Personnel Committee - Regular Meeting

Recording in progress.

Alright. It is 05:30. I will call the personnel committee to order. A roll call of the entire committee is present with the exception of Alder Norell who is excused this evening. I'll move on to public comment. Is there anybody from the public that wishes to address the personnel committee this evening? Anybody from the public that wishes to address the personnel committee? Third and final call for public comments. Is there anybody online for public comments? No. Any previously received public comment?

No.

Then I will close public comments and move on to the consent agenda. Is there any item that any member of the committee wishes to remove from the consent agenda? I'll make a motion to approve the consent agenda. Second. There's a motion and a second to approve the consent agenda. There's no discussion. So all those in favor? Aye. Aye. And opposed? Alright. Consent agenda passes. Then we'll move on to our only action or discussion action item tonight which is 20Five-six31, update on health plan from the clone advisor. Jessie?

Yes, thank you all for joining us tonight. I know this is just one item on the agenda, but I thought it was important to bring it forward at this point in the year because we are looking at starting the budget discussions. As many of you might know, we did earlier this year do an RFP for a benefit consultant, and we did move from USI after about ten plus years to McLone. And so today, I asked Tara Nelson, our adviser with McLone, to be here today to go over what they've done so far since we've contracted with them in July, and then also to kind of talk a little bit about where our health plan fund is right now and what we're looking at for 2026 and how that will impact our budget. So with that, I will turn it over to Tara unless anyone has any questions before we start.

Alright. Thank So

we'll just sort of get started. We'll run through a little bit of the renewal information, reporting and analytics, some innovations and next steps that we'll be planning for 2026. And within there, we'll also talk a little bit about market trends and market information as it pertains to the health plan benefits. In the renewal, renewal, overall, you have not only your medical

Debbie, can you click it?

You'll see here for lines of coverage, it's not just about having the health plan itself, right, from from a health partner's perspective or Robin, but you also have a lot of other ancillary lines that are behind the scenes, one of which is your stop loss policy. And then also pharmacy, your dental, your vision, voluntary, short term, long term, critical illness, and accident benefits as well. Okay? So those are sort of all the lines of coverage that we manage and that we'll be renewing here for 2020, '6. Keep in mind that we do have a number of them which are great.

We have some what we call rate guarantees that are also going to run through the 2026 plan year, which means there is no change in those plan plan rates at all. So the cost will remain the same. Some of the costs that will change, and I'm gonna outline those here and give you more details, they are in regards to your group medical TPA. We've also proposed to move your pharmacy benefit manager away from health partners to become more transparent. We found a lot of dollars of savings that I think you'll be happy about, that I'll go ahead and highlight for you in the next few slides as well.

And then also adding some long term risk coverage for you as it pertains to transplant coverages. One of the other pieces was in regards to the vision. You're with NBA for your vision, and there was a little a few different bumps in the road. We were able to come and go to Delta to say, hey. They've also got, dental with us. What does it look like from a vision perspective? So were able to save some dollars there and get you some similar, take on better benefits with some broader coverage for you for providers. Okay? So a few reports and a few things in regards to projections. As we look, at our projections, calculations, we do a couple of things.

We look at what's called year over year. We look at the claims data as it pertains to months. So not only what's paid in the medical bucket, but then also in the pharmacy bucket. And so as we see, we've broken that down, sort of totaled it for you in 2024. We saw those numbers from the pharmacy benefit be at that 3,000,000, 3,600,000.0, and about 781,000 in pharmacy benefits.

And then year to date in 2025, just to kinda get you an update, unfortunately, you're already exceed exceeding your dollars in the year for 2025. And that really is contributed to the fact that in 2025, about 83% of your claims spend right now is only for about 13 members that have some claims over $50,000, some of which are exceeding over 1,000,000. And we'll talk about those two in a minute and how that sort of affects your plan. Now it's not all doom and gloom. You're not gonna see a 400% increase or anything crazy just because year to date, we're seeing those claims come into the over 4,000,000.

What we are looking to do is sort of mitigate some of that cost by reducing what we consider your claims cost. The middle number here below your fixed cost, you'll see that at about 11%. Well, how can it be 11% if you're telling me, Tara, doom and gloom. Right? You're over 400 or $4,000,000 already in 2025, exceeding what you did in '24.

The reason being is we've we've taken some steps to move your pharmacy administration to what's called National Rx, which has a chassis of called CVS Pharmacy. And with that particular move, we had found an additional $340,000 in savings that we could take and put in that claims pocket. So instead of seeing a larger increase in claims, which is the biggest portion of the spend at that 3,400,000.0, we were able to reduce that down to 3,400,000.0 because of those additional savings in pharmacy. Make sense? So overall, we do all the really great calculations.

