City Council - Regular Meeting

All right, everybody. We're going to start here in about 45 seconds. Not listening. Rod, they've been there. We're going to start in 45 seconds. That's all right. I just wanted to let you know that's all the ruler. Rod die, please come to the

I'm sure. I don't doubt you. Okay, 15 seconds.

Okay, that was nice.

Okay, good afternoon everybody. Welcome to the Northlad City Council work session here on Thursday, January 22nd, 2026 at 3:30 p.m. here in the council chambers. Of course, calling the meeting officially to order. I don't have anybody to do a roll call. Okay, go ahead. Do the roll call, please. Here. Yes. BS here. Lucas. Lucas here. Flanders breaker here. Avenue here.

Thank you. The current copy of the open meetings act of state Nebraska is posted on the wall at the back of the council chambers. Just want to remind everyone that no formal vote or action will be taken at this meeting. I repeat, no formal vote or action will be taken at this meeting. Our discussion today is on the health insurance plan performance and renewal. And one of these two guys over there looking at their computing devices is probably going to start this. So, whichever one of you is going to start, please approach the microphone. Make sure it's on, please. Little red light and have your conversation or start your presentation. Excuse me. Do we need to identify ourselves? Yes, please. Tanner Hub International. You know my home address?

No, I know where you live. Is that mic on? It's It's red. Red light. Okay, good. Yep, it's on. Thank you. Okay. Please try to stay in front of the mic as much as possible. You don't have to breathe into it, but please try to stay in front of it as much as possible. You don't want to breathe it. No, preferably not. Probably not. Yeah.

Good afternoon, gentlemen. I know everybody's super excited to talk about health insurance. It's so much fun. But, um, Spencer and I are here to just run through, I mean, kind of year-to- date performance with the switching to a new TPA last year from going from Meritain and Etna to First Choice Health in the M&A network. And then another thing we did this year is we looked at different PBM results because now that we switched TPA it's like hey should we look at different PBMs which right now we use Mellin which is a version of prime express scripts in the background. So we have some data to go over there. So Spencer has some data on the plan. Um one thing I guess is on the plan performance we are in a good place. The city is actually running at a slightly decreased trend. So I mean for this year is pretty amazing. If you talk to folks in our world that have been doing health insurance right now, this was probably the worst renewal season that anyone can ever remember. So small groups across the nation here in Nebraska on average saw 30 to 60% increase on their health insurance this year. Large groups like the city, so self-insured groups on average, you look at this data, the average increase runs 3 to 5%. This year they ran 9 to 15%. So a lot of that is I mean there we're seeing a lot of sick people. So you also have a factor of a couple things. People delayed treatment because of COVID. We have much more chronic conditions. Treatment costs more now. So I mean that's driving a lot of things. So you're you're seeing groups in in self-insured place like yours. So the city has reinsurance stop-loss insurance. So once a employee hits x amount of dollars, the city gets reimbured for any claims after that. Um I had personally a client that had is self-insured similar size to the city with employees maybe a little smaller. They had no employees hit spec. So they

had no employees get stop-loss. They still had an 18% or 19% increase on their stop-loss insurance this year. So I mean a lot of that is the stop-loss companies are paying for the million- dollar claims and they're losing a lot of money. So the rates just going up. So I mean overall great news. I mean the data is trending nicely. The we can't really compare I guess dollar for dollar. I mean the city this year in eight months spent less in the last eight months last year but that's not really a fair comparison because there was different treatments, different diagnosises, different codes. So Spencer's got some data on percentage of Medicare. So which actually the nice thing about Medicare the way it tracks is it it tracks with inflation. So plans kind of benchmark I mean in the background percentage of Medicare. So, um, a lot of plans and you get into reference based pricing, but we don't it's hard to explain, but the the average plan Medicare pays $100, right? The average plan will the hospital doctor will bill the standard society 600% of Medicare. And so, that's why you see this big huge bill come in when you first go to the doctor or the hospital and then comes back down. And typically the plan's going to pay 250 to 300% of Medicare. So the data we showed the insurance committee before is this year we're running at 186% of Medicare. So far since we switched to First Choice Health. When Spencer pulled up the data for the last five five years we were with Etna

five years you ran 224% of Medicica or Medicare. So we're actually running at a lower percentage. So we're spending less. So, I mean, so some great results. So, I mean, things are working. I mean, the the move to First Choice Health, I mean, it appears to be helping. We just don't have enough data to say, hey, it 100% saved us half a million dollars this year because we moved to First Choice Health because we don't have that exact data set. So, I mean, that's the the kind of high points there. So, um, questions on all that spiel on the state of the market and kind of how we got here.

Maybe just to back up some information I'd shared that ties to what he was saying in the Nebraska bankers group that we and most Nebraska banks are part of, we didn't have 15 or 20%. They just did 9 or 10% twice during the last year. So, I think that's about the same. But to your to your point, we're hearing across the board 20%'s not uncommon at all. And so that's that's I can tell you some real data from our end, too. Right there. That's a rough year. Yeah. And you don't get to just raise your rates 20%. Just because health insurance goes up. Yeah. And health insurance to most companies is a top five expense. I mean, so it moves the needle. So, which is unfortunate. And

I guess what I get out of this is that the elector the electors need to elect older people.

We're on Medicare. I mean it there there is some relief on plans when folks move off the plan and go to Medicare. So there I mean I we we do have some classes that we do across the country. I know for other clients of explaining Medicare because Medicare is super confusing and why Medicare might be the better choice than staying on the employer's plan because people continue to work past 65. So yeah, but Medicare isn't free. I mean, you still have to pay for that. So it's not nothing's free. That's what I think there's kind of a mindset is like, oh, I'm going to turn 65 and I don't have to pay anything for health insurance. That's not how it works. So, and in some situations because I've ran numbers for folks and sat down with them, Medicare costs them more than on their employer's plan. So, some of them keep working, which is fine. I mean, that's if you're on a plan that's self-insured, you have that right. So, I mean, you have the right if if it's even a small plan, but the way it works on reimbursements is a little wonky. So,

you already pull up your reports. Yeah. Did you want I mean Spencer can pull up the reports. Do you got those? Yeah. Well, I've got I was actually I was going to kind of back you up on a couple of points. I um I thought you guys might find it of interest. I know everybody else finds all of what we're talking about super interesting. By the way, sorry I know I didn't introduce Spencer Thomas app to health. Um I can give you my home address if you would like. I know you don't know where I live. Um so I actually um if the No, we're not on yet. Give it a second to see. Yeah, they were using them before.

