Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: Scott. We are live.

[Sen. Thomas Chittenden (Vice Chair)]: Great. So, this is Senate Finance. It is February 6. Senator Cummings will be joining us shortly. She's at the joint JF, I forget the title. She's at a committee meeting and should be here shortly and on the agenda for today, we have Vermont Education Health Initiative. So, we're going start by hearing from Bobby Joe. Sounds and I welcome her to the chair. If you'd like to share your screen at home for coffee.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I think we'll have handouts instead. That was very wordy, so probably it would look great on the screen.

[Sen. Thomas Chittenden (Vice Chair)]: Oh, Mark, you

[Mark Hage (Vermont-NEA/VEHI)]: wanna join her? Thank you. We also provided a copy of our FY27 rate of filing document. You may find that of interest as well. Refer to it. We can also look at it in the insurance.

[Sen. Thomas Chittenden (Vice Chair)]: I don't believe this is pertaining to any specific bill that's before us in the spine.

[Mark Hage (Vermont-NEA/VEHI)]: Our understanding is you wanted an overview of what the cost drivers are for BI and what BI is and what we do. That's sufficient. We're certainly prepared to speak. We're also happy to take questions during our presentation, or at the end, at your point of discussion.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah. Well, thank you for having us. I'm Bobby Joe Salz, and I work for the Vermont School Board of Insurance Trust. I'm the director of DEI programs, And it's my colleague, Mark Hage, who works for Vermont National Education Association, Vermont, NEA. So we work together on a daily basis. I'm also using BIHI. So we did want to stress at the outset that Beehive is not alone in facing these rising costs and prices, especially for hospital and pharmaceutical services. It's a critical problem across the state, both regionally and nationally. Vermonters are spending almost 20% of their income on healthcare compared with the national average of just under 8%. All self insured risk pools and insurance carriers are confronting the same problems and cost drivers, and this includes an increase in utilization of care. The costs are going up and the utilization and how much of being used is going up as well, which is a combination for increases. Beehive is a Vermont education health initiative. We were established in the 1990s. We're nonprofit, self insured, and inter municipal insurance association. We are regulated by the Vermont Department of Financial Regulation, VFR. We contract across Vermont for actuarial and administrative services, for things like claims processing and customer support. We are the health insurance pool, and they're like our TPA, really. They process claims for us and such, and many other services. We provide health insurance benefits to every public school in Vermont, as well as some private education institutions, and to stay a snippet of the Medicare population through your visitors. We have the Vermont State Teachers Retirement System. We have their pre Medicare retirees. We have about 800 of those. Think those are on the next page. Then we also have about 1,200 that are not yet eligible for the Medicare Advantage Plan that most of the retirees are on, so they still have a Medicare Supplement Plan, a more traditional plan through BCAI.

[Mark Hage (Vermont-NEA/VEHI)]: Can I

[Sen. Ruth Hardy (Member)]: ask about that? I know that there were a lot of Medicare Advantage plans that exited the state, but yours is still intact?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Vistar contracts themselves. We do some administrative work for them, and they have our wellness program. They had their plan through Vermont Blue Advantage, which was affiliated with Blue Cross of Vermont. Because of an increase, they switched to HealthSprings, which was another Medicare Advantage plan. They have about 7,000 people on that plan through HealthSprings as of January 1, and we have about 1,200 that are on MedSup plans, and then another 800 that are pre Medicare. They retire before Medicare age.

[Mark Hage (Vermont-NEA/VEHI)]: These retirees were not impacted by Vermont Blue Advantage and MVP leaving the Medicare

[Sen. Ruth Hardy (Member)]: Okay. Advantage Yeah, that was basically my question. Like you're, it's still intact.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah, the P and portion has zero. Okay.

[Sen. Scott Beck (Member)]: May I just ask you, move to another plan to replace the Medicare Advantage Plan from Blue Cross Blue Shield. Was the plan that you moved to cheaper or more expensive?

[Mark Hage (Vermont-NEA/VEHI)]: It was Vestas that made the contractual decision to move. So they weren't our plans, but as Bobby just said, we used administrative working.

[Sen. Scott Beck (Member)]: But it was super easy

[Mark Hage (Vermont-NEA/VEHI)]: to move, so you chose to. No, visitors chose to. Especially if chose to.

[Sen. Scott Beck (Member)]: Did not have the ability to

[Mark Hage (Vermont-NEA/VEHI)]: make But to your point, yes, the overriding decision to move was because of cost. I think the cost increase came in at nearly 50%, and that was just unacceptable.

[Sen. Scott Beck (Member)]: So you were able then, so they were able, when they moved it, to find a plan that was less expensive? They very quickly, definitely found another carrier who could provide comprehensive coverage at a lower rate increase. As the same coverage. How much of a savings did you achieve as a result of that, do you know?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: We would have to check with visitors outside of that.

[Sen. Scott Beck (Member)]: Yes, I would be very interested to know in terms of just how much would cost reduction My recollection when

[Mark Hage (Vermont-NEA/VEHI)]: they moved to Vermont Blue Advantage.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I think it was '19

[Mark Hage (Vermont-NEA/VEHI)]: I would say nineteen million was the savings, and that would have been in 2022 when that plan became active. Yeah. So significant savings when the plan was launched.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I think the first two years, they had increases in the 8% range, if I remember correctly, less than 10, and then the third year came in just way too high, so they had to find something else, but they were able to find another carrier and offer the same plans. If

[Sen. Thomas Chittenden (Vice Chair)]: I can ask, you also mentioned how about cost and utilizations increasing, What you recall, what you've seen in the numbers, is there surface areas, types of care that are outpacing the increase in utilization relative to the other categories?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I think we're gonna talk to some of that. Hospitalized, we'll talk to some of that. Don't know if we can talk to utilization specifically, think but utilization is fair

[Mark Hage (Vermont-NEA/VEHI)]: to say is up across the board, but we are seeing some fairly dramatic increases in costs for musculoskeletal conditions, cancer, oncology medications, diabetes, asthma, COPD, and those categories are generally high cost categories, so there's no surprise there. But there is, I think, been an intensification of utilization in those areas and also increasing prices.

[Sen. Scott Beck (Member)]: The carrier that you are are now using, I assume, is

[Mark Hage (Vermont-NEA/VEHI)]: a multistate carrier? It's Blue Cross and Vermont. They're our TPAs. So we're self insured. Okay. We carry all our risk. Okay. And we contract with Blue Cross to make claims, as Bobby Joe said. Alright. They're helping our wellness program. They do a variety of services. So do you have any

[Sen. Scott Beck (Member)]: sense of whether or not the costs that you are incurring, particularly for these particular conditions, are out of line with what people are being charged who use the kind of services you do elsewhere outside of abroad?

[Mark Hage (Vermont-NEA/VEHI)]: I don't have that kind of national analysis at the top What of my I can say, I think confidently, Bobby Chittenden's opening remarks alluded to this, we're seeing a dramatic increase in cost nationally, statewide, regionally. We're also seeing an increase in utilization across the country as well. So whether our costs are potentially more costly, less costly, kind of analysis we don't have to be interested.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: But it is fair to say that there are certain services that depending on where you get them, even in Vermont, vary widely. And we put out a notice about that a few weeks ago with the help of some information from Blue Cross, where labs range from $54 to $650 depending on where you went. So there definitely is that's a piece of it

[Sen. Ann Cummings (Chair)]: for sure.

