Guidelines on approved medications. On further illustration of this slide on slide 1, the agents where doxopene hydro chloride would be moving from tier 1 to tier 3 where the cros cross crotozome. These are examples and commissioner scott i heard your request. And we will get back to you. Thank you. Moving on to slide 8. So based on the utilization of hss in calendar year 2017 for the impacted prescriptions on the very left there, would be 117hmo members would be impacted. During calendar year 2017, 27,000hss members had prescriptions filled. So of those 27,000 members, 117 members would be impacted. Which represents 0. 4 or in other words, less than half of 1 of membership. In the middle graph there, there were over 400 prescriptions filled and the impact was 675. So the percentage was at 0. 2 . And moving over to the right during calendar year 2017 there were 1700 different drugs that were had prescriptions filled by sfhss medicals and 15 drugs were impacted and were being taken by hss members which was 0. 9 of types of medications filled. So when our analyst evaluated the data and made the shift assumptions for the hss plan, the estimated savings to hss is about 360,000 but that really depends on changes in utilization, shifts and so forth. So that was just the estimation based on what the analyst predicted would be marketplace changes for the marketplace. Can i ask a question . Randy scott shae. Please. You look at this what im take away from the design of this particular slide it doesnt really effect very many people and not very many drugs. So it probably doesnt mean anything. What i see from this, a small handful of people for whatever reason are being predescribed these drug drugs and they may have unique circumstances that require them is. Theres a pattern here for the most part people are driving toward lower cost drugs but as we know in medicine there are unique circumstances. Every human being is different. So i guess given that there isnt a lot of cost here, that this is just a small sliver it. Lead me to suspect that we are trying to extract cost savings from people who may be getting predescribed medications that they uniquely need. For whatever particular reason happens to exist within that individual. So if there was a pattern of people predescribing medications that were very expensive. But i see a reverse pattern am i see exceptions to the rule rather than creating a new rule. So i guess im trying to determine why we are trying to get this deeply into the details of a relationship between a patient and a doctor where they may have you know have had to workfarely hard to find a medication that for whatever reason was tolerable and effective for that particular patient. Good point. The strategy behind this is because the drug tiering we had as illustrated as well, the tiers were based on generic preferred brands and nonpreferred brand. The strategy is the same strategy we had used for bran medications and where we had preferred brands and nonpreferred bands to the same amount of tears as the brands. O times when physicians predescribe medications they may not know the cost of the medication. However i think this is a good tool to use not only for savings in a point of time but also to help manage a trend in future years. We are asking patients to bear this cost. There are people who will pay more. And we dont have any data on effectiveness and tollable of these medications and we will just assign them a higher cost. Well that hasnt happened yet. According to what im seeing here in the next few slide you are planning to give 60day notice and all of that. So my question to the director is when is this supposed to be going into effect . The plan is january of 2019. So this will be bart of a blue shield renewal review. When we get to that point for active and early le retirement renewal. The reason we asked for blue shield to present on this is because it is a planned Design Change in the sense that the tiers have traditionally been tier 1 generic. Tier 2, preferred, et cetera. So thats changed ha little bi. Part of blue shield and trend we heard that generics are increasing a lot and for the most cases its because they can. They are looking at some of the other ones and again back to the preferred and nonpreferred tiers that we have for some of the same reasons. We typically every year for our insured plans can change. That is not since its an assured plan, that is not something we necessarily review. But if they i think two years ago, i believe it was, they added another tier for specialty drugs. And that went up to 100 for a copay. And for city plan, the health plan since its a self funded plan we do review the changes every year. And its a similar type of things. Some particular drug may no longer be covered. Their pharmacy review or applying the fda rules when they see another drug that is as effective we see the same communication process that you are go to hear about. As well as we can discuss this with blue shield but there are grandfatherrings in circumstances too. So i get the letters that are shown on 11 and 12 and the enclear sures at the end of the presentation. So i would have a keen interest before this starts to kind of go from cement to concrete. To have an interim step in terms of reporting back to the board about the kind of magnitude of the impact in a reflective basis. So that we are able to see what it is that you are talking about. Which drugs, how many folks are using them. How have they been used over the past couple of years . Has this been an increasing utilization, that sort o of thing. For me, when we are dealing with a drug bill that i think is 27 million, total, if i recall correctly. 