Um, I was just going to actually show you a couple of things that you guys might find. Oh, perfect. Okay. Um, I'll show you a couple of things that you might find of interest just from a national perspective because healthcare, you know, is a really large topic that's being discussed right now nationally. We didn't talk about this in the last meeting, but I just thought some of Tanner's comments, you know, I thought were of interest. So, if you look, this is actually data by the largest reinsur.

You want me to try my clicker? Just kidding. There it is. The other one's turned off, which is fine. You guys can see this. Nope. There we go. Nope. Okay. Okay.

Um, that graph in the bottom right hand corner, I know it's probably hard to see, but you can clearly see the line that's kind of taking place. This is the number of stop-loss frequency that one of the largest reinsurance carriers in the country that they're facing. You can kind of see the graph and and how much that's shooting up. Um something in this report that there's two more things that I want to just highlight is you know again you know sometimes people kind of point out and I like the graph it's the kind of the the bubble graph. Uh the pink represents cancer. Um so what is the largest claims that stop-loss can carriers continue to see what is driving and what is changing? You can see down at the bottom that some conditions have moved down or they've moved up. What's interesting to me is that still in this country for the last four years, what is driving up our claims costs, the pink is uh neoplasms or cancers. The green is cardiovascular diseases. Purple is muscoskeleletal and number four is digestive diseases. So the top four conditions in this country that continue to be chronic ongoing claims, those are the top four and they haven't changed for four years. And actually the four years prior to that, I don't think that those have changed much either. Um but just kind of give you some interesting number five. This is kind of again what you might find of interest that dark blue bubble. Um that one is a respiratory disorder which would probably fall into the era of COVID. So even during COVID what's kind of interest during CO still didn't beat cancer in terms of overall uh cost uh to the country in in the form of you know large stop-loss claims and those kinds of things. Um but and this is again I I don't mean to to kind of dive into the bad news. Um, but something that this report showed that I thought was really kind of sad is the percentage of overall million-doll plus claims by age group. So, the age group that is causing the largest million-doll claims, you can kind of see it. You want to take a guess at what age group that is, sub 10 years old. So, actually, the the individual who we're most worried about causing a million- dollar claim is not a

65y old, it's somebody under the age of 10. Um, and those are typically answer. Yeah. What was the age group? I missed it.

Uh under age of 10. So 10 and under see about 38 and a half of all million dollar plus claims. 38 and a half% of those are under the age of 10 nationally. Again, this is just national statistics. This is not anything with the city of North Plat. This is just national data, just stuff that you guys might find of interest. So anyways, um just when Tanner was kind of talking about that, this report kind of came up and I I just thought it was of interest. So where that lands for the for the city is is where are we at from an overall perspective? And and Tanner already mentioned this. Um again, I'm hoping you guys can can see this. The box in the top right corner. The reason that I want to bench you against Medicare is for a couple of reasons. Um discounts are often times uh a difficult elusive game in our industry. Um you know, it does and and and everybody will do it. Um so I try to stay away from percentage off discounts um and actually look at what as a percentage of Medicare did we pay. So there's an actual benchmark in that data. The other thing that's nice about it is it allows us to kind of cut across years. So we can actually take a look at overall performance of the plan um across years because Medicare rates are adjusted annually uh with inflation and overall cost. So you can actually go back to 2019 and compare your Medicare costs even going all the way back to 2019. So the data set that you're looking at right now is from December of 2019 through March 31st of 2025, which is right when we cut off and moved from Etna to First Choice Health. And as an overall perspective, the city of Northplat was paying on average over that six years, you were paying 227% on average of Medicare across all of your procedures across the entire book of business. So that's claims going to Denver, claims going to Omaha, claims staying here. You were paying overall 227% of Medicare. Um now specifically hospital claims again all hospital claims that was 311% that you were paying on average. So set another way you are typically paying during this time a little over twice what Medicare

would pay for that same given procedure or at a hospital setting three times that amount. Again to Tanner's point um you know from a national perspective we're seeing on average about 250 to 300% of Medicare is is about the average. um some bright spot and I think some good news to share is that um if I do if I switch this and we go to where we've been for the last eight months now I want to be super clear this is eight months worth of data um and so you know take it for what it is you're comparing six years of data to eight months of data but I'm really happy with what we're seeing so with the switch we're now going from 227% of Medicare we're going to 184% of Medicare so we can pretty conclusively say at least for the eight months that we have so far, regardless of the cocktail of claims that the city has incurred, uh regardless of where they're going, we are paying lower dollar amount today for a given medical procedure than we were previously. Um hospital was about 224% from an overall perspective. So, um I think that that bodess really well for where the city is from an overall perspective. Again, maintaining good benefits for the for the city employees um while also managing those costs. Um, any questions on any of that?

I know that this is all super riveting. Um, we try to make it exciting at least somewhat. Spencer, on the not get into big political discussion with vaccinations or anything, but what's the the 10 years and under? What's going on there? That is a deeply political discussion that I I'm I'm totally joking. No, no. I mean, I honestly um I it's NICU claims. Um, anytime we have a situation come up where we have a premature baby and we know that there it's there in the NICU, we know that that's going to easily be a million- dollar claim. Average fight over easily.

So, so the nick the NICU issues are rising at a have risen significantly postco I can tell you for a fact there and a lot of it has to do with drugs. Oh, okay. So,

interesting. pre preeies like that's if there's ever a time when my heart skips a beat is when I find out we have a preeie because it's expensive. Now again not to speak again um as a father of five I I want to be you know um the nice thing about a preeie is that it's typically one and done from the city's perspective looking at it from your perspective and your financial perspective it's typically one and done. There's no lasers that are typically associated with it because you know you unless the mom's in a high risk the carrier might have an inkling and may laser for something. Um but typically you're not experiencing a laser because of you know that happens goes away and you move on.

Oh thank you.

