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HomeMy WebLinkAboutMinutes - Health Care Benefits Trust Board - 1/16/2024MINUTES HEALTH CARE BENEFITS TRUST REGULAR SESSION January 16, 2024 KACHINA CONFERENCE ROOM 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 10:00 AM   CALL TO ORDER The meeting was called to order at 10:00 a.m.   ROLL CALL Present: Frank Trembulak, Chair Dave Gephart, Vice Chair Harry Greene, Member Mark Parston, Member Jennifer Marek, Member Staff Present:Jennifer Inboden, Board Secretary Andrew Votava, Human Resources Director Tobin Sidles, Legal Services Director Oscar Diaz, CBIZ VP of Business Development CALL TO AUDIENCE - There were no speaker requests.   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE DECEMBER 5, 2023 REGULAR SESSION MEETING MINUTES       Motion by Chair Frank Trembulak, seconded by Vice Chair Dave Gephart to approve the December 5, 2023 regular session minutes.  Vote: 5 - 0 Carried   2.PRESENTATION AND DISCUSSION OF THE MEDICAL AND PHARMACY EXPERIENCE REPORT THROUGH NOVEMBER 2023 Oscar Diaz, CBIZ VP of Business Development, presented the most recent Medical and Pharmacy report. Mr. Diaz started by reviewing the table for All Plans. He pointed out that Stop Loss Recovery and Rx Rebates are only included in the table for All Plans, not the separate PPO table or HDHP table. He explained that we only track employee members per month, not all the dependents since that number fluctuates so much from month to month. He explained that Expected Claims Liability is Maximum Claims Liability divided by 1.25. CBIZ will track these two numbers as well as the Town's Budget Liability. Chair Trembulak asked what the Individual Stop Loss was set at. Mr. Diaz answered that Individual Stop Loss is $150,000 and the Aggregate Stop Loss is a 125% corridor between Expected and Maximum    1/16/2024 Minutes, Health Care Benefits Trust 1 Liability. Member Parston asked what the Rx Rebates are for. Mr. Diaz answered that the Pharmacy Benefit Manager negotiates brand-name prescription drugs. Mr. Diaz went on to explain that Admin Fees include the stop loss insurance premium and that this column is sometimes referred to as fixed fees. He pointed out that the sum of the Total Claims and Admin Costs column is the total spend for the first 5 months of the Plan Year. Next Mr. Diaz explained the Loss Ratios and that they demonstrate how the Plan is performing against the Expected and Maximum Liability as well as the Town's Budget Liability. The goal is to have that number as low as possible or to be at 100% or less of Expected Liability. He pointed out that the Plan started out with a 57.3% Loss Ratio for Expected, went up to 118.5%, down to 66.8% and back up to 104.1% for an average of 91.1%. He explained that these changes from month to month are due to some large claims. Chair Trembulak asked if this was due to volume of utilization or large claims. Mr. Diaz said that both are factors. In the current Plan Year, volume is more of a factor than large claims. Mr. Diaz continued to explain the table and focused on the final columns that are broken down by PEPM (Per Employee Per Month). This demonstrates a level playing field and makes it easier to see how costs will be impacted by new hires or resignations. The Paid Claims are running at $601 PEPM; Rx Claims are $209; Total Paid is $740 and Claims and Admin Fees are $1011. The PPO Plan is running at 70% of the cost, the HDHP Plan accounts for 39% of the cost, and Rx Rebates are -9%. Mr. Diaz finished by focusing on the Budget columns. He said that CBIZ gets together with the Town on an annual basis to determine what the budget should be. The factor that is considered is the United Healthcare renewal, (UHC holds the Town to Maximum Liability). If the Town underbudgets by too much and doesn't have adequate reserves, they will have to find the money somewhere. Mr. Diaz said that the Town is usually very close to the budgeted amount and is currently at 91.1% of Expected Liability, 74.6% of Maximum Liability and 93.9% of the Budgeted amount. The Town will adjust the amount based on factors such as CBIZ' recommendation and what they have on reserve. Chair Trembulak asked how many total eligible employees the Town has. HR Director Votava answered 358. Chair Trembulak asked how often UHC gets paid. Mr. Diaz answered that UHC bills the fixed costs monthly and claims are paid automatically on a weekly basis. There is an imprest account that can be used if there is a large claim that cannot be funded. If a claim exceeds the Individual Stop Loss level, typically UHC will audit the claim to make sure it was billed correctly before payment is made. The Town has a monthly accomodation built into their plan. If a claim ever exceeds the Aggregate Stop Loss level in a month, they do not have to fund that amount until after the stop loss insurance carrier gets involved. Mr. Diaz reviewed the PPO Plan separately from the HDHP Plan and pointed out that the PPO is running at 110% of budget and the HDHP Plan is running at 87%. He stated that this is typical. He pointed out that a page is included in the report for the prior year. CBIZ will always include this information so that the Town can see how they are running compared to the prior year. Last Plan Year, the Town finished at $986 PEPM and so far this year the PEPM cost is $1011. The Town's spend last Plan Year was $3.57 million. Mr. Diaz reviewed an annual cost comparison analysis and explained that this table includes a completion factor of 7% so that the data is as accurate as possible early in the Plan Year. As the year progresses, employees meet their deductible and out of pocket maximums, which causes the Plan to cover all the costs. CBIZ is forecasting that the current Plan Year will be $400,000 or 9.1% more than the previous year. Mr. Diaz showed data for the past decade which demonstrated how much the Plan has both increased and decreased throughout the years. Member Parston asked what has caused the fluctuations. Mr. Diaz answered that high claimants cause the fluctuations. 