.
Hammer [00:05:53] Thank you. And Jake, just a lot going on so refresh my memory about something. United ended up with the bid. It was through a competitive bid process. And who else were the– who else bid on it besides United?
Bleed [00:06:06] Yes, sir. It was a, an RFP, a request for proposal, that we put out in working with the Office of State Procurement through state law, state procurement law. We also worked with the legislative consultant, the Segal Group, to develop the criteria for the Medicare Advantage plan, the limitations. They really helped us develop on the front end a, I felt, very strong RFP that laid out what we were in the market for and what we were not wanting. So we really laid out an RFP for what I feel like the best possible plans. We limited it to vendors who had a strong track record, who had high ratings with the federal government, who we felt could deliver us a strong product. In response, we had three bids. The three bids were with United, Humana, which is– and United is the largest provider of group Medicare Advantage plans. Humana, I believe, is number two. And then there was a third company, Benistar, who submitted a proposal in response. In reviewing those, we followed procurement law and UnitedHealthcare, following the process laid out in that law, was deemed to be the winner. We then moved forward into negotiations and we, we really, I feel like, pushed a pretty hard bargain. We strengthened some of the performance guarantees and some of the other aspects of the contract to make sure that the vendor we selected was really held to a high standard, was going to be responsive to the needs of our members and to the expectations, not just of the administration, but the General Assembly. This is an important policy decision for us. It’s a big step, and we wanted to make sure we did a really good job.
Hammer [00:07:58] But the bottom line is there was a competitive bid process, and based on the procurement laws of the state of Arkansas, they were awarded fairly the bid?
Bleed [00:08:06] Yes, sir. I think it was a very good procurement.
Hammer [00:08:08] Thank you.
Ladyman [00:08:10] Representative Meeks, you’re recognized for a question.
Meeks [00:08:14] Thank you, Mr. Chairman. I have two if it’s alright with the chair.
Ladyman [00:08:17] Yes sir.
Meeks [00:08:18] So my, my first question is I’ve been getting emails from constituents with concerns, and I’m sure you’ve probably heard them, that if a enrollee chooses the Medicaid Advantage, that they can never go back or that everybody’s going to be enrolled and you have to opt out. Can you, can you kind of talk about how that works?
Bleed [00:08:38] Sure. So this first year in particular, because we know our retirees are not used to making, to being forced to make a decision on an enrollment option, the Medicare eligible retirees will be automatically enrolled in the Medicare Advantage plan. They will then have the opportunity beginning in August or September and running all the way through late into the year into November 30 to make their decision. If they want to keep their existing level, their existing plan, their existing benefits and pay the accompanying rates, they can do that or they can roll over to the Medicare Advantage plan. In addition, there will be a period in January in which, if for whatever reason, somebody has missed all of our marketing and all of the meetings and all the efforts, that for whatever reason they haven’t made a decision, they can still opt out during that period. What’s more is coming in October, again, when we do open enrollment for our active members, there will be an opportunity for folks who, if they’re enrolled in Medicare Advantage and they don’t like it, they can go back, or in the alternative, if they’d like to enroll in the Medicare Advantage plan because they had opted out initially, that would be their opportunity to do so.
Meeks [00:09:54] So during normal open enrollment, they can switch back and forth.
Bleed [00:09:58] This is a choice. It really is.
Meeks [00:10:00] So my, my second question as I’m looking at this page with the proposed cost and savings, and it looks like with 50% enrollment, there’s going to be a $25 million savings to the, to the plan. Do those savings come from reduced cost, more efficiencies, or are we just transferring that cost from the state to the federal government?
Bleed [00:10:25] Kind of all of the above.
Meeks [00:10:26] Okay.
Bleed [00:10:27] So the– what we do currently is we run through traditional Medicare and they pay 80% of the costs. We then follow up with 20% so that our members from at least the medical side don’t pay anything. On the public school side, we don’t provide pharmaceutical coverage. We do provide pharmaceutical coverage for the state employees. By moving over to a Medicare Advantage plan, what we would be doing is relying on the expertise and the ability of UnitedHealthcare to reduce costs. The federal government will pay them significantly. So what you’re seeing on that sheet is just what the state pays and what the member pays. You’re leaving off the other part of the iceberg, which is the amount the federal government will pay. UnitedHealthcare will then bear the risk. So it’s their skin in the game at that point. That’s where the savings are going to come in for everybody. But also keep in mind, those savings are not going to come at the result of reduced benefits or reduced care. In fact, we have negotiated with them something called a gain share agreement, where they have to report to us how much money they spend on benefits. And if they keep too much, they pay it back to us. So I think we have some really good guardrails in place to make sure that the savings don’t result in lesser benefits for our members.
Meeks [00:11:49] All right. Thank you. Thank you, Mr.Chairman.
Ladyman [00:11:53] Representative Beck, you’re recognized for a question.
Beck [00:11:56] Thank you, Mr. Chairman. And this question really comes from some emails that I’ve received, and it’s about that– it’s– according to the emails, it’s my understanding that people will automatically go to the Advantage plan. And that seems to be the rub with a lot of people, that why we, you know, why wouldn’t we just use the marketing to allow them to opt into it as opposed to they have to opt out of a move? And I’m just curious as to why that is.
Bleed [00:12:29] So the thing that I think is causing a little bit of an issue for us is that the market right now is full of Medicare Advantage plans that are individual plans that are not very good. They don’t provide very good benefits. And that a lot of our members have been targeted, some have even enrolled, and it’s caused all kinds of problems for them. So our members are very wary of that term, Medicare Advantage plan. Our group plan is different from those plans. In our Medicare Advantage group plan and what we’re proposing to the subcommittee today will be identical in the level of benefits we’re providing. I think I provided to the subcommittee some of the supporting documents, an explanation of benefits that would be provided under the Medicare Advantage plan. And if you look at it, you see zeros. And that zero represents how much members will pay. Okay? They pay nothing. That, that reflects and is identical to their existing level of benefits. So with very, very, very few exceptions– and we can talk about when that might occur– with very few exceptions, members who enroll in Medicare Advantage will not see any change in their benefits. They will still benefit from the same level of care and coverage that Medicare currently provides, will still be provided over to the same members. Recognizing that and recognizing the amount of money it will save to the member themselves, and it’s significant for the employee or for the retiree, as well as the amount of money it will save the state and the opportunity that presents to us to keep rates lower and provide the same level of benefit for future retirees, it makes sense to me to enroll, to do the auto enroll function. And that was a recommendation of the consultant. The UnitedHealthcare people are here, and they can tell you, they’ve done this in many other states with many other groups, many other clients. And it’s somewhat rare, actually, for people to even have a choice. A lot of folks are automatically enrolled with no option to maintain their existing benefits, or in the alternative, if they want to maintain their existing benefits, they’re allowed to do that but they have to pay the full cost. They don’t get any help from their employer. So they can speak more about that. John Thompson and his team are here. But a lot of employers look at this as a great opportunity to make sure that we’re providing the same level of benefits at reduced costs, and that allows us, that buys us more time to provide additional benefits going forward.
Beck [00:15:12] I appreciate that. And hopefully we’ll spend some efforts communicating that out to that group in general because I do get some that are concerned about the coverage themselves. But the majority of them just, they don’t want to have to opt out of it.
Bleed [00:15:27] Yeah, we had a great meeting yesterday with the Arkansas Retired Teachers Association and we continue to work with and emphasize education. United will be holding 135 meetings over the summer and fall all across the state. They have geo mapped out where those meetings will occur so that our members don’t have to drive very far. We are going to as much as we can educate members on what this is and what it is not.
Beck [00:16:03] Well, thank you, and thank you, Mr. Chair.
Ladyman [00:16:06] Representative Beck, we, we will probably get into more discussions under D-3 on what you’re talking about. Senator Chesterfield, you’re recognized for a question.
Chesterfield [00:16:17] Thank you so much, Mr. Chair. I appreciate the opportunity. Jake, there are some individuals who are less cogent about this. Are they automatically, if they were a part of the ATRS, are they automatically enrolled in this program already?
Bleed [00:16:35] No, not already.
Chesterfield [00:16:38] I mean, are they automatically enrolled in a, in a Medicare Advantage plan already?
Bleed [00:16:43] No, we do not do Medicare Advantage. Our current level of benefits is traditional Medicare with our services coming in on the back end.
Chesterfield [00:16:50] Okay. Well, do our services already come in, and if they needed to go to the hospital and they were a retired member of ATRS, do they already have some health insurance in place as a result of their working in the public school system?
Bleed [00:17:05] Yes, ma’am. We provide that benefit for our retirees.
Chesterfield [00:17:07] Is that free or what are they paying?
Bleed [00:17:09] They pay. So an active member right now on the retirees system pays about $100 a month and that payment usually comes out of their retirement system, their annuity, their pension.
