CITY OF LOS ANGELES JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE

CITY OF LOS ANGELES JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE PROPOSED MINUTES SPECIAL MEETING MARCH 2, 2017 9:00 A.M. CITY HALL, 200 NORTH SPRING STREET, ROOM 1060 Present: Committee Members: Regular: Wendy Macy Personnel Department Cheryl Parisi AFSCME, Council 36 Tony Royster General Services Department June Gibson Fire Department Chris Hannan Building & Construction Trades Council Richard Llewellyn Office of the City Administrative Officer Paul Bechely Laborers Local 777 Alternates: Jeremy Diaz Building & Construction Trades Council Personnel Department Staff: Jody Yoxsimer Assistant General Manager Russell Escueta Management Assistant Paul Makowski Senior Personnel Analyst I Leonor Gardere Senior Personnel Analyst I Neil Malabuyoc Senior Management Analyst I Steven Montagna Chief Personnel Analyst Jenny Yau Senior Management Analyst II Ted Vasquez Management Assistant Office of the City Attorney: Curtis Kidder Assistant City Attorney The Segal Group Stephen Murphy Bobby Mitchell Keenan Associates Steven Balentine Laurie LoFranco

1. Call to Order Cheryl Parisi called the meeting to order at 9:11 a.m. There were no public comments. 2. Public Comments 3. Minutes A motion was made by Paul Bechely and seconded by Tony Royster to approve the JLMBC minutes of the February 2, 2017 Special Meeting; the Committee unanimously adopted this motion. 4. Committee Report 17-12: Benefits Third Party Administration Request for Proposal Update and Mercer Human Resources, LLC Contract Extension Jenny Yau presented the report. She began by stating that staff continued to develop the Request for Proposals (RFP) for benefits third party administrator (TPA) services. Ms. Yau stated that a draft RFP is nearly completed and will be ready for review by the Committee at the next JLMBC meeting in April. Ms. Yau further stated that extension of the contract with the current TPA, Mercer is required to continue to provide TPA services through Open Enrollment and implementation of the 2018 plan year and to provide sufficient time for transition in the event a new TPA is selected. She also stated that the contract extension will require Council approval. Cheryl Parisi asked what the timing issues are with release of the RFP and extension of the current contract through 2018. Steven Montagna responded that the plan would be to release the RFP in the month of April and provide a four to six month period to go through the review and selection process. Mr. Montagna added that if there is a change in provider, then spring would be the target to transition the new TPA as it would be after Open Enrollment but before the programming changes that are implemented during the middle of the year for the subsequent plan year. Ms. Parisi asked if there would be two concurrently running contracts. Ms. Yau replied that the new TPA would be working with Mercer to transition the plan, scope of services, and systems implementation issues that would need to be worked out. Mr. Montagna stated that whether both contracts would need to be in effect side-by-side was not yet determined, but may be necessary. Tony Royster asked how long the current TPA has been contracted with the City. Mr. Montagna replied that it has been at least since the year 2000. Mr. Royster voiced his concern about the challenge of transitioning to a new TPA and the potential of disruption to the City population. Mr. Montagna answered that there is awareness of the complexity of the task that comes with transitioning to a new TPA. 2

A motion was made Chris Hannan and seconded by Paul Bechely to receive and file the update regarding the status of the benefits third party administration services Requests for Proposal; the Committee unanimously adopted this motion. A second motion was then made by Richard Llewellyn and seconded by Tony Royster to recommend to the General Manager Personnel Department extension of the term of Contract No. C-116336 with Mercer Human Resources Services, LLC for recordkeeping, enrollment, and benefits administration of the City s LAwell Civilian Benefits Program through December 31, 2018; the Committee unanimously adopted this motion. 7. Committee Report 17-13: Employee Benefits Trust Fund Staffing Reimbursements - Fourth Quarter of Fiscal Year 2014-15, Fiscal Year 2015-16, and First and Second Quarters of Fiscal Year 2016-17 Paul Makowski presented this report and began by stating that through prior actions, the Committee approved Employee Benefits Trust Fund reimbursements for three staff positions, two at the Management Analyst II level and one at the Senior Management Analyst I level. Mr. Makowski stated the Committee last approved reimbursements for staff positions in August 2015 which covered reimbursements through the third quarter of the 2014-15 fiscal year. He stated this request would bring the request for reimbursements current through the current quarter ending December 2016. He further explained that Attachment A to the report provided additional detail on reimbursements totaling $585,899.76. Mr. Montagna added that the reimbursements review had been on hold because of the Trust Fund review, but now that the review was complete, moving forward reimbursement requests would be brought to the Committee at the end of every quarter. Ms. Parisi asked if the Personnel Department had been paying for the staff salaries of the three positions and whether the reimbursements would be paid back to the Personnel Department. Mr. Montagna replied yes to the first question but stated the reimbursements would be paid back to the General Fund. A motion was made by Paul Bechely and seconded by Wendy Macy to approve reimbursements from the Employee Benefits Trust Fund for Personnel Department salary costs of staff providing direct administrative support of the LAwell Civilian Benefits Program in the total amount of $585,899.76 inclusive of the following periods: (1) Fourth Quarter of Fiscal Year 2014-15 totaling $76,006.84; (2) Fiscal Year 2015-16 totaling $311,636.41; and (3) First and Second Quarters of Fiscal Year 2016-17 totaling $198.256.51; the Committee unanimously adopted this motion. 8. Committee Report 17-14: LIVEwell Wellness Program Joan Centanno presented this report and began by discussing staff development of an employee wellness survey as attached in the appendix of the report. Ms. 3