So it's a good question. Um so so we're really pleased from that perspective. Um I know one other question that I you know I think and Tanner and I spent quite a bit of time on this um is is the pharmacy side um andy's being talked about a lot um for a number of different reasons. Um we'll talk about you know dispensing fees. We'll talk about um just overall PBM management. Um so what we did is here I'll actually I'll pull it up this way. Um and I know that this data is really really tiny but um you know again um happy to kind of you know zoom in and kind of go through a couple things. So, we took the city out and we did a a full market shop with a number of different PBMs. Um, KPPP is is Kroger. Um, they're actually a really great PBM we're use. We're actually using them more and more. Um, we think they're a pretty terrific PBM. Um, we did take a look at um Ventegra, which is the same PBM that the hospital uses. Um, had a number of great conversations with Ventegra. CVS Caremark. Um, and then, um, you'll see like KP Carveout, you'll you'll see a couple. Every PBM offers v a little bit of a difference in their network and basically what they're doing is they're tweaking the formulary, the medications that your members can have access to. So when you see PBM carveout, they're limiting some drugs. Um the national co-op we went to um we've got the big ones that you'd be familiar with. We went to CVS, we went to Optum to Express Scripts, ESI um and then you know there's a few other Mellan contracts, Prime um that we all went to. And what we found um interestingly enough is that basically all of the PBMs from a total ingredient cost like actually I'll show you down at the bottom. Um here I'll I'll scroll up. Um so down at the bottom is basically where the PBM thought they would come in relative to where you're at today. Um so uh Kroger basically said, "Yeah, we actually think we would perform worse. Uh we would, you know, we would actually cost the city $3,500 more to use our platform." Uh, Ventegra, interestingly

enough, we actually got reporting directly from Ventegra. They actually self-disclosed that they thought they would cost the city more dollars. Um, our platform based on their performance guarantees, we thought they would be at about a $22,000 savings. Um, uh, and then the rest of them, you know, were basically at about 9 $3,000 differences. Basically, in said another way, even all of these PBMs came back and they said, "We don't think that we could really match or do any better than where the city is at right now from an overall performance perspective." And sir, yes, sir. PDM,

uh, PBM is a pharmacy benefit manager. Um, they are the ones. So, the city of Northplint has contracted with First Choice Health to be your medical administrator, and right now you're contracted with Prime Therapeutics to actually administer your pharmacy benefits. You bet. Um, so a few interesting points on this. Um, I'll actually kind of show you. So this is all benching performance guarantees. So all of these PBM say, "Hey, we think we're going to perform here, here, and here." And actually, I'll show you what I mean by all of this. And again, I know we're getting into some nitty-gritty data, but uh, I enjoy it. And hopefully maybe you guys might enjoy it. Um, it'll make more sense when NBC is talking about the rising cost of healthcare in this country. You'll be like, "Oh, I actually I know what they're talking about." Um, so each PBM has different metrics that they're trying to meet. Specialty, retail brand 30, retail generic 30, retail brand 90, all these different categories. They're basically making a guarantee to the city saying we will perform at X level and this is the kind of savings that we can achieve. Um, what you have to keep in mind is is that the city and actually let me change the time parameter. um when you when you look at how Prime has actually operated. So we're comparing performance guarantees to actual how uh Mellin is performing um from an overall perspective. Mellin is actually outperforming their contract by $21,000. So you know again nothing to I mean on a $6 million claim spend I'm not telling you that that's like lights out but not only is Mellin performing the way that they are but they're actually beating their performance guarantees by an additional $21,000. One other thing that we found of interest in our in our um what we were looking at is rebates are another really big part of this equation. It's a really big part of the discussion. Um and so when we looked at the rebates and actually we got a rebate report back from Ventegra, which was one of the ones we were taking a strong look at. Now, let me pause for a second. When you go to Best Buy and you want to

buy a TV, how does LG get you to buy their TV over the exact same Samsung competitor? How does LG get you to buy their TV? Rebate.

Rebate. Hey, I'll give you 100 bucks if you buy my TV over my competitor. I'll give you 100 bucks. Ironically, the pharmaceutical industry works the exact same way. Um, and those rebates are oftentimes retained by the PBM as an additional source of revenue. It's a it's a really dark, sinister game in my opinion. Um, and actually as a side note, I think I've mentioned this before, but just as a reiteration, if you actually listen during the CO era, um, when the CEO of Milin, who's the manufacturer of the EpiPen, was on Capitol Hill testifying getting grilled by everybody on Congress, one of the things, if you actually listen to what he was saying, um, it was funny to me is he basically said that the actual manufacturer of the EpiPen not making a dime more than they were previous to the pandemic. But if you listen to what he said, he goes, "The reason that the EpiPen now costs $600 versus $200 is because of rebates." And those rebates are often retained as an additional source of revenue for the PBM or the insurance company, whoever it may be. So, because you're self-funded and because you're unbundled in the way that you are, rebates are passed back to the city of Northplat. Now, we're going to take this one step further because we actually have discovered that PBMs again still get their hands caught in the cookie jar and they take portions of those rebates before they actually make it back to the client. So, what we do is we have a direct arrangement with your GO. Again, using a lot of words, but basically we have a direct arrangement with the people who cut the check for the rebates. So, the city of Northplat right now is on track to have about $270,000 coming back to the city um in the form of rebates. That's over a quarter of a million dollars in a year that you're getting on rebates that come back. And that just goes back into, you know, the health plan fund. And that's something that Lane and I as we're going through and and determining budgets, we actually use that to offset in any type of increase. What I thought was of interest um is when we were looking at Ventera in particular, Ventera's their own estimate for rebates for the city was about $140,000. So, I think that's really good proof

positive that the rebate contracts that we have you on are not just a little bit better, they are substantially better. Um, and again, I I want to be let me make a very clear point. I don't think that that's because Vente is doing anything wrong. Um, I think it's because we're cutting out yet another middleman and actually filing those rebates directly on behalf of the city and doing it directly. And so, we are cutting out in essence another middleman in doing that. So, questions. There is one there was one outlier that was I guess I should bring it up closer to the mic. So of everybody that came in everybody was almost a wash or a little higher like we talked about except one outlier was Leinity which is formerly known as Southern Scripts. Levinity was is projecting to cut the city's script spin in half. So part of this process as we did the PBM process is I actually talked to a couple of the localarmacies because I wanted to know hey who who do you work with? How's how's the plan performing? I mean benchmarking etc. So the one thing we found right away is Levvenity Southern Scripts I mean none of the localarmacies really run more than a handful like less than a dozen scripts a year. So we don't know how the plan actually pays because what this all shows on paper and what the pharmacy get paid are two different things because the pharmacy has to contract do different things etc. So we brought we brought this up to the insurance committee earlier just be I mean because it is a potential savings but it's I mean it's potential it's not Oh shut off again. I didn't touch it so I promise I didn't do anything but um yeah so I mean it is it's one of those things that we were discussing with the insurance committee before and I mean it is it is a potential savings the insurance committee also had in the discussion before we had this meeting we talked about hey how did the I mean we switched