Chesterfield [00:17:21] And so when they retire, they’re automatically enrolled in a health care plan?
Bleed [00:17:26] They have to voluntarily elect into it. I don’t know that it would be an automatic. So some have benefits from other employments or their spouses that they elect to use, but that option is there.
Chesterfield [00:17:39] Okay, but that is automatically available, but not automatically done?
Bleed [00:17:45] No, I think that they have to fill out the paperwork.
Chesterfield [00:17:47] They have to opt into it.
Bleed [00:17:48] Yeah.
Chesterfield [00:17:49] Well, with this plan, are they opting in or is everybody that is a member of APERs and ATRS automatically enrolled in this plan?
Bleed [00:17:57] They will be automatically enrolled if they’re Medicare eligible.
Chesterfield [00:18:00] Okay. Gotcha. Well, one of the things that I’m concerned about is, will the doctors accept this plan? Have you done a poll of physicians across the state to see whether or not they will accept this Medicare Advantage plan? Because that’s one of the the major concerns is will doctors accept it.
Bleed [00:18:22] Yeah, we’d heard that very early on. We continue to hear that. And when we wrote the RFP, we emphasized that whatever provider ends up winning the contract has got to make sure that we have a strong and expansive network. One of the things we really wanted to make sure we limited as much as possible was a negative impact on our members by switching over to this. We want them to have the same drugs that are covered. We want them to have the same doctors available. We really, honestly, I don’t want them to notice a difference except for the card that’s in their pocket and the amount that is pulled out of their annuity. Their annuity check should go up significantly if they enroll in this.
Chesterfield [00:19:00] Well, if they’re Medicare eligible and they didn’t opt in before, they must opt in now? I’m trying– that’s what I’m trying to get to.
Bleed [00:19:07] So we have our network specialists here at United who can answer all the questions.
Ladyman [00:19:13] Senator Chesterfield, under D-3, United will come up and maybe give some more detail.
Chesterfield [00:19:18] Maybe give some more information. Thank you, senator– I mean, Representative Ladyman. I appreciate it. Thank you, Jake.
Bleed [00:19:22] Yes, ma’am. And we could talk more about that but I do want to say we emphasized that and there are very, very, very few providers who do not take Medicare Advantage through United group. And if there are any out there who, for whatever reason, don’t want to see our members, we want to know who they are so we can talk to them about it.
Ladyman [00:19:45] All right. Seeing no further questions from committee, is there a motion to approve? I have a motion to approve. Is there a second? I have a second. All in favor, say aye. All opposed, nay. Motion carries. It’s approved. Representative Meeks, push your button there. You’re recognized.
Meeks [00:20:17] Thank you, Mr. Chairman. Just a quick point of personal privilege. Wanted to wish everybody a happy birthday. It was today back in 1836 that Arkansas became the 25th state in the Union. So today is our 186th birthday. .
Ladyman [00:20:32] So we were average back then.
Meeks [00:20:34] We were.
Ladyman [00:20:37] Thank you, Representative Meeks. Senator Pitsch, you’re recognized.
Pitsch [00:20:44] Since we’re wishing birthdays, I think we all ought to acknowledge Representative Rick Beck’s birthday is today.
Ladyman [00:20:52] Happy birthday. All right, committee, we’re going to move on to item D, review of employee benefits, division contracts and amendments. So, Jake, if you would, please introduce yourself again for the record and who you represent.
Bleed [00:21:18] Jake Bleed with the employee benefits division of the Department of Transformation and Shared Services.
Ladyman [00:21:23] All right, you’re recognized to present D1, EBR.
Bleed [00:21:28] So EBRX is– and we have a number of contracts– I think one of the things that we submitted to the subcommittee last month was our quarterly report. In there on the back page is a whole kind of quilt list of different contracts that we have ongoing. One of the contracts that we have submitted for renewal, and this is effective July 1, is with EBRX, which is an entity out of the University of Arkansas for Medical Sciences Pharmacy College. They are our primary clinical consultant when it comes to managing pharmacy benefits. Those of you who are familiar with PBMs or pharmacy benefit managers know that there’s a lot that can go on there and it can get very complicated and there’s a high level of expertise that is required. So we have contracted with EBRX to help us manage those pharmacy benefits. This proposal, this extension is on an existing contract and I believe there’s no rate increase involved.
Ladyman [00:22:30] Any questions from committee? Senator Hammer, you’re recognized.
Hammer [00:22:34] Thank you. Help me get my mind around something. EBRX previously, until we went through all the changes that we went through, was providing– weren’t they providing some services to the retired teachers or am I confused on that?
Bleed [00:22:49] They have evolved over the years. They have provided a number of different services. They provide services, for example, not just to EBD but to Municipal League, State Police, the ASU system. They really are kind of integral to what we do on the pharmacy side.
Hammer [00:23:09] Okay. And what– hit it again. What is this amount for and what are they doing for this amount?
Bleed [00:23:15] So let me see if I can do this. So when we– we spent about a quarter million dollars a year on pharmacies, on drugs. And if you look at our cost drivers, drugs are easily one of the fastest growing, specialty drugs in particular. If we allowed– normally, you would rely on a PBM to manage those costs. But we know from the past that maybe the PBMs can’t always work in as transparent a manner as we would prefer. How does that sound? So we rely on the College of Pharmacy staff and the employees of EBRX to review the decisions of the, of the PBM, and in particular to help us pick which drugs are worth covering and which are not, when we should have a prior authorization on a drug, and to really allow us to do some hands on management. And as a result, we have, I think, very low costs. That was one of the things that the Segal team had identified when they reviewed EBD last year. We also have a very, very high level of generics that we use, and a lot of that were decisions that EBRX helped us arrive at.
Hammer [00:24:26] Okay, for the sake of time, let me– not to cut you off– but cut you off for the sake of time. So and this is applying to state employees or which population is this–
Bleed [00:24:37] Both state and public school.
Hammer [00:24:39] Okay. And I guess part of it, because I remember the discussion about UnitedHealthcare is now going to be picking up part of the pharmacy cost, and I’m just wondering–
Bleed [00:24:48] The UnitedHealthcare would pick up the pharmacy for those post-65 retirees who enroll.
Hammer [00:24:56] Okay.
Bleed [00:24:57] The EBRX contract will cover everyone. So we have 160,000 members right now, give or take. 30,000 roughly are retirees, post-65 retirees. So we still have to worry about how we’re going to make sure the pharmacy benefit needs of the other 130-140,000 employees are met.
Hammer [00:25:15] And where I’ll go and I’ll finish is, if it was such a good thing that we’re keeping them for this population, why was it not such a good thing that we wouldn’t keep them for the population that is now going to be covered by UnitedHealthcare?
Bleed [00:25:29] UnitedHealthcare has their own pharmacy benefits. So one of the things that we did in working with the UnitedHealthcare Team and in going forward with a Medicare Advantage plan, is really setting out the benefits that they lay out, including medical, including pharmacy, including everything. For them, it’s a package deal. I think that they can probably speak to more detail on how the pharmacy works.
Hammer [00:25:56] They can come when they come up.
Bleed [00:25:57] Yeah. Yeah.
Hammer [00:25:58] Okay. Yeah. All right. Thank you. Thank you, Mr. Chair.
Ladyman [00:26:03] All right. Seeing no further questions, without objection, this rule is reviewed. Jake, you’re recognized to do, to represent D2, Med Impact.
Bleed [00:26:15] So Med Impact is our current pharmacy benefits manager. Their contract actually expires in February. And we are right now, in fact, working on a new pharmacy benefits manager RFP. We have issued an RFP. We’ve gotten proposals back, and we are evaluating those proposals. However, we need to make sure that those benefits extend out until the new contract begins January 1. So the proposed contract would allow us to extend the Med Impact contract for the remainder of 2022, the last six months.
Ladyman [00:26:58] Any questions from committee? Seeing none, without objection, this rule stands reviewed. So we’re going to move on to Item D3, UnitedHealthcare. We do have a handout, committee, that’s coming around. So you’ll be getting that quickly. And, Jake, you’re recognized. United, if you all want to come up. So let’s, let’s let them get up and introduce themselves. Or did you want, Jake, did you want to go ahead and present?
Bleed [00:27:35] No, I just wanted to say, I hope you like looking at these folks because they are going to be visiting a lot. They are going to be very active in working with our members all over the state and helping to educate them on the Medicare Advantage plan, what it is, what it isn’t. And there’s a lot to learn. And the good news is that our retirees, particularly on the public school side, are very interested in it. They have a lot of really good questions. So I’ll turn it over to John Thompson. Push the button.
Ladyman [00:28:11] If y’all will hold on a minute, we’re going to bring another chair up so that you can come up because we need to get you at the table. All right, so committee, we’re looking at D3 here. And if you would, and Mr. Bleed, including you, if everyone would introduce yourself and who you represent.
