State and Public School Life and Health Insurance 
Benefits Sub-Committee
Minutes
February 23, 2005

The Benefits Sub-Committee of the State and Public School Life and Health Insurance Board (hereinafter called the Committee) met on Wednesday, February 23, 2005, at 9:00 a.m. in the First Floor Hearing Room 2, Public Service Commission Building, 1000 Center, Little Rock, AR.

Members Present					Members Absent
John Hartnedy					Becky Walker
Jeff Altemus						Nancy Sheehan
Janie Roach
Janis Harrison
	Shelby McCook
	Debbie Veach

Sharon Dickerson, Executive Director, Employee Benefits Division, DFA.

Others Present: 
Pat Minyard, Ashli Davis, Susan Bumpas, George Platt, Leigh Ann Chrouch, EBD; Barbara Melugin, Ron DeBerry,  BC/HA; Rob Thorpe, QualChoice; Rose Gantner, Corphealth; Larry Carnes, FBMC; John Glassford, Bryan Meldrum, John Ryan NovaSys; Eddie Fryer, William Dickover, USAble; Ted Borgstadt, Brian, TrestleTree; Patty O’Malley, PSC; John Bauerlein, Kevin Geurtsen, Shane Tanzer, Milliman; John Moran, ASEA; Beth Peto, ACH; David Wise, Datapath.

Call to Order:
The meeting was called to order by John Hartnedy.

Approval of Minutes:
Motion was made and seconded to approve the minutes of the previous Committee meeting. Motion carried.

Retiree Issues (PSE)
Medicare Part D – John Bauerlein   Effective January 1, Medicare part D will be subsidizing school retirees about $120.00.  To continue to sponsor the school plan and get some of the Medicare money from Part D, Plan sponsor has to meet two tests. One to have a plan as good as Medicare part D, the other is to subsidize the pharmacy portion of the premium by 50%.   Folk sign up for the plan mainly for the drug coverage which drives up the cost.  Part D reimburses about 52% of total prescription drug cost. Right now your10/25/50 pays out about 60-65% of total cost. You are currently subsidizing $55 per retiree member (spouse and retiree). The other big issue hurting the Plan is the high cost members. We would have to double the subsidy coming into the program to get double your contribution. 

John Hartnedy asked what would happen if for retirees we did not cover the drug program, major medical only, on their own for the drug program, therefore overall reduce their cost. Ms. Dickerson stated if they understand what the true cost, how much is this costing they may be more receptive to the change. Our drug program will be costing them the same as Medicare Part D would cost them – a wash.  

Hartnedy stated if we don’t cover drug benefits, it will cost retirees less, if we don’t change the plan they will be paying the same we are paying now.  McCook said we would be taking subsidy from the government and passing to plan.  Dickerson said that would be the case, however the subsidy is not enough to even get the funding from Medicare. T McCook stated the net cost to retiree could be higher, but give them a choice.  The retirees will have a cost savings judgment to make.  Altemus asked if we could get this laid out in print so we can get some input from them.  They need to know what their options are. McCook asked Jeff to get ballpark information from Retired Teachers Assn, see how they come out

As a result of the discussion Dickerson asked that Milliman have all the rates available for the March meeting.

Bauerlein stated we need to look at the over-65 population separately.  Dickerson stated that legislatively we are required to offer the plan if they want it.  Also, legislatively, they will pay full amount of premium.  If the State is responsible for retiree they have to project long-term what the financial obligation will be according to GASB 45.  We don’t think we are financially responsible for the retiree.  Who takes over that financial responsibility – the schools?

It was decided to have Milliman come back to the March meeting with numbers for over-65 retirees separate from active.  Focus on rates and options for retirees. Medicare Part D decision needs to be in by April, in hands by mid-July. Bauerlein then introduced Shane Tanzer who is working with George Platt, EBD Tech.

At this point Debbie Veach, assistant to Dr. Thompson, was introduced. Ms. Dickerson said we would recommend to the Board for approval at next meeting adding Ms. Veach to the Committee.

Future Plans
Addressed issue in Consumer-Driven Approach.  Goal is to set out in general direction for 3-5 years, and make decisions to support our goals.  It was decided to combine the Consumer-Driven Approach and Traditional Approach, and revamp the Self-Administration Approach as a consideration.  After much discussion it was determined to rewrite the Long-Term Plan to read as follows:

State of Arkansas Health Benefits Program
Long Term Plan

Revised 2/23/05
Current Environment

1.	Unsustainable premium increases.

2.	High cost increases – 8% to 12% industry expected annually; employee percentage pay increases will be lower than cost increases.

3.	Total premiums are high even though they are competitive with other states.

4.	PSE employee are not competitive with other states.

5.	Administrative costs are too high. 

6.	Medicare Part D prescription drug benefit – will provide additional funding source for retiree benefits.

7.	Increasing recognition and awareness of lifestyle choice impact upon health care
8.	Costs.

9.	New tools and information available to health care “consumers”.

10.	Over utilization is a problem.  Managed care has been rendered fairly ineffective in Arkansas.

11.	Utilization efficiency and other managed care program improvements not likely to impact cost trends significantly.

12.	Limited, but increasing competition in Arkansas.

13.	The US has the best health care in the world but probably the most inefficient delivery and administration system, lacks standardization of care.