went through a big change last year I mean we had some bumps I mean everybody had to update doctors etc so I mean the general consensus is they don't really want to change anything again this year. So, unless I mean it potentially could come, but I mean for the savings I mean the general consensus was I don't we don't know what the guarantees could be. I mean Leinity could say, "Hey, we guarantee we're going to save you $300,000, but in year two they can completely change the contract and wipe the guarantee and then you pay twice as much as we paid before and then we have to move PBMs again." So, I mean that that's one thing on the on the actual reporting that Levvenity came in. I mean, we ran the data set multiple times and they came in way better than everybody else. I mean, as a front leader and if you look at the the data on the dispensing fees, which is what I mean that gets paid at the pharmacy on top of what percentage they get. I mean, Levvenity had the highest dispensing fee of everybody on on the the sheet and the percentages were more favorable for theies. So, I mean,

if I could real quick, that's something that because we had a couple of the localarmacies that um turned down some of our large prescriptions because they're losing money on them and so they said go to someone else. And so, we had some discussion as far as the dispensing fee today is if would it make more sense if we as our if our plan pages a little bit higher on the dispensing fee to maybe help so we didn't have people having to maybe have some prescriptions at one pharmacy and some at another. So, it's something we're talking about, but that that's a different piece, but I think it's important for the council to know that that is a piece of the whole

Yeah. So, talking to one pharmacist, the they filled 1300 scripts for the city of North Plat last year in just their pharmacy and they lost $200 overall. So, and then depending on the fill, like the contract right now with Mellin has a $50 dispensing fee for brand. They get zero dispensing fee on generic. So, or 50 cents, sorry, excuse me. Sorry about that. But um they wouldn't be concerned about it if you

Yeah. Sorry. 50. So I mean when you think about it, the dispensing fee is essentially the thought of it is supposed to pay for like their overhead, the pill, the bottle, the label. I mean we all understand that a plastic bottle probably is going to cost I mean it doesn't cost zero and 50 cents isn't going to really cut much of that plus the time to fill all the stuff that goes into it. So what you're seeing in talking to the pharmacists is some plans I mean Medicare and Medicaid now are paying in the state and this is state negotiated. Nebraska does this. The dispensing fee is $10 for those programs to the pharmacies. So I mean I know that in other plans in town the dispensing fee is pushing that $10 mark. I mean, and I know talking to the pharmacies, they they're trying to negotiate the dispensing fee because what what you have is if the dispensing fee goes up, they could potentially not have a net loss and have some sort of a profit. I mean, and it's not really a profit. They just didn't lose money, but they they have something to pay employees cost, etc. is the way it was explained to me. It's super I mean, it's super interesting when you really get into it because their side's completely different than what we see on our side. So I mean the dispensing fee is different on each drug and it changes all the time because the PBM basically has a contract in place that they deal with theies completely different way than what the plan says it's going to pay. So I mean PBM's I mean right now I mean it's one of the topics in every state legislature on how to fix this make it more transparent to try to have some sort of control. So because everybody agrees the cost of I mean the cost of prescriptions is just out of control. So and it it has been for a few years now. I mean some I mean some states are suing like some states themselves are suing PBMs. So what um many PBMs have been doing for years is they

they charge the plan this but they pay the pharmacy a much smaller number. And that's and the differential is how they make is one of the ways they make money. And like um he said with the the rebates is another way they make money. They keep 100% of the rebates. And so what happens is it pushes your localarmacies out of business or towards out of business because they can't make any money. And that's in essence what the localarmacies have been saying with the existing city plan. And and the numbers show I mean they have the data to prove it.

Yeah. And the fact is that what what they'll do is they'll just stop taking the city plan at some point because they'll lose money on so many of the things. That's the that's the issue for us really from that perspective for the employee mail mail order or how would they get prescriptions or they go to big box stores the big box you go to the big box stores they'll lose money on the scriptions because they know if they get you in the door you're going to buy I mean okay lane just said everybody when they go to the the pharmacy to buy candy bar and pop right you get your candy bar and pop at the counter So I did somebody have a question? Go ahead.

Just I just want to summarize that back and make sure I understand. So when you shop what our spend would be, it looked like it was generally in line with all the other options. But but the localies there's still too much cut out of the middle to what they're receiving.

The the local pharmacy like in some of those ones because I've got a printed version if somebody wants to actually see it. But um it it is I mean Mellin pays better than Optive does. I mean, so I mean there there's worse ones on the list. I mean, there's really there was no really I mean, if great options for the pharmacy from their point to try to make some sort of profit and I mean the so a couple things came up in the review committee that Spencer and I kind of talked about is we're going to go to Mellin, the current PBM, and ask is there a way to change the dispensing fee for certainies or just for the plant? What's the cost difference? Because if you for example take a zero dispensing fee on 1300 scripts and we change that to $10, it's $13,000, right? So I mean on $5 million that's not really moving the needle and we're helping a local business. So I mean but it doesn't have to be $10. It's just it's do we move it up or not move it?

Because that's one pharma statement. What's our to what's the total script for the whole city plan? Do you know what that number is? I bet you pull somewhere because that's the whole thing is we're we're looking into it and then we're going to run the data to see what the impact is on the plan. I mean because some of the I mean to be completely honest some of the committee I mean thought it was a fair idea. Some thought hey that that's how they do business. They got to figure out how to make money which is a fair I mean I can see it both sides. You're not very close to microphone Tanner. Sorry. I'll switch

I'll switch sides. So, but but I mean, so I I can see both sides, but I also know I mean we are a small growing town. We want to make sure we take care of our local businesses. I mean, everybody can go buy a vehicle at Woodhouse. I mean, that's your choice, but I'd rather spend personally spend my money in town because the local dealerships are sponsoring stuffs in town versus Woodhouse. I'm glad to hear you say that. Quick question. Who owns Mellin? Right. Melanas. So they just merged with Prime Therapeutics. So it is now it they do go by Prime, right? And who owns Prime Therapeutics? Um my understanding is that Prime Therapeutics is is their own.