[Mark Hage (Vermont-NEA/VEHI)]: And before the legislature passed Act 55 last year, which cast the cost of hospital administered medications at a 120% of average sales price that CMS has. Vermont had the most expensive hospital administered medications, and was 500% down the CMS rate. So nationally, in that regard, unfortunately, we're the leader. Yeah. Not a distinction we want to. Alright.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: So happy to take any more questions, but just to move forward. We have about 33,000 active school employees and their dependents that we cover. We're covering the bulk of the school employees, 33,000. We have, again, just about 800 that are non Medicare retirees and 1,200 that are Medicare retirees on that plan. This is, again, outside of the sister's plans that they have that are Medicare Advantage. We have a board of directors that has six members. Three are appointed by the Vermont NEA and three are appointed by the SBA, or the Association. School The management team responsible for day to day operations, there's four individuals, myself, Mark from the NEA, and then two of my colleagues at Bisbeeck, which are John Steiner, he's the CEO, and Chris Roberts, is our finance director. Most interactions, Mark and I are lucky to handle most of them.

[Sen. Thomas Chittenden (Vice Chair)]: We're looking at data.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I work really directly with the central office staff, business managers, human resources, and Mark works with local union leaders, as well as school employees who escalate calls to him. This has, again, been dating back to the 1990s that these groups have been in partnership. Also offer, outside of our health plan, have dental, and we also have long term disability and life plans with Northeast Delta Dental and National Insurance Services. A big part of our program is our PATH wellness program, which is administered by four of my teammates at this event. It's a very well established plan and very popular with our employees.

[Sen. Martine Larocque Gulick (Member)]: Can I ask a question about that? Yes. I'm a former educator and I always like the PATH program, but do you collect any evidence as to it's, if it's working?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah, we work closely with Blue Cross on that and they do a lot of data analysis there to de identify everything and say, Alright, if I take these thousand people that did the survey and take the same like, people just like them, the same age, same gender, the same location, how did their plans compare and the program has better experience. We even have some information.

[Mark Hage (Vermont-NEA/VEHI)]: Have some data later. Oh, yeah, awesome.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: So, EHI offers four health insurance plans to our school districts, public and private. They have access to medical and prescription plans, and all the same networks across the board. There's a link in the electronic version to our plans if you need to see them. Then we have three benefit plans that we offer to our pre Medicare retirees at VISTAs. We set the rates for our premiums separately. We've got our VISTAs group, and then we've got our actives group. Our actives group renews on fiscal year, in July, and we do that for budgeting purposes. Our retirees are set on a calendar year. They have different plans, different experience, and their rate filings are done differently and separately, independent from the other. Our premium rates for both subscriber populations are approved by DFR. Those are the actuaries at Blue Cross calculate them, they're sent to DFR the filing, and then DFR works with another actuary that validates the numbers, and they usually get our rates approved for us in the January. To kind of give you an idea of how the rate cycle works, the rates for FY '25, which is July 24 through June '25, were set in the '24, utilizing claims from June '3 to 'twenty four. By the time you look at the claims from July '3, these are the rates that are set through June '6. There's really a long span of time, and there's a lot of catch up that we can find play as certain things come into play.

[Sen. Ruth Hardy (Member)]: So can I ask you about that? So Mark brought up the the work we did last year with the hospital prescription prices.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: When will you see that? We filed that based on the work that was done, across the analysis, and we filed that as part of our FY27 rates. Actually, on this next page, it shows you the difference between the two. I'll talk about that in one second. To kind of follow this, premiums and the out of pocket expenses are set at the statewide bargaining level. Years ago, everyone, each local school had their own bargaining, and then a number of years ago, the statewide bargaining went into play, and they decide each year, or for every couple of years, who pays what for premiums, and if there's any out of pocket expenses that are held by the district or the employees. Moving into rates, if you look at our rates, our FY twenty six rates increased just under 12%.

[Sen. Ruth Hardy (Member)]: So just so I'm clear, the so the work from last year will go into

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: the rates for the next So for June July of this year.

[Sen. Ruth Hardy (Member)]: Oh, so that your fiscal year, it is June to July, like, thing it is.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Okay. Okay.

[Mark Hage (Vermont-NEA/VEHI)]: We will see some savings as well.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: That's true.

[Mark Hage (Vermont-NEA/VEHI)]: In the second half of this fiscal year because some hospitals, implemented changes at 55 set of motion earlier than required. So we'll see some savings this year and we will see, as you'll see, various savings.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: But it is baked into so what the you know, not only f y twenty seven, but some of the f y twenty six has been baked into the f y twenty seven as well because really was, like, eighteen months worth of savings because the rates have already been set a long time ago for this period. Yep. Okay. But yeah, it does definitely get confusing on which I sometimes forget what you're wearing. Yeah. So when you look at our FY '27 rates, to your point, our increase was I think it averaged at 7.3%, which was significantly better than the last few years. And this really had to do with, you know, some of the changes that were put into effect into effect from the legislature, Vermont and Care Board, as well as to stop covering GLP-1s for January 1 for weight loss. That was a difficult decision for the board to make, but if we had included it, it would have increased our rates overall by 45%. So we've Yeah. It was, like, $16,000,000. It was a lot.

[Mark Hage (Vermont-NEA/VEHI)]: We were just talking about this yesterday. We were thinking about the presentation today. I was looking at some data, and from 2023 to 2024, our independent pharmacy analysts, who also have a lot of interest for us, told us that the anti obesity pharmaceuticals went up at gross cost of 178 per se. You combine that with a sharp increase in volume and you get an additional four or five points on premium just from that one.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Amazing. Wow. So while it was a difficult decision, we felt like, especially facing year after year of double digit increases, we had to do something to keep costs down. That was one of the decisions that we made. To be honest, when you're looking down through the allocation of premium dollars, typically that 84.4% of premium dollars that it shows there, it's actually closer to 89 most years. Usually of the 100% of the premium that we get, 89 to 90% of it goes right back out the door in claims pay. This year, it's a little lower because we had to rebuild our net position or our reserves because things like the GLP-1s had us losing, we lost $20,000,000 out of our reserves in FY24 and FY25, unexpectedly because of the sharp increase in those prescriptions, not only in the cost, but in the utilization as well, and it wasn't baked into these rates that we set three years ago. We had to rebuild our reserves. We're hoping that rebuilding our reserves will get our debt position back to a favorable level, and DFR has agreed with that and approved our rates for FY '27. So about 4% covers administrative costs for Blue Cross and internally at Beehive. Blue Cross is really only it's about their administrative charge is about 3.2% of our rates, which when you look at fully insured plans, be significantly more. 1.8% covers state and federal assessments, and the point six is our wellness program. So that's the rate allocation this year, but it does change your binder as we have to adjust things based on increases and such.

[Mark Hage (Vermont-NEA/VEHI)]: Also, to expand a little bit on Bobby Joe's comments about the FY point seven rate filing, that we need the decision not to cover them for weight loss and low risk, we'll cover them for diabetes, and for cardiovascular conditions. I think that was like a $16,000,000 savings for us. We were able to lower projected spending in FY 2017 by approximately $40,000,000.16000000 of that's attributable to the GLD one decision. However, 14,000,000 is attributable to Act 55. Mhmm. And we're also at $10,000,000 is attributable to Greenmont Airports directly to the hospitals, so they will file budgets in the FY twenty sixth at both of those, the board's recommended guidance, which was 3%. All the hospitals came in at or below that level and UVMMC's budget, of course, was cut by about 88,000,000. That decision was a $10,000,000 savings expense. With the Act 55 savings, we're in the neighborhood of $25,000,000 just by addressing prices, right, and price inflation. So those two decisions were very bad. And again, for Act 55, for us, Act 55 was just like a monopoly. So thank you for that.

[Sen. Ann Cummings (Chair)]: You did something right. You did something. You're right. You don't even know. No.