360,000 you know, its not chump change. But its in the magnitude of what we doing here. And more importantly its not about the money. Thats a level deve tail bu thats a level of detail but really the impact on members. So thats where i want to be sure we are getting a broader pick rather than just an illustration. And i think that will be critical before you to say automatically, this is what we want to do. And here are the rates. There need to be this interim initial step. Thank you. Randy scott are there any other comments from the board . Those 36 drugs. We should be able to see those. But also i remember in the past when we had issues like this, sometimes with a doctors note or something, that it could be a special drug and it wouldnt be charged at this higher rate s that still possible . Not with the current plan. Yeah. At one time but the director is saying that there are exceptions that have been made. We have made exceptions on the selfplan because technically we are paying directly. So insured plans, typically no. And blue shield is a hybrid plan. Its flex funned so thats a discussion that i certainly can have with blue shield. Randy scott are there any other questions, comments . Is this only specific to Health Services . Or are you doing it its for the commercial arts group book. Your book of business for commercials . And are you doing that for everybody for 2019 . We are trying to make it a standard form of Commission Book for business. Randy scott other questions from the board. The prescription per tier. What is written right now, is that what we are doing currently . Just a change in tiers. The change in copays for that particular tier. Thank you. Randy scott thank you for the presentation. Any other comments . If not, is there any Public Comment on this discussion item . Thank you for coming today. Thank you. Good afternoon, commissioner, representing rhss. Thank you. I find this presentation extremely disturbing and difficult to understand. I think our members are going to have a great deal of difficulty understanding what do you mean my generic is going to cost me 50 bucks or 100 bucks or isnt in the generic category. When i sat on this board one of the thing we did was we defined the benefits across the board so that gender i object was one cost for all plans and each of the tiers then were pretty much the same and told to each of our vendors this is how we have defined our benefits. Now you go put together the plan and tell us how much it cost and we negotiate from there. What i see with this i believe blue shield overrates their premium costs, and i would like to know what percentage of their premium is pharmacy. I think this is another example of trying to actually charge more. And i think it will impact early retirees and retirees more than any other group. If will also impact a number of active employees with specific kinds of diseases and conditions that put them into those specialized categories where they need very specific kind of drugs because some of the regular gender i object i genderrics gender rics cant help them. It seems theres a lot of movement from people and it will confuse members of the system and overall it doesnt seem like a lot of money. I understand the point of what they are trying to do but i think the point of what we are trying to do is offer the best for our members. And when youve got generic in all four tiers i think you confuse the heck out of every member who will take a look at their benefittings and its hard enough when formularies change and we all get the call and how can we get this and how can we get that . And saying thank you, when the doctors would override that, because theres some special reason that an individual cant take a particular drug. There have been exceptions made. And we really need to look at our membership and what this means overall. But again i would like to know what the percentage of the farmsy cross is out of the premium of blue shield. Thanks very much. Randy scott thank you for your comment r. There any other Public Comments on this item . If not we are going to take a bit of a recess to get focused on the next item as a committee. Which is finance and our budget for the ensuing year. So im going to declare a 5minute recess at this president scott here we are. We are reconvening we have moved out of the rates and benefits section of the meeting and moving into the finance Committee Matters and as chair and finance committee i will be chairing it one item. Delain any would be introduce this item 9 . Clerk yes, item 9. Action item approval fiscal year 2018 19 and fiscal year 2019 20. General Fund Administration budget and Health Care Sustainability fund budget. Committee chair staff. President scott thank you. In preparing for this item in the interest of time and obviously because theres a great deal of material included in here, ive asked our cfo to make more of an overview presentation and a highlight of the changes that have been made to the various budgets and on the theory that all of the premises here have read the material that was sent to them, and certainly may have questions and we will move into the question section but hopefully we will be prepared for a higher level of overview. So if our cfo panel can come to the podium. You can take over. Pmo11 chief executive officer, financial director. The first item i between ask is to respond to the questions that occurred last meeting on the health care stainability. I did a brief memo for you that was an overview of the sores and uses of the Health Care Sustainability fund. I will call that the 3 budget. As you know the authorizing language is in the city charter and it says that it can be used for spends in connection with obtaining and disseminating information to members with regard to planned benefits and costs. The second investment of such fund are fund that are maybe established included travel and transportation costs. Next is member wellness programs. And act wear spends and finally spends incurred to reduce health care costs. The charter also requires the board to approve the 3 budget by resolution. The Health Care Sustainability fund is part of the Overall Trust fund. I dont really know the origin of the name but its not at separate fund. Its part of the trust fund and the source of the funding is a 3dollar per member per month charge that is inn corps rated to medical premiums for all members. We call it often refer to it as to the four employers but its to all hss members. The charges reflected in the rate card under expense. So when you go through that you will see that, when we present the rate cards and both. Employer an pretirery based on the insurance moll so i gave the example of the 1993 and 83 and the 100100 for the