It's owned by Blue Cross and Blue Shield. It's it's part part ownership. Yeah. Yeah. They're all they're I mean they all have some sort of Yeah. My my point is is all these most all these companies these PBMs are owned in one form or another by the major insurance companies I have a

or the major drug makers they have a stake in it so the big three that's commonly referred to so CVS is owned Etna well actually ironically CVS owns Etna um Optum is owned and a subsidiary of United Health Group ESI Express Scripts is owned and operated by Sigma Prime Therapeutics um is owned in part by the Blues now you got to keep in mind the blues are not like one it it's not like an ETNO or a United uh and I believe they have it is a minority stake so the blues do have a minority stake within within prime what is of interest though when they did when they did merge together the entire sweet seauite from Mellin is actually the leadership team of all of prime therapeutics so the CEO of Mellin actually took over Prime therapeutics which we felt pretty good about because we have a good relationship there um so we felt pretty comfortable with that but yeah the blue does have some level of influence

that's but back to Brandon's point is pharmacy world is one of the only worlds that the middleman makes the biggest slice by substantial amounts. So I mean it's it's a it's a unique system and there I don't no they're they're also that world is probably the number one lobbyist in the government so that magically that happens somehow. Yeah. So what's the the time frame of data that you've been comparisoning? Is that the they've been comparing? Is that the eight months of data or is that years of data? So when we sent over on the PBM side, uh we sent over 12 months worth of data. 12.

Yep. And it was the same data set for each one on that one. So yeah, everybody got the same. So it's the last 12 months where our spend for eight of it anyway has been lower. Um the overall healthcare spend has been lower. Your your medical has been lower. um pharmacy state about has told about current. Okay. Um and I'm I'm going to grab you the total number of scripts. I just got to run a quick report. Um and I'll be able to grab you the total number of scripts.

So, but but back to that I mean back to the whole I mean the whole part of the process is we're just trying to figure out what options we have as the plan and what the impact could be the plan on I mean we Spencer's already sent a note to Mellin to find out hey is this possible? Can we do a different dispensing fee specifically for a set ofies? Because I mean there's somearmacies in town that don't need to make an extra $10 or $5 because they're making plenty, right? The big box stores versus helping. But I mean, if they say, "Hey, you just have to do it all." Hey, what's the impact for doing it all? So I mean on the report the if I passed around the dispensing fee if you look at the report the one that had the highest dispensing fee was leinity the southern ships the lowest option at 95 cents the rest of them were averaging at 20 to 30 cents for per fill for dispensing fee. So

answer your question, total all overall claim count for the last rolling 12, $5,132 prescriptions filled. So $10 a pop, that's what 50ome,000 dollars if we Yeah. $10. Oh, sorry. Yeah. 10 $10. Sorry. Yeah. If if you would go to $10, but like we talked about, that's just I mean that's the number they just brought up that that hey, this is what Medicare and Medicaid are paying. So I mean which 55 cents a pop, we're at $2,700 right now. And that would be a big change if we had to go to the 10. Yeah. Well, but we want to try to get Mellin to pay for it, right? Isn't that the idea? If you can.

So, this goes back to and just kind of backing up something that the mayor said. Um, so, not to get too far into the weeds, there's a lot of the pharmacy game is is really convoluted and I think it's meant to be that way. So, you have a couple of different things. Um, the city right now is on a pass through contract. So, some ways that PBMs try to make money is through what's called spread pricing. This is what the mayor was referencing. So basically there is what they paid the pharmacy versus what the city actually paid for that same medication and sometimes there's what's called a spread there. Um the city is on a transparent pass through contract. So Mellin is required whatever they paid the pharmacy is what they're required to charge the city of Northwest. So there's no spread there. However, um, one of the other challenges that's introduced is unfortunately the pharmacy is acquiring that same product for their own price and there's sometimes a spread between what they acquired that medication for versus what they're being reimbursed by Mellin. So, and then that's with any pharmacy. It's what they're it's more of a reimbursement. The PBM is reimbursing the pharmacy and sometimes there's a that's where they can also lose money because what they acquired the medication for is not what they're being reimbursed for as well. Um the dispensing fee, what we're talking about is how much are we going to pay you, okay,

for the for the pill bottle. So that's straight from our plan to them. Okay. Yeah. It's a it's a straight pass through which if we change and this got brought up in the committee earlier, it was brought up is if we change that technically it doesn't change anything to the employee because it's just on the back end. I mean if it's $10 copay, it's still a $10 copay.

I mean if they decide that, hey, they want to pay generic out of pocket because it's $3. I mean, it could impact him at that point because it's going to change that piece. But from a from a copay perspective, if you choose the co-ay, it won't impact anything. But yeah, it is it but the way the plan's set up, it's yeah, it's 100% passed through the city. So, I mean, what we what we talked about earlier is we're going to run the data points, right? I we also talked about if we don't want to look at change I mean we can run this data set again next year super simple and we can really push through it again I also offered I mean like I said the localarmacies haven't really had very much experience with liveinity southern scripts um I don't have any groups with them I know we have groups with them somewhere in the country I can get more data if we want to I mean we want to look into it further so I mean it it's it is I mean it's I'm projecting what? 300.

Yeah, it was 300. I Yeah, it's about 300,000. Um, I'll show you here. So, it's at the point where I mean, it's definitely something to probably try to consider if it was a I mean, the other ones, like I said, they're within 100,000 each way up or down of I'm supposed to be on the bike. I'm going to find you every time you step away from that thing and talk. We just need a portable mic for Tanner. That's right. Just make just here. I'll come over and mow your yard. Okay. I've seen how your yards mowed. Just kidding. Tanner and I live about three two houses away from each other.

Spencer, do you guys have other groups in Lein with Leinity?