[Mark Hage (Vermont-NEA/VEHI)]: So, I'll build that a little bit into these big cost drivers, and as Bobby Joe has already stated, and this is a consistent theme, our two biggest cost drivers are hospital prices and pharmaceutical prices. Hospital claims account for roughly 55% of our total spend in inpatient and outpatient. 44% of those claims come through a hospital in the University of Vermont Health Network and the lion's share of those claims are with the University of Vermont Medical Center. We have a high concentration of employees and family members who, of course, live in Chittenden County. 20% of our spend in total is on pharmaceuticals. So 75% of our spend is attributable to hospital care and to pharmaceutical care. Yep. Just a question about that 20 on pharmaceuticals, does that include inpatient stays or cancer treatments? It includes inpatient treatments at hospitals or there aren't medical.

[Sen. Thomas Chittenden (Vice Chair)]: Okay, so you wouldn't see that That under

[Mark Hage (Vermont-NEA/VEHI)]: would be mostly retail and labor. Wow. And that's one of the fastest growing sectors of health care in the street

[Sen. Scott Beck (Member)]: as well as the pharmaceutical.

[Sen. Ann Cummings (Chair)]: That's kind of like mirrors what we hear. Yes.

[Mark Hage (Vermont-NEA/VEHI)]: Hospitals and pharmaceuticals are the big We have a quarterly meeting with our independent pharmacy analysts, Randy Ambrose, and the numbers are stable. And what you're going to see in the pages that follow, most spending in healthcare, whether we're talking about medical or Rx spending, is incurred by a relatively small number of people. Most people do not get a lot of that. But those who do, especially the chronic conditions or severe conditions, generate enormous costs, and that's true, again, in both the medical and the Rx field. So one of the things we do with Blue Cross, this was an initiative by VHive, is we ask for a cost stratification analysis of VHive. We wanna know what we're spending on our top 1%, what we're incurring in cost in the top five percent, and what we're incurring in cost for the bottom 50%. When we say bottom here, we mean the people who incur the least amount of cost. And this cost ratification analysis was actually inspired by something that the federal government does. Federal government's been doing this for about fifty years, and what's really illuminating is you tend to see the same percentages year in and year out, whether you're talking at the federal level or the state level, or even for a pool like VIAT. So for example, roughly 34,000 people in 2024 in our pool of active employees, three forty four of them made up our top 1% of claimants' tenure. That was 25% of our total spend. Three forty four people, 25% of total spend, at an average cost, as you see here, of $286,152 The top 5% of our claimants, that's seventeen twenty patients, accounted for 52% of our total spending at an average cost of more than $116,000 per member per year. When you look at the bottom 50%, and we're talking more than 17,200 patients, they come for just 5% of our total cost, and an average of a little, roughly $1,100 per member per year. Our high cost members, and there's some more data here in the table as you can see, these are folks who exceeded $100,000 in cost. They numbered just five eighty people out of that very large pool, but they incurred costs almost $122,000,000 And you can see in the table below the sort of progression from 2021 to 2024 of high cost patients, those exceeding a $100,000 of cost, and the impact on our total spend and the percentage of spending that they represent for the pool as a whole. So in 2024, we saw 580 high cost members accounted for a third of our total spend. Now, as we've mentioned, pharmacy continues to be an area where we are devoting a lot of time with respect to cost containment and doing so in a manner that does not compromise the health of our members. And Remedy Analytics, a long time partner. We've been with them now for ten years. They've been very helpful and intimidating for us where we are spending money and in what categories appear. And so once again, small number of Rx patients, like the small number of medical patients, drive most of our costs. Our total Rx spend in 2024 is a little over $90,000,000 That was an 18.4% increase over the 2023 number of seventy six point three. We had four zero four patients out of our pool who took medications that cost $50,000 or more. Again, relatively small number of people. It represented nearly 49% of our total RN expect. We had nearly 4,900 BMI subscribers, 14% of our pool of five that did not even use their own. If you turn to page number six, we thought it'd be helpful for you to see the impact of specialty medications versus generic or low cost non brand medications for starters. There's no common definition of specialty medications, except that they're really expensive and they're often the most expensive medications in the market. They tend to require, special handling and storage, often prior approval criteria is stricter. But without question, the most expensive medications we see year in and year out. Now, in this category, there's nine ninety five people in 2024 who needed a specialty nitrate channel. There was just three point three percent of the patients in BI who actually filled the prescription. Again, very low number, but their average gross cost was $50,000 in gross, $50,000 in gross. Those nine ninety five patients drove nearly $50,000,000 in gross spend, or 55.1% of our total spend per day. Bobby Joe and I have been watching this gross percentage grow year in and year out. I think when we first started working with Remedy, if I recall correctly, specialty meds at that time represented roughly 35% of our total spend. In 2024, they were 55.1%. And we don't see an end to that trajectory at this point in time, barring some very significant price recognition. Now generic medications, roughly in the immediate or early 2000s, we discovered at Beehive that our generic fill rate was much lower than we wanted it to be. And generic medications have the same ingredients, they're medically efficacious and profoundly less expensive. Their costs can be anywhere from 70 to 80% less expensive than the brand drug. So we undertook a major education effort in the early 2000s to encourage our members to learn about generic medications, to talk to their physicians about it, and whenever possible, to use generics. And we were successful in a relatively short space of time, so roughly eighty six percent of our members today take a generic medication when they need to, or when a prescription's prescribed. So in 2024, more than twenty three thousand six hundred of our members took a medication that cost between a dollar and less than a thousand dollars. But notice the average cost here compared to the specialty vendor. The average cost for that population was $197 and they represented, again, eighty six percent of prescribed medications in 2024. So our members are doing what we ask them to do by March. They are taking generic medications, lowest cost on the market, or they're asking for low cost, non brand medication, and even there, we're still seeing just tremendous increase in pharmacy. May I ask a question?

[Sen. Ruth Hardy (Member)]: So, I can't remember. I mean, we've had this conversation. I've participated in

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: this conversation about generics down the hall a bunch of times,

[Sen. Ann Cummings (Chair)]: but I

[Sen. Ruth Hardy (Member)]: can't remember. Can you require that people get generics over if there is a generic alternative?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Well, know there's a expense that's written in Yes,

[Mark Hage (Vermont-NEA/VEHI)]: think what often happens, can look into this more, but my understanding is that if a person with a prescription goes to a pharmacy, I believe the pharmacist is required to provide the lowest cost option unless there is some medical reason why that is not good for patients. Okay. We have never actually told people you have to get this generic, but I believe the way the system is structured, that's effectively how it happens. Okay. And again, the education effort was really successful.

[Sen. Ruth Hardy (Member)]: Well, mean, if that if that's true, if that if it's true that there's a law that says the pharmacist has to provide the lowest cost option, then you educating your members about generics isn't necessarily a cause and effect because if the pharmacist is already doing that anyway by law.

[Mark Hage (Vermont-NEA/VEHI)]: The education we started began well before what I think this one was. Okay, okay. The other thing is, medication taken for rheumatoid arthritis and really chronic pain, very successful medication. No exaggeration, nearly two decades. It was the most expensive medication that we paid for. Yeah. It was protected by like £140. So for two decades, manufacture of that drug made a lot of money. It made a lot of money from us and from the people we serve. Humira is now a biosimilar, which is a fancy way of saying generic. We do not allow coverage for Humira any longer. You have to take the less expensive, just as effective generic or bispecific. So we have taken those efforts in

[Sen. Ruth Hardy (Member)]: Yeah. I just wonder

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: across the board. Unfortunately, there's just a lot of medications that don't have the generic Yeah, yeah. So, like some of these really high cost drugs, there's nothing to refer them to. Yeah.

[Sen. Ruth Hardy (Member)]: There's a certain number of years that go by. Yeah.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I think a typical patent is twenty years, and then correct. Make a lot of money for a CT scan.

