13665
GROUP INSURANCE COMMISSION
Charles F. Hurley Building
19 Staniford Street
Boston, MA 02114
MINUTES OF THE MEETING
NUMBER: Six Hundred Twenty-nine
DATE: April 13, 2017
TIME: 8:30 A.M.
PLACE: 19 Staniford Street, Boston, MA 02114
Members Present:
Katherine Baicker (Health Economist), Chair
Edward Tobey Choate (Public Member)
Dominick Ianno, Designee for Kristen Lepore, Secretary of Administration and Finance
Bobbi Kaplan (NAGE)
Melvin A. Kleckner (Massachusetts Municipal Association)
Timothy D. Sullivan (Massachusetts Teachers Association)
Valerie Sullivan (Public Member)
Margaret Thompson (Local 5000, SEIU, NAGE)
Renu Wadhwa, Designee for Gary Anderson, Acting Commissioner of Insurance
Members Absent:
Theron R. Bradley (Public Member)
Christine Clinard (Public Member)
Kevin Drake (Council 93, AFSCME, AFL-CIO)
Tamara P. Davis (Public Member)
Robert J. Dolan (Massachusetts Municipal Association)
Edward A. Kelly (President, PFFM)
Eileen P. McAnneny (Public Member)
Anne M. Paulsen (Retiree Member), Vice Chair
9:47AM – Call to Order: No Quorum
DECEMBER 2016 Final Reconciliation
The Executive Director reported, and it was noted, that final reconciliation payments were made to the insurance carriers for the premium due as follows:
DECEMBER 2016Premium Reconciliation / Estimate / Final / Reconciliation / Percent
Basic Life / $1,025,118 / $1,029,340 / $4,222 / 0.4%
Optional Life / 3,225,852 / 3,347,090 / 121,238 / 3.8%
HMO Premiums / 36,831,677 / 36,813,547 / (18,130) / 0.0%
Long-Term Disability / 1,229,172 / 1,231,052 / 1,880 / 0.2%
Dental / 2,292,330 / 2,292,093 / (238) / 0.0%
RMT Life / 56,885 / 57,235 / 350 / 0.6%
RMT Health / 3,353,828 / 3,411,522 / 57,694 / 1.7%
EGR Health / 7,716 / 7,716 / 0 / 0.0%
ASO Administrative Fee* / 7,593,948 / 7,593,948 / 0 / 0.0%
TOTAL / $55,616,526 / $55,783,543 / $167,017
Date paid: / 12/1/2016 / 3/23/2017
*The ASO Administrative Fee is reconciled on a different schedule than the other premium payments. The estimated ASO Administrative Fee is shown in both the "Estimate" and the "Final" columns.
Reported of Estimated Premiums Paid
The Executive Director reported, and it was noted, that the estimated premium due April 1, 2017 was paid for the following contracts:
APRIL 2017Estimated / State / Employee / Total
Premiums / Share / Share
Basic Life / $813,660 / $212,838 / $1,026,498
Optional Life / 0 / 3,396,471 / 3,396,471
HMO Premiums / 29,470,263 / 7,684,488 / 37,154,751
Long-Term Disability / 0 / 1,240,067 / 1,240,067
Dental / 667,426 / 1,651,937 / 2,319,363
RMT Life / 45,698 / 11,471 / 57,169
RMT Health / 2,404,226 / 945,324 / 3,349,550
EGR Health / 6,195 / 1,153 / 7,348
ASO Administrative Fee / 5,905,812 / 1,588,185 / 7,493,997
TOTAL / $39,313,280 / $16,731,934 / $56,045,214
Commissioner Kleckner asked if the information provided included the municipalities. The Acting Financial Director confirmed that municipalities are included in the information. Commissioner V. Sullivan then suggested changing the name of the employee share column. The Acting Financial Director stated that it would be changed to “enrollee” which reflects to whom it applies.
