AGENDA State and Public School Life and Health Insurance Board March 27, 2018 1:00 p.m. EBD Board Room – 501 Building, Suite 500 I. Call to Order ............................................................................ Dr. John Kirtley, Chair II. Approval of February 20, 2018 Minutes ................................. Dr. John Kirtley, Chair III. ASE-PSE February Financials ................................ Cheryl Reed, EBD Fiscal Officer IV. Cheiron Update .............................................. John Colberg, Gaelle Gravot, Cheiron V. Emerging Therapies .......................... Dr. David Harshfield, Regenerative Therapies VI. Director’s Report .......................................... Chris Howlett, EBD Executive Director Upcoming Meetings April 17, 2018, May 22, 2018, June 19, 2018 NOTE: All material for this meeting will be available by electronic means only Notice: Silence your cell phones. Keep your personal conversations to a minimum. STATE AND PUBLIC SCHOOL LIFE AND HEALTH INSURANCE BOARD MEETING MINUTES 179th meeting of the State and Public School Life and Health Insurance Board (hereinafter called the Board), met on March 27, 2018 at 1:00 p.m. in the EBD Board Room, 501 Woodlane, Suite 500, Little Rock AR 72201. Date | time 3/27/2018 1:00 PM | Meeting called to order by Dr. John Kirtley, Chair Attendance Members Present Members Absent Dr. Terry Fiddler Stephanie Lilly-Palmer Renee Mallory- Vice-Chair Greg Rogers Melissa Moore Dr. John Kirtley - Chair Carla Haugen Rett Hatcher Dr. Lanita White Dori Gutierrez Herb Scott Lisa Sherrill Cindy Gillespie Chris Howlett, EBD Executive Director, Employee Benefits Division OTHERS PRESENT: Eric Gallo, Rhoda Classen; Gretchen Baggett, RaQueisha Washington, Ellen Justus, Cheryl Reed, Jamie Levinsky, Terri Freeman, John Ashley, Drew Higginbotham, EBD; Sandra Wilson, Active Health; Wayne Whitley, Rhonda Walthall, ARDOT; Suzanne Woodall, MedImpact; Karyn Langley, Qual Choice; Delilah McCarty, Frances Bowman, Nova Nordisk; Marc Watts, ASEA; Sean Seago, MERCK, Sherry Bryant, EBRX; Dr. Micah Bard, UAMS EBRX; Jessica Akins, Takisha Sanders, William Cottrell, Health Advantage; David Doctor, AHM; Jenna Goldman, Delta Dental; Dr. Carl Keller, Morgan Pile, Dr. David Harshfield, ICMC; Jason Jersey, DataPath; Sylvia Landers, Eileen Wilder, Securian; Jackie Baker, ASP; Rep. Karilyn Brown, AR House of Representatives; Andy Davis, AR Democrat-Gazette; Seth Pinkerton, AIRM; David Kizzia, AEA Approval of Minutes by: Dr. John Kirtley, Chair Kirtley asked for a motion to approve the February 20, 2018 minutes. Scott motioned for adoption of the minutes. Mallory seconded; all were in favor. Minutes approved. Financials by: Cheryl Reed, EBD Fiscal Officer Reed reported financials for February 2018. For February PSE, four (4) weeks of medical and pharmacy claims were paid. Total FICA savings for the month and year-to-date was $1,049,947.21. There was a net gain of $4.07 million for the month, and a net gain of $8.6 million year-to-date. The net assets available are $78.7 million. For February ASE, four (4) weeks of medical and pharmacy claims were paid. There was a net gain of $2.3 million for the month, and a net gain $1.2 million year-to-date. Net assets available are $34.5 million. Cheiron Presentation by: John Colberg, Cheiron Colberg presented the review of the trend experience. Since a lot of the Board members are new, there will be some background presented and how we use and arrive at these trends. Also, presented will be the medical and pharmacy trends and the considerations taken into account for setting the 2018-2019 rates. Current annual trend assumptions are 5% Medical and 11% Pharmacy. These trend assumptions are set by looking at the plan history, national benchmarks, marketplace knowledge and stress testing. To project costs, we reflect anticipated changes due to: Plan Design Vendors/Network Demographics Migration (people changing plans) Geography Utilization Unit Price Changes New Services Leveraging Historical trend data has factors to remember: Demographics o Have lowered PSE non-Medicare (actives & retirees) medical by 0.9% per year, and pharmacy trends by 1.2%per year for the last 5 years o Have increased PSE Medicare trends approximately 0.9% per year for 2012-2016, then no change for 2017 o Have not significantly affected ASE trends Plan Design o Changes effective in 2015 Plans/Vendors o Elimination of silver plan affected PSE in 2015 Page 2 o PBM change lowered costs 8% effective July 2016 Migration o Does not significantly affect ASE o Significant impact on PSE Discussion: Dr. Fiddler asked about case management intervention for cost projection is taken into account when setting the new rates for the 2019 period. Colberg replied that the savings from case management intervention will be considered, and it will be accounted for in the cost projections. Howlett