Joint Insurance Committee

THE CITY OF OKLAHOMA CITY JOINT INSURANCE COMMITTEE Joanna McSpadden Isaac Locke Jeff Cooper Donna Skidmore Larry Slaff Phil Smith By The City of Oklahoma City Office of the City Clerk at 12:53 pm, Sep 08, 2025 420 W Main Ste 110, Oklahoma City, OK 73102 Basement Conference Room September l0, 2025 8:30 a.m. It is the policy of the City to ensure that communications with participants and members of the pub lic with disab ilities are as effective as communications with others. Anyone with a disab ility who requires an accommodation, a modification of policies or procedures, or an auxiliary aid or service in order to participate in this meeting should contact the ADA Personnel Department Coordinator at 297-2861 or TDD 297-2020 as soon as possible but not later than 48 hours (not including weekends or holidays) before the scheduled meeting. The department will give primary consideration to the choice of auxiliary aid or service requested b y the individual with disab ility. If you need an alternate format of the agenda or any information provided at said meeting, please contact the ADA department coordinator listed ab ove 48 hours prior to the scheduled meeting. B. Discussion and finalize meetng dates for 2026. Proposed Dates: March 4, 2026; June 3, 2026; September 2, 2026; December 2, 2026  AGENDA ITEM II. Approval of June 11, 2025 Minutes  CITY OF OKLAHOMA CITY JOINT INSURANCE COMMITTEE MINUTES June 11, 2025 The Joint Insurance Committee meeting was held on June 11, 2025 at8:30a.m. in the City Municipal Building, 420 W Main, Ste 110 Basement Large Conference Room Those in attendance were: Members Present: Donna Skidmore, Retiree Member Jeff Cooper, FOP Lodge 123 Member Joanna McSpadden, City Manager Designee Phil Smith, Citizen Member Larry Slaff, Citizen Member Members Absent: Isaac Locke, AFSCME Representative Staff Present: Jason Long, Total Rewards Manager Richard Mahoney, Asst Municipal Counselor III Taylor Atherton, Benefits Systems Specialist Lolly Landgraf, Sr. Human Resources Analyst Citizens Present: George Fina I. Call to Order Jason Long, called to order the Joint Insurance Committee Meeting at 8:33 AM II. Approval of Minutes The minutes of the March 5, 2025 meeting were approved with no objection. III. Information From Vendors IV. Information from Employee Benefits Division: Lockton presented performance through December 2024. Review minutes from previous meeting: Montion to approve minutes - Motion approved. Health Plan Performance Overview • Data & Methodology: Review based on claims through March 2025 and full-year 2024 data, with projections influencing 2026 funding; analysis segmented by plan (EPO vs. PPO) and participant status (active vs. retiree). Plan Performance Metrics • Loss Ratios & Utilization Trends: 2025 aggregate loss ratio at 98.4% (higher than typical for Q1); March 2025 showed $9.1M in claims — a record month; costs driven by utilization, not large claims. Membership & Claims Movement • EPO Transition & Claims Growth: Sharp EPO membership increase in Jan 2024 post- HMO transition; March 2025 claims ($9.1M) more than double Dec 2023 ($3.6M); annual claims per enrollee at $20,430. Plan Comparisons (EPO vs PPO) • Loss Ratios & Member Mix: EPO ended 2024 at 77.1% loss ratio; PPO at 120% (due to lagging high-cost claims); retirees favor PPO (476 members vs. 59 in EPO), but PPO underperforms in cost-efficiency. Claims Composition • Medical vs. Pharmacy Split: EPO split stable at 70/30; PPO approaching 50/50 due to increasing specialty pharmacy use, affecting overall cost dynamics. Administrative & Financial Clarifications • Understanding Cost Reporting: Clarified that some data shows only claims costs, while others include full plan cost (admin, rebates, stop loss, etc.); pharmacy rebates help offset administrative expenses. Retiree Plan Structure • Eligibility & Subsidy Rules: Pre-2017 hires receive partial city-paid subsidies; post-2017 hires receive none. Small EPO retiree group causes volatility in performance metrics. 