[Mark Hage (Vermont-NEA/VEHI)]: I guess they do what you need. And we just thought you might be interested to see just two categories of medications where we incur a lot of costs, again, inflammatory conditions are a major cost benefit. And not a lot of patients in our pool need these medications, just $4.76 in 2024, but as you can see, the average gross cost is in the neighborhood of £64,000. And the medication for diabetes, and we cover insulin at no cost, that has always been true. We have roughly eight hundred, eighteen hundred people who are, needing diabetic medication, and the average gross cost for that, in that category, is a little over $12,000 per kid.

[Sen. Ann Cummings (Chair)]: This is just this is active teachers or Even school employees. School employees, but not retired. Just as retired teachers.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: It would only be just the 800 that are included, haven't hit Medicare age yet. Those that could retire before being 65, it might include those 800, but for the most part it's

[Mark Hage (Vermont-NEA/VEHI)]: just that The Medicare Advantage folks at this just serves me on a different set of numbers. Yeah, just

[Sen. Ann Cummings (Chair)]: because we set up retired teachers' healthcare, we set up basically but when we were working on pensions, we set up a fund. Was just Pay as you go. Yeah. It was just pay as you go for a while. But if this does include them, then

[Mark Hage (Vermont-NEA/VEHI)]: If it includes them again, as Barbara just said, it's a it's a pretty small population.

[Sen. Ann Cummings (Chair)]: Your numbers sound, percentage wise, pretty close to what I'm seeing for the general population, where the thought is the teachers are generally younger and healthier, and so your cost should be less. But if you're picking up that older group, that That certainly should be. Okay.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Of course, it's all public school employees, not just the teachers. But think we're a teacher that would ask.

[Mark Hage (Vermont-NEA/VEHI)]: School administrators. Licensed and non licensed schools.

[Sen. Ruth Hardy (Member)]: And their family.

[Mark Hage (Vermont-NEA/VEHI)]: And their dependents.

[Sen. Ann Cummings (Chair)]: Yeah, And can I just add one thing, Martine?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Just when we're throwing a lot of numbers around and talking about, you know, 50% of this cost. But just to give you an overall, like, our expected revenue in f y twenty seven is about 400,000,000. So we're talking about really big numbers. Each week, we receive a a claim file and a bill from Blue Cross that says, these are all the claims we paid out this week, and we pay out about it's between, depending on the weeks, between six and ten million dollars a week in claims. So, you know, big dollars coming in and out, for sure.

[Mark Hage (Vermont-NEA/VEHI)]: And once more, thank you for Act 55. As you can see at the end of page five, excuse me, at page six, it's almost $15,000,000 savings for us at Act 1.7, and we haven't seen that kind of number in our ex for a long time. Price regulation works, and in this particular case, it was immediately established. That law had been in effect for two years running.

[Sen. Ann Cummings (Chair)]: Good.

[Mark Hage (Vermont-NEA/VEHI)]: Now, it says, I think, we've been in the neighborhood of, like, $2,526,000,000 dollars for us. And you should know as well, this is drawing attention outside our borders. We had people contacting me about it, the monthly states saying, wow, what's going on with your prescription medication regulations? So the work that he did is drawing attention beyond the. So looking forward, as I said, I spent a lot of days and was a lot of sleep thinking about how to control pharmacy costs. And so one of the things we're doing is considering contracting with a new pharmacy benefit manager or staying with our current pharmacy benefit manager, which is under contract with Blue Cross, but on more favorable terms. So we've put out an RFP for pharmacy benefit manager in 2025, and after researching for a couple of years, new competitors in the PBM market. The PBM market is highly consolidated. The top three PBMs are totally in the market. One of them is Optum, which is under contract with Blue Cross. And Bobby Joe and I thought, you know, why don't we go out and see what the competition can offer? They're called generally next gen PBMs, right of way to capital RX, and they operate very differently than the big three. They have been delivering some very significant cost savings on both the public sector and the private sector. So we put out the RFP, we interviewed four candidates, think it was, and what we can say without, no decision has yet been reached, but whatever decision we make as a result of this process, whether we stay with the current PBM or we move to a new PBM, we're looking at several million dollars of savings each year for the next three years.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: What does several mean?

[Mark Hage (Vermont-NEA/VEHI)]: I said high single digit. Until we sort of finish the process, like to keep the extra That's

[Sen. Ruth Hardy (Member)]: fair, but several has a lot of range.

[Mark Hage (Vermont-NEA/VEHI)]: I'd say high single digit. Very good, good. Okay, so we are also always looking for possibility for new partnerships and vendors to deal with high cost conditions. As you can see from the earlier numbers we shared, small numbers of people with severe or multiple chronic conditions can generate an awful lot of cost. Is there a better way to serve those populations, particularly in the arena of chronic care management? Any pool you look at, and you can look at federal data as well, overwhelmingly most costs are generated by crime care, anywhere in the neighborhood of 70 to 80% from one year to the next. So can we help those folks get more timely, high quality, and affordable care? So for example, and I think our GLP-one conversation over the last couple years helped to propel this thinking, is there a vendor out there who can help us independently work with folks with type two diabetes? And recently we've been approached by a vendor whose presentation was very impressive, and the numbers were impressive. Bobby Joe and I hear a lot from vendors all the time, promising us alone. So we move very slowly and cautiously and carefully in this arena, but this is a vendor that looks promising. We're gonna continue to do more research. These kinds of approaches are in our business called point solutions. We use a self insured pool, go out, you contract with an independent vendor, and you provide services in a sort of non traditional way and a more personalized way to address chronic conditions and other high cost conditions. We also want you to know that we were very supportive of another act that implemented this in 2024. You gave prescription drug affordability authority to the Green Mountain Care Board. You created a division within the Green Mountain Care Board to begin building a framework and a methodology for lowering the cost of these specialty meds and other high cost prescriptions. So again, we understood immediately when we saw that legislation, it was important, it was gonna be impactful for us and for all Vermonters, and we endorsed it, and we're looking forward to seeing how that division carries out its work in the years to come. There are prescription drug affordability boards across The United States, and Maryland was the first to do it in 2019. Vermont and the A picked up that ball and ran a meeting with it. And we since then, other states like Colorado, Maine, etcetera, have also instituted prescription drug affordability. So what we're seeing nationally is, again, the recognition that if we want to bring down cost, we have to regulate prices. With respect to hospital costs, again, this is 55% of our spend, so we are now at the early stages of a new benefit design process. Bobby Joe spoke to the four plans that we currently offer. We've been tracking what's happening in the national market with benefit design and new ways to get at crisis and costs, again, without compromising access to care. And so we want to look at a new benefit design process that will help us to incentivize people to get the best care they can, the best access metrics outside of hospitals. And this will mean, and again, this is also part of what Act 68 did last year. Act 68 also speaks to primary care, revitalizing, restructuring primary care, getting people in the Act 167 report. Get as much care out of hospitals as you can and get it back into the community setting, doctor's offices, primary care, mental health, that sort of thing. So we want to look at benefit design options that will do that, and we're going to be contracting soon with a benefit design consultant who can help us think in new and innovative ways about how benefit design can help us to advance what it is you're trying to achieve with Ag 68. The other thing that interests us, and again, this is in the early stages, there are pools and there are big employers who contract directly with us, they are using reference based pricing as one of the ways of determining what a fair price is for hospital services. And there are states like Indiana, which passed a law last year that said if a self insured pool like VR or an employer contracts directly with a hospital, you will charge them, you know, more than 250% of what Medicare charges where statutes don't exist like that. As I said, employers or pools can go in and negotiate on their own. So as we watch reference based pricing be implemented here in Vermont, consistent with Act 68, again, very, very promising. Cannot say that right now. We will be looking to what extent, to what extent we can, we should be looking at doing this on our own, or again, just piggybacking on what it is to be monetary.

[Sen. Martine Larocque Gulick (Member)]: Yeah, we have a question for you.

[Sen. Ruth Hardy (Member)]: So, benefit design process. I mean, much within what has been negotiated can you shift around the benefit design?