Bleed [00:28:48] So, Jake Bleed, Employee Benefits Division, Department of Transformation and Shared Services.
Thompson [00:28:52] Thanks. Hey, good morning, everybody. I’m John Thompson. So I’m a national vice president with UnitedHealthcare.
Jones [00:28:58] Good morning. I am Linda jones. I’m the chief client officer with UnitedHealthcare.
May [00:29:04] Good morning, everyone. I’m Dr. Linda May. I’m the medical director for UnitedHealthcare and I will be the medical director for this plan.
White [00:29:11] Good morning, everyone. My name is Joy White. I’m the vice president of network for UnitedHealthcare.
Ladyman [00:29:15] Okay. All right, y’all are recognized to present.
Bleed [00:29:20] So as I mentioned earlier, this is a Medicare Advantage contract. It would be made available to our post-65 retirees in the Arkansas School and State Employees Plan beginning January 1 of 2023. The benefit would be a significant cost savings for the member, for the state, and for, I think, the federal government even. But it is dependent upon really the expertise and the ability of the folks that we have brought in before you all today to talk about it. I am by no means an expert on the Medicare Advantage plan. They are been very active and responsive to our needs and there’s been a lot of discussion. I don’t want to belabor it. I’m sure you all have heard from the retirees. So with that, Mr. Chair, I’d like to, I guess, field questions from the committee as needed.
Ladyman [00:30:13] All right. Okay. Yeah, we do have some questions. Representative Meeks, you’re recognized for a question.
Meeks [00:30:20] Thank you, Mr. Chairman. I have just two quick questions. First question is, talk to us about your presence that’s going to be in the state to be able to serve members and their member questions. I notice y’all are, your corporate office is out of Minneapolis, Minnesota. So talk to us about your presence that you’re going to have here in the state of Arkansas.
Thompson [00:30:40] Yeah, I will start. Again, I’m John Thompson with United. And so we do have a very strong presence in the state of Arkansas. Again, what we do is group Medicare Advantage. People laugh at me because I will say group, because it is not and this is not the plan you see on TV, fully customized solution. So we have a very strong local team with regards to network, client management and also a strong presence in the state where we are the largest Medicare Advantage provider. And for instance, the University of Arkansas moved to a group Medicare Advantage plan with United eight years ago. We also have several other clients that are located in Arkansas.
Bleed [00:31:21] And John, if I can jump in here, when they move, did they have an option?
Thompson [00:31:25] No. So the university, they did what we call full replacement, where they moved their Medicare retirees to a group Medicare Advantage. We just renewed their contract and they have 98% retiree satisfaction. And that’s not us telling that. We’re not being self-serving. That is, they polled the retirees individually.
Jones [00:31:46] I’d like to add a little bit. Again, Linda Jones. I lead the account management team. The presence that we will have here locally to represent for the retirees, we will be placing two onsite representatives in the EBD office. The purpose of that is to make sure that we don’t allow our group Medicare Advantage plan to be an additional burden on the staff. We plan to field all the questions, calls and concerns of the retirees. We do this with all of our state customers, and what we find is that it gives them an opportunity to truly focus on the business at hand, to make sure that the folks that can help manage claims questions, provider questions, care questions can be available within that office. We also have call center folks that are actually here in the state of Arkansas that will take those phone calls. We will have a presence throughout the summer and throughout the fall where we will be hosting meetings to make sure that we educate the retirees. So our goal is to make sure we are very present, very up front, because retirees do require hand-holding and they deserve that hand-holding. So we will definitely be here for the retirees.
Meeks [00:33:00] Thank you, and that was exactly what I was hoping to hear. My second question, you may have actually already alluded to that, is so when constituents contact me with questions or concerns about what’s going on, I’m assuming that these two people that’ll be in their office would be who we would go through in order to get those issues resolved? Is that correct?
Jones [00:33:18] That is absolutely correct. We have also made it a way that if you would like to even publish their names, pictures, phone numbers on the website, more than welcome to do that, because their goal is to meet with every retiree that needs their assistance.
Meeks [00:33:31] Excellent. Thank you. Thank you, Mr. Chairman.
Ladyman [00:33:35] Senator Caldwell, you’re recognized for a question.
Caldwell [00:33:39] I actually have two questions. One’s from me. One’s from Senator Ingram, who texted a question in. My question, my constituents’ concern has been provider access and eliminated out of network. Could you address that, please?
Thompson [00:33:54] Yeah, I’ll start and then I’m going to have Joy– I promise you, I’m not gonna steal your thunder. Again, it’s John Thompson. So the key here is that we are providing a group Medicare Advantage plan. So it is a group plan. It’s not the plan you see on TV. It’s not an individual plan. So it is a group Medicare Advantage PPO, where the benefits are the same in and out of network. And I’ll let Joy White talk about that, but again, the benefits– there is not a different benefit if you go out of network. So if the retiree, you see the zeros where they don’t pay anything, the benefits are the same in network and out of network. And now I’ll have Joy talk about how we work and pay providers.
White [00:34:34] Thank you, John. So again, Joy White, vice president of network. So as John alluded to earlier, how this, how our product works and how we work with our providers. If you are a non-contracted provider with this group plan, you get reimbursed at 100% of the CMS allowable. Which means if you accept Medicare, you accept this plan and get reimbursed exactly the same. Not only in Arkansas, if your retirees were to travel to Hawaii, California, Florida, it is the exact same. This is a national PPO plan. That is accepted that 99.9% of time in the United States and the five U.S. territories. Literally. So we have, as John alluded, we also have many other clients in this state that also have the group Medicare Advantage plan from UnitedHealthcare. So we have a long history of provider acceptance of this plan and that will continue to be for your retirees as well.
Thompson [00:35:30] Can I add one last comment? So we know we have to educate retirees. And we educate retirees, but at the same time, what we will do is educate the provider community. And we received a disruption on what providers, the Medicare retirees with ASC and PSC are utilizing. Not only were we going to work with the retirees, but Joy’s going to lead the provider education on how the plan works, how they get paid. Again, they are going to be paid the same as they are paid today. 100% of the Medicare allowable. That’s the same as the original Medicare pays.
Caldwell [00:36:06] Jake, this may be for you. This is from Senator Ingram, who texted in. It says, it was my understanding that we are guaranteed 34 million in savings on pharmaceuticals. Are PBMs savings capped at 34 million? Why shouldn’t we be getting a percentage of savings above that?
Bleed [00:36:24] So I think Senator Ingram is talking about the PBM contract and some of the analysis that the Segal group made. Trust me, we’re not placing a cap on any savings, and I don’t know that we guaranteed that number. That was their projection on how much they thought we could bring in.
Caldwell [00:36:40] But his question was, there is no cap.
Bleed [00:36:43] We are going to save as much money as we can.
Caldwell [00:36:45] Okay. Thank you. Thank you, Mr. Chair
Ladyman [00:36:50] Senator Irvin, you’re recognized for a question.
Irvin [00:36:54] Thank you. Just– I think– just– there are people watching online and they’re texting us questions. One is, again, explain the difference between the maps. Is it a, is, is it a Medicare network paying Medicare rates? And how is that different than the existing maps?
Jones [00:37:18] So what the retirees have today, as Jake talked about earlier, is a Medicare supplement plan. That means Medicare pays 80% and then your plan picks up the remaining 20%. That means they go to any doctor that accepts Medicare. The plan that you are voting on today is a group Medicare Advantage PPO plan with prescription drugs. That means that, yes, we do have a network of doctors that are contracted with us, but that also means we have out-of-network benefits. And as John talked about, the benefits are the same irregardless of whether you go in or out. So if you see a specialist in network, you pay that co-pay, you pay zero, because your co-pays today are zero. Or if you go to a doctor that’s not contracted and accepts Medicare, you also pay zero. We pay Medicare. We pay the providers the same as what we pay when Medicare pays. Okay? So it’s the same program. The only difference is we are now taking on the full liability. We no longer send your claims through Medicare. We take that liability. And the reason why we do that is because today under the Medicare supplement program, you have no care services. You have no clinical services. There are no programs in place to encourage the retirees to be healthy or to address chronic conditions because Medicare just simply pays your claims. With the group Medicare Advantage program, we will now take on the responsibility of helping the retirees live healthier lives. We will put clinical programs in place and incentives in place, in addition to the value added services that we have added. But at the end of the day, every provider will be paid the same as what they are paid by original Medicare.
Irvin [00:39:19] Okay. And then just, can you follow– I know that you have said previously that you’re going to add doctors or work to try to get people into network, you’re going to look at the map of the state of Arkansas and to go through that process, but that doctors would also be involved in this clinical process.
Jones [00:39:38] Yeah, that’s correct. Do you want to speak to that?
