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PEBB Board Meeting Minutes, April 17, 2007
Public Employees’ Benefit Board
Tuesday, April 17, 2007 9:30 a.m. to 12:30 p.m. - Minutes
PEBB Board Room
775 Court St NE, Salem OR
 
Approved May 8, 2007
Board MembersPresent
Diane Lovell, Chair
Peter Callero
David Hartwig
Rocky King
Paul McKenna
Sue Nelson
Rich Peppers
Jeanene Smith, Vice Chair
PEBB Staff Present
Bobbie Barott
Isabel Joslen
Lydia Lissman
Mona McMullen
Ingrid Norberg
Brian Olson
Rick Schoonover
Margaret Smith-Isa
Rebecca Sweatman
Jean Thorne
Consultants Present
Pam Hodge, Aon
Dennis Monaghan, Aon
Dennis Tierney, Aon
Barbara Wall, Aon
Guests Present
Cindy Barrick
Linda Burgin, OR Dept. of Education; SEIU
Kristina Herron, Providence Health Plans
Sally Hill, Providence Health Plans
Gordon Hoberg, ODS
Keith Johnson
Diana Jones, Regence BCBSO
Bill Lindekugel, Kaiser Permanente
Megan Myrick, Willamette Dental
David Scearce, The Standard Insurance Co.
Daniel Sloan
Tamara Strauss, Samaritan Health Systems
Kim Tran
Deborah Tremblay, Oregon Judicial Dept
Kim Waldroff, BenefitHelp Solutions
Denise Yunker, Oregon University System
Agenda
Welcome and Approval of Minutes
Overview of Meeting
Operations Subcommittee Report
Report on Other Postemployment Benefits (OPEB)
Member Cost Sharing – Supplemental Report
Plan Design Options – Member Input
Options for Use of Standard Reserves
General Public Comment
Other Business

 
Welcome and Approval of Minutes
Diane Lovell called the meeting to order.
Jean Thorne referred to Bdattach.1 and noted a formatting issue on p. 5. “Seeking Member Input” should have a separate header and not be part of the item on options for life and/or disability coverage. 
 
David Hartwig moved to approve the March 20 meeting minutes with the corrected formatting on page 5.
Rocky King seconded the motion.
 
Hearing no further discussion, the motion passed unanimously.
 
Overview of Meeting
Jean Thorne provided an overview of today’s meeting. The Board will address several action items brought forward from the Operations Subcommittee, and will hear a brief report on actuarial findings on Other Postemployment Benefits. The Board will then hear a follow-up on last month’s member cost-share report specific to dental and vision services, followed by a review of member input on member-initiated plan design options (with possible member testimony). The Board will also have continuing discussion on possible uses of PEBB reserves which have accumulated at Standard Insurance.
 
Operations Subcommittee Report
Paul McKenna explained that there are several motions brought forward from the April 10, 2007 Operations Subcommittee meeting for Board consideration.
 
Optional Long Term Care Coverage (Bdattach.2 )
The Operations Subcommittee moved to renew Unum’s long-term care policy for an additional year.
David Hartwig seconded the motion.
Rich Peppers reported that he has received correspondence regarding notification processes when an employee terminates and may want to continue coverage. He asked whether this has been discussed by the Subcommittee. 
Jean Thorne replied yes, they had a general discussion about how agencies handle terminating employees as well as Unum’s process.
 
Hearing no further discussion, the motion passed unanimously.
 
Consultant Services (Bdattach.3 )
The Operations Subcommittee moved to approve the issuance of a Request for Proposal (RFP) for consultant services.
Rich Peppers seconded the motion.
Rocky King asked whether the timing of the RFP and eventual contract lines up with PEBB’s work.
Diane Lovell replied that it does; if Aon isn’t the successful proposer, there is time to transition to the new consultant. 
 
Hearing no further discussion, the motion passed unanimously.
 
System Consultant Services (Bdattach.4 )
The Operations Subcommittee moved to renew the contract with Saber Consulting, Inc. for system consultant services.
Rich Peppers seconded the motion.
 
Hearing no further discussion, the motion passed unanimously.
 
Administrative Fees (Bdattach.5 )
The Operations Subcommittee moved to maintain the PEBB administrative fee at 0.6% for 2008; to continue the Retiree administrative fee at 1.1% (0.5% for Third Party Administration and 0.6% PEBB Administration); and the COBRA administrative fee at 2.6% (2.0% Third Party Administration and 0.6% PEBB Administration) for 2008.
Rocky King seconded the motion.
 
Hearing no further discussion, the motion passed unanimously.
 
Consultant Commission Rate
Paul McKenna referred to Bdattach.5a and explained that while this item was not discussed during the April 10 Subcommittee meeting, staff identified it after the meeting as an item requiring Board approval in order to finalize premium rates.
 
Paul McKenna moved to continue the consultant’s commission rate of 0.16% of medical, dental and routine vision premiums for 2008.
Rocky King seconded the motion. 
 
