Loading...
HomeMy WebLinkAboutMinutes - Health Care Benefits Trust Board - 4/1/2025MINUTES HEALTH CARE BENEFITS TRUST REGULAR SESSION April 1, 2025 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 Eric Rustand, CBIZ Business Unit President Sonya Martinez, CBIZ Account Executive CALL TO AUDIENCE - There were no speaker requests.   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE FEBRUARY 18, 2025 REGULAR SESSION MEETING MINUTES       Motion by Chair Frank Trembulak, seconded by Vice Chair Dave Gephart to approve the February 18, 2025 regular session minutes.  Vote: 5 - 0 Carried   2.PRESENTATION AND DISCUSSION OF THE MEDICAL AND PHARMACY EXPERIENCE REPORT THROUGH JANUARY 2025 Sonya Martinez, CBIZ Account Executive, presented the Medical and Pharmacy report through the end of January 2025. She started with the Year-over-Year Financials and pointed out to the Trustees that the Total Medical/Pharmacy Claims Paid are still trending 19% lower than the prior plan year at $1.3 million compared to $1.6 million a year ago. The Net Medical/Pharmacy Paid Claims Per Employee Per Month (PEPM) are at $599.58 compared to $738.85 a year ago. Ms. Martinez continued by reviewing the paid claims and administration information for all plans combined. Ms. Martinez reminded the Trustees that the Plans run July - June, but the deductible    and out-of-pocket maximum accumulators reset on January 1 each year. This is why there was a 50% increase in paid medical claims from December 2024 to January 2025. The average enrollment through the end of January is 313. The amount paid for medical claims through January was $1.08 million. The amount paid for Rx claims was $403,000 and there have been $175,000 in Rx rebates. The total paid claims are $1.3 million YTD; with the admin fees of $503,000 and HSA contributions of $180,000, the total claims and admin fees for the first seven months of the plan year are $2 million. The loss ratio for expected claims is tracking at 71% and at 52% against maximum liability. The claims and admin fees PEPM is at $911 through January. The plan is running at 78% against budget. Ms. Martinez continued to review the report and focused on the High Deductible Health Plan (HDHP). This plan is tracking at 59.6% of expected liability or 48% of maximum liability. The claims and admin fees PEPM is $754 through January. For reference, the prior plan year ended at $727 PEPM. The membership of the HDHP has been increasing every year for the past few years and is at 194 compared to 169 a year ago. The HDHP plan is running at 67% against budget; the prior plan year ended at 73%. The PPO plan is tracking at 104% of expected liability or 83% of maximum liability with claims and admin fees PEPM at $1,325 through January. For reference, the prior plan year ended at $1,216 PEPM. The membership of the PPO has been decreasing every year for the past few years and is at 119 compared to 143 a year ago. The PPO plan is running at 101.7% of budget; the prior plan year ended at 102.6%. Ms. Martinez added that the PPO is easier even though the HDHP makes more financial sense for most participants. Next Ms. Martinez reviewed the year-over-year comparison and reminded the Trustees that the numbers on this page are very conservative. The 2023-2024 plan year finished at $3.4 million; the estimated annualized cost for the 2024-2025 plan year is $3.9 million with an expected increase of 14.3% or $486,000 from the prior year. These estimates are based on the trajectory of how the plans are being utilized. The estimated PEPM is currently $1,038, but the further into the plan year we are, the more accurate this projection gets. The annualized estimated budget vs. Annualized Paid Claims is 89.7%. Ms. Martinez finished by going over the Large Claims Report Over $50k. There is one large claimant of $123,000 which is 8.2% of total medical and Rx claims. Looking forward, it appears that this claim will drop off in the next month. This one claim accounted for 25% of the total claims paid for the month of January. Chair Trembulak asked what the lag is for claims. Mr. Rustand answered that United HealthCare (UHC) typically has a 10-15 day turnaround for claims since the majority of claims come in clean from the participating providers and do not need to be reprocessed. Chair Trembulak followed up with a question about denied claims. Mr. Rustand answered that the majority of claims that are denied are due to not going through the prior authorization process when necessary. Self-funded plans have less onerous requirements than fully-insured plans. Ms. Martinez added that if claims are denied, they get brought to her attention, and she has not received any such complaints. Mr. Rustand pointed out that the non-clean claims are often for out-of-network services from providers who are not familiar with UHC's submission process. The Town does not see many out-of-network claims since most providers in this area are contracted with UHC. Ms. Martinez added that in Arizona, claims cannot have a pending status for more than 30 days, so there is a higher denial rate for non-clean claims since they take longer than 30 days to process.   