May [00:39:42] Good morning. I’m Dr. Linda May, medical director for the plan, and wanted to explain a little bit and just acknowledge the members that we’re talking about. I know that, you know, we come and talk a lot about insurances and numbers. But I, as a physician, my main focus is on who we’re treating. And it’s the teachers, the public employees, those who have sacrificed and put their health last to try and support us. And I feel like as a physician working for UnitedHealthcare, this is my time to help support them and to really be involved in those programs that we and I help create and monitor. So we’re very involved with speaking with the physicians that are in contract and out of network with us. My background is I am triple boarded, I am family medicine residency. I did a geriatrics fellowship and a hospice and palliative care fellowship, and I also I’m still a practicing physician. And that’s important to me because that way I’m not just sitting behind a desk all day. I’m actually treating members, treating patients not only through my private practice, but also through UnitedHealthcare. I am very involved in the clinical programs. I do ride alongs. I go to members’ homes that are on this plan to be sure that they’re actually receiving the quality care we’re promising you today. And especially because there’s just nothing beats an in-home personal visit. And I’m sure the physicians in the room would understand that, you know, a 10-minute sterile exam room visit, you’re never going to get the kind of quality care that not only addresses medical care and medications and diagnoses, but looks at things like social determinants of health. When we’re in the home, we can see things like if they don’t have access to food, if they don’t have a car or any transportation, if their air conditioning unit isn’t working. And I know you’re thinking, well, that has nothing to do with medicine. But we’re able to do things outside the box, like help with fixing that AC unit, providing them a new one that ultimately, yes, it’s going to affect their health care. So I’m very passionate about what I do because I came into this profession to make sure that we all provide and I provide quality care, and I view all the members on this plan as if they were a family member of mine and how would I want that family member treated. So I just want to emphasize that UnitedHealthcare is about quality, is about having people live healthier lives longer at home. And that’s why we proactively are screening for conditions so that we can find out how to educate people and help complications before they happen. Now, granted, a lot of these public employees, teachers have conditions that are more advanced because they sacrificed during their careers. And we’re here to try and see how we can best support them despite where they are and meet them where they’re at in their condition. We have post-discharge programs for those coming home from the hospital where we’re providing caregivers to help with hygiene, cooking meals, preparation, transportation services, meals. We go above and beyond to make sure that these members are taken care of because that’s one of the reasons we’re a five star plan. It’s the quality of care that we’re providing.
Irvin [00:42:56] Thank you. I just want to follow up with the last question.
Ladyman [00:42:59] Senator, if you could be more specific. There is a meeting in this room at 11.
Irvin [00:43:03] Yep. Last question. Thank you for your answer. The last question I just have is you’re a practicing physician. And so just as we have experienced things with the PBMs and working to ensure that rural pharmacies are viable, we want to make sure that your, you know, these clients, these employees have a viable healthcare option in rural Arkansas. And that’s why you are getting these questions, because it’s important for them to be able to pay their employees and keep their doors open so that they do have a doctor, you know, and a healthcare provider in rural Arkansas. And so it is an important balance that has to be struck so that we we want to give maximum benefits to our public school employees and our teachers employees. But we also have to balance that with making sure that the people that are providing those points of care are paid appropriately so that they can remain viable in these rural economies. Thank you.
Thompson [00:44:03] I just want to add one thing on that, because I know there’s a lot of discussion on the network. What’s a little bit different with a group Medicare Advantage plans, so we do have network providers, but it works as a Medicare provider. So the key is it’s not so much in and out of network. So a retiree can go out of network and pay that zero cost share and then we’re paying the provider the same as original Medicare. So that’s the key. It’s not so much about– so we have 99.9% provider acceptance. So you’re not limiting the network. Again, it’s the Medicare network. So I just wanted to be clear on how this product works. It’s very different from the individual Medicare Advantage plans. And I will say it’s a group Medicare Advantage plan now probably for the 10th time. Thanks.
Ladyman [00:44:52] All right, members, we do want to get all the questions answered because this group, we may not have them before us. So we do want to get those answered. And I apologize. I made a mistake. The meeting at 11 is in B, so we have more time for questions. So, Senator Chesterfield, you’re recognized for a question.
Chesterfield [00:45:12] And I shall be brief. How will you notify folks when this goes into effect?
Jones [00:45:19] So, hi. Linda Jones, again, so–
Chesterfield [00:45:22] Lovely name, by the way.
Jones [00:45:25] Just don’t start singing that song. One of the things that we do is we will work very closely with the EBD staff. It’s important for us to understand your culture, how you currently communicate with your retirees, and to supplement that. So I think as Jake mentioned, we will be doing about 130 in-person meetings. In addition to those in-person meetings, we’re also going to have virtual options for meetings. A communication campaign will go out mid-June when we’re ready, when every– July, so when everything is done to make sure that everyone is aware of what’s going on. We also have a tele-sales department. It’s our pre-enrollment department that will open up. It’s a special number dedicated to your retirees, and those folks will be able to answer all questions that retirees may have. They have the ability to help them locate where the nearest meeting is going to be, make a reservation for them–
Chesterfield [00:46:28] Well, Linda, what I need to know is, are you gonna send them a letter or something saying that they’re enrolled in this program?
Jones [00:46:32] Yes, ma’am.
Chesterfield [00:46:34] If everybody’s covered, why have a network at all? That was a question I had from someone. You know, people are asking me, why have a network if everybody’s covered anyway?
White [00:46:45] Well, the network is important because, not only do you want to make sure that you have access, a broad access to providers, but you also want to make sure that we’re partnering with quality providers.
Chesterfield [00:46:54] Well, someone in the audience ask me that question. So I’m asking you and I’m good.
White [00:46:58] It’s a great question.
Chesterfield [00:47:00] Let me introduce some folks who are here. Miss Nevada Gates is here, Miss Paulette Parker, Mr. Roy Bond. Two of them are retirees. One is hoping to be soon. So we’re hopeful that, that, that the number will be up, that there is sufficient notification. You know, I see Joe Namath all the time and all these other crazy people with all this stuff, which is so annoying. But I want you to be just as annoying, so that people are aware that you’re here and that they are automatically enrolled. Are you sending them a letter saying they are automatically enrolled or what? Is that– what’s going to happen, Jake, how they’re going to know? Because there are some folks who have not opted into anything that will now automatically be opted in, I assume. How will you make them sure that they know?
Bleed [00:47:43] And that’s going to be the big challenge. Like, like they mentioned earlier, we’re going to be meeting, we’re going to be sending out letters, we’re going to be contacting people as much as early and as often as possible.
Chesterfield [00:47:54] What should they look for? When you’re sending out the correspondence, what should they look for? Should they look for the employee benefits division? Should they look for UnitedHealthcare? Because a lot of folks just throw stuff that they aren’t expecting away. I want to make sure this is not considered junk mail.
Bleed [00:48:11] So they should definitely look for the logo, first and foremost.
Chesterfield [00:48:15] The EBD logo? Because I can’t see that far.
Bleed [00:48:16] Yes, that’s the– that’s actually the TSS logo. But we will have logos. We will have branding. We will have a specific name for the program. I have been told that we might do videos. We’ll have a website. I’ve even offered to make a video doing my best Jimmy Walker impersonation.
Chesterfield [00:48:35] Oh, please don’t. Please don’t. I won’t buy it then. I will not buy it. I don’t know. I don’t want to hear you say dynamite at all. It’s offensive, but go ahead. Okay.
Ladyman [00:48:46] All right. Is that all?
Chesterfield [00:48:49] That’s it for me, Senator– I mean Representative. Thank you.
Ladyman [00:48:51] Thank you. Senator Hammer, you’re recognized for a question.
Hammer [00:48:54] Thank you, Mr. Chair. I was at the meeting yesterday along with Representative Warren. You all did an excellent job presenting to the Retired Teachers Association. I want to commend you on that as we interact and get that information out. I want to hit a couple of bullet points that you shared yesterday. It may bring some clarity. There’s a letter, I understand, that’s going to be mailed out July 1, and, Jake, it’s going to go to all all eligible retirees, not just those that are currently enrolled in the system. But if they’re eligible, they will receive a letter sometime after July 1 with the designated logo. Is that correct?
Bleed [00:49:26] Yes.
Hammer [00:49:28] Okay. So that’s going to be the first point of information they should receive. That’s an official document that says here’s how you get a hold of us and the communication lines open up at that point. Second bullet point, they will have from that time until November 30 to make a decision as to whether they want to opt in or opt out, which gives them, as far as open enrollment period is concerned, plenty of time to lay down and do a comparison between the plans that they either have now, the plans if they want to go independent and opt out and go get it purchased from somebody else, or stay in the group plan that’s being offered through this that we have worked out the arrangements for. So they’ve got that window of time from the time they receive that letter until November 30 in order to make a decision. Is that correct?
Bleed [00:50:16] Yes, confirmed.