Centanno stated the goal of the survey was to gather baseline information on demographics, behaviors, and what areas of wellness employees are most interested in. She further explained that staff developed the survey to encourage participation by using simple questions and staying away from rankings and ratings to allow ease for completion. Additionally, she stated that the survey topics were limited to ensure the survey could be completed within 15 minutes. She also stated that staff tested the survey before final release to ensure it was easy for employees to understand and that they could complete the questions within the 15 minute goal. Ms. Parisi asked how participation would be solicited. Ms. Centanno replied that postcards would be mailed to all employees to ensure they could participate in completing the survey either online or by requesting that a survey be mailed to them. She also stated the survey would be live for two weeks. Ms. Parisi asked if employees would be allowed to complete the surveys during work hours. Ms. Centanno answered that they would be allowed to do so. Ms. Parisi then asked how employees in the field can complete the surveys if they do not have access to a computer at work. Ms. Centanno replied that these employees could obtain a hard copy and return a hand written response to staff or complete from home. Mr. Montagna also this replied that requesting a hard copy to complete the survey is similar to how the health and dental surveys were conducted a year and a half ago. Mr. Montagna further added that mailing a post card and sending a City-wide email to notify all employees of the plan that they may take the survey at a time and location most convenient to them are effective tools to encourage participation. Richard Llewellyn asked if there was data that showed if response rates were higher among employees who had regular access to computers and those that did not. Mr. Montagna answered that data response rate by category is not capable of being collected currently. Mr. Royster commented that consideration may be given to work with DPO s to make computers accessible during work hours for employees to complete the survey. He continued that some people may not have computers at home and when it comes to mail, they may throw it away. Mr. Montagna replied that the survey is mobile friendly and employees may access it from their smart phones. Mr. Royster stated it is important to inform DPOs about the survey to ensure that supervisors provide staff the ability to complete the survey at work without fear of being disciplined. Ms. Parisi stated there are employees in different working conditions and asked that DPOs be made aware of the survey to provide accommodations for employees to complete the survey and ensure there is a balanced response. Mr. Llewellyn added that he would be interested to know if the response rate is affected by whether an employee works at a desk compared to an employee that does not. Ms. Centanno replied that a survey question relating to work location could be added to the survey. Mr. Royster commented that the survey should also include a question regarding working shift and Ms. Centanno replied that this question is currently included in the survey. 4

Ms. Centanno next presented the section of the report pertaining to Wellness Program marketing, equipment, and printing costs for the LIVEwell program for 2017. She stated that the communication plan and strategy is outlined in the report which describes plans for activity, communications and events in the third and fourth quarters. She stated that staff plans to address the three foundational elements of wellness nutrition, physical activity, and stress reduction. She continued that it is important for the program to create brand awareness by having wellness related items like jump ropes, tote bags, and other materials to promote and represent the program at different events. Mr. Royster asked how it was determined that the promotional material items being proposed were the best items to select. Ms. Centanno answered that the items were chosen to align with the three core areas of wellness nutrition, physical activity, and stress reduction. June Gibson asked how the promotional items are going to be distributed to members. Ms. Centanno replied that there will be opportunities throughout the year where the program will be present at worksites. She further stated that each quarter will have a wellness theme to distribute materials and for live event participations, tote bags may be given as gifts or participation rewards. She confirmed that the promotional materials will not be mailed but given through interactions and wellness events. Ms. Gibson highlighted her concern about employees not receiving value from the materials if individuals take items that are free and do not stay to learn about the program. Ms. Centanno replied that there will be employees who are curious and will be attracted by the communication of the benefits and wellness brand. She continued that each person has a different way of engaging with programs and that the engagement strategy is meant to engage all types of employees. She further stated that it was important to build brand trust and engage champions in different departments to share information and distribute materials. Ms. Gibson inquired why the price of the promotional water bottles was $17.00 per bottle. Mr. Malabuyoc responded that the pricing was provided by a City preferred vendor and an alternative option or options will be identified. Wendy Macy asked if the program would be called wellness and not well-being. Ms. Centanno replied the former, indicating that well-being applies more broadly to topics outside of wellness such as career well-being and organizational well-being. She continued that there will be some overlap of information since the two are related. Ms. Parisi asked about the partnership of the Wellness Program and Recreation and Parks. Ms. Centanno replied that staff met with Matthew Rudnick and discussed wellness opportunities and community engagement at different Recreation and Parks events. She continued that two upcoming events in the summer might be a good fit for the first live events for the Wellness program. She added that there was discussion with Recreation and Parks to provide of an area free of charge at different events for staff to set up a table and pilot events and activities for employees as well as the community. 5

