MISSOURI CONSOLIDATED HEALTH CARE PLAN BOARD MEETING JANUARY 27, 2011

MISSOURI CONSOLIDATED HEALTH CARE PLAN BOARD MEETING JANUARY 27, 2011 Attending: Absent: Director John Huff, Chairperson Kaye Newsome, Vice Chairperson Representative Eric Burlison (via conference call) Director Margaret T. Donnelly Nikki Loethen Commissioner Kelvin Simmons Representative Terry Swinger Garry Taylor Michael Warrick (via conference call) Senator Tom Dempsey Others attending: Richard Bowles, Executive Director; June Striegel Doughty, General Counsel; Stacia Fischer, Chief Fiscal Officer; Judith Muck, Chief Operations Officer; Emily Kampeter, Communication and Publication Manager; LeAnn Perkins, Manager of Customer Support; Lisa Fennewald, Senior Administrative Specialist; Denise Chapel, Project Manager; Elfin Noce, Compliance Counsel; Garry Kornrumpf, Director of Plan Integrity and Cost Recovery; Sue Hilkemeyer, Director of Government Programs, Retirees and Member Management; Kim Backes, Research Coordinator; Denise Webber, Quality Manager; Steve Korbecki, Towers Watson; Ramon Vickman, Senior Account Director, Express Scripts, Inc. (ESI); Karen Morita, Clinical Program Manager, ESI ; Dr. Steven Goldberg, Vice President and Chief of Medical Affairs, ESI; Ryan Eller, Chief Executive Officer, WeSave; Allan Forbis, Office of Administration; and visitors. Mr. Huff called the meeting to order. Ms. Ramona Huckstep, an employee of the state of Missouri, addressed the Board of Trustees. She stated the cost of health care for 2011 has created a great financial hardship for her. She also expressed concern regarding the 2011 prescription drug formulary. Following this public comment, the Chairperson directed the Board s attention to the draft minutes of previous meetings. Mr. Swinger made a motion to approve the minutes of the Dec. 9, 2010, Regular Board of Trustees meeting. Ms. Donnelly seconded. Motion passed unanimously. Ms. Donnelly made a motion to approve the minutes of the Jan. 20, 2011, Appeals Committee meeting. Ms. Loethen seconded. Motion passed unanimously. 1

Mr. Ramon Vickman, Senior Account Director, ESI, provided an overview of MCHCP s 2010 plan pharmacy costs. The total pharmacy cost for 2010 was $102,651,494, a 12.7 percent increase over 2009. He stated the generic fill rate (GFR) achieved was 78.5 percent, which was an increase of 2.8 percent from the previous year. The increase in GFR resulted in a savings of $4,331,300 to the plan. Key cost drivers for the plan include a reduction in home delivery utilization, an increase in plan utilization, a decrease in member cost share and an increase in specialty drug plan costs. The GFR is projected to increase with the implementation of the highperformance formulary the generic-based formulary adopted by the board for the 2011 plan year. Research performed by ESI indicates that MCHCP has a GFR potential of 87.1 percent. He emphasized the trend in utilization of specialty drugs resulted in a 22.8 percent increase in plan cost. Mr. Vickman introduced Karen Morita, Clinical Program Manager and pharmacist with ESI. She presented a 2009-2010 plan comparison of the top 10 indications by ingredient cost. The top three indications were similar for each year: diabetes, high blood cholesterol and high blood pressure/heart disease. The largest trend in utilization and inflation was in the multiple sclerosis category. The top MCHCP specialty drug indications were typical for the industry: inflammatory conditions, multiple sclerosis and cancer. The greatest increase was in the blood cell deficiency category. Clinical program savings were realized with respect to GFR for step therapy, prior authorization and drug quality management from 2007-2010, resulting in cost savings to the plan of $25,119,826. Dr. Steven Goldberg, ESI Vice President and Chief of Medical Affairs, outlined three key issues shaping the 2011 pharmacy landscape, including: health care reform, specialty drug spend and patient care. Non-specialty therapy classes, which make up half of the drug spend, include: lipids, diabetes, blood pressure, depression, asthma, ulcer drugs, pain and viral infections. Key drugs losing patent protection in the next five years will create an opportunity for price reductions. Dr. Goldberg stated it is estimated by 2014 specialty medication growth is projected to outpace the traditional drug market, resulting in 40 percent of pharmacy benefit going to specialty medications. 2

Mr. Allen Forbis, Office of Administration, spoke about the WeSave program currently in place. He stated Missouri entered into a cooperative agreement with WeSave, Inc. The program provides ways for state employees to save money. The proceeds of the program are given to the Missouri State Charitable Campaign (MSECC). Mr. Forbis introduced Ryan Eller, Chief Executive Officer of WeSave, Inc. Mr. Eller outlined details of the nationwide discount prescription drug card that would work in conjunction with the current insurance pharmacy card. The card would provide discounts for non-formulary drugs. It would be made available to all MCHCP members, with the funds generated going to the (MSECC). Board members inquired about various components of the program, including: program branding, eligibility, cost, card activation, prescription pricing comparisons, reporting capabilities, pharmacy network and legal review. Ms. Donnelly made a motion to proceed with legal review of the WeSave pharmacy discount card concept at no cost to the plan. Ms. Newsome seconded. Motion passed unanimously. Mr. Kornrumpf, MCHCP Director of Plan Integrity and Cost Recovery, presented the results of the recently conducted member coverage cancellation survey. Surveys were sent by mail to 3,522 former members. MCHCP received 678 responses. The primary reasons for cancelling coverage with MCHCP offered by those who responded were: They chose another plan with a lower deductible and/or out-of-pocket costs; they chose a plan offering a lower premium; or they choose a plan with better coverage. Some responders (23 percent) reported they cancelled coverage with MCHCP because the 2011 pharmacy benefit did not meet their needs. Overall, 84 percent of those who responded reported they had obtained health care coverage elsewhere, while 16 percent reported they are without coverage for 2011. Mr. Kornrumpf noted that this was not a statistically valid survey, but it did give some insight into the reasons these former members cancelled coverage. Ms. Webber, MCHCP Quality Manager, presented an overview of the MCHCP care management program. She indicated 20 percent of MCHCP members were identified as having a high-risk condition, including diabetes, heart failure, coronary artery disease, asthma, chronic obstructive pulmonary disease, hypertension or depression. Some of the program goals include: improvement in the health outcomes and quality of life of MCHCP members; reduce cost and utilization associated with a specific condition; reduce hospitalizations, emergency room visits and length of hospital stays; and 3