February Claims Paid Reimbursements
The Executive Director reported, and it was noted, that February reimbursements were made for the self-insured plans for claims paid as follows:
Claims Reimbursements / February 2017 / February 2016 / differenceBeacon Claims / $2,917,583 / $2,978,730 / ($61,147)
Caremark Claims / 26,241,182 / 25,853,350 / 387,832
Davis Vision Claims / 37,076 / 41,646 / (4,570)
Harvard Pilgrim Claims / 42,395,426 / 44,162,734 / (1,767,308)
Tufts Claims / 47,391,383 / 40,667,802 / 6,723,581
Unicare Claims / 55,298,632 / 65,772,112 / (10,473,480)
Other Costs / 124,307 / 316,429 / (192,122)
Total / $174,405,589 / $179,792,803 / ($5,387,214)
Claims Reimbursements / February 2017 / AVG YTD 2017 / AVG YTD 2016
Beacon Claims / $2,917,583 / $3,195,577 / $3,147,181
Caremark Claims / 26,241,182 / 21,068,471 / 21,241,313
Davis Vision Claims / 37,076 / 36,420 / 37,304
Harvard Pilgrim Claims / 42,395,426 / 43,438,856 / 46,104,352
Tufts Claims / 47,391,383 / 48,548,278 / 45,838,153
Unicare Claims / 55,298,632 / 54,807,459 / 51,067,801
Other Costs / 124,307 / 1,158,545 / 1,550,665
Total / $174,405,589 / $172,253,606 / $168,986,769
Renu Wadhwa, Designee for Gary Anderson, arrived.
GIC Quarterly Temporary Employee Utilization Report
The Executive Director stated, and it was noted, that the Quarterly Temporary Employee Utilization Report was distributed for review.
Overdue Premiums and Discrepancy Reports
The Acting Finance Director stated that more than 14 entities (out of 675) are 30 (or more) days overdue. She then noted that the MWRA’s overdue premiums/discrepancies had been resolved since the report ran.
Commissioner V. Sullivan asked for an update on the City of Boston. The Acting Finance Director stated that there was no update on the City of Boston, except that the City is working on reconciling enrollment. She noted that Paul Murphy had been speaking with them. The Executive Director stated that it was a work in progress and there’s a lot of variability and variation to the process in which agencies respond.
Prescription Carve Out Study
The Executive Director stated that, prior to the study, she had a predisposition to look at consolidating pharmacy relationships and believed this would put the Commission in better negotiating position. She said the remaining question was whether this consolidation would create incremental gains above and beyond those achieved through the latest recontracting. If gains could be realized in pharmacy, this would inform the upcoming procurement process. The Executive Director reminded the commission that the GIC currently had eleven non-Medicare plans. The pharmacy report evaluates cost savings by simulating carving out pharmacy for all plans. The report separated the self-insured from the fully insured.
The Executive director discussed the current GIC products. UniCare’s three products have pharmacy carved out to Caremark. All other GIC products are carved in for pharmacy. Carving in pharmacy, from the health plan’s view, simplifies benefit administration. The Executive Director noted that, programmatically, the more pharmacy is carved out, the more the GIC has transparency, control, and consistency.
The Executive Director discussed tradeoffs. If the PBM was carved in, it would be easier to look at medical and pharmacy together and there would be seamless data exchanges. When prescription drugs were carved in, there was the potential to subsidize pharmacy by other medical services. The Executive Director wanted to understand the costs of each option (carving in v. carving out) and add more transparency to pharmacy in general.
There was discussion about the previous Caremark presentation where the GIC said they would renegotiate and if that was the current carve out program. The Executive Director responded affirmatively. The Executive Director noted that with Tufts, the GIC was able to ensure best pricing. Chairwoman Baicker then asked whether the promise of preferential pricing would translate in the claims costs. The Executive Director responded that the GIC was working with their consultant on this. The fully insured side doesn’t necessarily have to provide the GIC this kind of data. The GIC went into this study asking ‘if we carve out, what would be available? How much money could we save?’ The results might not be the actual numbers, but it would give a sense of what would be possible.
The Conduent Consultant, Mark Runge, presented the results of the carve-out study. He explained that “Average Wholesale Price” is similar to the sticker price for vehicles – it’s not the price anyone actually pays for the goods.
Commissioner Thompson arrived at this point.
The Conduent Consultant stated that for GIC’s self-insured plans, the total gross costs were the costs after discounts and the rebates were relative to one another. He then pointed out the total costs after applying rebates. For GIC’s self-insured plans, the slide presented the FY18 trended data, where the GIC/UniCare contract discount was applied to the contract claims. He noted that most of savings were tied to rebate guarantees.
The Chair then summarized for clarity that Conduent applied the better pricing from one bucket to the other bucket. She added that, presumably, there were different drugs in the two buckets and asked if Conduent was assuming that they were the same. The Conduent Consultant responded affirmatively. There was discussion about specialty pharmacy as a separate carve-out for the self-insured plans.
The Conduent Consultant then presented on fully insured plans comparing the Per Member Per Month (PMPM) and premium rates. Conduent asked the fully insured carriers how much PMPM is allocated to pharmacy, i.e. what’s being charged to GIC under the fully insured plans.
The Conduent Consultant explained that UniCare pricing was applied to the fully insured plan, then they looked at the PMPM premium allocated to pharmacy.