[Mark Hage (Vermont-NEA/VEHI)]: We can't design a plan based on what we believe is in the best interest of school employees at the VA. So the statewide bargaining plan doesn't dictate the services that we offer. Okay.

[Sen. Ruth Hardy (Member)]: Does it dictate things like co pays and things like that?

[Mark Hage (Vermont-NEA/VEHI)]: Correct, statement bargaining.

[Sen. Ruth Hardy (Member)]: Okay. So that you guys can't that has to be part of the bargaining process.

[Sen. Thomas Chittenden (Vice Chair)]: That's part

[Sen. Ruth Hardy (Member)]: of the bargain. Because, I mean, that's

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: one way to Yeah. Adjust the We create the plans, but then they

[Mark Hage (Vermont-NEA/VEHI)]: They bargain.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: They bargain over them. You we can recreate whatever plan design we want, and then they can, you know, kind of separate, you know, decide who's paying one. Okay.

[Sen. Ruth Hardy (Member)]: I have another question that I have mixed feelings about, but so one of the things that one of my school administrators was talking to me about was some kind of analysis to see of if you have a two working household like, you know, both adults in the household are working and they both get benefits through their employer but one of them is a teacher or employed by a school. They're more likely to take the school plan than whatever the other plan is because it's a almost always a better plan. So, I'm wondering how, I mean, it's awesome that those people have health insurance and good health insurance, but I'm wondering if you've done any analysis to see like how much you're picking up of costs because you know what I mean? Like I said, I have a mixed feeling about asking this, but I'm wondering if it is any bit of a cost driver.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I mean, Sure, it costs more to cover an additional member. We get in a higher premium, so they're paying a higher amount for it. We have not done an analysis to say if we stop covering spouses. I have heard of some small employers

[Sen. Ruth Hardy (Member)]: I'm not suggesting stopping covering spouses, believe me. I'm a spouse who's covered by my spouse.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: So, not suggesting that. I'm not suggesting that either.

[Sen. Ruth Hardy (Member)]: But also, just to sort of see, it is a little bit of a cost shift. I'll use my own community as an example. We have Middlebury College that tends to have pretty good health insurance, but I think our school health plan is even better. So, there are people who have a spouse employed by one or the other, and they're taking the school. So, like, almost you're kinda saving Middlebury College some money there. So I'm wondering, like, if you've done any of that analysis and if there's a way to tweak that. And I don't have ideas. I'm just curious.

[Mark Hage (Vermont-NEA/VEHI)]: Yeah. We don't have access to what spouses Yeah. I mean, it's touchy

[Sen. Ruth Hardy (Member)]: because you don't have the data to do it, and it's kinda private data, but also just wondering if there's

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: There has not. We've not done the analysis on that. And, honestly, I think it's really the first time it's come up.

[Sen. Ruth Hardy (Member)]: You know? I'm only asking because one of my school administrators mentioned it to me. Yeah.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: And and I was like, I

[Sen. Thomas Chittenden (Vice Chair)]: don't know. I have no idea.

[Mark Hage (Vermont-NEA/VEHI)]: I need to know. Yeah. Even where there is a caution, let's assume for the sake of argument there is in some cases. Big picture, it doesn't change our dynamic.

[Sen. Ruth Hardy (Member)]: It's probably small. Yeah. And, I mean, your point about the prime the premium is higher, but, I mean, as you're thinking about the premiums too, which is also a negotiated benefit, but I'm assuming it's part of the negotiations, but just thinking about that, that

[Sen. Thomas Chittenden (Vice Chair)]: I'd be happy to know it's how it might

[Sen. Ruth Hardy (Member)]: be playing out, and it's probably very different across the state.

[Sen. Thomas Chittenden (Vice Chair)]: My communities vary has a different situation than others. Yeah.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: The reason I brought that up about this past is my husband works for an employer. They sent something out that said we're no longer covering spouses as of January 1. It's funny that you brought it up though, they've just recently come up. We'll take it back and ponder. Yeah, we will ponder. You. So,

[Mark Hage (Vermont-NEA/VEHI)]: five Bs. Go ahead. Sorry. Got one quick one, sorry. So along those lines, your FY '27 or eight's platinum single, $1,400. What, that's the cost of the plan to the school, right? A month? That's the total cost.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: So that's the total premium.

[Mark Hage (Vermont-NEA/VEHI)]: So what?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: And the school pays 80%.

[Mark Hage (Vermont-NEA/VEHI)]: Okay, so 20%. Okay. Just wanted

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: to make sure. And actually just one more thought on your question before, which is some employers have a cash in lieu of benefits option, so it's cheaper for them to say, I will pay you $5,000 Yeah, not cheap. So that plays a role as well.

[Sen. Martine Larocque Gulick (Member)]: Okay, thank you. Thank as you know, we're under a tremendous amount of pressure to bring down healthcare costs and to generally bring down education costs in the form of property taxes and so on. Are you gonna speak a little bit to how you are governed and who is responsible for making these cost decisions?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah, so we've talked about who kind of funds me, if you will. So we have a board of directors, three appointees from Vermont NEA and three from the Vermont School Board Association. And they really made the decisions on the management team will bring them suggestions of what we think, or we'll work with a small committee from the board, and we'll bring them suggestions, but ultimately it's up to the board to make these final decisions. Then DFR has to approve it, and then the statewide bargaining takes what we've done and puts their Stance going on. Well, and their benefit design to that.

[Mark Hage (Vermont-NEA/VEHI)]: And even before our board makes a decision, before we make a recommendation, sometimes it's options, multiple options, to what is considered. Our rate setting goes through a pretty rigorous actuarial analysis that you can expect.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: And then

[Mark Hage (Vermont-NEA/VEHI)]: it goes through another actuarial Mhmm. Through DFR. Okay. And then DFR, Bobby Joseph gets the final say, and it's usually a January or something.

[Sen. Ann Cummings (Chair)]: Okay. So you develop plans and costs? Mhmm. Correct. That goes to the bargaining group, and they Once it's been approved, it gets approved. Once it's approved. Yeah. Yeah. It gets approved, then that is the group, and we've had a couple witnesses and said, well, we should allow, it's one or the other, and some groups have said they would like to be able to take this from this plan and that from that plan, create a third plan, but that's not allowed.

[Mark Hage (Vermont-NEA/VEHI)]: Right, the negotiators do not negotiate over benefits, How much hospitalization they have, primary care visits, ambulance services, etcetera. What they negotiate over is the cost sharing arrangements, and then there's some eligibility issues that they negotiate over as well, But they have the BI plans with the cost you see, then they negotiate over the cost sharing arrangements along with fewer things.

[Sen. Ann Cummings (Chair)]: Okay.

[Mark Hage (Vermont-NEA/VEHI)]: There are unions and employers or employers and employees who actually negotiate at the bargaining table over the actual how many visits are you going to get for this service or that service. Yeah. That's not what happens here.