A motion was made by June Gibson and seconded by Paul Bechely to receive and file the report regarding LIVEwell Wellness Program development, updates, and activities; the Committee unanimously adopted this motion. A second motion was made by Richard Llewellyn and seconded by Paul Bechely to authorize expenditures not to exceed $67,500 for marketing, equipment, and printing costs for the LIVEwell program for 2017 with the condition that a lower cost alternative to the water bottle be purchased; the Committee unanimously adopted this motion. A third motion was made by Jeremy Diaz and seconded by June Gibson to approve the proposed draft survey to be issued to all LAwell members; the Committee unanimously adopted this motion. 9. Committee Report 17-10: Kaiser Utilization Review Justin Cao, account manager for the City s account with Kaiser Permanente (KP) and Michael Allard, underwriting consultant for Kaiser Permanente, presented this report. Mr. Cao began by stating that the objective of the presentation was to provide the Committee with a preview of how the City s utilization is trending through the first three quarters of 2016 ahead of the 2018 renewal. Mr. Cao explained that the final rating calculations for 2018 have not yet been finalized and that certain items that will go into the renewal include pooling credits and charges, conversion of paid claims to incurred claims, demographic changes, rating trends and retention, and ACA fees. Mr. Cao next presented the key findings summary regarding the City s utilization through the first three quarters of 2016. He stated total paid claims per member per month increased by 6.4% from $376.31 to $405.82 through the first three quarters of 2016 as compared to the 2017 renewal period. He indicated the KP Southern CA health plan average was 7.5% currently, with the City running about a point better. Mr. Cao stated that inpatient claims per member per month increased by 2.28% which was primarily due to newborn and neonatal conditions and stated that KP has several programs in place for high risk pregnancy members to keep them engaged and healthy. He then stated outpatient claims per member per month increased by 12.51% from $140.40 to $157.96 due primarily to an increase in emergency room visits by 14.6%, outpatient visits by 14.2%, and outpatient surgical by 12.3%. He indicated that for emergency room, the increase was not necessarily due to frequency but intensity of use. He also stated that many procedures are being moved to an outpatient setting. Lastly, Mr. Cao stated that pharmacy claims per member per month increased by 8.71% from $77.64 to $78.14 due primarily to an increase in brand formulary drugs. He explained that the majority of prescriptions (94.2%) remain within the generic formulary. Mr. Allard next discussed the demographic overview of the City for the most recent third quarter of 2016. He stated the City has an even distribution of male to female distribution and the City s average age is 35.6 compared to the KP regional average 6

age of 33.9. He then stated that over time for total paid claims, the City s claims cost is 10% higher than the KP average due primarily to the City s average age. He explained that for every year the average age is higher than the health plan, a 2% higher cost versus the health plan average can be expected. He stated that plan design contributes to higher claims cost as public sector plans are generally richer in benefits. Mr. Royster asked if the City s age demographic is similar to other public agencies because there is probably less turnover in the public versus private sector. Mr. Allard confirmed this is correct and there is less turnover in this group because they tend to be lifelong employees. Mr. Cao explained the City s average age of 35.6 includes dependents and if dependents were removed, the average age of City employees is 45-46 years old which is in line with other public agencies. Mr. Allard stated the total paid claims amount of $405.81 includes high cost claims. He stated there were seven individuals that had claims exceed the pooling threshold and that this number may increase or decrease depending on the final quarterly data not yet received. He also stated the top cost claimant was a liver transplant. He next discussed the inpatient overview in three categories medical claims cost which increased for the City by 12.7% versus the health plan of 10.3%, surgical claims cost for the City which decreased 4% versus the health plan increase of 7.6%, and maternity claims cost which increased for the City by 1.7% compared to the health plan increase of 9.2%. He stated that not shown on the table is substance abuse which increased 20% for the City and mental health which decreased 26%. For scale, Mr. Allard stated that substance abuse and mental health services combined account for about 3% of total inpatient claims cost. Mr. Cao stated that mental health and substance abuse cases are usually very severe cases which generally result in fluctuation from year to year as there are not many of these cases. Mr. Allard then discussed inpatient medical conditions seen in the most recent reporting period and indicated the top ten medical conditions claims cost is $9.8 million for the third quarter of 2016 compared to $5 million in the prior period. He stated that admits for these conditions increased 38% and average length of stay increased 27%. He indicated four of the top ten medical conditions are newborn and neonatal conditions with claims totaling $5.5 million and that 2 of the 7 high cost claimants for the third quarter of 2016 are newborn related. He further stated that admits for these four conditions increased from 21 to 44 and the average length of stay remained flat at 15 days. Mr. Cao then discussed several care management programs offered by KP for high risk pregnancy members to keep them engaged and healthy throughout their pregnancy and communications efforts made specifically to these members. Mr. Llewellyn asked if additional detail could be provided on the top 2 high cost claimants in the newborn category. Mr. Allard stated that this information is protected. Mr. Royster asked if KP has implemented any programs for other agencies that would help reduce this cost and what the City could do to help in this area. Mr. Cao replied that typically for neonatal cases, a program may not necessarily help eliminate these costs but KP has programs built into its plans that 7