employee only to show you how much the division is between the employee and the employer. Alternative members pay into the Health Care Sustainability funds and benefits from the 3 are available to all of those who paid into the fund. And in the 1819 and 1920 budget that we will be discussing, we categorize it into the following categories, personnel, communications, wellbeing and initiatives that reduce the cost of health care for all members. Are there any questions . You say the employees microphone. You say the employees share. What about retirees . Because they are not picked up by the unions. Right. They are based on whatever the formula is. So for instance if its tim county, then they have a different formula. Right, so they would be paying obviously a lot more than what this shows for the employees. Right. Thank you. Are there any other questions from the committee before we move on . I just make the note that the fun has not been used for actual rather spends to date. Would they be in the contract . The way you look at the structure, if you look at the budget in front of you, it wouldnt be enough to be able to shoehorn that in. We would have to shoehorn that out. Okay. In the second item in the january Board Meeting i presented the instructions which called for the department to propose ongoing reject rerejects equal to 84,000 in 1819. And then we would maintain the pro in 1819 and an additional of 84,000. So i will be presenting how we went through and the considers we looked at and how we met those two targets. I wanted to give you a comp significant of what the budget looks like so you can tell why there are certain thing that are not available to cut. As you look at that you can see that the size make up approximately 7 of the budget in typical years. This is the typical number throughout the last five years. And i expect that to continue. The budget instructions included a provision that departments should not layoff employs. Therefore in order to meet the reduction targets the focus of the balancing efforts were on the remaining 30 . And just as an aside, 18 of that remaining 30 is in work orders and those are primarily negotiated through the mayors fees of the budget. So those are also with the exception of a couple. And we will talk about what my proposal is what the proposal is. They are not available to cut because they wouldnt be counted as meeting our target. Could you just cite an example of a work order . An example is a work order of a City Attorney in the outside council. We work order to the Controllers Office for maintaining the Financial System and the benefit admin system. We work order to the department of technology for the whole range of Citywide Services provided there. And then workers comp is another really large one not just the claims but also the administration of the workers comp claim. So those are the larger ones. Alright. Thank you. So we looked at three different large groups of strategies in order to balance the budget. And i will discuss each of these separately. But they are funding first and for most to fund our structural issues whilie talk about. Second is to i a just our budget to actuals, and third is to look at what we can transfer over to the 3 budget that would serve all members of the sfhss. So first im going to talk about the structural issues. We have discovered although you know they built structural issues tend to build up over the years, hence why any are called structural and they get to a point where you actually have to take care of them, and you cant assume you have to bounce around them. And there are two that are problematic for us. The first is for the expenditures related to the administration of the flexible spending accounts. These are for health care and dependent care. And we had a growth in the number of employs participating in the Program Since especially since it was implemented. At this point if you dont spend whatever you dont spend at the end of the year, if there is between 10 and 500, you can carry that forward and that then also adds to the administration because we are continuing to carry forward. So if you decided, oh, i have enough money and im not going to sign up again, we still have to carry you through that with the administration. And in addition, the charges for external audit are increasing. That is not something we have a lot of control over. So in 1819, we put 80,000 into contracts for the fsa administration and 4,300 to the auditor. In the second year in 1920, since our cut is so large, we have to cut 167,000. I took out the 80,000. And put that in as an additional request to the Mayors Office. So are those details found on pages 6 5 and 6 . Yes. I will go through that. Thank you. So the second prong in a 3prong strategy is to adjust the budget to actuals. We always look at this and try to figure out how much really we can cut that would be cut in perso person duety perpituity. Since there has been a high turnover in staff, they experienced high attrition levels we had a small increase in attrition and this would have been something that the budget analyst, when it gets to them, would have recommended. Solve it seems like we do a preemptive cut at this point in time. I dont want to say theres no impact but this could be reduced impact. The other is training. This still leaves 12,000 for annual board training. The professional Service Reduction are you seeing is for contracts for wellbeing and the spending administration which is based on actuals and will not adversely impact the department. Tears and supplies is just a small little tuck. And then the looked at all effects the model to be presented what could be done with a 3 budget. This was done to try to minimize the impact on the departments operations. So it was not the first area we looked at. It was basically the last area we looked at. Salaries and fringes for personnel with the management of projects that are funded for 3 and review and revision of planned materials that are provided to all members are transferred over to the 3 budget. This is a minor amount. But it does make a difference. We also did a transfer of the wellbeing personnel that served all of the members. So that saves us roughly 51,000. The s