Hammer [00:50:17] Okay. So that should put a lot of people’s mind at ease that this isn’t being shoved down their throat, that they’re actually going to have that. Jake, you have a little bit of question in your mind based on–
Bleed [00:50:29] No, what I just want to add, that will be the official deadline. But you also have an opportunity to reconsider later on in the year. So January rolls around, there’ll be a 30 day period during January 2023. And then also going forward, if you get into the plan and you don’t like it or you want to get into the plan later on, you’ll have an opportunity to do that in the fall of 2023.
Hammer [00:50:50] Okay. And then also, as far as the savings that’s being created from this plan, that money is going to be parked where and what’s the purpose of the money that’s going to be saved through this long term?
Bleed [00:51:00] Sure. So savings is a funny word around here, as you know.
Hammer [00:51:05] I understand. It is defined in law now, though.
Bleed [00:51:06] Wonderful. So when we save money, what we’re looking at is spending hundreds of millions of dollars on our existing health care benefit for these folks. And so what we would be saving is, in effect, money that we would not be spending. And so what we’re going to see over time is the cost curve of the employee benefits division coming down. And so as a result, the funds that are provided by the General Assembly– and the General Assembly has stepped up big time to help out our teachers and our retirees– that money will go further, meaning that next year, 2025, 26, 28, 30, 35, even going forward, the amount of money we need will not be as great, we’ll be able to stretch those dollars further. So we won’t necessarily have money in the bank that we are saving, in a sense, but there will be costs that we are avoiding as a result of this.
Hammer [00:51:59] Which would be a repeat of 2013 is what we’re trying to avoid through all this.
Bleed [00:52:02] Absolutely.
Hammer [00:52:03] Okay. The last thing– thank you Mr. Chair– last thing, and I always want to give people a chance to defend themselves if something’s been said. So I spoke to a teacher yesterday after the meeting, not there but out and said UnitedHealthcare is going to be the administrator. They were not real happy because they do not feel that UnitedHealthcare has a stellar reputation of taking care of their customers and their clients. Jake said a while ago it was awarded through a fair process through the procurement plan, which I believe probably would have included looking at your past history in other states. I want you to speak to your reputation as UnitedHealthcare, because if it’s not good, we’ll all be back in this room and it will not be a pleasant experience. So I want to give you a chance to defend your reputation as UnitedHealthcare in 2 minutes or less, please.
Thompson [00:52:52] Thank you. So this is John Thompson again. So we are providing a group Medicare Advantage plan. And this is regulated by the Centers for Medicare and Medicaid Services. And they have a star rating program that is based on quality of the plan, how you serve Medicare retirees, customer service, claims, etc. Five stars is the greatest you can get. We are a five star plan. We are five out of five stars. We are the only national carrier that has a five star plan. That is not United saying we’re a five star plan, that is the Centers for Medicare and Medicaid Services, CMS, where we are awarded five stars. That is the highest you can get and that is based upon claims, customer service over 30 measures, quality, and it’s all about quality. So the good thing with Medicare Advantage plans is you have CMS looking over our shoulder and they are always looking out for the retiree. They’re not looking for the insurance carrier. So quality that is quality speaks for itself. And we are very proud of being a five star plan. We also have 20 other state retirement systems that were sitting right where you are. So we have surrounding here the two Texas retirement systems, the teachers and the former employees, the state of Alabama, the teachers, and the teachers and the employees, the state of Missouri, the state of Georgia all were sitting where you are. And again, our retiree satisfaction for our group Medicare Advantage Plans is 98% and consistently so. And those are, those are each state providing their own customer satisfaction for retirees. It’s not us.
Hammer [00:54:34] Thank you. Thank you Mr. Chair.
Ladyman [00:54:37] Representative Vaught, you’re recognized for a question.
Pilkington [00:54:42] [00:54:42]It’s actually Representative Pilkington sitting in Representative Vaught’s seat. [1.7s]
Ladyman [00:54:44] [00:54:44]Your hair is shorter. Okay, you’re recognized. [2.8s]
Pilkington [00:54:48] [00:54:48]I’m better looking now, too. [0.9s] Thank you, Chairman Ladyman. So one of my questions about the same benefits in and out, which I know we’ve kind of danced around this a little bit, but maybe you can help me understand a little more. So if you’re a beneficiary, whether you’re going in or out of network, you’re getting the same benefits. And as a provider, the advantage is that you get reimbursed at a higher rate if you’re in-network as opposed to out-of-network. Is that correct?
White [00:55:14] Not necessarily so. So if you’re a contracted, you are being reimbursed at whatever that contracted rate is that we negotiated both between us and the provider. If you’re not contracted, you are paid 100% of the CMS Medicare allowable.
Pilkington [00:55:28] Okay. So one of the things I know when you say you want to call this a triple aim and reduce costs, one of the best ways I believe in reducing costs is reducing variations of care. You know, cookbook medicine is kind of the negative term used to it. How do y’all, when you have people that are going in and out of networks, especially with your high, you know, your, your high cost people, how do you make sure that you eliminate variations in care to help reduce cost over that population if you have providers that are in and out of network?
White [00:56:02] So I’ll take it from a quality standpoint. So what we do from a quality standpoint is to ensure that our members’ quality of care is the same, whether the provider is contracted or not. So we’re the only national carrier that has a primary care incentive plan where we work with our PCP to make sure that they are engaging with our members, to make sure that they have their diabetic eye exams completed, that they have their mammograms completed, that they have their colonoscopy completed. And we do that both for in-network providers as well as out-of-network providers. We’re the only carrier that does that. So we’re incentivizing a PCP based on those gap in care closures and engagement and we pay them a bonus. We do the exact same thing for our out-of-network providers.
Pilkington [00:56:49] Gotcha. So the incentive plan is for anyone, whether they’re in network or out?
White [00:56:54] Absolutely.
Pilkington [00:56:54] Okay. That, that clears up. Okay. Thank you.
White [00:56:56] You’re welcome.
Ladyman [00:57:03] All right, we’ve got more questions. But committee, I’m going to call a recess for 5 minutes. Don’t anybody leave. Some of you need to go next door for that meeting in Mac B to vote. So we’re going to recess for 5 minutes and then come back. If you don’t need to go to that meeting, you just stay where you’re at. It will only be a few minutes. So we are recessed for 5 minutes.
Ladyman [01:05:59] All right, committee, I want to call us back into order and we’re going to go ahead with questions. You all ready? Representative McCollough, you’re recognized for a question.
McCullough [01:06:12] Thank you, Mr. Chair. Right over here. This is a question from a member that’s not here today but that’s watching and not sure– I know this question has been asked in some ways but want to see if it’s been asked in this way and try to get an answer for it. If a retiree decides to not enroll in the advantage plan, will they be allowed to stay in the current plan or be allowed to convert to an individual supplement with a guaranteed issue basis?
Bleed [01:06:44] They will certainly be given the opportunity to maintain their existing benefits. If, if they want to do something other than that, I don’t think that they can do that. So under state law, you have to maintain coverage in our plan. Once you leave our plan, if you choose to do that under state law, you cannot come back.
McCullough [01:07:12] Okay.
Ladyman [01:07:15] Did that answer your question, Representative?
McCullough [01:07:17] I think so. Yeah.
Ladyman [01:07:20] All right. Senator Hammer, you’re recognized.
Hammer [01:07:24] Clarify that just so there’s no confusion. Are we talking about the retired population or are we talking about– was that–
Bleed [01:07:38] I interpreted the question to be regarding the opt out provision available to retirees. The Medicare Advantage plan that we’re talking about today will only be available to folks who qualify for Medicare. So they would be over the age of 65 and not working, primarily. If– this plan will not be available to our regular active members. I wish I could enroll in it, to be honest.
Hammer [01:08:05] Okay. All right. Thank you.
Ladyman [01:08:09] Senator Caldwell, you’re recognized.
Caldwell [01:08:12] Thank you, Mr. Chair. Another question from someone who sent an email in. It says what about premium costs with the current plan? Premium rate go up dramatically over time?
Bleed [01:08:26] So we haven’t issued the rates yet for the current plan. One of the issues before the subcommittee today is some policies regarding rates and, of course, the approval of the Medicare Advantage plan will to some extent affect how rates are calculated because the Medicare Advantage plan will reduce the amount of money we have to come up with. That’s the amount everybody has to pay. But right now, we’re looking at our rate proposals. And while rates will go up, and they have not gone up in years, we don’t anticipate it will be major, significant increases like we’ve seen in some other plans.
Caldwell [01:09:05] And I’d like to bring out, Jake, that this is basically kind of a closed plan. That money goes in for the premiums, the costs go out on treatment. So the legislature has had to bail out EBT two or three times in recent history, well, you know, several hundred million dollars. So basically, to make the plan work, you either are not charged enough or you’re paying out too much or somebody is stealing from the plan, that basically there’s no other way that money can come in either through, than through premiums. Now, again, the legislature did bail them out to keep it afloat, and that can’t continue to happen. But, but the other thing, I don’t think we have anybody stealing. So we’re either, either not charging enough or paying too much out. And I’m just throwing it out to the general public will know why the plan is in trouble.