[Sen. Ann Cummings (Chair)]: Okay. And the other suggestion that's been made is that we could consider freezing the actuarial value of the plans. What would happen if we did that?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: So just a quick view of what actuarial value is, is when you look at the qualified health plans on the exchange, they're called the platinum plan, the gold plan, silver, and those all have an actuarial value. And the value represents so if it's a platinum plan, on average, the average person in the platinum plan will have 90% of their claim costs covered. So that's how we kinda get to that point. Our plans that we design are at I'll speak to the gold CDHP, which is where 85% of our membership is. Our gold CDHP, the actual value is 87.4. It's just below the platinum level, because the platinum can really go from 88 to 92. There's a little room there. Then when you add what the statewide bargaining has added to it, as far as helping with the coverage, helping the cost, it brings the actual actuarial value to 97.4 and 98.4, depending if you're a licensed or non licensed group. So,

[Sen. Ann Cummings (Chair)]: as far as like Pretty good. Yes. That is a pretty good health insurance part of it. You're at $97.98. Mhmm. Silver plan, I've been told, is cheaper, but it has more value than the silver because we have silver lotus. Has anyone ever looked at the silver plan? Yeah, so we have a silver plan. The problem is it does increase the out of pocket exposure to

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: the member It does increase the amount the member would have to pay. When you add in the exposure and the premium, it actually doesn't create a better benefit than what they have on the gold. I think what you might be referring to is how the QHPs work with

[Mark Hage (Vermont-NEA/VEHI)]: State exchange.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah, the exchange with the funding, but subsidies and they can adjust the deductibles. There's ways to make the plans less expensive by increasing the out of pocket exposure for the members. Then, even if we switch to a silver plan, we would then give it to the statewide bargaining group, who would then decide how much that would be paid out

[Sen. Ann Cummings (Chair)]: of pocket by the member versus helped by the employer. The statewide bargaining group is school employees and school administration? No,

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: it's the, go ahead.

[Mark Hage (Vermont-NEA/VEHI)]: Sure. So it's representatives from Vermont and AA and Aspen. It's the union side of And it is representatives from Vermont School Boards Association, the GSB and one side is able

[Sen. Ruth Hardy (Member)]: to use some Yeah. Of

[Sen. Ann Cummings (Chair)]: Do you do any stretch? Yeah. They were doing a estimation? Yeah. They're commissioners for me. Mhmm. But they're. Right. Okay. But if we froze the actual work because it's been suggested by one of the national or statewide organizations. Actually, I've heard it a couple of times. If we froze the actual where no value or the actual where no value is 97%, I'm trying to figure out if you froze it. I can't imagine going to a 100% right now.

[Sen. Thomas Chittenden (Vice Chair)]: That's what I was gonna say.

[Sen. Ruth Hardy (Member)]: It seems like freezing it, you would

[Sen. Thomas Chittenden (Vice Chair)]: be freezing it high. Yeah. So I don't know. I don't understand. Less cost.

[Sen. Ann Cummings (Chair)]: Yeah. The costs go up. Now, if your actuarial value stays the same, you're saying 94, 97%. Interestingly enough,

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: the actuarial value goes up each year because the plan stays the same, but costs go up. So, VIHI is picking up more costs each year as these amounts go up because the cap for the member and the cap for the employer stays the same, but VIHI is going up as these high costs are going up. That makes sense. So the actuarial value actually increases slightly each year. Oh, I

[Mark Hage (Vermont-NEA/VEHI)]: like And actuarial value is an interesting conversation, and it's often a conversation had among the actuaries, if you

[Sen. Ann Cummings (Chair)]: could imagine. I did. We are That actuary. I know it's above my pay grade.

[Mark Hage (Vermont-NEA/VEHI)]: Yeah. Well, it's above mine too. But what's important to understand, and part of the reason why we shared so many numbers with you today, so there's no correlation between actuarial value What you can afford to pay, whether you can pay it when you charge, depends on your income. So I'll you an example. This is relatively recent. It happened last late last year. You know how they tell you to stand six feet back within pharmacies, so you can protect his privacy or figure your prescriptions. And I watched the gentleman at the counter beg for his medication. He was asked for $400. Didn't happen. He walked out without his medication. I went up after him. Difference between the two of us, that I could afford. Right. He could actually have been in a high actuarial plan and not. I could have been in a low actuary because of the income difference. It's always important to understand this is that whatever sort of intellectual or mathematical exercises we go through with actuarial value, there's no correlation between that and price. And importantly too, the work that's been done here in 2025 is beginning to address the systemic cause of the problem. That's why a 120% average sales price on hospital administered medications can yield us. It'll be $15,000,000 in saving without having to create any affordability.

[Sen. Ann Cummings (Chair)]: Once it doesn't get shifted onto the hospital.

[Mark Hage (Vermont-NEA/VEHI)]: Well, there's also the question of whether hospitals can operate more efficiently, and that's

[Sen. Ann Cummings (Chair)]: why Well, we some of us spent some time this morning hearing Yeah. We are starting,

[Mark Hage (Vermont-NEA/VEHI)]: we

[Sen. Ann Cummings (Chair)]: think, excuse me, the message. We are beyond affordability both in hospital and pharmaceutical costs. Many years ago this committee spent several years trying to do something about pharmaceutical costs. They are bigger and stronger and richer than we are and may have had minimal effect, but that's about what it is.

[Sen. Ruth Hardy (Member)]: Thank you. To your point about affordability being income related, are your benefits structured so that the higher income employees in the pool pay more for their premiums?

[Mark Hage (Vermont-NEA/VEHI)]: There's there's different cautionary arrangements for licensed and non licensed. Cautionary reasons are not indexed to income.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Okay.

[Mark Hage (Vermont-NEA/VEHI)]: Just a board classification.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Okay. There might be something to look at in that. We

[Mark Hage (Vermont-NEA/VEHI)]: can actually talk.

[Sen. Ruth Hardy (Member)]: There are plans that are doing that right now that yeah. That yeah.

[Mark Hage (Vermont-NEA/VEHI)]: I see the piggyback on that.

[Sen. Thomas Chittenden (Vice Chair)]: Yeah. So it's just it still pops my mind that my co pay is 10 and my boss who makes four times as much as me at UEM out here, of folks, is also $10. So I just would love the income sensitization.

[Sen. Ruth Hardy (Member)]: Yeah. That's what I Yeah.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah. That's sure.

[Sen. Thomas Chittenden (Vice Chair)]: It's like you're

[Mark Hage (Vermont-NEA/VEHI)]: a Martine Larocque story. I I got to meet Martine Larocque for fifteen minutes. That's my fifteen minutes of fame. I got to meet him for fifteen minutes in New York City last fall. I was out to speak by the union about health care reform. I was out to speak about what this legislature had done in 1925 because it's not being done anymore. So I was like, okay. I'll come and talk about these reforms and their impact on my pool and on Vermont just generally. And Mark Humo was the keynote. Mhmm. And my evening colleague said, it's like, need Mark Humo. I said, you know, why not? I did. We spoke for about fifteen minutes, and I'm glad I said, well, cost plus is our x program. But he's also moving now into hospital contracting, direct hospital contracting. He wants to go into hospitals and he wants to teach other employer, big employers in particular, how to do this and negotiate directly with hospital, something I mentioned earlier. He said, I'm a pay him a fair price. Reference into Medicare. And I'm gonna say to them, I'm gonna pay you a fair price for these services. Yeah. And you're gonna see my employees, and you're not gonna charge them at the doctor. Said he to me, and I didn't expect the conversation to go. He said,

[Sen. Ann Cummings (Chair)]: what are you doing about the documents?

[Mark Hage (Vermont-NEA/VEHI)]: Are killing people. So I think there's a growing awareness that these high out of pocket cops, they clearly have not brought down possible, and they, again, they create the kind of affordability.

[Sen. Ann Cummings (Chair)]: The idea is that if you didn't have a copay, people would have three colonoscopies in the year.

[Mark Hage (Vermont-NEA/VEHI)]: Well, I hope not.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah.

[Sen. Ann Cummings (Chair)]: I mean, if there's there are some people that might

[Mark Hage (Vermont-NEA/VEHI)]: Right.

[Sen. Ann Cummings (Chair)]: I think they probably have a medical or psychological condition, but going to the doctor is not generally an overly pleasant process, it's inconvenient if you're a working person, transportation, in and out, all the issues we hear about. But that was the original argument for co pays. It really doesn't cut down the cost. It's supposed to make sure you have some skin in the game so you think twice before you go. But for some people, even a $10 copay is a detriment.

[Mark Hage (Vermont-NEA/VEHI)]: Yeah. You get it.