would help to engage affected members at the beginning and throughout pregnancy. Mr. Royster asked if there are statistics to support early intervention would reduce costs. Mr. Cao replied that with all care management programs, early intervention does prevent long term costs. Ms. Parisi stated the City s plan design provides for no co-pays for maternity visits and asked if there was any correlation between these high cost claims and the maternity care received. Mr. Cao replied he did not have specific detail on the City s high cost claimants but for the size of the City s plan, two members in this category is lower than other agencies. Ms. Parisi stated that this number seems to be an outlier and while unfortunate, there may not have been preventative measures available. Mr. Cao agreed this was likely true. Mr. Allard moved on to discuss the outpatient overview broken down by the change in outpatient visits which increased by 14% for the City compared to the KP regional average increase of 12%, emergency room cost which increased 14% for the City compared to the KP regional average increase of 8%, and outpatient surgical cost which increased 12% for the City compared to the KP regional average increase of 14%. He stated that overall visits per 1,000 for emergency rooms increased 3.6% and the cost per visit increased 10.6%. He further stated that the City is experiencing a proportionally higher increase in the cost per emergency room visit compared to the number of ER visits which indicates appropriate usage. Mr. Allard then provided a pharmacy overview and stated the City s percentage of total scripts for brand formulary is 5% compared to the KP regional average of 4.7% and for generic formulary 94.2% compared to the KP regional average of 93%. He also stated that the percentage of total claims for brand formulary is 72% for the City compared to the KP regional average of 68.7% and for generic formulary 27.9% compared to the KP regional average of 31%. Mr. Allard stated there was an 11.9% increase in brand formulary cost compared to the health plan average of 2.1% and 1.3% increase in generic formulary cost for the City compared to a health plan average of 2.6%. Mr. Allard moved on to discuss further detail of the cost driver in brand formulary drugs which increased by 14% from $4.3 million to $5 million and the number of scripts which increased by 14%. He stated the top brand formulary drug was Harvoni, with scripts increasing from 120 to 137. He further indicated the average cost to treat a patient with Harvoni is $70,000-$100,000 and that leaving this condition untreated could result in a higher claims cost if a liver transplant is needed. He also explained that the number of scripts for brand formulary drugs Truvada, Atripla, and Stribild increased by 21%. He stated that these are non-specialty drugs used to treat HIV. Mr. Cao next discussed the various levels of engagement and KP programs for expecting and high risk pregnancy mothers. He also explained the various levels of access of care available to members ranging from routine non-urgent care, other nonurgent care, urgent care, and emergency room care. Mr. Cao explained that members have various options to access care through the KP nurse advice hotline, same day appointment, telephonic appointment, walk-in urgent care clinics located in the City and County, and emergency room care. He explained that KP now offers telephonic 8

appointments to members for minor health conditions that do not require an in-person visit. He stated members have a 45 minute to one hour window of time for the provider to call the member back to assess the member s condition over the phone and if a prescription is needed, the provider can send a prescription to the pharmacy for the member to pick up. He further stated there is no fee or copay for this service. Mr. Llewellyn asked if, regarding the two high cost claimants related to the neonatal condition and other conditions, if Kaiser can further review these claims to determine if they are outliers and whether there is anything Kaiser would recommend addressing these claims. Mr. Cao replied that communication is critical to advise members on available resources, but that for these high cost claimants they were most likely engaged in KP s programs but the condition may have been unavoidable. 10. REQUEST FOR FUTURE AGENDA ITEMS There were no requests for future agenda items. 11. NEXT MEETING DATE A meeting was noted for April 6, 2017 at 9:00 a.m. The meeting adjourned at 10:21 a.m. 12. ADJOURNMENT Minutes prepared by staff member Russell Escueta. 9