We add in some, what we call, estimates because stop loss, we know, unfortunately, that's one of the coverages we're not able to firm until about October, to make sure that for those high risk members, those high cost members that you here at the city are getting reimbursed for those larger dollar claims. And I'll talk about that here in a minute as well. So overall, when we total that and we look at our fixed and claims cost in regards to both dental and medical, it's about a 16 percent increase for 2026. That's all in fees as well as claims cost expenses. Understand that the trend right now, from a medical perspective overall is around 8%.

On a stop loss though and the leverage trend, the actual premiums, which is that top roll that you see saying specific, which is kind of the largest dollar, you're like, okay, that went up a 185. How do we get that reduced? That's that one we can't firm, unfortunately, till October data, and that is the one that has a leverage trend of about 22%. So that's why we have the '22 number as an estimate in there, sort of the larger numbers. Okay?

High cost members is really, again, the biggest contributor and year to date 2025 at $3,500,000 in spend so far this year. But of that, we have reimbursements already, in in those particular totals right on the bottom of 1,800,000.0. Okay? So because you have that stop loss coverage that cost you about a million dollars, you're already getting a $1,800,000 back from those vendors and carriers just like it would, you know, any other sort of insurance reimbursement. Back in 2024, you had 12 members exceeding sort of that 50,000,000 50,000 spend, and you had total reimbursements of 1,600,000.0.

K? We mentioned, and I just talked about earlier, that pharmacy savings analysis. So we did diligence, and we went to three different vendors for the city. We did go to Navitas, National Rx, and Smith Rx, sort of looking at the numbers. What was happening with Health Partners is they were retaining really your rebates, what we call the kickbacks from the manufacturers.

Instead of you just getting that back independently to put that back into your claims bucket or your claims fund, right, HealthPartners was keeping that and saying, we're gonna give you a discount on your fees. But as those drugs fluctuate and as your employees use different prescription drugs perhaps or maybe they go into new prescription drugs, those numbers change and fluctuate throughout the year. So it's really on a cost containment perspective. It's really beneficial for you to just see those rebates right away, right, instead of getting discounts and fees or things like that. So this becomes fully transparent.

And the reason that we went we highly recommended the National Rx was because not only is it fully transparent for you and it has a great amount the greatest amount of savings at $371,000. It also allows you to keep transparent going forward proactively in the future, which means their contracts are transparent, their rebates that they give back to are transparent, as well as the discounts that you'll get on the core prescription drug. So if that drug is a $100, right, and you have a discount, which call which is called average wholesale price is, let's say, at 75%, you're getting $25 discount. All of that's transparent to the entire team at the city of Manitowoc. So there is no reason to worry that whether or not you're getting the best rate possible because you get to see all of the numbers instead of the smoke and mirrors that are behind the scenes with a lot of the fully insured premium policies that we see today, and sometimes even with the TPAs that own their own relationship with those pharmacy vendors.

So the city will now own that relationship directly, and they actually will also market for you and on behalf of you for that particular vendor, meaning who processes your claims and does the negotiations for you, every two to three years, which is great because that that helps with your fiduciary duty. K? It's a lot of smoke and mirrors. I could talk about that for a long time if you can tell because I've been doing this forever. But does that make sense for that recommendation of making the move, obviously, not only financially, but also for the best benefit of you all going forward?

K? So changes for 2026 that are would be happening are in regards to remaining with Robin at this time and and health partners. So no changes at network, no changes in any of your medical claims, providers. Pharmacy moves to National Rx. There was about seven members that would be disrupted, 1.3% of the overall utilization in your plan, which is really great.

The seven people that are affected will get letters, most of which were maybe diabetic supplies, maybe like lancets, for example, or there was a few inhalers that were on that list. So very, very small impact for the disruption to your members. And again, just because it's labeled CVS does not mean you can't go to Walgreens, you can't go to Walmart, there was zero disruption in the providers on the pharmacy side that your members are going to today. Vision is gonna go ahead and move to Delta. And then stop loss, we've definitely suggested that you add a transplant policy.

This does a couple of different things for you. It allows for you to have that risk paid not only at a 100% under this particular rider, but it also takes the risk out of your stop loss policy and premium. So think of it this way. In 2024, your highest risk members, right, were just transplant members. If you would have had this rider in place, instead of seeing almost a 23 or 28% increase in that premium, you would have had an average trend of probably five or 6%.

In that really large premium we talked about right before, the one that was at the top of the line of that specific where the current premium is 841,000. That would have been a much better picture, right, where you're able to have this policy in rider for about $40,000 a year. So definitely something to get in now. Even though, knock on wood, right, we don't have any more of those member that have the transplant, but then that risk is there, and it's insured for you. Does that make sense?

