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Public Employees' Benefit Board Meeting Minutes, January 15, 2008
Public Employees’ Benefit Board
Tuesday, January 15, 2008, 10:30 a.m.-4:30 p.m. – Minutes
DAS/Basement Mt. Mazama Room
1225 Ferry St SE, Salem OR
 
Approved 2/19/08

Board Members Present
Diane Lovell, Chair
Sue Nelson, Vice Chair
Peter Callero
Rocky King
 
Paul McKenna
Senator Bill Morrisette
Rich Peppers
Bret West
 
PEBB Staff Present
Bobbie Barott
Adrienne Binam
Dena Comer
Wendy Edwards
Isabel Joslen
Joan Kapowich
 
Lydia Lissman
Mona McMullen
Ingrid Norberg
Brian Olson
Margaret Smith-Isa
Rebecca Sweatman
 
Guests Present
Jennifer Aberg, VSP
Jean Gabriel, State Controllers Division
Sally Hill, Providence Health Plans
Gordon Hoberg, ODS
Diana Jones, Regence BCBSO
Bill Lindekugel, Kaiser Permanente
Renee McDonald, Regence BCBSO
Julie Marshall, Cascade EAP
 
Paul Pfnister, AFLAC
Jean Poling, Kaiser Permanente
Sara Rengler, Willamette Dental
David Scearce, The Standard Insurance Co.
Diane Skutack, BenefitHelp Solutions
Tamara Strauss, Samaritan Health Plans
Deborah Tremblay, Oregon Judicial Dept.
 
 
Consultants Present
Won Andersen, Mercer
 
 
Agenda
Welcome and Approval of Minutes
Overview of Meeting
Board Priorities
Vision Overview and Criteria
Report Discussion: Partnerships
Other Post Employment Benefits
Evidence Based Medicine
2009 Contracts
2009 Medical Plans
2009-2011 Policy Option Packages
Other Business
General Public Comment
Adjourn
 
Welcome and Approval of Minutes
Diane Lovell called the meeting to order and introduced Joan Kapowich, who began as the new administrator for PEBB and OEBB on December 1, 2007.
Joan Kapowich explained that her background is in social work and nursing, and most of her career has focused on health planning and administration, including many years in workers’ compensation. She served for eight years in program planning and policy for the Oregon Health Plan, and most recently worked for two years in preventative medical programs at SAIF Corporation.
 
Peter Callero moved to approve the December 18, 2007 meeting minutes.
Rich Peppers seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
Overview of Meeting
Lydia Lissman provided an overview of today’s meeting, and explained that the order of agenda items has changed to accommodate board member schedules.  
 
Board Priorities
Work Groups
Wendy Edwards referred to Bdattach.2 and explained that in its November and December 2007 meetings, the board identified the following first-level priorities for plan years 2008-2011:
  • Evidence Based Plan Design;
  • Medical Home;
  • Communications; and
  • Wellness.
 
She explained the workgroup process and that the work groups may develop policy option packages (POPs) for inclusion in the 2009-2011 budget process. The groups will meet in February, March and April. She will draft a status report on the workgroups for approval by the Operations Subcommittee which will then be submitted each month to the board. Board members volunteered to serve on the workgroups as follows:
  • Evidence Based Plan Design: Rocky King, Rich Peppers
  • Medical Home: Peter Callero, Bret West
  • Communications: Diane Lovell, Sue Nelson
  • Wellness: Diane Lovell, Paul McKenna
                                                     
Survey
She explained that staff prepared a short survey of board members prior to today’s meeting in order to facilitate the work group process. She distributed a handout that outlined the survey responses and the board discussed the priorities it would like to address in the work groups, resulting in the following lists:
 
Medical Home
  • Define medical home
  • Strategies with others
 
Sen Morrisette stated that Legislative Concept 62 includes a section on patient centered care and could help with the definition of medical home.
Diane Lovell added that the Oregon Health Fund Board has a working definition of medical home that could be useful, as well.
 
Evidence-Based Plan Design
  • Philosophy of prioritized list
  • Provide alternatives to procedures
  • Incorporate design formulary
  • Use reports available regarding PEBB population
  • Utilization of trend/impact
 
Wellness
  • Look at plans and agency successes
  • Measuring success
  • Partnering
 
Communications
  • Define formalized communication
  • 3rd party clarification if needed
  • Direct communications to specific populations/target
  • Collaboration
  • Audience à key message à forum
  • More broad based surveys
 
Other
  • Identify target and how it will be measured
 
Vision Overview and Criteria
Overall Vision Statement
Margaret Smith-Isa referred to Bdattach.6 and explained that at its December 2007 meeting the board reviewed options for an overall Vision statement and decided to amend a proposed statement to include specific references to “wellness” and “community”. Bret West and Jeanene Smith volunteered to draft final language for the PEBB Vision statement.
 