3.PRESENTATION AND DISCUSSION OF THE FUND BALANCE REPORT THROUGH FEBRUARY 2025 Vice Chair Gephart reviewed the fund balance report through the end of February. The Total Cash is $3.37 million. Total Investments are $797,000 at the end of February for Total Assets of $4.24 million. The fund has $3 million in Total Revenues. This is a combination of $2.2 million in employer-paid premiums, $409,000 in employee-paid premiums, $279,000 in cost allocation for the health clinic and pharmacy rebates and $86,000 in investment income. The investment income at the end of February already exceeds the amount at the end of June 2024.    Vice Chair Gephart continued to review the income statement and reviewed expenditures. Outside professional services are $691,000 at the end of February. The wellness program is $39,000 and claims are $1.8 million. Total Revenues over expenditures are $512,000, down from $523,745 at the end of December. The total ending fund balance is $3.9 million. The trust fund remains very healthy, up $500,000 since the end of the last fiscal year. Chair Trembulak noted that the portfolio in treasuries is not subject to as much volatility. Vice Chair Gephart agreed and stated that the volatility is only reported once at the end of the fiscal year. He also reported to the Trustees that we do not anticipate that the interest rates will continue to rise but rather that the Federal Reserve should reduce rates two more times this year. Vice Chair Gephart finished by pointing out that the fund balance has increased from $3.4 million at the end of the 2023-2024 plan year to $3.9 million at the end of December 2024.   4.PRESENTATION AND DISCUSSION OF THE ANNUAL AUDIT Vice Chair Gephart reviewed the annual audit for the year ending June 30, 2024 that was completed in December and is required by the Arizona Revised Statutes. The self-insurance fund is included in this audit. The Town received a clean opinion. The auditors did not find anything to report on. The bottom line is that the Trust improved and is healthy and solid financially.      5.PRESENTATION, DISCUSSION AND POSSIBLE ACTION ON RESERVE CALCULATION USING RENEWAL FIGURES FOR THE 2025-2026 PLAN YEAR Mr. Votava, Human Resources Director, started by reminding the Trustees about the Reserve Requirement Policy. This policy states that the "Trustees shall determine Funding Levels and Reserve Requirements as the Trustees deem appropriate." Last year the policy was adopted to have "a Reserve Requirement between a minimum of six (6) months and a preference of nine (9) months of the Plan's forecasted annual variable costs." Mr. Votava presented the reserve calculation utilizing the renewal figures for the 2025-2026 plan year. He explained that CBIZ prepares reports with actuarial rates for four tiers of the plan. This report is where he got the $3.48 million figure for expected claims and the $4.76 million figure for maximum claims. Mr. Votava reviewed the other costs that are factored into the Reserve Calculation including Patient Center Outcomes Research Institute (PCORI) fees, the Employer-paid clinic, and wellness incentives. These costs result in total expenses of $3.8 million for expected claims or $5.1 million for maximum claims. Based on these projections, the fund balance should be between $1.9 million and $2.9 million. The fund currently has about twelve (12) months of cash at $3.9 million. In order to get the cash balance within the 6-9 month range, the Town needs to come up with a strategy. Some possibilities are to lower premiums, incur more expenses, offer additional benefits, or optimize the wellness program. The goal is to get the cash balance within the 6-9 month range within two (2) years by April 2027. Trustee Parston asked about the services that the onsite clinic offers. Mr. Votava summarized the various preventive and urgent care services that the clinic provides. Trustee Marek asked if the employees are surveyed about what they want. Mr. Votava said that the employees have not been surveyed. Trustee Parston agreed that it would be interesting to see what the employees want. Chair Trembulak also thought it would be interesting to have a focus group. Trustee Parston asked if the Town would have enough data in November 2025 to know how effective the new wellness plan was in its inaugural year. Ms. Martinez answered that the Town will know what the utilization was, but it will take more than one year of data to know how effective the wellness plan is. Chair Trembulak summarized the discussion by saying that staff will look at steps that can be taken to expend or draw down the fund to return to the 6-9 month corridor and will approach the employees to solicit feedback and come back to the Trustees with the Town's recommendations.    solicit feedback and come back to the Trustees with the Town's recommendations.    Motion by Chair Frank Trembulak, seconded by Member Mark Parston to approve the Plan Administrator's Reserve Calculation.  Vote: 5 - 0 Carried   ADJOURNMENT    Motion by Chair Frank Trembulak, seconded by Vice Chair Dave Gephart to adjourn the meeting at 10:54 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 held on the _1st_ day of _April__. I further certify that the meeting was duly called and held and that a quorum was present. Dated this __4th__ day of __April_, 2025. ______________________________ Jen Inboden Senior Human Resources Analyst