Questions were raised as to whether keeping the current commission rate was sufficient, given the work that might be anticipated. 
 
Rocky King asked if the Board could contract for less than the full amount of the commission, then increase the contract amount or use it differently once work needs were better known. 
Jean Thorne indicated that the health and dental plans would actually have the funds, as this is included in the premiums, and that the plans submit the funds to the consultant as directed by PEBB. 
Rocky King asked staff to explore writing something into the plans’ contracts that would allow the funds to roll over, or for unused funds to be reverted to PEBB. 
 
Rocky King moved to amend the motion to increase the commission rate to .17% for 2008 and for staff to explore with the carriers possible language to recover or carry over unused funds. 
Rich Peppers seconded the amendment. 
 
The amendment passed unanimously. 
 
Paul McKenna asked for clarification on how this would relate to the RFP for consultant services.  Jean Thorne indicated that the RFP and contract could establish a “not-to-exceed” rate that is less than the full contract amount, to allow room for flexibility in the future. 
 
Rocky King moved to increase the consultant’s commission rate to 0.17% of medical, dental and routine vision premiums for 2008.
Rich Peppers seconded the motion.
 
Hearing no further discussion, the motion passed unanimously. 
 
Report on Other Postemployment Benefits (OPEB)
Jean Thorne reported that she attended a meeting yesterday with the Governor’s Chief of Staff, representatives from the Public Employees Retirement System (PERS), and the State Controllers’ Division (SCD). Because of the low level of liability included in the report the Board will hear today, the decision was to avoid rushing into taking actions. A workgroup of staff from PEBB, PERS and SCD will begin meeting after the Legislative Session to begin outlining options and their consequences. If necessary, the 2009 Session could then consider any suggested budgetary or statutory changes to reduce or eliminate the accumulating liability.
 
Dennis Monaghan of Aon Consulting referred to Bdattach.6, which highlights the final report from Aon on the state’s projected liability for OPEB. New federal accounting reporting standards require that public entities include the amount of projected liabilities in their books. This information would then be considered by the bond market. He noted that Oregon’s projected liability is quite low compared with other states, but that if nothing is done the liability would increase over time, potentially affecting the State’s bond ratings. The report outlined some possible options, although there are many variations.
 
Jean Thorne again indicated that no action is needed by the Board at this time.
 
Member Cost Sharing – Supplemental Report
Dennis Tierney of Aon Consulting reviewed Bdattach.7, which includes supplemental information on member cost sharing on dental and vision coverage. Issues for both service categories relate to possible member cost sharing that exceeds the annual benefit maximums. He noted that there are some indicators of utilization, but that it is difficult to capture all member cost sharing beyond the maximums.
 
Rocky King asked whether orthodontic benefits were represented on the graphs.
Dennis Tierney replied that they were not, nor were non-covered services such as implants.
 
Regarding vision (routine eye care) services, Aon was unable to tease out whether the excess materials costs were primarily related to lens costs (which might be medically necessary) versus frames costs (which would be considered cosmetic).
 
Sue Nelson commented that her experience is that lens costs are increasing, possibly due to the number of options available such as lighter weight and glare reduction, although that may not necessarily be for an issue of medical necessity.
Barbara Wall of Aon Consulting indicated that they might be able to gather more information from VSP on this issue.
 
Plan Design Options – Member Input
Ingrid Norberg and Rebecca Sweatman referred to Bdattach.8 and summarized member input received on the four member-initiated plan design options the Board is considering, along with other general comments received from members. The four plan design options relate to autism-related therapies for those age 7 and older, hearing aid coverage, frequency of physical exams for teens and frequency of eye exams. Over 1800 comments were received; the attachment summarizes the comments for each.
 
Rich Peppers thanked Ingrid and Rebecca for all their work on summarizing the input, finding it very useful.
 
Keith Johnson testified as a parent of a child with autism. He stated his opinion that in practice, coverage by schools isn’t sufficient, and that schools aren’t designed to treat the conditions but rather to accommodate the condition. He explained that there are many unknowns right now regarding effectiveness, and expressed his belief that a variety of supports is necessary. As a parent, there is much uncertainty on how to make the condition better, and the worry of how to pay for it adds to that uncertainty.
 
Peter Callero asked whether Mr. Johnson had any sense of what he had to pay out of pocket for services.
Keith Johnson replied that he did not.
Jeanene Smith asked Mr.. Johnson what their experience had been with treatment when their child was under age 7.
Mr.. Johnson stated that his child’s condition was not diagnosed until school age.
 
Kim Tran spoke as the parent of two autistic children. She testified that she has seen improvements in her son when receiving treatments such as occupational, physical, speech and neurological therapy. Her son receives about 20 minutes of speech therapy per week at school. She also suggested that coverage could be structured similar to psychologist coverage, where a patient could receive a certain number of visits and then would need to provide evidence indicating that the service will improve the condition.
 