Bret West moved to adopt the PEBB overall Vision statement, as follows:
PEBB seeks optimal health for its members through a system of care that
is patient-centered, focused on wellness, coordinated, efficient, effective,
accessible, and affordable. The system emphasizes the relationship between
patients, providers, and their community, is focused on primary care, and
takes an integrated approach to health by treating the whole person.
Sue Nelson seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
Vision Criteria
Margaret Smith-Isa referred to Bdattach.6a and explained that during its November 2007 retreat it discussed the six criteria that comprise the PEBB Vision. They determined that aspects of the criteria need to be revised to better reflect the specific changes in the health care system that the board expects to achieve through the Vision.
 
Bret West moved to authorize the revised Vision criteria as follows:
  • An innovative delivery system in communities statewide that uses evidence-based medicine to maximize health and utilize dollars wisely;
  • A focus on improving quality and outcomes, not just providing healthcare;
  • Promotion of health and wellness through consumer education, healthy behaviors, and informed choices;
  • Appropriate provider, health plan, and consumer incentives that encourage the right care at the right time and place;
  • Accessible and understandable information about costs, outcomes, and other health data that is available for informed decision-making; and
  • Benefits that are affordable to the state and employees.
Rocky King seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
Report Discussion: Partnerships
Lydia Lissman referred to Bdattach.9 and explained that it includes a matrix of current collaborative partnerships PEBB is actively engaged in through the work of board members and staff. As the board continues to examine and pursue opportunities to further the PEBB Vision through collaboration, this matrix is intended to serve as a reference document that outlines key partnerships and PEBB’s role as a contributor in them.
 
Diane Lovell stated that other groups could be added to the list when board members attend meetings or events where they informally represent PEBB. She added that it would be beneficial if board members could attend events sponsored by the partners included in the matrix.
 
Other Post Employment Benefits (OPEB)
Jean Gabriel of the State Controllers Division provided background information regarding the work group formed to address how Oregon will manage PEBB’s Other Post Employment Benefits (OPEB) obligation in the long term.
 
The (GASB) issued two standards that require state and local governments to measure and report OPEB in a manner similar to pensions. That is, to recognize the cost of benefits in periods when the related services are received by the employer, rather than when benefits are paid, and to provide information about the actuarial accrued liabilities for promised benefits associated with past services. These two standards are Statement No. 43 (applicable to plan administrators, such as PEBB) and Statement No. 45 (applicable to employers participating in OPEB Plans, such as the State of Oregon). The State Controller’s Division (SCD) is responsible for the implementation of new accounting and financial reporting standards for the State of Oregon.
 
In preparation for the implementation of these two new standards, the State Controller’s Division (SCD) obtained an initial actuarial valuation for the PEBB Plan (completed by Aon Consulting). Based on this valuation, the actuarial accrued liability for the PEBB Plan is $309.0 million. The estimated “annual required contribution” is $33.5 million for the first year. If pay-as-you-go funding is continued for the PEBB Plan, a $20.0 million liability will need to be reported in the State’s financial statements for the fiscal year ending June 30, 2008. While both the disclosed liability ($309.0 M) and the recorded liability ($20.0 M) are relatively low compared to other states, the valuation report estimated that the recorded liability would grow from $20.0 million to $181.1 million over the next ten years, if pay-as-you-go funding is continued for PEBB OPEB.
 
A work group was convened by the SCD to explore options for how this obligation could be managed on a long-term basis. The consideration of possible options required an in-depth discussion of potential solutions and identification of the various impacts of each option. This complex issue involved the need to study fiscal impacts, legal considerations, health-policy implications, etc. Therefore, the OPEB workgroup included representation from The State Controller’s Division, Office of the State Treasurer, DAS Budget and Management, the Public Employee’s Retirement System, and PEBB to bring a variety of perspectives to the discussion. The work group met between August and November of 2007 and identified six options, as outlined in Bdattach.3a.
 
As a responsible approach to manage the PEBB OPEB obligation, the work group is recommending option 6, as follows:
 
Monitor the PEBB healthcare benefits offered to retirees each year and review the
bi-annual actuarial valuation report on PEBB OPEB; continue looking at demographics, trends and retiree utilization to assess the overall financial situation; continue to
coordinate and communicate regarding applicable financial reporting disclosures
that are required by both GASB Statement No. 43 and Statement No. 45.
 
A basic premise of the OPEB standards issued by GASB is that post employment benefits are an exchange of promised benefits for employee services (benefits to be taken in retirement). The GASB standards require an “OPEB Plan” to be reported as such, even when there is not a written contract of the benefits offered.
 
For Oregon, it’s important to recognize that the decision about the types of healthcare benefits the PEBB will offer, the level of coverage that will be offered, and the amount that will be paid by retirees versus the amount paid by the State is made on an annual basis; therefore, the need to fund an implicit rate subsidy may at some point not exist. By monitoring the situation annually, we will be able to see if anything has changed that would significantly impact the PEBB OPEB obligation.
 
The work group will make its recommendation to the SCD. The financial liability issue is one for the state to decide; however, the statutory right is the board’s when it comes to making decisions regarding retiree benefits. The board would only need to take action regarding this issue if the Legislature or Governor’s Office makes a decision that could affect PEBB benefits.
 