So definitely recommending that. And then also making sure that we're taking some of the risk around gene and cell therapy. So gene and cell therapy, it's here. It's it's hopefully, your plan may never see these treatments because they are in the millions of dollars. But if they are and they do hit your plan, this is another one of those proactive approaches to make sure you have coverage for that. And it doesn't need to hit your stop loss, and it is something that pays out immediate. So you also don't need to fund those dollars immediately. K? Any questions about those changes? Any extra comments, Jesse or

Sean? Nope? Did

I talk too fast? So one of the things we wanted to take just a quick look at, and there's just some remaining slides for you guys to just kind of take a peek at. Just know that we've not only taken care of looking at compliance, but we've also reviewed all of your client vendors today to make sure we're sort of squeezing them and making sure all of the benefits that they have and programs they have in place today are working. And if they're not working, making sure that they do going forward. We're also looking at the different market trends, which is really comparing, you know, in regards to the premium cost, looking at diligence on benchmarking, for example.

We're also digging into sort of the Manti clinic, not only the utilization, but what the city of Manitowoc pays for their portion of that Manitowoc clinic. Right? So if the district is has more uses of it versus the city, doesn't make sense for what percentage is being paid by Bayou. And so we're really looking to make sure that we're monitoring that more closely and then also getting promotional pieces out there because one of the key initiatives for 2026 in our parking lot is communications. Right?

So, we are finding about 58% of all employers coming forward in '26 and beyond feel that communication is needed, especially with our millennial our, you know, the gen z's that are coming in, our millennials. They wanna know they wanna have the information at their finger tips, and they wanna understand what types of coverages that they have. We'll be reviewing further items in the wellness programs and the synergy in relation to vitality and how the clinic, the Manti clinic, can help promote that in a better way. And we're also continuing developing ways to stay ahead of your risks such as the the two recommendations of mitigating risk from the stop loss. And then we're continuing to monitor what's called the return of investment on programs that are within your medical administration and the vendor partnerships for 2027.

I know, scary to think that we're already planning for 2027, but we are. Any questions at all? These next few slides I've just placed in here to support sort of those things that we've looked at already in 2025 and we have in our parking lot for 2026 because the reality is that the employees at all employers today are looking at all of these different things to be covered by their employer in their benefits packages, going forward and help with not only the fact that they have their their, physical well-being, but also their mental well-being. Any questions at all? Did you guys find this helpful?

Yeah. Let me open it up to the committee to see if there's any questions. Alderman Dunbar?

Yeah. Thank you for the presentation. I do have a couple. If we go back to the 2026 renewal summary, it's like the second or third slide somewhere around there. The PMPM, which I believe is per month per member rate, it seems it's going from a little over $2 to almost $50 a

month. Mhmm.

Is that what how does that factor in, I guess? That's the number that jumped off to me. That's No. I don't know what, like, a 2000% increase, somewhere around there.

Yeah. And that's a great question. So essentially, when you think about it, we carved the pharmacy out of HealthPartners. And if you remember, I said discounting your admin fees, your administrative fees in order to retain those rebates, that $371,000 in savings. So essentially, you have to pay what's called a carve out fee and the actual fees that were being discounted. So that's that $110,000. And that's already been allocated in that particular savings of 371,000.

How set, I guess because the seat when I when I hear rebate and all that, I I kinda for me, I hear that as we hope to get this later. So we're increasing the fee by 2000% to hope to later get a rebate to bring us lower.

So think

Or how does that like, what's the guarantee, I guess, on that?

Yep. The guarantee is at the $371,000. Essentially, you're paying about $80,000 more to get 371,000 in savings.

Okay.

To put that in terms. So if you look at slide six, I believe it is, where it has the pharmacy analysis on it slide eight, excuse me. Okay. You'll see on the bottom in the middle there, it had oops. Sorry.

Right in the middle where it has the parenthesis of the 300 and 71159.

Okay.

That's the actual savings. So in order for you to to get that savings, you have to move to the chassis, which is National Rx Pharmacy. And to do that, health partners, right, is losing money. Think of it that way. Plain and simple. Because they're no longer keeping all of that money from your pharmacy claims. Okay. But, again, $371,000 savings for the 80, you know, eight that $80,000 still makes a lot of sense. And then going forward, it becomes very transparent. It goes back to that normal way of doing things. Paying them to process your claims and being the TPA, and that's it. Good question. Thank you.

No. Thank you. I have one more for somebody else that

have anything else. Yeah. No. You still have the floor.

Okay. And then my last thing, and this is maybe more of a question for you, Eric. We identified, right, our top 13 spenders. We also identified seven people that are gonna be getting a drop in their in what's gonna be covered by them. I guess due to the fact that we've identified 13 people cost us the most money and we're now dropping the benefits of seven, if there's crossover there, are we opening ourselves up to any sort of an issue legally with, hey. They said I cost the city the most money, and now my coverage is being dropped. Is there any legal issue with that? And, again, it's just kinda something that came across my my my mind.