Commissioner Choate asked how accurate this was, given that the data wasn’t transparent. The Executive Director explained that instead of actual pharmacy data, the GIC asked health plans what they charge for pharmacy PMPM. The GIC then asked what that number would look like if we applied the UniCare rate. This kind of estimate was not firm, but it demonstrated that there were cost savings to be had. Self-insured is a natural place for the GIC to consider, but the GIC wanted to look at the fully insured to get a sense of what would be available for potential savings.
The Chair asked, since there was other data on aggregate spending, whether that has been compared to the report’s aggregate numbers. The Executive Director responded that there would be a subsequent analysis that included that comparison, but the GIC had not completed this yet. Potentially it could be muddied by the plan estimate – the estimate doesn’t always translate into the split between pharmacy and medical premiums. The take away was that it appeared that there were potential savings, but additional analysis was needed to understand the specifics.
The Conduent Consultant discussed carving out specialty pharmacy. Specialty pharmacy managers have more tools to steer members; the question remained whether this was better from a medical perspective. He discussed the positives and the negatives of carving out only specialty pharmacy. The Conduent Consultant stated that there were marginal savings with this approach.
The Conduent Consultant then addressed the cost associated with this approach. An administration fee charged by specialty pharmacy vendor would offset savings and discounts. Specialty carve out savings weren’t necessarily guaranteed.
The Executive Director stated that this study and presentation was helpful. She stated that initially she had proposed looking at specialty pharmacy carve outs first. The study results showed that the GIC should start with the overall PBM relationship.
There was discussion about same-vendor management of specialty and regular pharmacy.
There was discussion about long-term ramifications and that the study helped identify what to tackle first.
There was discussion of member impact and specifics on what is contained in the analysis.
The Chair noted that the percentage of people affected did not capture the out of pocket hit to members and that it would be helpful to see this going forward. She stated that if everyone adapted to new formulary, out of pocket costs might go down, however if members couldn’t use the new formulary that would be worse.
The Conduent Consultant reviewed the analysis for the fully insured plans. He noted that there was a lot more variability here and the net savings ranged from 1.9 – 7.2%. There would be minimal disruption – about 0.3% of retail pharmacy users. He also presented an analysis broken out by pharmacies, claims, and utilizers, with a focus on the utilizers at 0.3%. Across the plans there would be very minimal disruption for pharmacy networks.
Commissioner Lepore’s designee, Dominick Ianno, arrived at this point.
Commissioner Kleckner asked the Executive Director when the staff might make program recommendations. The Executive Director responded that this was a perfect segue to the health care consultant. She reminded the Commission of the RFP for a consultant to work with the GIC on Medical, Pharmacy, and Behavioral Health. Working with the best individual consultant in the separate categories might not result in the strongest overall results for the GIC; rather, it might be best to look at all categories together.
The General Counsel noted the presence of a quorum as of 9:30.
Health Care Consultant Recommendation
The Executive Director distributed a memo on the health care consultant bid and recommendation. She stated that the procurement was different and challenging. The GIC needed a consultant to be strong in many categories. While the previous procurement only had one bidder, this time there were five very strong bids: AON, Conduent, Towers Watson, Segal, and Mercer. After the initial scoring phase, all but Segal were invited to interview. The Executive Director mentioned that the scoring process was outlined on p. 3 of the memo.
The Executive Director requested that the Commission focus on finalist scores on P. 5, where the points were added from interviews and references. The Executive Director noted that in her short time with the GIC, she hasn’t seen a score over 80 and the staff hadn’t ever scored an 80. There was a large difference between 1st place v. 2nd and 3rd, but all bids were very strong. The GIC wanted an “A team” in depth across categories, strategic excellence, solid examples of improvements with other clients, strong analytic capabilities, and strong understanding of the Massachusetts market.
The Executive Director stated that all the bidders had submitted excellent bids, but Towers Watson really shined. They put together a very strong team – the lead had a very strong familiarity and track record with the GIC’s market; Towers Watson also had a strong implementation team. Towers Watson’s responses to questions were solid and clear. There was a promise to devote a significant amount of time from the principal and assured working with their staff that we met in the interview.
Commissioner Kaplan made a motion to enter into contract negotiation with Willis Towers Watson for health plan, pharmacy and behavioral health consulting services. Commissioner Thompson seconded the motion.
There was a question about whether this was in the operational budget. The Executive Director confirmed that the bid was within the operational budget and matched the budgeted amount. She further stated that she asked the staff of the GIC to look at five year total spend. She also noted that the proposal fit within the budget and gave the GIC room to add on special projects.