Bleed [01:10:06] That’s right. And one of the things that we looked at when I came on a year or so ago was why we kept having this challenge, because, of course, we did it in 2013. We did it again in 2021. The legislature has provided a tremendous amount of support and funding for the plan when there was the need there. One of the things that we’ve shown in the quarterly report, which we provided you all last month, showed that the course of the plans really turned around because of all that support and funding. But at the same time, that support and that funding will go away. And we will have a repeat of 2013 in five or six years when that funding goes away. So one of the things that we’ve worked on is trying to develop a rate process where we have the state step up and pay more. So right now, the state pays 65% of the active members’ premiums, give or take. We looked at our surrounding states and that’s very, very low compared to everyone else. So under the proposal before you today, that amount would increase to 80%. We would also adjust the rates to reflect how much they actually cost. Instead of having everybody’s costs pulled flat when costs are going up, obviously that’s going to leave a gap between how much money the rates bring in and how much money we need. That’s the gap that this legislature has had to step in and bail out, and we want those rates to float with those costs. So all of this is to say that we really think that the proposal we put into place, the rate structure we have in place, should prevent bailouts in the future, and it should instead provide a far more stable and secure insurance benefit for our members.
Caldwell [01:11:47] Okay. Thank you.
Bleed [01:11:48] Thank you.
Caldwell [01:11:49] Thank you, Mr. Chair.
Ladyman [01:11:52] Representative Crawford, you’re recognized for a question.
Crawford [01:12:01] [01:12:01]Thank you, Mr. Chair. I have a million dollar question. Put your seatbelt on. CMS mandates providers’ employees to be vaccinated to be able to receive the funds. Will this plan require members to be vaccinated to receive benefits? And if it ever does, will that, those members be able to move back to the old plan? [39.0s]
Jones [01:12:42] [01:12:42]So this is Linda Jones. I’m going to start first. Simply put, no. To be a member of this group Medicare Advantage plan, we do not require members to be vaccinated. I will tell you that as a healthcare company, UnitedHealthcare does require employees that come in contact with retirees to be vaccinated because we care about the health of our retirees. So when we host meetings, all of our employees and staff that will be present are vaccinated. But we do not require members to be vaccinated to be a part of this plan. [35.0s]
Crawford [01:13:20] [01:13:20]Okay. It is a federal plan. I mean, Medicare is federal. So even though it’s group, I mean, I understand. But the base, the base. [7.7s]
Jones [01:13:29] [01:13:29]What, what CMS requires of us as anyone who takes federal funding from CMS for a program, is that their employees be vaccinated. They do not mandate that members be vaccinated. So anyone that has a contract with CMS, and our group Medicare Advantage program is a contract with CMS, we are required as employees to be vaccinated. [23.5s]
Crawford [01:13:53] [01:13:53]And I understand that. And there’s where the million dollar question is. If it ever changes to where members would have to be vaccinated, would they ever– would they be able to move over to the old plan? [15.1s]
Jones [01:14:09] So what I can answer first, and I’ll let Jake take the rest. We are required to follow all CMS mandates. So if CMS ever came to us and said the members of your group Medicare Advantage plan must be vaccinated, we then come before you all and we share that information with you and we let you know what that mandate is, and then you can make decisions from there.
Bleed [01:14:44] [01:14:44]If I could add to that, our members are already covered by Medicare. So if Medicare were to come along and say all of a sudden to receive Medicare benefits, you have to get vaccinated. We would have the same issue, whether they were covered by Medicare Advantage under the United or under their current benefits. [15.7s]
Crawford [01:15:02] So you’re saying all state employees are covered by– I’m not just talking retirees, but–
Bleed [01:15:09] This would just cover retirees.
Crawford [01:15:11] Okay. All right. Thank you.
Ladyman [01:15:15] Representative Dotson, you’re recognized.
Dotson [01:15:17] Thank you, Mr. Chair. So just, just to clarify, just some of the previous questions and answers back and forth, you had said if a member leaves the plan, they can’t come back in under state law. That’s if they leave a state plan altogether.
Bleed [01:15:36] Correct.
Dotson [01:15:37] That’s not on an annual enrollment basis. They could choose the Medicare Advantage one year and–
Bleed [01:15:42] They have to have some form of coverage.
Dotson [01:15:44] –and back and forth. So they’re not– if they want to try it out for a year, they don’t like it, they can go back to the old plan or the old benefits.
Bleed [01:15:52] And we have– and just to be clear, it’s really a break in coverage issue. So if we– we have some folks who will retire and go on their spouse’s coverage and they won’t use ours, but then later on they want to join our plan. Because they haven’t had a break in coverage, they are eligible to do that.
Dotson [01:16:11] Okay. That makes sense. I just want to make sure that if if they choose this for a year, then next year they decide, hey, it didn’t work out, I don’t like the coverage–
Bleed [01:16:21] They won’t– no, no. They’re going to have to be in one or the other of the two plans. It’s really if people just say, you know what, I’m not going to have insurance. To heck with it. That where the policy–
Dotson [01:16:33] There’s no risk to members to, to try it out for the year. And you’re going to work with them over this first year, especially, to make sure that any issues that might crop up, we’re addressing those and, and making sure that the members are really handheld and taken care of even more so–
Bleed [01:16:51] Correct.
Dotson [01:16:51] –in this first transition year.
Bleed [01:16:52] We want this to work. And this is a long term commitment. This is not a one year or two year or five year process, really. I mean, this is going to be something that we want to work and we want it to be very successful.
Dotson [01:17:02] Thank you.
Ladyman [01:17:05] Senator Bledsoe, you’re recognized for a question.
Bledsoe [01:17:09] Thank you, Mr. Chair. I have a question from a retired teacher, and she is too young for Medicare. What insurance will she have?
Bleed [01:17:17] She’ll have her existing benefits.
Bledsoe [01:17:19] Her existing benefits?
Bleed [01:17:21] Yes, ma’am.
Bledsoe [01:17:21] All right. Thank you.
Ladyman [01:17:25] Senator Hammer, you’re recognized.
Hammer [01:17:27] To that issue, what are the projected rate increases for that population that’s going to be caught in that window of being punished for being too young and not old enough to get on Medicare?
Bleed [01:17:37] So the rates are not yet finalized. Of course, we’re dependent on some of the decisions today, but those rates will increase. Now, one of the things to keep in mind is that while the rates for the pre-65 population will go up, and that’s a reflection of the cost that those individuals impose on the plan, and we have some very sick people in our pre-65 population. The state will also be increasing its contribution for those folks. Right now, we pay between 55-65% of their costs. We’ll be moving that up to about 75%. So while there will be some increases, the increases will be spread across. The state will be shouldering more of the rate going forward.
Hammer [01:18:21] Are we able to use some of the savings from what we’re doing for the retired population to help neutralize the cost of the population that’s caught between retired young but not old enough to be put on a Medicare plan?
Bleed [01:18:34] Absolutely. And not only are we using the savings that the state enjoys from the Medicare Advantage plan to offset cost increases for the pre 65 retirees, we’re doing the same thing for our actives. This really is a commitment to making sure that the same level benefits that are available to our retirees today are available for active employees when they retire 5, 10, or 20 years from now.
Hammer [01:18:58] Which is an important distinction, because what we’re doing in this one population, all populations are going to benefit to the overall driving down of the cost of the plans.
Bleed [01:19:06] Absolutely.
Hammer [01:19:07] Thank you.
Bleed [01:19:07] At the end of the day, if I can add on that, and you all know this, this all comes out of the state’s budget. And it all comes out of the school districts’ budgets, whether it’s for retirees, whether it’s for active members, regardless. And so the extent to which we can help provide a relief to those costs now, in the long term, the better the benefits can be, then the longer we can provide them.
Hammer [01:19:30] Thank you.
Ladyman [01:19:31] Representative Rye, you’re recognized for a question.
Rye [01:19:43] Thank you, Mr. Chairman. Getting back to what Representative Cindy [Crawford] was speaking about a few minutes ago, if, if one of our people want to get out of this shake, let’s just say that they don’t want to go with this, they want to go with the old plan that they were on before this actually began, is this going to be more expensive for them should they go that direction?
Bleed [01:20:10] So if they opt out of the Medicare Advantage plan and they want to keep their existing level of benefits– is that what you’re asking? They can do so. They will probably see an increase in costs. Again, the retirees have not seen an increase in some time. But they– we’re working on exactly how much of an increase that is. We’re trying to make this an option. We’re trying to make sure that those cost increases are not so prohibitive that people are driven into the Medicare Advantage plan.
Rye [01:20:42] Yes, sir. Follow up, please?