1/16/2024 Minutes, Health Care Benefits Trust 2 Member Greene asked if the pandemic was a factor. Mr. Diaz answered that most clients saw a decrease in costs during the pandemic since people could not access care. CBIZ recommended that their clients put these savings in their reserves to prepare for the wave that would come once demand returned to normal levels. Member Parston asked if there are algorithms based on median age. Mr. Diaz answered that they use a 24-month funding projection that includes age, spending and national trend factors. This is the same practice as the stop loss carriers. Mr. Diaz explained large claims and said that it is typical for a Plan of the Town's size to have one or two in a year. He said that the Town is not what is considered a credible group since the total enrollment of about 700 is under 1000. This 70% credibility can help the Town in a bad year in terms of the stop loss renewal rate. Mr. Diaz finished by going over the summary page. This page compares the current time period with the same time period from the prior year and identifies possible trends. In general, the Plan is performing better this Plan Year than last year.   3.PRESENTATION AND DISCUSSION OF THE HISTORICAL FUND BALANCE Vice Chair Gephart presented a 10-year history of the fund balance. Chair Trembulak asked if the cash balance is invested. Vice Chair Gephart answered that cash is invested safely in treasuries. All of it sits in a sweep account to try to leverage the earnings environment with higher interest rates and yields. This is separate from the imprest account that does not have earnings.      4.PRESENTATION, DISCUSSION AND POSSIBLE ACTION ON RESERVE POLICY Mr. Votava, Human Resources Director, presented a draft reserve policy that the Town wrote on the Trustees' behalf with Mr. Diaz' recommendation. He stated that the Trustees' two principal responsibilities are to establish and determine the annual amount of money that is necessary to cover the Plan, and to determine the reserve amount. The proposed Reserve Policy is based on the Plan's forecasted annual variable costs and a corridor with an amount of money on the low end (6 months of cash) that will trigger certain actions and an amount of money on the high end (9 months of cash) that will trigger certain actions. The actions could include changing the Plan design or granting a Premium Holiday. If the cash balance falls out of range, the Town has two years to take remedial action. Mr. Votava reviewed a sample calculation for a Reserve Calculation. Mr. Diaz stated that this is a sound process and that CBIZ goes through this process for the Town. They also will let the Town know if there is a possibility of being over reserve or under-funded. He agreed that it is a good idea to have two years to take remedial action because of the historical pattern of the Town's fund. Member Parston asked if we should include a reserve policy requirement about actuarial reports being conducted on a regular basis to give the Trustees a heads up about future reserve needs. Mr. Diaz suggested adding in wording to indicate "based on CBIZ' funding projection at renewal, with the option to be adjusted at the time CBIZ releases their annual Premium Adequacy Report (PAR)." The renewal happens in the spring and the PAR comes out in the fall. Member Parston asked if it would be a good idea to include a comparison of our Plan with others in the Tucson area to make sure we are staying competitive. Mr. Diaz and Mr. Votava answered that the Town is competitive and these comparisons happen on a regular basis. Chair Trembulak asked about the Reserve calculation and Mr. Votava clarified the components of the calculation. Mr. Diaz added more explanation about the purpose of the Reserve fund and the purpose it would serve if the Town ever decided to stop being self-funded.    1/16/2024 Minutes, Health Care Benefits Trust 3 Member Greene asked how the runout tail is calculated. Mr. Diaz answered that it is based on 4 months of outstanding claims. Member Marek asked for the Reserve Policy document to include what the acronym IBNR stands for. Staff said they would include Incurred But Not Reported for this term.    Motion by Chair Frank Trembulak, seconded by Member Harry Greene to table the approval of the Reserve Policy until the next meeting to read the language.  Vote: 5 - 0 Carried   5.DISCUSSION AND REVIEW OF CHAIR TREMBULAK'S "ROLES AND RESPONSIBILITIES" DOCUMENT Chair Trembulak reviewed the document and explained that he wrote the document to make sure he had a complete understanding of what the Trustees' roles and responsibilities are. He pointed out that most of his questions were answered either at the first meeting or at today's meeting. He did point out that the Trust Document has certain items that the Trustees should take action on by acknowledging at a future meeting so that the minutes serve as a record that the items were acknowledged.      6.DISCUSSION AND POSSIBLE ACTION TO RESCHEDULE THE MARCH 19, 2024 HEALTH CARE BENEFITS TRUST MEETING       Motion by Chair Frank Trembulak, seconded by Member Harry Greene to reschedule the March 19, 2024 meeting to April 2, 2024.  Vote: 5 - 0 Carried   ADJOURNMENT    Motion by Chair Frank Trembulak, seconded by Member Mark Parston to adjourn the meeting at 11:26 a.m.  Vote: 5 - 0 Carried     I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Health Care Benefits Trust of Oro Valley, Arizona held on the 16th day of January. I further certify that the meeting was duly called and held and that a quorum was present. Dated this _19th__ day of _January_, 2024. ______________________________ Jen Inboden Human Resources Analyst 1/16/2024 Minutes, Health Care Benefits Trust 4