We do. Um Um So we we do have a couple of groups. Um they're they were formerly known as Southern Scripts. So they were kind of more based in the southern United States. Um um so we we've got a contingent of groups. I would say the the bulk of our groups are uh either with um Prime Therapeutics. Um another big contender is Kroger. We've had some really great success with them. Um they are owned by the the grocery chain store. Um but they're a really good, you know, everything I've seen. Um I think they're a really honest PBM. Um and so we've had good success with Kroger. Um we have also been starting to work with a a a PBM called Servu. Um they seem to be again another nice outfit. Um you know the challenge is though again this this is a game the whole PBM game is buying things in bulk um and being able to get good discounts and be able to pay good prices because at the same time we want to make sure that the city has enough leverage to to actually buy things at a reduced cost and because of the Prime Mellan uh merger. Prime is now the fourth largest pharmacy benefit manager. To put it into perspective, the big three control about 80% of the market. Um, so when I say Prime is now the fourth largest, I think they control like 10 to 15% of the 20% that's remaining. So the big three suck a lot of oxygen out of the room. And part of the big savings also as we look at this, I mean, Leinity also is projecting 350,000 in rebates versus the 200 and some we're having now. I mean, just keep in mind is rebates are I mean kind of fickle because somebody could change meds etc. This is just that same data set. So I mean that is one thing to point out. I mean it's it's definitely a strong option to consider.

Yeah, I I do think it's relevant to say that in because we spend an enormous amount of time analyzing drug spend where I work and also how PBMs work. Um and your PBM savings is directly proportional to the drugs that are being prescribed by the people you're insuring. So, it's very easy for us to experience a better deal this year and have it be different next year. Doesn't mean it necessarily would be worse. Probably it would be if we had a really good year, but it's not probably going to be drastically worse and it's not probably going to be drastically better. They they just tend to to do this. But the one thing that that can really sort of play havoc is um a good example of a recent one is the u the weight loss drugs. Um because I mean a lot of a lot of plans have excluded them or limited the amount you can use them with because so many people started using them and they were so expensive. It was it was almost bankrupting some plans and things like that. So you can have that sort of variability where a product comes out that no one anticipated was coming and the effect it was going to have. But that doesn't happen very often. So, it it's great that we that we did well this year, but my point is don't naturally assume that we're going to do that well again next year because it just depends on how healthy our folks are. That's really what it comes down to.

And actually, to really agree with something that the mayor just said, I want to just point something out to you. So when when you look at the underlying data, so you can kind of tell and I know you can't see on your screen, but each category again, there's a performance guarantee that each PBM is giving you saying, "Hey, in retail brand, I'm going to get you an 18.14% discount." Now Kroger's coming in and saying, "Hey, we're going to get you a 20.25% discount." So Kroger's actually saying, "We're going to be better in retail brand 30. We're going to have a better discount than Mellin is." Now then as you scroll down there's other areas where Mellin is going to outperform Kroger because in each category each PBM has strengths and weaknesses. So to the mayor's point actually taking that one step further your drug cocktail next year may be entirely different than it is this year and it may play to a different PBM's strength. So just because we've looked at one PBM one year doesn't mean that that's going to change all that or there there could be the potential for a large shift in the subsequent years because if the actual cocktail of prescriptions that are being prescribed changes and falls better into that PBM's overall bucket then there's an advantage there. But you know again the the cocktail of medications shifts from year to year. So you want to kind of be slow in making reactionary changes simply because again you could win, you know, you do a a backwards analysis and say, "Oh, we would have won with Kroger. Let's switch to Kroger." But then that next year your cocktail switches and then you just played to Kroger's weaknesses and you kind of hurt yourself.

That makes sense. And it's in part driven because the PBMs are somewhat reactionary to those rebates because that's how they make money. So they change their list of available medications based on the deals they're getting from the drug companies and then that's what that's what creates that variability because if you can't get drug X on this on your insurance you're going to go get drug Y and that's what makes it change. It's a very simple version of it, but that's what and in talking to the hospitals being Fentegra, I mean he said if if we would have had more in this category, our number set would have been completely I mean Roy said the number set would be that Roy Integra said the number set would have been completely different. So I mean it just is how it felt.

One one thing and again um something that's of interest I'll give you a really specific example. One of the things though that I think is important about what the city has is because we actually process your rebates, we know what the rebates are per prescription. Now, most PBMs cannot share what those rebates dollars are because that's a it's a revenue source for them. So, they so again, it's kind of like the coke recipe. They're not going to share on Humumera on whatever drug what that rebate is because it is it's a propri they'll say it's proprietary. So, the city has an advantage because because we actually file those rebates. We know what the rebate dollars are per script. So, let me give you a more specific example. Um, right now, everybody's a little scared of Humumera um because there was biosimilars that came out onto the market and they can actually prescribe biosimilars and they're cheaper. Generally speaking, Humumera runs at about $6,000 per month for Humumera. The biosimilars are roughly $3,500ish dollars. Um, now something interesting and again, uh, I think the mayor will enjoy this. Um what's ironic is there's three biosimilars and all the big three PBM said we're going to exclude hum off our formula can't take hum you have to take a biosimilar so they're going to completely exclude that drug because it's so expensive what they failed to mention is that actually the big three PBMs actually have an ownership stake in the three biosimilars that they're also prescribing so again wonderful system that we work in

here's what's of interest there's no rebates with the biosimilars so the net cost is $3500 what we have found is that with rebates Humera once you net out rebates hum comes out to about $4,000. So now anybody could say, well, hey, the biosimilar is still $500 less expensive net, even with rebates, it's about $500 less. So we should go with the biosimilar. The only reason that you don't want to exclude something like that is because if somebody can't tolerate the bioimilar and they can't take him because you've excluded it, the only other alternative drug to that is a drug called Stellar. uh and Stellar runs at about $15 to $16,000 per month. You have one person that can't take Humumera or that can't take the biosimilar and you've excluded Humera and then has to go to Stellara, any kind of savings that you just had, you shot yourself in the foot. And so that's why we haven't recommended excluding Humumera because again, the city's not driven off of rebates. You get rebates back at 100%. So when you remove that part of the equation and say, "Look, let's just look at the formula that makes sense." I would rather the city pay an extra $500 for Humumera to prevent somebody from taking possibly a stellar and end up costing the city three times the amount because we've excluded Humera. So again, it's an interesting industry that we work in. I don't know may I don't know if you've seen something similar about

I probably wouldn't see it to that level of detail in my job. So it's interesting. Anybody have any other questions or comments? Go ahead, Ed. Well, I don't I don't know that I understood about 99% of what you said, but I I don't Is there some way that we can make sure that we don't remove our local drugstores from being able to compete in this market? We don't want to drive these people out of business. At least I don't. I don't think anybody does.