2026 Plan Funding Forecast • Rate Proposal & Assumptions: Projected 8.3% funding increase includes medical, pharmacy, admin, and stop loss; EPO “maturity factor” applied to normalize early data; trends based on 6–12% annual inflation. Market Pressures & Uncertainties • External Cost Drivers: Specialty drugs (GLP-1s, biosimilars), rising service costs, and global supply/tariff risks flagged as ongoing pressure points; not all reflected in current projections. Premiums & Plan Value • Employer/Employee Contribution Split: EPO: 85/15; PPO: 80/20. Despite structural similarities, EPO offers better value due to lower utilization of costly out-of-network services. Future Plan Design Discussions • Potential 2027 Changes: Committee to explore modest plan adjustments in September 2025, aiming for cost containment without disrupting benefits. Industry Trends via BCBS Report • High-Cost Claims & Conditions: Increase in $100K+ claims, especially cancer and MSK; GLP-1s and specialty drugs fueling pharmacy spend. Cancer impact notably high among retirees, especially firefighters. Digital Tools & AI Adoption • Innovation in Healthcare Management: Growth in member use of digital tools; provider AI utilization rising; AI now aids claims, authorizations, fraud detection, and chatbot support. Hinge Health & MSK Management • Program Design & Integration: Hinge Health offers tech-enabled PT at no cost to members, billed only when used; discussions ongoing about aligning this with Workers Comp services. Key Action & Follow-Up Items • Next Steps: Schedule review of plan design changes for 2027; align Hinge Health with Risk Management; closely monitor pharmacy trends, loss ratios, and claims lags; expect detailed BCBS diagnostics at next JIC meeting. ADDITIONAL MATERIAL IN DECK: BLUE CROSS BLUE SHIELDS Market Cost Trend & Future Outlook Chronic Condition Management Programs • Overview & Focus Areas: Evaluation of existing and potential programs targeting diabetes, hypertension, and cardiovascular conditions, with emphasis on proactive disease management. • Teladoc Program Features: Offers chronic disease support (diabetes, hypertension, weight management) with mental health integration; includes smart monitoring devices with nurse follow-up and free supplies like test strips and lancets. • Cost & ROI: No direct cost to members; billed as claims. Long-term savings demonstrated in other cities due to improved adherence. Compared structurally to Hinge Health (claim-based model with no member charges). Pharmacy Cost Trends and Drug Utilization • Spending Overview: Pharmacy spend from April 2024 to March 2025 totaled $42.6M and is now outpacing traditional medical costs. • Key Drivers – Traditional Drugs: Account for 99.3% of claims and 61.7% of cost; cover chronic conditions like diabetes and hypertension. GLP1 drugs included here. • Key Drivers – Specialty Drugs: Only 0.7% of claims but represent 38.3% of spend (vs. 46.5% industry average); cover autoimmune diseases, cancer, and rare disorders. Include injectables and biosimilars. • Top Categories by Spend: Diabetes and autoimmune conditions lead in plan-paid amounts, followed by cancer and rare condition categories. • Legislation Impact – Oklahoma: The Patient Right to Choice Act prevents limiting members to a single specialty pharmacy or using copays to steer utilization. Pharmacy Cost Management Strategies • Advantage Network Savings: Excludes CVS; saved $200K in the reporting period. • Utilization Management Programs: Step therapy, prior authorization, and quantity limits produced $885K in savings. • Specialty Coupon Program (PlexAccess): Automated use of manufacturer coupons saved $291K in Q1 2025, directly lowering member costs and total plan spend. Biosimilars: Trends and Cost Implications  • Educational Context: Biosimilars are near-identical alternatives to biologics but not generics; must meet FDA standards for clinical equivalence. • Market Growth: Biosimilar availability expected to grow through 2032; offer cost relief, though less dramatic than generics. • Cost & Care Balance: Though biosimilars add complexity, they help manage expensive chronic conditions and reduce long-term medical events like hospitalizations. GLP1 Drugs: Utilization and Overspend • Usage Evolution: Originally for type 2 diabetes, now frequently prescribed for weight loss. Popular brands include Ozempic, Wegovy, Mounjaro, and Zepbound. • Plan Trends: 900–1,000 members (~8–9%) using GLP1s; costs surged during 2022–2023. • Financial Impact: GLP1s make up 19.9% of pharmacy costs at $65.58 PMPM; estimated $8M annualized cost. Open access policy currently allows broad prescribing. GLP1 Oversight and Control Discussion • Control Recommendation: Strong support for implementing prior