[Sen. Ann Cummings (Chair)]: Yeah. Think we

[Mark Hage (Vermont-NEA/VEHI)]: You know, to the point about where you get a share and all the cost options and looking at some of the material here on page seven, Bobby and I or I should say, Vi was one of the early endorsers of licensing the Green Mountain Surgical Center as an independent stand alone. So this was back in twenty fifteen, twenty fourteen. Bobby Joe's predecessor, Hikora Soros, was in the working at the Miami once he testifies or to this. We provided written information also endorsing the center. May recall, there was a lot of resistance from the status quo Yeah. Against those that independent center. Fortunately, it was established. It is a very high quality center, and it has a lower cost. Blue Cross has recently rolled out an affordability Yeah. In the county. We have endorsed that as well. We've said to our members, here's some low cost options for you to consider with surgeries and also imaging. It's in mostly in Chittenden County at the moment. But again, for us, that's where a large percentage of our members live. If they get care at those centers, they're gonna lower cost as well. We continue to put a premium on education and on supporting, you know, standalone institutions like this that can deliver high quality care at a lower cost, and there's no question that they can do it. And getting again, coming back to the Act one sixty seven report, it gets much care out of the hospitals. So there is competition around the margins in Chittenden. We try to support that as best we can. Coming back to a point solution that we haven't talked about yet is hinge health. You see this bottom of page seven. MSK, musculoskeletal conditions are a big cost driver for us. Chronic pain is a big deal and a lot of people end up getting medical care and Rx prescriptions because of that pain. And so we're in the second year of a partnership with Inge Health. However, this is virtual PT. It has been enormously popular with our members. We've engaged about little over 1,200 members so far in just the first year. Fifty two percent of them are reporting a positive outcome in pain reduction, and eighty two percent reach what providers call a medically significant clinical benchmark. That could be, for example, a greater than 34% reduction in pain. And then this next stat for us is really helpful to know. Twenty three percent of people who are doing this program say they are less likely now to pursue surgery. Here's cost savings. High quality care done in your home through a point solution, independent vendor with Vehive that is now more likely to mean you need fewer medications, fewer visits to the specialist, and fewer surgeries. All of that is cost savings for us as well. And that's part of our thinking when we look at new benefit design. Can we advance care options like this in other categories of need and lower our costs while also making sure our members get the best care? And by the way, there's no out of pocket cost for members for the child. They won't take a client that has a deductible for COBRA. They said, because it's an affordability barrier. You want folks to get this care, and we'll make sure you get a return on investment if these folks follow our our therapists. And so far, the results are really promising.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: I'll also add that it's less people leaving work. Yes. You have to go to physical therapy, have to leave work, go to the PT, go back. It's kind of time intensive, especially if you live in one of the more rural areas. Yeah. So this allows people to do it at home before work, after work, at night, whenever they want to do it. Just, it's an app on your phone. So

[Mark Hage (Vermont-NEA/VEHI)]: I have to say, I was incredibly cynical and thoughtful about this virtual PT. I thought, how can it's possible to work in the community? And then I met two PT folks at the gym one day who do virtual PT, two young people. And they gave me a tutorial. I thought, alright, maybe we should look into this little

[Sen. Ann Cummings (Chair)]: little PT, you go and they they put you through a few exercises. Then my husband comes home with a sheet of paper with pictures on it.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Maybe some stretchy things. Yes. This actually has some sensors on it that can make sure you're doing it correctly, so it's not just, know, he'd do this, it's more advanced. Straighten your back, you need to, you know, whatever it is.

[Mark Hage (Vermont-NEA/VEHI)]: And finally, to page eight, thank you for your patience.

[Sen. Ann Cummings (Chair)]: That's okay. This Recently, has been

[Mark Hage (Vermont-NEA/VEHI)]: someone reached out to me, again, they're always receiving inquiries from different vendors, most of them promising the world to deliver it far less, but in this case, this particular vendor really impressed me. They're offering another point solution, specialty care program to reduce surgical cancer and infusion costs. As you can imagine, these are pretty big cost drivers. I was really impressed with the presentation. Again, I tend to be pretty suspicious of this stuff. Shared some of the stuff about me, so let's set up a meeting and talk with them. So that's in the works. Yesterday I sent a that was sponsored by the North Carolina State Health Clinic and they had recently, or last couple of years, contracted with this vendor and they were very optimistic and very positive about what they were seeing in their results, both in terms of medical outcomes and cost reductions. And now a shout out for our wellness program. And to your question earlier, senator, about results, in addition to this being, what do you think it is, our most popular program of all everything we do?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Oh my gosh,

[Sen. Ann Cummings (Chair)]: I'm not gonna quote on that.

[Mark Hage (Vermont-NEA/VEHI)]: I'm sure it's been around for a long time, it's gone through many iterations. What our data shows, and this is data that we work with Blue Cross to generate, is that those folks who engage with our Path Wellness Program, again as Bobby just said earlier, compared to folks who do not, they had lower per member per month rate of spending. We've looked at this from a 2018 to 2023 period of time. They engage more with their primary care providers. They're more likely to have a preventative visit compared to nonparticipants, and recent Blue Cross data of our pool showed us that someone that's getting a preventative care visit every eighteen months generates less incentive. They have lower frequency of ER visits, lower prevalence of diabetes, lower prevalence of hypertension, lower prevalence of medical health. So our colleagues in the wellness program are doing fabulous work, People are responding to it. Again, very popular. It's locally based. Sometimes it's part of the service programs as well as folks getting information they can take home. They've got all kinds of challenges that they can undertake in terms of lifestyle changes, exercise. It's another testament to the power of education.

[Sen. Ruth Hardy (Member)]: That's good. Yeah. Is it is this program incentivized to for members to participate?

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Or There is an incentive portion. Each each event or, you know, each Just can do, like, little events and things, and they can gaze points. And if they hit a 200 points in a calendar or in a fiscal year, there is a gift card that they will get. $100 gift card.

[Sen. Martine Larocque Gulick (Member)]: So The individual will get it? Yeah.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: The employee. And it is offered not only to VHI members, but all employees that will work in the building. So it's not just our covered folks if everyone

[Mark Hage (Vermont-NEA/VEHI)]: And by which you're going to do a retirement, you said access to

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: What about family members? Not family. Just the employees. Yeah. Surrender. If if it would help to have

[Sen. Ruth Hardy (Member)]: If it's saving money, like, and you're paying for

[Sen. Ann Cummings (Chair)]: Sure. A spouse. Maybe

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah. And I think the reason that they do it just at the employee level is they do so many

[Sen. Ann Cummings (Chair)]: things at the schools.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Yeah. They do they might have lunch and learns and things like that right at the school. So it might be harder for a spouse to get there or a family member, but that's their home. Yeah.

[Mark Hage (Vermont-NEA/VEHI)]: Also, I think, popular in part because it is often collective effort, collective projects, people doing this together, learning together, exercising together, going for walks together. And so the the collective communal nation Yeah.

[Sen. Ruth Hardy (Member)]: Mean, it does seem like you're missing half the population if you're only doing the employ I mean, it also could be kids too. Mhmm. Somehow. They're in the schools. Right?

[Mark Hage (Vermont-NEA/VEHI)]: Yeah. They are in the you're a captive

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: audience. Yeah.