14.	Federal government has created cost shifts, uneven tax benefits and an atmosphere of “entitlement”, all adversely impacting costs.

15.	Aging population; significant number of retirements over the next few years.

Traditional Approach

1.	Maintain overall program.

2.	Offer multiple vendor health plans to employees; encourage competition and provide range of choices to employees.

3.	Adjust cost sharing gradually to reduce rate increases and maintain current cost sharing split between State and employees; respond to rate increases as they occur.

4.	Reward health plans that control cost increases and meet performance standards.

5.	Funding PSE and ASE formula goal e.g. from 70/50 ASE to 80/50 for both with CPI contribution increase.

6.	Introduce wellness and preventive programs and lifestyle financial incentives.

7.	Explore and offer new types of programs that encourage cost-effective utilization of services.

8.	Focus on high cost utilizers and make it a requirement they work with our wellness contact.

9.	Define who goes to Corphealth and who goes to Trestle Tree; need integrated approach of mind and body (and spirit).

10.	List wellness and preventive services covered, their uses, and effectiveness.

11.	Encourage enrollment in consumer-driven health plan options using financial incentives if necessary; encourage use of tax-favored opportunities such as Health Savings Accounts.

12.	Aggressively communicate a comprehensive campaign to make available health care information, resources, and tools to better educate employees on the use and cost of health care services and personal behavior.

13.	Expand use of wellness programs and lifestyle incentives.

14.	Explore lifestyle measurements into premium levels, e.g.,1-100.

15.	Identify the chronically ill and get them into a voluntary program that will improve their lifestyle.

16.	Investigate what can be done with HSAs and how to use an HSA debit card.

17.	Consider adding other options, i.e. FICA, LTC, for pension dollars to HSA.

For Consideration
Self-Administration Approach

1.	Manage all financial and administrative responsibilities within the Employee Benefits Division.

2.	Manage state HSA.

3.	Perform or subcontract medical management functions.

4.	Adjudicate claims within dedicated EBD unit.

5.	Develop or lease a provider network.

6.	Develop our own price list e.g. 115% of Medicare.  See what others do.  Post prices on our website.  Out-of-network expenses get paid only at in network prices.

7.	Increase EBD staffing significantly to perform additional administrative functions.

8.	Develop a nurse hotline.

9.	Redefine all plan terms, conditions, and procedures based on State and employee needs.

10.	Address:  “Is more government control the answer to administration costs” – tougher criteria?

After discussing the Self-Administration Approach it was the general consensus that government control is the only answer for lower costs.  Dickerson has discussed with Weiss and Leathers and they are interested in this approach and would like to see a feasibility study conducted. Dickerson presented a handout showing the projected organizational structure and outlined the current responsibilities of EBD.  McCook made the motion to recommend to the Board to adopt a feasibility study for the benefit of a self-administration plan.  Motion was seconded by Janie Roach.  McCook then withdrew the motion based on the suggestion that the committee look at the rewritten goals with changes made,  and review the EBD material and bring back to Committee on morning of the 8th.

The health risk discount was discussed with Hartnedy stating we would not be doing letters as we have been doing them.  It was asked if we saw benefits from the survey.  Dickerson said yes.  Hartnedy suggested we start with state employees then go to teachers with a proven plan.  Separate from wellness program,  Point system uses incentive as days off, each step toward improvement you accrue points toward days off.  For our application points would equate to premium discount.  We would need by April, ASE only.  

In relation to tobacco cessation, Milliman is to bring back structure, baseline without tobacco and with tobacco.  

Obesity was discussed with reference to gastric bypass.  Not ready to make a decision.

Hartnedy asked if based on what we know now do we want to do a risk assessment on the wellness program for the upcoming year (2006), representing adjustment for tobacco cessation, weight loss, etc. More discussion after feedback from Milliman.  

The questionnaire for carriers was discussed and if information is back in time it will be brought to the Board at the March meeting.

Rep  HB 1559 – move additional money into the school insurance program.  Milliman is doing survey on that.  Senate group very serious at looking at this.

New Business
Corphealth and TrestleTree Obesity Program

It was pointed out that there is a problem with distinguishing what each plan can do on the obesity program.  Today presentation is for educational purposes, as the Committee is not ready to make a decision, possibly not sponsoring an obesity program.  Would like to continue to learn about obesity, and determine if there is a permanent stop-measure.  The Committee wants to put money where most effective.  Also, develop a better understanding of what the vendor can do and long-term results. 

Corphealth – Rose Gantner
Tobacco cessation program doing exceptionally well reported Gantner. Gantner conducted an obesity management program.

TrestleTree – Ted Borgstadt
Presented an obesity management program.

Hartnedy asked that they continue to educate us in the obesity area and what to do about it.   Hartnedy asked if there was any other business for discussion.  He commended the Committee on the accomplishments today.

Meeting adjourned 2:55 pm.