The 2nd meeting of the Subcommittee on Benefits of the Blue Ribbon Panel on Public Employee Health Benefits was held on Friday, July 8, 2005, at 10:00 AM, in Room 131 of the Capitol Annex. Representative Jimmie Lee, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Jimmie Lee, Chair; Representative Harry Moberly Jr; Jerry Bailey, Victor Cooper, Shawn Crouch, Cheryl Hayes, Brent McKim, and Nancy Toombs.
Guests: Pamela Taylor, Jefferson County School System, John Wilkerson, Kentucky Education Association, Mark Birdwhistell, Undersecretary for Health, Don Plant, PricewaterhouseCoopers, David Wille, Consulting Actuary.
LRC Staff: Greg Freedman, Rhonda Franklin, and Jamie Griffin.
The minutes of the June 15, 2005, meeting were approved.
Pamela Taylor, Jefferson County School System and John Wilkerson, Kentucky Education Association discussed changing the health plan from a calendar year to a fiscal year. Ms. Taylor expressed her concerns regarding changing from calendar year to fiscal year. She noted the financial problems that would occur with a change. Mr. Wilkerson stated that while there appears to be some advantages to changing the plan year to coincide with the state's fiscal year, there also appears to be significant problems and uncertainties for public schools because of all the staffing changes that occur during the summer months and concerns about a spring enrollment involving spring break and student testing. He stated that the KEA believes the Blue Ribbon Panel should refrain from recommending changes to the plan year so that these issues can be more thoroughly studied before the next legislative session.
Representative Jimmie Lee asked if their concerns were based on the current plan and bid process. He asked whether they would still have the same concerns if the state plan was self-insured.
Ms. Taylor stated yes.
David Plant, PricewaterhouseCoopers, and Mark Birdwhistell, Undersecretary for Health, discussed transitioning from a January 1 plan year to a July 1 plan year. Mr. Birdwhistell addressed the issue of converting to a fiscal year plan and agreed to discuss the matter further with Ms. Taylor and Mr. Wilkerson and report at the next meeting. Mr. Plant discussed four approaches. Mr. Plant gave a cost projection analysis for state employee health insurance.
David Wille, Consulting Actuary, presented a review and cost projection analysis for state employee health insurance.
The subcommittee adjourned and reconvened at 1:30 p.m.
The subcommittee made the following proposed recommendations:
PROPOSED RECOMMENDATIONS
SUBCOMMITTEE ON BENEFITS
BLUE RIBBON PANEL ON PUBLIC EMPLOYEE HEALTH BENEFITS
July 8, 2005
1. Continue on a calendar year basis for 2006 plan year, unless concerns about a plan year based on fiscal year are resolved.
2. Retain current plan structures after June 30, 2006 and retain co-pay structures as currently used.
3. Permit adoption of HRA/HSA instead of the Essential plan, but don't penalize PPO participants with higher premiums as a result. Premiums should be based on the experience of the entire state group.
4. Increase the state contribution for family coverage.
5. Reduce incrementally over 5 years the state contribution to FSAs for persons who opt out of the state plan. Consider whether person opting out has access to other coverage (if legal and practicable).
6. Explore the state's authority to limit employees' use of HRA/HSAs for private insurance premiums.
7. Expand wellness programs to promote good health.
8. Specify in the Kentucky Revised Statutes the membership and responsibilities of the group that evaluates the drug formulary. One responsibility is to take into account medical necessity.
9. Subject the state plan to the utilization review statutes KRS 304.17A-600 to 304.17A-633 that provide for an internal and independent external appeal process. The decisions made as a result of the external review are binding and are to be based upon medical necessity.
10. Develop consumer-friendly information tools so members can compare providers relative to their cost and quality.
11. Require the Commonwealth, not the members to pay any administrative fees, including any fees associated with HRAs or HSAs.
12. Establish tiered co-pay structure for prescription drugs to encourage the use of therapeutically equivalent generics.
13. Keep the current reduction of prescription drug co-pays after 75 prescriptions during the plan year.
14. Develop a program to inform members about the cost of therapeutically equivalent generic prescription drugs.
15. Explore the possibility of participation in a multi-state consortium to purchase prescription drugs.
16. Require the Secretary of the Personnel Cabinet to promulgate administrative regulations to establish the state employee health insurance program as provided in Attachment A.
17. Provide the General Assembly and the state group health insurance board with detailed calculation of rates.
18. Require an ongoing evaluation of network requirements to assure access to quality care.
19. Address use and security of funds--set aside in separate account or leave as necessary government expense if their is a deficit.
20. Continue to provide fully paid individual coverage.
21. Evaluate member cost sharing so members can continue to receive preventive care.
22. Consider all plans in establishing premiums--do not penalize retirees.
23. Provide network for retirees who are outside of Kentucky.
24. Clarify language of coverage for employees and provide a directory based on specialty in each geographic area of the state.
25. Encourage like reimbursement for like services rendered by providers.
26. Require Medicare be deemed the primary coverage for dependents eligible for Medicare.
APPENDIX A
(1) The secretary of the Personnel Cabinet shall promulgate administrative regulations to establish the state employee health insurance program.
(a) If the administrative regulation relates to administrative matters, including open enrollment dates, the administrative regulations shall be promulgated by the secretary of the Personnel Cabinet.
(b) If the administrative regulation relates to policy, coverage, benefits, prescription drugs, or any other non-administrative matters, the secretary of the Personnel Cabinet shall submit the administrative regulation to the secretary of the Cabinet for Health and Family Services for review and approval prior to filing the administrative regulation with the Legislative Research Commission. In accordance with KRS 13A.120(3) and KRS 13A.220(6)(a), the secretary of the Cabinet for Health and Family Services shall sign a statement that the administrative regulation has been reviewed and approved before the administrative regulation is filed.
(2) The secretary of the Personnel Cabinet shall, with the advice and approval of the secretary of the Cabinet for Health and Family Services, develop the state employee health insurance prescription drug formulary. The drug formulary shall be posted on the Personnel Cabinet's Internet web site and shall:
(a) List drugs, drug categories, and related items that are covered or excluded from coverage in the state employee health insurance program and, if applicable, excluded medical uses for covered drugs;
(b) Specify those covered drugs requiring prior authorization or having special prescribing or dispensing restrictions; and
(c) Be updated as frequently as necessary.