Ladyman [01:20:45] Yes, go ahead.
Rye [01:20:46] But if our folks, some of these folks, come up to us, Jake, and say, look, we don’t like what was going on– which it’s probably going to be great overall– but let’s just say that they have a problem with it. We probably need to let them know there probably is going to be a cost increase based on the two plans if they got away from the old one.
Bleed [01:21:09] Well, but the reality is that there’s going to be a cost increase for everybody, at least from the state standpoint. We’re increasing the amount the state is paying from 65 to 80%. The reality is that insurance costs and health care costs go up 6-8% annually. Somebody’s got to pay that additional funding. Now, the state has shouldered an increasing amount of that cost, and we’re doing everything we can to shield our folks from paying more. But those cost increases are going to be absorbed by the plan one way or another.
Rye [01:21:46] Thank you, Jake. Thank you, Mr. Chairman.
Ladyman [01:21:50] Representative Beck, you’re recognized.
Beck [01:21:53] Thank you, Mr. Chair. So I just want to needle in just a little bit more on, on what, what you said. You know, the question is, is this group that’s pre-65, I’m going to call them, and they’re retired, all right, so they’re on the– they have the old plan available. Any rate increase with that plan for those people, is that attached to like a rate increase for active employees? Is there any kind of, you know, like, they both get increased that 10% because the costs are and there may not be any connection at all between those two plans, but–
Bleed [01:22:31] So the memorandum that we put and we provided to the committee, and it really lays out kind of what best practices are for a large group insurance plan. But one of the things that we want to get in the practice of doing is taking the total cost of the plan and allocating those costs out on populations. And then, in effect, if you are a member of a particular population, we know how much it will cost to provide you insurance based on prior year experience. And that’s how much the costs are going to be paid by that particular member. It’s a way to actuarially adjust the risk that the plan bears by providing insurance, and it’s based on our actual experience. It’s a way of saying, if everybody pays the amount they should pay than the amount actuarially that they cost for the healthcare for them, then we have a way of paying for the plan 100% and we won’t need any money from you. Another way to think of it is everybody is going to, in effect, pay their fair share based on our experience over the last few years. So we know that spouses tend to be more expensive than active employees. I think we probably have a lot of self-employed folks, a lot of farmers, a lot of folks who are working with their hands and they have a lot of healthcare costs. Conversely, we know that kids are cheap. They’re healthy. They don’t cost much. We can build those realities, those things that we know, into costs so that we can make it cheaper to insure kids than it is to insure spouses. The same with the pre-65 retirees. So while it’s complicated and hard to explain, there is a rhyme and a reason to the amounts that everyone will pay. Building on to that, the employer, the state will have a uniform rate that we pay. We’re going to give everybody the same amount. Whether you choose to be in the premium plan or the classic or the basic, the contribution from the state will be uniform. Right now it’s not. So in the next five years, we’re going to shift into that so that 2028, 2029, when we get to the place where we want to be, we will have everybody kind of at a place where they’re paying their fair share, the state’s paying a uniform rate, and we’re following best practices for a large group employer.
Beck [01:24:58] All right, Mr. Chair, follow up?
Ladyman [01:25:02] Yes, go ahead.
Beck [01:25:04] My concern is this, and this may not be possible. So let’s say that that group that’s on, that’s pre-65, that they’re on that plan. I’m seeing that, as as a whole as compared to the other groups, probably a small group of people.
Bleed [01:25:25] It’s about 4,000 people total.
Beck [01:25:27] So, which is still a pretty good size. But, so my concern would be that if you had some events there, you could– and you were looking at that group, you could– they’re, they’re– if the state– and the state’s giving a flat amount into that, their premiums for that plan could, could really fluctuate.
Bleed [01:25:50] Absolutely. And one of the things that we’re looking at with the risk adjusting process is how do we manage that, that, that population? How do we help them? How do we reduce their risk to cost? But one of the realities of being a self-funded plan, and that’s what we are is we pay whatever the claims come in. If we have to pay them, we have to pay them. If we have a good year, we have a good year. If we have a bad year, we have a bad year. If you remember what happened in 2013, on the teacher’s side, we had a handful of very expensive cases that occurred at really a bad time for the plan, and that was one of the reasons that we had problems. The same could be true for the pre-65 population. And it’s, it’s just a challenge for us to manage those costs.
Beck [01:26:36] All right. Thank you.
Ladyman [01:26:39] Senator Chesterfield, you’re recognized for a question.
Chesterfield [01:26:47] Thank you, Mr. Chair. Break it down for someone who has not been a part of the, even though post-65, has not been a part of this program. What do current retirees pay besides Medicare? What is the cost of our state plan? What are they paying? Are they paying anything a month?
Bleed [01:27:04] Yes. So on a public school side, they’re paying about $100 a month.
Chesterfield [01:27:08] For retirees.
Bleed [01:27:09] For our benefit. That is in addition to the amount that they would be paying out of their Social Security for Medicare.
Chesterfield [01:27:16] Medicare. So it’s not free?
Bleed [01:27:18] No, ma’am.
Chesterfield [01:27:19] And this won’t be free?
Bleed [01:27:20] Nope.
Chesterfield [01:27:21] What will it cost a month?
Bleed [01:27:23] Well, if the rates are approved and if this contract goes through. My proposal will be that the state bears a 90% cost share of the Medicare Advantage plan, 90% of the– it’ll be about $85 a month total. The state will pay 90% of that, which should leave about $8 or $9 a month for the employee.
Chesterfield [01:27:43] Thank you. That will help. And when you’re sending this out, and I know you’re going to tell us that? Are you going to tell those folks when we, when they get that information, that you’re going to pick up about 90%, which will translate into a cost of about $9 or $10 per month?
Bleed [01:27:57] And that will, that will provide the additional benefit of pharmaceutical drugs, which they’re currently not getting with the $100 this plan.
Chesterfield [01:28:04] Because I know that some of them, when I was paying the supplement for my mother, I was paying an enormous amount of money per month out of my pocket because it was important to me that she be okay.
Bleed [01:28:15] Yes, ma’am.
Chesterfield [01:28:15] Thank you.
Ladyman [01:28:17] All right, committee. Seeing there’s no more questions on the board, so I want to thank you all for coming up and answering questions. Been very helpful. Thank you very much. And committee– Jake, I don’t know, you might need to stay, but if you all would go back. Appreciate you being here. And, committee, just my opinion of this. I looked at this and the first question is, can I get on this plan? Because it looks very, very good. But the problem here is education. And they have a plan to go out in the state and try to educate folks, but I think we can help that by going, with the data that we’ve had presented to us, we can help that communication out to the people that are on this plan.
Bleed [01:29:14] I’m sorry to interrupt, Mr. Chair.
Ladyman [01:29:15] Go ahead.
Bleed [01:29:16] But if I can piggyback on that, we’d be more than happy to alert the members when we will be holding meetings in your districts. We would certainly appreciate your attendance and your feedback on the meetings.
Ladyman [01:29:28] All right. Thank you, Jake. Yes.
Chesterfield [01:29:34] We plan on getting those who are concerned about retirement and those pension benefits. We had meetings across the state. Is the chair considering having meetings in conjunction with these things that they’re talking about? Because sometimes when they have a committee meeting, people respond more to us than they do perhaps to–
Ladyman [01:29:56] I really can’t answer that question. I’m the B-team here, so we can pass that on to the A-Team. Senator Hammer, did you have a comment?
Hammer [01:30:05] Senator Chesterfield, the retirement committee is making plans to do that, to piggyback around the state like we did a few years ago, you know, where we went around and, you know, tried to offer information. So there is conversations about piggybacking, and if nothing else, doing our own where they could come in. So that it is being discussed.
Chesterfield [01:30:27] Thank you.
Ladyman [01:30:28] Okay, committee, before we move on to the next discussion, I want to recognize Rachel Betaine. I hope I pronounced that right. I know you signed up for questions, but I think your questions have been answered. Is that right? Okay. All right. We appreciate you being here. Appreciate you signing up. Okay. So committee, there has been a protest. A timely protest has been filed regarding the Employee Benefits Division’s anticipation to award this contract to UnitedHealthcare. So we have to acknowledge that. And I would like to ask Mitch Ross, if he’s still here, I hope, to come up and really discuss this and give us some information on the protest that has been lodged. If you would, please introduce yourself and who you represent.
Rouse [01:31:37] Mitch Rouse, I’m the director of the Office of State Procurement at the Department of Transformation and Shared Services.
Ladyman [01:31:43] You’re recognized.