education of providers and members. One of the steps in the first year is a focus on the diabetes program and reintroduction of the disease management program to all members. In addition, on-site coaching will be implemented for high-risk members. Mr. Huff stated the task of wellness and care management placed before the Quality Manager is very challenging and a very important focus for our members and the plan. He proposed a committee composed of MCHCP board members be established to support the efforts of wellness and care management. Ms. Donnelly volunteered to be the chairperson of the Wellness Committee, and Ms. Kaye Newsome volunteered to be a member. Ms. Fischer presented the MCHCP financial projections. She reported both state and member contributions remained relatively unchanged for the final quarter of 2010. Self funded claims expense for October 2010 is approximately $34.7 million and for November is $33.9 million. Self funded claims expense for December 2010 is projected to be approximately $37.1 million and the increase spend can be attributed to the anticipated increase in utilization of services due to changing benefits as of Jan. 1, 2011. Pharmacy expense tracked with projections at approximately $8.4 million. Incurred but not reported (IBNR) claims requirements are projected at $51.7 million at December 2010 as opposed to earlier actuarial projections of $80.2 million. The decrease in (IBNR) is due primarily to the speed of payment through MCHCP s new third-party administrator beginning in calendar year 2010, UMR. The 2011 financial projections were presented and it was noted the Governor has recommended an FY2012 appropriation of $376,235,848 beginning in July 2011. This level of funding would result in approximately $31.3 million in monthly funding from the employer (State of Missouri) for FY2012. Ms. Fischer summarized the 2012 fringe benefit financial summary. The MCHCP FY2012 core request was $410,913,704. The FY2012 Governor s recommendation of $376,235,845 includes expected savings through annualized efficiencies implemented last year, implementation of a Medicare Advantage plan, and use of reserves. Calendar year 2012 will hinge on several factors, including claims experience, enrollment, bids from third-party administrators, and a more effective wellness plan. She concluded with the Governor s recommendation financial summary for other post employment benefits (OPEB) for FY2012. The Governor has not recommended funding for OPEB in FY2012. 4

Ms. Kampeter provided a brief legislative update and focused on two bills affecting MCHCP: SB 90/HB 270, sponsored by Senators Dempsey and Burlison, requires MCHCP to provide Medicare-eligible participants substantially similar benefits, as compared to non-medicare members. SB 2, sponsored by Senator Ridgeway, requires MCHCP to offer a minimum of three high deductible health plans with differing annual deductibles and annual out-of-pocket expenses. The board had a brief discussion regarding the proposed 2011 MA-PD legislation as it relates to last year s legislation. Ms. Chapel, MCHCP Project Manager, provided a brief summary of the Early Retiree Reinsurance Program (ERRP), Missouri Health Insurance Pool (MHIP) and Pre-Existing Condition Insurance Plan (PCIP). She stated MCHCP received the first ERRP claims reimbursement. She confirmed the administrative services agreement and business associate agreement are in place, and MCHCP is willing and able to provide administrative services to the state MHIP and federal PCIP pools. Ms. Hilkemeyer, MCHCP Director of Government Programs, Retirees and Member Management, reviewed the emergency and proposed rules filed by MCHCP effective in January for plan year 2011. She stated 16 state rules and 15 public entity rules were filed, emphasizing the appeals procedure as one of the most significant rule changes. Mr. Bowles reviewed the Board of Trustees dashboard report. He stated pharmacy utilization continues to be a cost driver. He said as we move forward in our care management program, we notice 17 percent of MCHCP s UMR members are participating in a disease management program and 26 percent are participating in the Lifestyle Ladder program. Mr. Huff discussed election of Chairperson and Vice Chairperson. Mr. Simmons made a motion to nominate Ms. Newsome as Vice Chairperson of the MCHCP Board of Trustees. Ms. Donnelly seconded. By acclamation, Ms. Newsome was elected as Vice Chairperson. Mr. Simmons made a motion to nominate Mr. Huff as Chairperson of the MCHCP Board of Trustees. Mr. Warrick seconded. By acclamation, Mr. Huff was elected as Chairperson. 5

Mr. Simmons made a motion to go into executive session pursuant to 610.021 (1) (5) and (14) to discuss approval of minutes, appeals and general counsel report. Ms. Donnelly seconded. A roll call vote was taken, and the motion passed with Representative Burlison, Ms. Donnelly, Ms. Loethen, Ms. Newsome, Representative Swinger, Mr. Taylor and Mr. Warrick in favor. Upon to return to open session, Mr. Simmons made a motion to adjourn. Ms. Loethen seconded. Motion passed unanimously. Meeting adjourned. 6