Evidence Based Medicine
Margaret Smith-Isa referred to Bdattach.7 and 7a and explained that at the December meeting the Board suggested specific revisions to the guidelines.
 
Rich Peppers moved to authorize the revised Guidelines for the Evaluation of Evidence as follows:
  • The board will require the best available evidence to make evidence-based changes to existing benefits. 
  • In the event that the board decides to consider new benefits or benefit changes in areas where no evidence exists or where the existing evidence is inadequate or inconclusive, these changes will not be approached as “evidence-based” changes. In these instances, the board will consider other factors, including but not limited to potential impact on access to care, quality of care and cost. Any new benefits or benefit changes adopted in these instances will not be considered “evidence-based” changes, but rather, benefit changes adopted based on other criteria.
  • The board recognizes that in many instances, existing data are not black and white and that evidence from various sources must be weighed.
  • The board will look to impartial experts—such as the Health Resources Commission, the Center for Evidence-Based Policy, and the U.S. Preventive Services Task Force, among others—to evaluate existing evidence and develop recommendations. PEBB will use the recommendations of these expert bodies to inform evidence-based benefit design decisions.
  • In addition to recommendations based on evidence the board will consider other factors when exploring benefit design changes, including but not limited to the potential impact on access to care, quality of care and cost.  
Sue Nelson seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
2009 Contracts
Wendy Edwards referred to Bdattach.4 and explained the staff recommendation to issue a Request for Proposals (RFP) for PEBB’s third party administrator. Additionally, staff recommend contract renewals for the employee assistance program, system consultant, and long-term care insurance plan.
 
Third Party Administrator
Rocky King moved to accept the staff recommendation to issue an RFP for the Third Party Administrator (TPA) for benefit administration functions for all self-pay members, including retirees, members in eligible semi-independent agencies and members eligible for COBRA.
Rich Peppers seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
Employee Assistance Program
Rocky King moved to accept the staff recommendation to issue a renewal to Cascade Centers, Inc.
Paul McKenna seconded the motion.
 
Rich Peppers asked if a report exists to measure the quality of Cascade’s customer services.
Wendy Edwards replied that PEBB does receive a report, which has included good feedback from the participating agencies.
 
  • Hearing no further discussion, the motion passed unanimously.
 
System Consultant Contract
Rocky King moved to accept the staff recommendation to issue a renewal to Saber Consulting, Inc.
Peter Callero seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
Long-Term Care Insurance
Rocky King moved to accept the staff recommendation to consult with PERS regarding Unum Life Insurance performance, and to authorize PEBB staff to proceed with a renewal if PERS concurs. 
Bret West seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
 
2009 Medical Plans
Wendy Edwards referred to Bdattach.5 and explained that the medical, vision and dental plan contracts will expire on December 31, 2008. The board has the authority to offer renewals to any of the current contractors or elect to conduct an RFP for medical, dental and/or vision insurance coverage.
 
Medical
Rich Peppers moved to authorize the consultant to begin a renewal process by sending initial renewal letters to one or more of the following current medical plans:
  • Kaiser Permanente
  • §         Providence
  • §         Regence
  • §         Samaritan;
and to authorize the consultant to begin a renewal process by sending initial renewal letters to one or more of the following current dental plans:
  • Kaiser
  • §         ODS
  • §         Willamette Dental;
and to authorize the consultant to begin development of a renewal process by sending an initial renewal letter to VSP, or authorize the consultant to begin development of a RFP.
Rocky King seconded the motion.
 
  • Hearing no further discussion, the motion passed unanimously.
 
2009-2011 Policy Option Packages (POPs)
Lydia Lissman referred to Bdattach.8 and provided a general overview of potential concepts for inclusion in one or more POPs for the 2009-2011 budget.
 
The board discussed the concepts and suggested that PEBB request two additional contracts positions rather than one. Staff will include this suggestion as it continues to examine the POPs, and will prepare a more developed list of package concepts for presentation to the board throughout the progression of the budget process.
 
Other Business
Rocky King reported that Jim Dameron of the Oregon Patient Safety Commission recently made a presentation to the Oregon Medical Insurance Pool (OMIP) Board that included information regarding “never events”. These “events” include errors such as surgery performed on the wrong body part or on the wrong patient, leaving a foreign object inside a patient after surgery, or discharging an infant to the wrong person. AETNA, Medicare, and other national carriers have taken the position of not paying for these events, and the OMIP Board is considering asking its third party administrators to deny payment, as well. The OMIP Board has suggested that perhaps PEBB, OEBB and OMIP might collaborate on a strategic statement to stakeholders and providers that outlines non-payment for “never events”.  
 
Joan Kapowich stated that she will do some research prior to the next board meeting for consideration at that time.
Rocky King explained that OMIP will go forward with or without PEBB’s collaboration. OMIP will take the lead and is not asking others to do the work, only to provide input.
 
The board conferred and generally supported an initial discussion.
 
General Public Comment
None.
 
Adjourned