Rouse [01:31:44] Sure. So I think this closed– the period to file a protest closed, I think, yesterday. Today– was it this morning? There was a protest filed Friday. So we’re in the middle of that process. Typically, in the law, when there’s a protest, we halt contracts moving forward until that protest is resolved. This protest was brought by Benistar, which is a vendor that Jake mentioned earlier. Benistar was disqualified in this process. And that’s really the crux of their, their protest is that they feel like they shouldn’t be disqualified and they want to take it back and do another analysis around this and start the discussions over again. There is a provision in the law that allows me, as director of the Office of State Procurement, to allow the contract to continue to move forward despite the protest. And then we handle the protest while while the contract continues to move forward. I can do that if that’s what the legislature would like to do. I think there are some other options on the table potentially. The risk with that, just to be transparent, is that if there is some merit to the protest, then, you know, we would, we would have to pull that contract back and kind of go through that process. And there would potentially have been some work done in the couple of weeks leading up to that that would have to get resolved to start that contracting process over again. That being said, the reason we would exercise that clause is because time is of the essence in this particular situation, right? We’ve talked a lot about communication and outreach, and getting that done prior to October open enrollment for these folks is extremely vital. We’ve, we’ve worked closely with EBD and Segal and others to develop this timeline. And there’s a reason we got it here before this committee in June so that we could get that done. So if there is a protest if I don’t exercise that clause, there’s a potential that we hamper this moving forward in a timely manner. I believe there’s another proposal potentially, potentially out there about maybe a motion to, by this committee, to allow the chairs to make a decision once the protest is decided. To give you full disclosure, too, the way the protest works is get the protest in, we give the, the awardee, in this case United, and the division, EBD, an opportunity to respond to that protest statement. We give them five days to do that. That pushes us to, based on when I gave it to EBD and United, next Monday. Once those responses come in, we give an opportunity to Benistar, in this case the aggrieved, to file a reply. We usually give a few days on that as well, and then once I get all of those in, I can look through those and write up a determination that usually takes- well, I can make it as fast as I need to make it, but it usually takes a few days. But I can, I can get it done in a couple of days. So that’s generally a timeline and kind of an overview of what that process looks like.
Ladyman [01:35:37] Okay. I want to recognize my co-chair for a question. Senator Hammer.
Hammer [01:35:42] Thank you, Mr. Chair. Based on what you just said and I understand if this is being litigated, you may be limited in what you can or can’t say, but that being said, can you tell us why they were excluded?
Rouse [01:35:57] Yes. I can tell you why they were excluded. I think it’s, it’s public knowledge in this process and all this will become public at some point. The reason that OSP determined that Benistar was excluded is because they didn’t meet the minimum qualifications. The communication we gave back to Benistar is that they failed on two fronts. One, the RFP required that any vendor be a four star or more a vendor. Benistar is not a four star vendor. Another point is that the RFP had specific technical requirements in it, and that was to offer up an MAPD solution. And I believe, according to my staff, and Jake may be able to speak to this more than me, the solution that they offered up was not an MAPD solution. So that was the reason that they were disqualified.
Hammer [01:36:58] Okay. And follow up?
Ladyman [01:37:01] Yes.
Hammer [01:37:01] Okay. Thank you. Timeframe wise, give us the two scenarios. If this thing just played out without a recommendation from the committee, what would be the outside window you would anticipate it would be for the process to run its full course? Because, you know, we’ve said here today, July 1, a letter is going out, and this– we’re up against a wall, number one. What would be the shortest time frame if we were to give you what you need in order to make the decision to move forward?
Rouse [01:37:30] Sure. So I think before this committee, you’ve got two options. You can, you can have me exercise that provision in the statute, and that would allow this contract to continue to move forward, and it wouldn’t delay anything. The only risk there is that if there is some merit to this protest and it’s overturned later, then we’re starting the process all over and this committee would have approved a contract that potentially shouldn’t have been approved. Right? The other option is for that motion to have the chairs approve, assuming that once the protest is decided. If you were to go with that option, you would be looking at around, and I hope my math isn’t too fuzzy here, but June 28 or so for me to get that decision done, I think that should be the time frame. I think I can get that decision out and written by June 28. And then in that scenario, I think you would give the authority to the chairs to say as long as the contract hasn’t changed, as long as the protest is overturned and United is still the contractor, that that contract can move forward. The third option is for me to not exercise this clause, and us this to halt the whole thing. And we’d have to bring it back next month or next time we can get to committee. I don’t think that is a viable option for the timeline.
Hammer [01:38:58] All right. Thank you.
Ladyman [01:39:00] Representative Dotson, you’re recognized.
Dotson [01:39:06] Thank you, Mr. Chair. I’m just in the queue for a motion at the proper time.
Ladyman [01:39:11] I recognize your motion. Yes. You’re recognized.
Chesterfield [01:39:20] Four years ago, when we had this, when we had several of these protests come up about, I think, some DHS contracts, they were brought before the committee, the individuals who had the motion to, to challenge and all of that. And I’m just wondering what happened to that process that we used in the past so that the committee itself could hear what the complainant had to say? They would be able to– the individuals who were awarded the contract would be able to respond, and then we moved forward. It was not all in the hands of the procurement director. So that’s, that’s the process that we had in the past. So if we have something else– but it was just interesting to note that this committee had some– I don’t know if it was this committee or a committee. I remember working with Wardlaw on this, Representative Wardlaw on this, where we came before the committee, we heard the– we heard them bring it to us and it wasn’t just a one person show. So there’s Representative Wardlaw. Perhaps his institutional knowledge is–
Ladyman [01:40:21] I can’t answer that. Representative Wardlaw, have you got any input on that?
Wardlaw [01:40:28] I might. I’m going to turn to the Bureau for a second. Will y’all correct me where I mess this up? So when we wrote the law, Senator Chesterfield, that gave this committee this authority, we took the contracts for EBD won’t go to review. They come to here. So I think what you were going was typically this type conversation would happen in review. I met with Mr. Rouse yesterday and kind of went through how this process would work. The original way he was going to approach this committee today– this column’s bothering me because I can’t see you– but the original way he was going to approach this committee today was with a letter. And he has the authority to write a letter that gives us the authority to go ahead and review this contract. I advised him that my personal feeling was we didn’t want to proceed that way because I didn’t want to put members of council– as chair of council, I feel responsible and Senator Rice was there as well, and he can key in here at any moment– I didn’t want to put members of council in a position where we were reviewing a contract that was under a protest that could grow legs, so it could have merit. I’ll use legal terms. Even though we were being told some other things in that and we can bring Jake Bleed to table if y’all want to hear some of that, because Mitch can’t say some of that because he’s the final arbitrator of this proceeding. So I want to keep it legal. So our way around that was is that maybe a motion could be made that once this thing was found to have no merit, the chairs of council would then have the authority to sign it as reviewed. I just didn’t want to put our members in a position to take a vote that we may be led down the wrong road. I wanted to make sure that everything was looked at and everything was, was done and the legal process was followed before we actually reviewed this contract. I hope that makes sense.
Chesterfield [01:42:43] Mr. Chair.
Ladyman [01:42:44] Yes, go ahead.
Chesterfield [01:42:45] First of all, I wish you’d get from behind that stupid wall over here. I am less than clear. Are you saying that this committee should say go ahead and proceed with the process that this gentleman from procurement is saying? Is that what you’re saying? Just a simple yes or no?
Wardlaw [01:43:04] Well, it’s not that simple.
Ladyman [01:43:06] Well, it’s almost that simple. Can I say? Yeah, I believe what you’re saying is correct. So if you don’t– I want to move on and I want to ask Representative Dotson to make his motion, and then we’ll have some discussion.
Chesterfield [01:43:20] Okay. I just wanted to know, as a member of council, I want to be as informed as I can possibly be so that I can make an intelligent decision when this comes before the council. And perhaps this motion will clarify because I’m still not sure exactly what my chair of council was trying to tell me.
Ladyman [01:43:37] That’s what I want to do is have the motion so that everybody would hear that and, and the details. Maybe that’ll help answer some of the questions. So, Representative Dotson, you’re recognized for your motion.
Dotson [01:43:48] Thank you, Mr. Chair. I move that the ALC co-chairs be granted the authority to review the contract between EBD and UnitedHealthcare related to the MAPD coverage for retirees upon receipt of the administrative protest determination from the OSP director, if the determination is received by June 30, 2022, and the contract with UnitedHealthcare is unchanged from the contract presented to the subcommittee today.
Ladyman [01:44:23] Do I have a second? Any discussion on the motion? All right. Seeing no discussion, all in favor of the motion signify by saying aye. All opposed, nay. Ayes have it. Motion carries. Thank you. Thank you all for your comments.
Rouse [01:44:51] Thank you.
Ladyman [01:44:54] Committee, we’ve got one more item of business, suggested meeting dates and times for this subcommittee for the remaining months of the year. In your packet, you have those dates that are set. One thing on there needs to be changed. In July, council was moved a week back. So the July 13 meeting will be moved to the 20th. And you can look at that. If, if something changes there, emails will be sent out on that. So with that, that’s all we had on the agenda. So we are adjourned.