authorization to ensure prescriptions align with diabetes treatment. • “Loophole” Risk: Lack of oversight enables use for weight loss under diabetes coding; industry standard is prior authorization with continued monitoring (A1C or BMI goals). • Debate Points: Committee weighed health benefits vs. cost burden. Mid-year changes debated; longer-term strategy includes clinical criteria if covering for non-diabetic weight loss in future. Plan Structure and Contract Considerations • Open vs. Managed Drug List: Current open formulary allows broad access but creates high- cost exposures like unrestricted GLP1 use. • Contractual Timing: Significant changes (like adding PA) may need to align with annual contract renewals, though some members pushed for sooner action. • Clinical Appropriateness: Committee consensus: GLP1s should remain diabetes-specific; future weight loss use must be tightly controlled and evaluated. Committee Recommendations • Data Review: Immediate analysis of the 900 GLP1 users to identify diabetic vs. non-diabetic use. • Policy Planning: Prepare draft prior authorization protocols; assess cost impact of switching to managed formulary in the next plan year.  • Access Limits: Avoid open weight-loss coverage unless clinical outcomes (e.g., A1C, BMI) are tightly managed. Vendor and RFP Updates • Dental Plan RFP: Three vendor finalists confirmed for June 24 presentations. • Employee Clinic RFP: Six proposals under review; finalist presentations targeted for early July. One vendor offering weight-loss services raised legal/liability concerns. Compounded GLP1 Concerns • Legal Ambiguity: Some pharmacies offering compounded GLP1s with added ingredients (e.g., vitamin B) to navigate gray regulatory areas. • Potential Risks: Legal and safety issues flagged, especially regarding use in employee clinics. Action Items • GLP1 Data Analysis: Pharmacy team to verify how many users have type 2 diabetes or pre- diabetes diagnosis in claims. • Policy Development: Draft prior authorization criteria; estimate cost/ops impact of moving to a managed formulary. Follow-Up Points • GLP1 Oversight Next Steps: Complete user analysis before making formal policy moves; continue discussion in next meetings or contract sessions. • Ongoing Evaluation: Continue vetting chronic care programs for plan inclusion. • Member Engagement: Prepare communication strategies to explain rationale for pharmacy changes and cost containment efforts. City of Oklahoma City Joint Insurance Committee SEPTEMBER 2025 Agenda 01 Health Plan Performance 02 Potential Cost Mitigation Ideas for Consideration 03 Open Enrollment LOCKTON COMPANIES | 2 Health Plan Performance 2025 Plan Year (claims through July 2025) 2025 Health Plan Overview (All Plans – Actives and Retirees) LOCKTON COMPANIES | 4 Rolling 12 Health Plan Overview (All Plans – Actives and Retirees) Annual per enrollee per year costs have continued to grow. In July 2025, the annual per enrollee per year cost is $20,625. This represents all plans, Actives and Retirees. LOCKTON COMPANIES | 5 2025 Plan Performance Overview (All Actives and Retirees) Overall loss ratios have been under 100%, except for 2 months. LOCKTON COMPANIES | 6 Actives – Data through July 2025 LOCKTON COMPANIES | 7 Actives – Data through July 2025 Since January, claims have continued to escalate. The current annual per enrollee per year as of July 2025, is $21,154. LOCKTON COMPANIES | 8 All Retirees – Data through July 2025 LOCKTON COMPANIES | 9 All Retirees – Data through July 2025 Several months over the past 24 months have experienced higher than normal claims. This impacts the overall financial health of the plan since there were not ISL reimbursements to offset these costs. The current annual per enrollee per year as of July 2025, is $19,002. LOCKTON COMPANIES | 10 Cost Mitigation Ideas for Consideration Cost Mitigation Considerations for 2027 Benefit Consideration Level of Member Impact Population Health: Low Implement point solutions to address the chronic disease in the population Pharmacy: Low Implement prescription drug clinical programs (Prior Authorizations) Pharmacy: Moderate Change from the Basic prescription drug list (PDL) to the Balanced PDL with Prime Rx Pharmacy: Moderate Consider Rx Sourcing programs LOCKTON COMPANIES | 12 LOCKTON COMPANIES | 13 Independence changes everything. © 2024 Lockton Companies. All rights reserved. D: 2859452