Linda Burgin presented testimony in support of increasing the coverage for hearing aids. She expressed her concern that as the population ages there will be an increased need for hearing aids. She also stated her belief that the current coverage is so low that it’s not worth it. She noted that many of her coworkers have hearing problems and have also provided input to PEBB on this issue. Additionally, she spoke on behalf of adults dealing with autistic children, who need support as well. There are an increasing number of children with autism in special education programs, and what works for one child may not work for others. She expressed her appreciation for the Board in seeking input from its members on these issues.
 
Diane Lovell thanked all those who provided testimony. These are important decisions, and the Board appreciates the time spent to share this input.
 
Rocky King asked when the Board would next visit this issue.
Jean Thorne replied that the Board would make decisions at its May 8th meeting. 
Rocky King asked if there was any additional information or reminders regarding existing evidence for these issues.
Rich Peppers requested a clearer distinction between a lack of evidence on the effectiveness of treatment versus evidence that the treatment is not effective
David Hartwig asked staff to add a context regarding components of the Board’s Vision that may relate to the specific action items.
 
Jeanene Smith reported that the Health Services Commission is considering investigating therapies for autism and that the Health Resources Commission is also exploring undertaking an evidence-based review on those therapies. There may be legislation coming out of the Session that would address these services.
 
Options for Use of Standard Reserves
Jean Thorne explained that the Board had its first discussion surrounding this issue last month. Aon will present information today that outlines some of the advantages and disadvantages of the options presented, from a policy perspective. She reported that Lydia Lissman has been meeting with the Department of Justice, state payroll and state human resources staff to determine whether there might be legal, technical or collective bargaining issues with any of the alternatives.
 
Pam Hodge of Aon Consulting reviewed Bdattach.9 and summarized the options for Board consideration, along with implications for each.
 
Lydia Lissman updated the Board on her discussions with DOJ and DAS, noting that their analyses are not yet completed. She indicated that Option #7 (subsidizing the cost of medical coverage while on long-term disability (LTD)) is the most complex. No payroll mechanisms are available during the time an employee is on LTD. Additionally, when the reserves run out, this could create a future obligation for state agencies. The least complex are Options #2 and #5, which decrease rates for life and/or other lines of disability coverage. Options #3 (providing a rate “holiday”), #4 (increasing the amount of employer-paid life insurance coverage) and #6 (providing a basic employer-paid LTD benefit) all require additional review. Potential issues include the technical ability to administer the benefit, possible tax consequences for employees, and creating future obligations for state agencies.
 
Diane Lovell asked Board members whether they would be willing to narrow some of the options. 
 
There was agreement to discard Options #1 (do nothing), #3 (provide a rate holiday) and #7 (subsidize medical while on LTD). It was agreed that Options #2, #4 and #5 could potentially be administered by PEBB and the issue should be pursued with Standard, along with further discussion with DOJ and DAS.
 
Rich Peppers expressed his wish to continue discussion on Option #6 as well. 
David Hartwig suggested that such an option would need a good deal of work and that it is less connected to those who contributed to the growth of the reserve. 
Rocky King concurred.
Diane Lovell stated that Option #6 will be kept on the table for now. 
Jean Thorne explained that further discussion would occur at the Board’s May 15th meeting, but reminded the Board that it will need to make decisions by the June meeting to meet Open Enrollment deadlines.
 
General Public Comment
Cindy Barrick served as a sign-language interpreter for Daniel Sloan, a former state employee who testified in support of increased coverage for hearing aids. He noted that warranties are usually only good for one year, but the coverage is for once every 3 years and the amount of the coverage does not cover costs. 
 
Diane Lovell thanked him for his testimony.
 
Rocky King asked Aon and staff to investigate the possibility of the largest carrier purchasing hearing aids in bulk, in order to receive the best cost and warranties.
 
Other Business
Diane Lovell explained that Board leadership discussed having a dialogue in follow-up to the March conversation regarding using the prioritized list as a basis for plan design. Given that the participants for that discussion are busy with the Legislative Session, this will be postponed until after the Session.
 
Jean Thorne provided updates regarding staff, facilities, and the budget. Lydia Lissman has been appointed to serve in the newly-created position of PEBB Deputy Administrator. PEBB is recruiting for a Director of Operations to fill behind her. Margaret Smith-Isa joined PEBB on April 2nd as the new Program Development Coordinator, and Brian Olson joined at that time as the new Contracts Coordinator. Denise Hall from DAS HRSD is on a job rotation serving as the interim Deputy Administrator for OEBB, and recruitment for the position has been undertaken. Remodeling on PEBB’s current office space will begin immediately to accommodate additional staff. There will not be sufficient room for Board meetings in the current location, so Board meetings will move to DAS East (also known as the General Services Building or the Ferry Street Building) beginning in May. Lastly, the DAS (PEBB) budget for 2007-09 has now passed both chambers of the Legislature and is on its way to the Governor for signature.
 
Diane Lovell added that Board leadership also briefly discussed how the PEBB Board could be helpful to the new OEBB Board as it is named. Further discussions can occur after the OEBB Board is appointed.
 
Adjourn