Interim Joint Committee on Banking and Insurance

 

Minutes of the<MeetNo1> 4th Meeting

of the 2005 Interim

 

<MeetMDY1> September 27, 2005

 

The<MeetNo2> 4th meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Tuesday,<MeetMDY2> September 27, 2005, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Tom Buford, Chair, called the meeting to order, and the secretary called the roll.

 

Present were:

 

Members:<Members> Senator Tom Buford, Chairman; Senators Ernie Harris, Robert J (Bob) Leeper, J Dorsey Ridley, Richard "Dick" Roeding, Dan Seum, and Tim Shaughnessy; Representatives Sheldon E Baugh, James R Comer Jr, Ron Crimm, Robert R Damron, Mike Denham, Ted "Teddy" Edmonds, Danny R Ford, Jim Gooch Jr, Mike Harmon, Jimmy Higdon, Dennis Horlander, Dennis Keene, Charles E Meade, Rick W Rand, Frank Rasche, Steve Riggs, Brandon D Smith, Tommy Thompson, and Ken Upchurch.

 

Guests:  Christine Wilcoxson, Commissioner, Department for Employee Insurance, Personnel Cabinet; Mark Birdwhistell, Undersecretary, Cabinet for Health and Family Services; Shawn Crouch, Executive Director, Office of Health Policy; Cordell Lawrence, Executive Director, Office of Financial Institutions; Marcia Oyster, Mutual of Omaha, and, Dale Creech, Creech and Stafford Insurance.

 

LRC Staff:  Rhonda Franklin, Jamie Griffin and Judy Fritz.

 

Senator Tom Buford welcomed recently appointed Cordell Lawrence, Executive Director, Office of Financial Institutions.

 

The minutes from the August 23, 2005 meeting were approved.

 

Marcia Oyster, Mutual of Omaha, spoke to the committee briefly about state employee life insurance and provided information regarding what Mutual of Omaha could offer the employees of Kentucky.

 

Christine Wilcoxson, Commissioner, Department for Employee Insurance, Mark Birdwhistell, Undersecretary, Cabinet for Health and Family Services and Shawn Crouch, Executive Director, Office of Health Policy addressed the committee regarding the 2006 State Employee Health Insurance Plan.  Undersecretary Birdwhistell stated that there will be a new name for the state employee health insurance plan, Kentucky Employees Health Plan (KEHP), he stated that it is a movement from a fully insured arrangement to a self-funded arrangement.  He stated that over 60% of the recommendations of the Blue Ribbon Panel were considered during the contracting and benefit design for the 2006 plan year.  He stated that there are 180,000 eligible employees, approximately 145,000 take the insurance, and there are approximately 228,000 covered lives.  He stated that the contract was awarded August 22, 2005, to Humana as one statewide Third Party Administrator (TPA), and it includes a partnership with Bluegrass Family Health to provide claims processing and customer service support.  He stated that there will be one statewide Pharmacy Benefit Administrator (PBA), Express Scripts, Inc..  He stated that Express Scripts currently provide administrative services to over 50 million Americans.  He stated that the initial term of the contract is 2 1/2 years with the opportunity of annual renewals.   He stated that he is limited on what he can discuss regarding specifics of the award due to a protest.

 

Mr. Birdwhistell stated that communication of the plan design began months ago with meetings with the Employee Advisory Committee, Group Health Insurance Board, KEA, KASA, School Superintendents and ASE.  He stated that state employees were notified of the award via email.  Also a press conference was conducted on Tuesday, September 6, 2005, announcing the award of the contract.  He stated that insurance coordinator training was conducted over the last three weeks and that benefit fairs and open enrollment will be occurring during the next month.  He stated that in relation to contract cost, it is not a simple answer.  There are many variables in determining total administrative cost in a self-funded environment.  He stated that a fully insured plan cost is premium multiplied by membership.  Self-funded arrangements include per employee per member and per member per month charges associated with various administrative services.  He stated that cost is determined by both participation in the programs and membership in the plan.  He stated employee contributions will remain the same for the 2006 plan year as they were for the 2005 plan year.  He stated that the calendar year will be maintained and cross reference contribution is still in place.  He stated that pharmacy co-payments will change from $10 to $5 for Commonwealth Enhanced and Commonwealth Premier.  He stated 1st tier mail order will change from $20 to $10 for Commonwealth Enhanced and Commonwealth Premier.  He stated that open enrollment will be October 17, 2005 through October 28, 2005.  He stated that as benefits and employee contributions are the same, there will be a "passive open enrollment", only those members who want to change from their current benefits plans or enroll in a Flexible Spending Account will need to complete an application.  He stated the enrollment will be on-line.  He stated that employees waiving the plan will have to complete an application for an FSA.  He stated that the FSA contribution will be $234 from January 2006 through June 2006, then reduced to $200 from July 2006 through December 2006.  He stated that FSA accounts will be for state employees only and debit cards will be provided for each state employee with an FSA account.  There will be no fee for the card and no transaction fee for using the card.

 

Dennis McSweeney, Account Representative, TRICARE Insurance, presented the committee with a budget reduction strategy as an alternative, optional benefit for active and retired employees eligible for membership in the state health plan who are eligible for benefits under the TRICARE Military Health System.  He stated that TRICARE supplemental insurance also means budget savings for the state.  He stated that TRICARE is designed specifically to save the employer money currently being spent on their employees healthcare.  He stated that numerous employers use TRICARE and in doing so save millions of dollars annually.  He stated that the basic concept is simple.  The employees already have TRICARE and when these eligible employees join a group offering, their TRICARE is regulated to secondary status.  He stated that based upon data he was able to obtain, he thinks Kentucky could save approximately $7.3 million per year.

 

With no further business, the meeting adjourned.