Interim Joint Committee on Banking and Insurance


Minutes of the<MeetNo1> 5th Meeting

of the 2007 Interim


<MeetMDY1> October 23, 2007


The<MeetNo2> 5th meeting of the Interim Joint Committee on Banking and Insurance was held on<Day> Tuesday,<MeetMDY2> October 23, 2007, 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, Co-Chair; Representative Tommy Thompson, Co-Chair; Senators Julie Denton, Dorsey Ridley, Dick Roeding, and Dan Seum; Representatives Sheldon E. Baugh, Johnny Bell, James R. Comer Jr, Ron Crimm, Robert R. Damron, Mike Denham, Ted Edmonds, Tim Firkins, Joseph M. Fischer, Danny Ford, Jim Gooch Jr, J. R. Gray, Jeff Greer, Mike Harmon, Dennis Horlander, Dennis Keene, Adam Koenig, Rick Rand, Steve Riggs, John Tilley, Ken Upchurch, David Watkins, and Ron Weston.


Guests:  Brian Crall, Secretary, Kentucky Personnel Cabinet, Christine Wilcoxson, Commissioner, Department for Employee Insurance, Kentucky Personnel Cabinet, Mark Birdwhistell, Secretary, Kentucky Health and Family Services, and Carla Whaley, Vice-President of Sales, Humana.


LRC Staff:  Greg Freedman, Rhonda Franklin and Marlene Rutherford.


The minutes of the September 25, 2007, meeting were approved.


Brian Crall, Secretary, Kentucky Personnel Cabinet, addressed the committee regarding the Kentucky Employee Health Plan for 2008.  He stated that the benefits remain unchanged from 2007.  He stated that the good news is that this is the 10th straight year of essentially the same benefits.  He stated a challenge that will soon be faced is that pharmacy and medical benefits will require modest adjustments to ensure sustainability.  He stated that the premiums for 2008 reflect a 5.8% increase in cost.


Christine Wilcoxson, Commissioner, Department for Employee Insurance, Kentucky Personnel Cabinet, did a power point presentation regarding the Kentucky Employee Health Plan for 2008.  She outlined the plans and rates for non-smokers and smokers.  She stated that open enrollment was October 15-26.   She stated that it was a passive enrollment, meaning a member only has to enroll if they want to make a change in their plan.  It was an online enrollment and members were are able to enroll online unless the member is: a Kentucky Retirement System or Kentucky Teachers Retirement System retiree; paying by cross-reference with a Kentucky Retirement System or Kentucky Teachers Retirement System retiree; a retiree who has returned to work with a participating agency; a new employee who has not yet enrolled for 2007; or switching the "primary" plan holder on a cross reference payment option.  Ms. Wilcoxson stated that benefit fairs were conducted in eighteen locations across the state with representatives from the Department for Employee Insurance, Humana and Express Scripts were on site to answer questions.  She stated that at the Frankfort location a health fair was held in conjunction with the benefit fair.  She stated that in 2006 the claims trend rate was 11.56%, and in 2007 the claims trend rate was 9.63%.  She stated that the cost driver for the medical claims trend is more admissions/length of stay and increased outpatient services.  She stated that the cost drivers for the pharmacy claims trend are: increased ingredient cost; average scripts per member increased from 18 to 19.5 per year; drug co-payments are lower than the national average; the number of families reducing co-payments after 75 scripts has increased from 10,464 to 2005 to 13,105 in 2006; and the generic fill rate has increased from 49.5% in 2005 to 60.5% in 2007.  She also outlined the plan cost dynamics.  Ms. Wilcoxson pointed out that the cross-reference option of the plan appears not to be offered by other states.  She stated that prior to 2005 cross-referenced employees paid 20% of the family premium and since 2005 cross-referenced employees have paid no more than 6% of the family premium.


Representative Bob Damron asked about the progress of E-Health.


Secretary Mark Birdwhistell stated that the e-health program is making progress and shows an increase in utilization.


Carla Whaley, Humana, gave the committee an update on the Kentucky Employee Health Plan.  She gave the committee updated membership information.    She stated that the Humana Access Card is the industry's first ID and stored-value debit card.  It allows access to HRA/FSA funds by swiping the card at the point of service.  It eliminates the majority of claim forms and makes it easy to access funds and the funds are deducted directly from the account.  It also eliminates the wait for a reimbursement check.  She stated that it does not eliminate the need for substantiation.  She stated that the IRS restricts tax protected HRA and healthcare FSA plans to fund only qualified health care expenses and requires 100% "substantiation" or verification.  She stated that debit cards used in conjunction with these plan are subject to this restriction.  She said that Humana makes every attempt to auto-substantiate card swipes through real-time pharmacy auto substantiation, matching card activity and claims activity from Humana's medical system, and card transactions are considered "conditionally approved" pending verification.  Claims that cannot be auto-substantiated are communicated to the member in a series of three notification letters.  She stated that the first letter is mailed approximately 60 days after the initial swipe and if there is no response, the second letter is mailed 30 days later, if there is still no response, the third letter is mailed 30 days later, and suspends the HumanaAcess Card for further use.  She stated that transactions lacking documentation are "impermissible" and considered "nonqualified" expenses.  She stated that Humana is discussing enhancements to improve the process.


With no further business, the meeting adjourned at 11:50.