stated that the catastrophic fund being built helps us catch some of the anomalies, but generally that is captured through claims over an aggregate period of time and look at the average. On the medical management side, we are still pulling some pieces together to be able to articulate this. The anomaly that will come up will be the new members with new medical conditions. Dr. Fiddler asked if the emerging therapies would be accounted for in specialty drugs. Dr. Kirtley stated that these trends for pharmacy are different, and the emerging therapies will be completely under the medical billing side. The emerging therapies would not be considered pharmacy. Dr. Fiddler asked about generic utilization. If two drugs do the job of one because they are generic, will that be taken into account when deciding drug utilization. Page 3 Dr. Kirtley stated that yes, that is taken into account and the clinical efficacy is evaluated. The combination drugs sometimes can be taken out for the ease of taking one, convenience kits. This can be seen at the DUEC meetings. Gillespie asked if the individual mandate going away will make a change on these numbers. Colberg stated yes, it will bring up financial pressures and could end up increasing costs. Hatcher asked if Howlett would explain the timeline for setting rates for next year. Hatcher stated he would possibly like to have a policy discussion for setting rates with an actuary present since in his experience, they do such diligent work. Howlett said the discussion starts today and will continue in April and May. Our goal will be June to set the rates, but August is the latest time. As far as the actuary, the Board will be involved the whole way. The EBD Director can provide data as well to the Board. If there is anything you want to focus on, that can be arranged. Hatcher stated that he would like to discuss the retiree plan. There are not many companies that offer this great of benefits. He would like to look at the difference between the active and non- Medicare retirees, and really focus on this before we look at cutting anything for active employees. Dr. Kirtley asked if for next meeting we need a breakdown of state contributions of employee versus employer sent out to Board members. Hatcher stated that the larger point is that the State carries a great OPEB (Other Post-Employment Benefits) liability that affects the borrowing cost for building schools, highways, etc. and it greatly affects our credit rating. That is very important, and Hatcher would like to take an in-depth meeting. Howlett stated that this will definitely be pulled together and sent out. Howlett will start this for the April 9th Board meeting. Haugen said we need to look at making the PSE State contribution match the ASE contribution. They have done well this year, and we need to reflect that in the Plan. Regenerative Cellular Therapy by: Dr. David Harshfield & Carl Keller Dr. Kirtley reminded everyone of our deadline of June 30, 2018 for the mandate for emerging therapies, and that it is time to decide what areas we are wanting to address. Dr. Harshfield stated that they want to help the Board design a pilot program for emerging therapies as mandated by Governor Hutchinson. The regenerative therapies deal with patient lifestyle changes, and we need to develop guidelines for the doctors to follow. Stem cell work is interesting, Page 4 but that is only about 20% of this as a whole. We want to use nutraceuticals instead of pharmaceuticals. We have established six guidelines to follow, and we are not until step 5. Discussion: Dr. Fiddler wants to know, if the patient is on bisphosphonates, can they do this therapy? Dr. Harshfield replied that yes, they can, and this is a large group that they have been looking at using this therapy. Dr. Fiddler asked who makes sure that we do everything that we are supposed to? Is it through a governmental agency or a private vendor? Who makes the determination that we don’t skip a step? Dr. Kirtley discussed that when it comes to a pilot program, it could go through a prior authorization process or there is also a medical management component making it an eligible claim. Howlett stated that we did this before with Bariatric, and Act 1089 gives us the guidelines for this program. It is left up to EBD to operationalize. The first piece is to decide if we want to do this pilot program. The second will be what areas we will address such as lower back, knee and diabetic wounds. Nothing says we have to use certain conditions. As far as how the claims will work, we have some ideas. There are already some adjusted rates for MiMedx, but we would have to work out an arrangement for Dr. Harshfield. We need to capture the patient, what process is being done and what it is replacing. We need a cost analysis done at the end, and see if we prevent something later or create better quality of life.