And you are seeing smallarmacies across the country close. I mean, and it's not just it's not just your plan. It's I mean, most plans are going to pay in somewhere fashion this way. If you talk to localarmacies, there there's some employers that they won't fill any script store. They're like, "You have to go to the big box store because we can't because the contract is I mean, you you can't make money losing money every time." I understand that. That's my why I brought it up. So, but I mean there is like I said the the negotiating or potentially looking at paying a higher dispensing fee is how some employers are supporting this to get support back to the community. So, how much are we going to have to support them? What what what kind of dollars are we looking

Well, I mean, if if we don't that part I don't know. We just need to we first of all have to find out if it's possible and then find out what I mean what the data set's going to cost. If we like if we went from a 0% dispensing fee to a $10 on the $51,000 scripts, the city would have spent $51,000 last year more. Okay? And on $5 million, you're talking a percent, right? So, but that doesn't mean you have to pay 10. There's other I mean, so it's just first of all, let's figure out if we can do it the way the program's set up. I mean, you should be able to because I've seen others do it, but each each if we do it, we may still end up paying less with the plan that we have even though we're subsidizing the local people. Depending on how the scripts fall that year. Yes. I don't I mean, there's a potential,

if I understand correctly. Yeah. I mean, you're going to pay some way then. And and I don't want to reward Walgreens. I don't want to reward Walmart. I think those are the two biggest ones here in town. Um, but I sure would like to see these little guys keep their doors open. I think if we So, yeah, I think addressing your question, my hope is that we can go to Prime and say, "Hey, can we buy 10 at tax ID number? Can we reimburse you, you know, Westfield, whoever?" Yeah. Yeah.

Pick, you know, pick a fewies and can you up your dispensing fee? I don't, we don't have to do 10. We could do $1,2 up their reimbursement and can you just do that? Um I am working with Prime to see if their system can do that and if they can I think that's a great option. Um worst case scenario they just up the dispensing fee and then you are you are you know giving Walmart, Walgreens, you know they would be getting an extra but the majority of your the majority of your claims are running through the localarmacies. the majority but I don't want to sugar bars are running through the local pharmacies correct

here in town you do have you do have mail order you have spec allp specialy doesn't run through any local pharmacy or Walmart those are all outsourced but a majority of the claims are going to run through the localarmacies even though they're losing money they won't they won't continue to do it forever though that's exactly that's we're we're at the tipping point they're that's why they're negotiating back I I I think that's something we need to look at. I and I if there's any way we can excise the CVS's and the Walgreens and the Walmarts, I say go for it. I mean, they're not playing on a level playing field. They may say they are, but they aren't and we know it. And uh

yeah, we we the Walmarts and and and the Walgreens Lane, we can't even get them to mow their grass. Tanner said he'll do it. Why should we give them a rebate? He's not going to Walmart. He's not going to see Walgreens. No, not Go ahead.

Well, I was just going to say, you know, I've come to the same conclusion with just a little different path. To me, it's about choice. I mean, if if one of the city employees wants to go to Walmart's pharmacy, then they should go to Walmart's pharmacy. and if they want to go to USA and have extra advice or Westfield or people they know and longevity and all that. I I think the key is is that trying to give them as much choice as we can locally. What I what I don't want to see is is the Westfields and USA and all those getting boxed out, you know, to where we to where people lose that choice because as a consumer I never will know Yeah. what kind of a tipping fee or whatever you call it

dispens's going to get compared to Walmart. I mean, I know what the drugs are costing me. That's where I go. And oh, I'm sorry. No, I was just going to say and I think the path you're going to look to see if you can do a Westfield you save solely, you know, see what your plan will provide. I don't know. It's it's kind of a a morality road to walk down to subsidize with taxpayer money a farm. You know what I'm saying? It's an interesting pet topic Pete that we probably talked about Tuesday night, but anyway.

Yeah. No, but I'm saying, you know, to see if the plan itself can sub can work that in as opposed to the city paying for that. You know, that's just kind of a little bit of a path that I mean, the way the plan with with it being completely transparent going to be very difficult to make that happen. I mean, Mellin would have to re adjust contracts possibly, right? Yeah. I mean, well, why don't you guys check it out? Yeah, you guys you're thinking that right. that that's why other PBMs have come into existence is to

to be able to do some of these things that the big ones won't do basically. So we'll we'll see that. So okay go ahead. This isn't the meeting where you're going to talk about our reinsurance. That's probably next month. Is that right? Or have you done any reinsurance shopping yet?

Yeah, actually I'll I'll make I'll make quick work of this. Um we can I just in case I had my spreadsheet pulled up just in case I got asked the question. Um, so we are shopping your reinsurance. Um, you are you I mean your renewal is coming up in April. Um, so you know, again, we shop your group with uh a number of different markets because of the way you're running this year. You can actually see again each column is is a variety of different stop-loss markets. Um, so right now, um, I've got a market coming in, um, right now at about a 7% increase. Um, so again, I would expect Voya because of the way that you run this year, I would expect Voya to compete with that. So again, looking into my crystal ball with how you've run, I would expect that we'll be in the low single digits for a renewal for you and that should be probably sometime in the very near future. So again, kind of going to the point that Tanner brought up at the very beginning of the meeting where everybody else is staring down 20%.

So So 7% on our reinsurance is approximately what $140,000. Uh yeah, about 100,000.

So that's just the fixed cost. and we look at that fixed cost and then we look at where our plan's sitting this year. So hopefully we can keep our our rates pretty steady. One of the things that I I just had um I pulled up a couple again I'll keep this very brief. Again, the city from from a financial perspective has run actually quite well this year. As you look p, you know, at at previous years, you know, you've had, you know, going all the way back to 2019, 29 large claims, 31, 19, 19, 28, 29, and this year you only have 18 large claims. So, you know, knock on wood. Again, you've had kind of a good year from a large claim perspective. What's considered a large claim over specific point? 100,000 is over 100. Was it 110?

110 110. Sorry. So, anything over 55,000. Um, so again, you've seen a a decrease in kind of that that large spike claim.