[Mark Hage (Vermont-NEA/VEHI)]: So one last shout out, and, again, we've touched on this before, but it's really important to emphasize the reference based pricing reforms Mhmm. Are landmark. I think you will recall this in particular when appropriation was approved so we could do a reference based pricing analysis for my Lehigh's hospital claims and VSEA's hospital claims. That appropriation allowed this analysis to go forward. It was done under the auspices of the Green Mountain Care Board with an outside vendor. All of the hospital claims were repriced to specific benchmarks relative to Medicare over a period from 2018 to 2023. Those 2023, we couldn't get the data for the last quarter. But again, roughly, it's 2018 to 2020. Multiple benchmarks, but the one that's probably most important since it's one that's being done nationally in Oregon, Washington just signed off to this for the public sector, 700,000 public sector employees, 300,000 in Oregon. If we had reimbursed Medicare, excuse me, we had reimbursed our hospitals in Vermont, VI, VI 11, at double what Medicare pays, 200%, between 2018 and 2023, we would have seen savings of £230,000,000. That's where the rubber is. That's where we have real promise and value. So thank you for Act 68, and we're looking forward to the next iteration of the Green

[Sen. Ann Cummings (Chair)]: Mother Care. Going through the problem is that the majority of our hospitals are small, rural, and their financial sheets are in various shades of pink or red. If we cut their rates before other reforms can go into place, your members might find they have to travel to Chittenden County for a hospital care. And so we're we're facing it in. There's a lot of stuff going on and we're trying I mean, Brattleboro was our most recent. We did have Springfield go into bankruptcy. We wanna make sure that the hospital care is there when it's needed, and it also needs to be affordable.

[Mark Hage (Vermont-NEA/VEHI)]: Absolutely. They're trying to move it You know, there were two things I learned from that. I learned a lot of things from this study. We learned a lot from this study, and two of the things that surprised me, and I've been doing this now for almost twenty five years. Our reimbursements for our hospitals, well, with genetic care, between 2018, 2023, just be nice, went from 276% of Medicare to 326%. 50 jump in it. That is reflected between the interest in here with that 55% hospital spend for our clients. The other thing I learned is that roughly 88% of our spend was with our sixth largest hospitals. Most of our spend is, again, highly concentrated at UVMMC and the network, but also with five other TPS hospitals. UVMMC is by 500

[Sen. Ann Cummings (Chair)]: UVMMC is one of the most high, it's one of the highest priced hospitals in the country, and they control a large number of medical practices and hospitals. So

[Mark Hage (Vermont-NEA/VEHI)]: And I want to be

[Sen. Ann Cummings (Chair)]: clear They making progress, but it's

[Mark Hage (Vermont-NEA/VEHI)]: We want RVP implemented in a rational, fair, effective way, and we want all of our hospitals to be financially sustainable, deliver high quality care. There's a regional transformation project underway now with the HS that's probably gonna change the landscape. And the Advo 60 '7 report was, again, another landmark event for us that we're gonna fundamentally change how you deliver care if you want your hospitals to survive. We have no interest in seeing any of our hospitals in dire financial states, but we also have a DIVIP, because as you can understand, in making sure that care is affordable.

[Sen. Ann Cummings (Chair)]: Think we all do I think that is one of the major drivers of the affordability crisis that's worrying. That's national, but Vermont has the highest cost in the country, and we are not one of the richest states in the country, so it's definitely hitting home.

[Sen. Scott Beck (Member)]: And we've been encouraged by

[Mark Hage (Vermont-NEA/VEHI)]: what Doctor. Levs, like I said recently, about trying to move to Medicare benchmarks or Medicare breakeven over the next five years. There's clearly a recognition that we have to do something Yeah, there is. And we're beneficiaries.

[Sen. Martine Larocque Gulick (Member)]: That concludes my last comment on a Friday afternoon. Thank you very much. You're a wealth of knowledge and it's so helpful to hear from you. I would say Senator Hardy, Senator Cummings and I have been working really hard again to break down healthcare costs and doing whatever we can expand the health and welfare.

[Sen. Ruth Hardy (Member)]: I

[Sen. Martine Larocque Gulick (Member)]: know. Health and welfare blights. And I'm also on a school board, I know that losing the ability to negotiate healthcare has been not great, I would say, overall. So I want to sort of echo what my colleague said. It would just be nice to see some real targeted efforts in terms of deductibles, related salaries or whatnot. I'm not suggesting any particular strategy, but it would just be great to see that there's more

[Mark Hage (Vermont-NEA/VEHI)]: Uncompensative.

[Sen. Martine Larocque Gulick (Member)]: Yeah, on the back end happening as well. Because we are, I don't wanna speak out of turn, but we're in a situation now where we could potentially be really destabilizing our school system with new maps and new districts and a new funding formula. And, you know, we all need to be doing everything we can to break down those costs. So thank you. Thank you.

[Mark Hage (Vermont-NEA/VEHI)]: I appreciate the time today very much.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: And I appreciate When is the next time I'm sorry. No.

[Sen. Ruth Hardy (Member)]: Go Chair. When is the next time you all are in negotiations?

[Mark Hage (Vermont-NEA/VEHI)]: The parties, I believe, we have nothing to do with negotiations. Yeah. But the next time, I believe, that's April. Okay.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: It goes into effect, the next benefit cycle will go into effect January 29. Right now, the benefits are bargained through twenty eighth. We're trying to link up our new plans with the next time the bargaining goes. That way they have our new plans in hand when they go to bargain, as it goes to looking at our current plans. Right. And you would are you two responsible for doing some of the analysis?

[Sen. Ruth Hardy (Member)]: Like, if the income sensitive analysis, or would that

[Mark Hage (Vermont-NEA/VEHI)]: be the I think income sensitivity would be outside of our purview, Yeah. In past bargaining cycles, folks have asked us for claims data, that kind of thing. That kind of nuts and bolts stuff we can provide. Uh-huh. Question of how income sensitivity would play out in a negotiated settlement, that would be outside of The United States. Okay.

[Sen. Ann Cummings (Chair)]: So thank you, I apologize. I was late today because the Joint Fiscal Committee was approved in the overall health transformation grant. Wow. It's a very long accomplishment.

[Mark Hage (Vermont-NEA/VEHI)]: Yes. It is. That's a lot

[Sen. Ann Cummings (Chair)]: of money. But it is

[Mark Hage (Vermont-NEA/VEHI)]: Could be very impactful.

[Sen. Scott Beck (Member)]: Unfortunately, you decided to give all the money to Franklin County.

[Mark Hage (Vermont-NEA/VEHI)]: Thank you, I heard.

[Sen. Ann Cummings (Chair)]: Let's talk. Addison. Excellent. It's going to be with the newspaper. It's being negotiated and renegotiated almost on a line by line basis. It is called a cooperative agreement. It is not a grant and the cooperation is two full time people and a lot of telephone and emails like Caledonia is highly supervised. So it it's it it it is changing on a daily basis, but it's in. And, hopefully, it will help do the foundation, I think, more of especially well, it has to be in rural areas. So rural really, foundation for basic primary care and then access to specialty.

[Mark Hage (Vermont-NEA/VEHI)]: Yeah.

[Sen. Ann Cummings (Chair)]: So I think that's that one is in process. Okay.

[Mark Hage (Vermont-NEA/VEHI)]: Thank you, Candy.

[Sen. Ann Cummings (Chair)]: Thank you.

[Sen. Scott Beck (Member)]: Appreciate the time.

[Mark Hage (Vermont-NEA/VEHI)]: Thank you.

[Sen. Ann Cummings (Chair)]: Thank you. It is hard work, and it's always good to know what is going on.

[Mark Hage (Vermont-NEA/VEHI)]: We ask ourselves that

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: if you Yes.

[Sen. Ann Cummings (Chair)]: It is. Okay. So because we did that is in for today.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: Oh, wow. Great.

[Sen. Ann Cummings (Chair)]: Wasn't that something something that's on the.

[Sen. Thomas Chittenden (Vice Chair)]: Sorry. Sorry.

[Bobby Joe Salz (Vermont School Boards Insurance Trust/VEHI)]: What are other

[Mark Hage (Vermont-NEA/VEHI)]: I'm not

[Sen. Ann Cummings (Chair)]: well, no. You were here till 05:30. Oh, yeah. Wow.