I'm not sure it's a one to one anyway.

No. It's and that's not exactly that's not exactly what

I heard. Mhmm. If you wanna

No. I didn't either. I just heard there's 13 here and seven potentially are losing benefits. And I was just worried if there is a crossover, what is the legal stance that someone could take of saying they identified me as being costing the city more and now they're dropping my benefits. And when we're saying only seven people are losing their benefits, don't know. It's It's not

a loss of benefits. A loss of prescription a benefit in the prescription plan. Like the inhaler. A specific piece of the prescription.

I get that. But again, if that inhaler is something that is part of the reason someone has a million dollar claim, and now we say, you don't get that anymore, I just want to make sure that the city can't be looked at as we targeted them.

Jesse? So

the disruption means that the specific inhaler that they're on will not be covered.

There will

be a comparable inhaler, and they won't.

Perfect. I just wanna make sure there wasn't any weird open, you know

There's there's not gonna be a situation where any of our members won't get the drugs that they need. It'll just be having to get a new prescription perhaps for a

A different name brand,

a personal name.

Yes. Perfect.

Perfect. And and just generally for your,

you know, edification because I think this is where you're going with this. An employer has a right to to change plans if it's more economically beneficial or accountable. Absolutely. So it wouldn't be considered targeted at all, especially when you're showing this in savings. I mean, I can't even imagine a claim that would kind of get there. So I think we're safe.

And to clarify, those seven people don't tie to anything with the high cost claims like.

Just

to clarify for that record.

That's all

I have.

Any other questions? Just a couple. So when we take a look at and I think you hit on it a little bit when you were talking about with the new stuff with the transplant coverage and the gene and cell therapy riders. If we take a look at some of the year over years and then did we take a look at the high claims and kind of pull them out of the plan to see how healthy the plan is if we didn't have those claims? Because obviously those are some anomalies in the plan.

So because we didn't have I mean we had one high claim in 2024 I mean ultra high claim in 2024 and then we had a quite a few in 2025. Do we kind of pull those out to see if we didn't have those how healthy the plan looked comparative? So

ironically, I just went through this exercise earlier today. And so what I did was sort of recalculated what I call the renewal calculation and identifying and and looking at if in fact I were to at just pull out the transplant folks from '23 and '24 and the transplant and the preemie from '25. '5 and yeah. Just year to date '25, which is 2024 and '5 data. And I redid this whole entire calculation.

And I also made one other very key adjustment because, essentially, when we think about this claims cost, that claims cost I talked about, the 3,400,000.0, that we're projecting for 2026 and it's at 11%, that would really only adjust by the $100,000 in the specific because we already take the reduction of all of those claims that went over the specific of $100,000 We take those out of the calculation calculation already. Already. So with that being said, it really would get you a little bit of a reduction probably to about 3% of the claims cost, right? Because we would remove, let's say, 350,000 on average for those two blended years from the specifics, that $100,000 level that those folks hit. If we remove them, if they weren't on your plan and then the key up to that also would be the specific that top line where you see 841,000 up to that $1,000,000 premium for projected.

That obviously wouldn't have as large of an increase both in '24 and '25, right, if you didn't have those higher members. Because remember, we talked about the stop loss carriers are reimbursing in the city one point eight and one point four. So with both of those reductions taken into play in sort of a model, Going back down to the bottom, that bottom number goes from a 16% to about a 7%.

Which is kind of in line with what you're seeing across the market trends of what the cost increases are.

Correct.

Okay.

So removing them, again, I think that the good news is had you been or if your population was smaller, even if you cut this in half, that 16 would probably be more like 32. Right? Mhmm. So you've got enough folks on valleys on the plan that you're spreading that risk in a in a better manner.

Okay. So the recommendation and maybe we don't know completely yet because we don't have the stop loss in completely. But as projected, we'd be looking at a 16% increase recommendation coming from HR at this point. Perhaps.

Hard to know without the stock loss.

And when do we anticipate that in October?

When do you think

the stock

Yes. Loss

we're looking to try and firm early for you this year with the August data. Unfortunately, you know, again, we were hoping July would look better than it did. So we we might have to wait for that October time frame, but it could be as early as the September.

Okay. Yeah. I I mean, our data is all great, I'm sure they're not eager to climb aboard.

Yeah. We're not really ready with recommendation yet this month. Okay. This is really just informational. Sure.

I'm not

looking for any kind of action or motions today.

Okay. I'm sure the finance guru back there is looking for a little number to plug in. Okay. Alright. Any other questions from the committee? Otherwise, anything else, Jesse or Eric?

That's all I had. Thank you.

Okay. Thank you, Sarah.

Absolutely.

Then without taking any action on this, unless there's anything else for the good of the committee, look for a motion to adjourn. So

moved. Second.

Alright. We are adjourned. Thank you. Yeah.