Um, and you know, to put a reference point on it, the thing that we're going to use with Voya is you've paid Sorry, battery. Um, but you paid out um, you know, about a million dollars in premium um, and had $200,000 in claims. Now, the year prior to that, you paid out $800,000 in premium and had 2.3 million in reimbursements. So, you know, again, um we're going to use that with them. Um and then the last thing I was just going to show you real quick, um is uh how you're running from a PEPM perspective, um per employee per month. Um you're down as a trend perspective. So, this is kind of getting to Lane's question. Your fixed cost may be going up about sevenish percent. Um, I'm going to probably advocate that we probably raise budgets probably one or two%, maybe even 3%. I I know we kind of want to hold that flap. Um, here's what I'll tell you. You know, your trend line right now, looking at a 24-month trend line, it's the far right. Your claims trend are about 14% decrease. So, I just want to be conservative with the budget. You know, we've got um I think about $5 million in reserve. I'd like to continue. The city's done a very good job of being conservative and a good steward of your your overall account. So I think there might be a situation where maybe we can hold flat. Um but the plan's running well. So I think from a budgetary perspective for for you reinsurance will probably be low single digits budgetary what we actually charge the city and then ultimately employee premiums will be zero one maybe 2%. Maybe I should just throw out case

which is really good based on what I told you when we started. That's a very very it is really good to be able to provide to your employees. Always pushing that. So yep. Can you talk to us about um care coordination? I know it's it's just eight months in this year, but how's everything going with the the merger of the new uh the new program and care coordination and just how's things going with all that?

Yeah. Um you know, I I think one of the comments that I made to the insurance committee was you don't um you don't by happen chance get to be in a spot where everybody else is at a 20% increase and the city is looking at zero. that doesn't just come by sleepwalking. Um, so the the care coordinators are pushing things like and I'll just kind of touch on this real quick. Um, this was something that I brought up and of course now I've timed out, but um, you know, uh, I brought up with the insurance committee, you know, um, the care coordinators are pushing things like paid health. Um, paid health just helps with pharmaceutical costs. Uh, over the last four years um, paid health has saved about $1.4 million in manufacturer assistance and other programs. Um, so I'll just show that to you real quick. And what is of interest of that in particular is that over that time horizon, so 1,366,000 that the city has avoided paying pharmaceutical companies in overall costs, members have paid in total over those four years $160 in co-pays. It's pretty phenomenal program that care coordinators are pushing that. Um, and then overall utilization of the care coordinators. Um, I uh I was going to have that report pulled up and I closed it. Um, so shame on me for that one. Um but uh well Ty, I think you're just asking how's the marriage between First Choice and and the care coordinators. Was that kind of what you're asking?

Yeah. And and if and if Lane has any comments from how the employees feel just just an overall state of the union on how that's all gone, I guess.

I mean, there was a few hiccups when we first changed plans. But as far as overall with with the care coordinators and with the plan and everything, I think most people pretty happy with it. Now, you know, we've seen a few people that something that they've had done, maybe it's costing them a little more out of pocket. We still have the same maximum out of pocket. So, in the long run, it's not going to cost more, but you know, for those initial claims, but there's other things that are costing less for some people, too. So, I mean, you know, and that's any plan is going to have that. I think overall, it's it's been a good change. And, you know, the care coordination utilization continues to go up with our employees as we continue to do push our health programs. We're we're pushing this year some smoking sessation programs, hoping that people maybe try that and some other things to continue with the the health of our employee base which hopefully plays into all this as well. So I think overall it's been good.

Ty go into some of the data that we're asking for. So the care coordinators have touched so anybody who's had a claim any any type of medical claim on your plan quantum has had interaction with that member they've engaged 92%. Um, to put some more kind of granular numbers on that, anybody with claims that have the claims over $100,000 in total overall medical claims, Quantum is 100% engaged with anybody over 100,000. They're 91% engaged with anybody between 10,000 and 100,000. And they're 36% engaged with those with sub 10,000. Um, average overall engagements per member. So per employee, they're averaging 8.3 engagements with the care coordinators. That means every single employee averaged is having at least eight and a half conversations with the care coordinators from an overall perspective. So I guess tied to your question, are we using the care coordinators? Yes.

And are we probably using them where we really need them on the high cost claimments? Yes. Um last thing I'll just kind of point out is this screen. And again, I I have no doubt it's probably hard to read on that side. So if you guys want some of these slides, happy to lane, you know, happy to send them over to Lane and share them. um your team they actually Quantum is now so I'm going to pop I'll keep this brief because I know we're out of time. Quantum is now using AI in all the phone calls. So they have an AI bot listening to the phone calls and basically the bot is um taking notes on the phone calls of what's being discussed. So that way the care coordinator's kind of been freed up to really assist the member and then we actually have the data on what's being talked about in those phone calls. Um so on that first column in the green it's network and steerage. So they had 222 calls that they fielded where people were calling about the network. Hey probably I have no doubt we got this new network. What is it about? You know who's a network? All of those things um cost and transparency um prescription savings predetermination point solutions. There were overall 245 interactions on that side. What I really like about where I see Quantum's engagement, it's the third column and it's called solutioning. Um, so that's where they had the most engagement with your employees, which tells me that your population is more advanced with Quantum because they're not talking about what's my deductible, what's my out of pocket. They're calling Quantum and 154 of their discussions were about claims advocacy. Um, 128 were about claims denial assistance. 45 were uh approval barrier resolution, 43 were PBM related barriers, 21 was reduced financial burden, and then 31 was other interventions. And then again on the far right one which is clinical support 443 of those were about authorizations 21 are about medical reconciliation. Um two 21 were about postage start support. So what I see your utilization of of the care coordinators it's more clinical in nature than it is just like what's my

deductible. I and I love to see that. I really feel like the engagement that the city is getting out of quantum is far deeper than superolous superolous items. Not those. So is that far right column is that talk discussions with doctor's offices or hospitals or are those also with employees on that right? So the care coordinators so what makes quantum unique is that they the one phone number that's on your member's card is the same number for providers. Okay.

So the team of 30 care coordinators that your team is calling is the same pod that providers are calling as well. So it's very possible that your member could hang up the phone with one care coordinator and their provider call in and speak to the same care coordinator. Okay, we're a little bit over. Anyone have any other relevant questions? Thank you, gentlemen. We appreciate being here today. Meeting adjourned. Thanks, guys.