GIC Commission Meeting - May 21, 2026

Hinzugefügt: 2026-05-23

[00:00:00]All right, great.

[00:00:04]Well, good morning everyone and welcome to our May Group Insurance Commission meeting. I feel like we had just met uh and yet that was the beginning of March.

[00:00:16]So, it's nice to be in springtime uh which was not the case back in in March.

[00:00:24]So, I'd like to welcome everybody today to our meeting. Uh especially our YouTube viewers. Uh very excited uh for today's agenda. Uh we've got a great one as always. Uh so, I'm Valerie Sullivan.

[00:00:41]I am chairman. I am joined here by uh Vice Chair Bobby Kaplan. Uh we have a new design for ANF. Uh so, welcome Anna Freriedman. We have designign Rebecca Butler from DOI. We have Martin Curley.

[00:00:58]We have Tamara Davis. We have Gerino Gar. We have Eileen Mciny. We have Melissa Murphy Rodriguez. Kristen Pepin, Dean Robinson, uh Jason Silva, or he's joining uh and uh Anna Senko and Katherine West.

[00:01:22]So, uh we've got a nice group here. We also have uh Darren Amler and Toby Chot on who are leaving us. Uh so they have circled off of the commission. So hello Toby, are you there?

[00:01:40]>> I'm here.

[00:01:42]>> Toby has been with us since uh 2017 and he has stayed on uh mostly my request. uh he has been an amazing uh resource uh to me as the chairman and to all of the commissioners and of course the staff. So Toby uh from the bottom of my heart, I want to thank you for uh everything that you've brought to the commission throughout your tenure and I want to wish you only the best.

[00:02:16]>> Thank you very much. Um, I did I went out and found I found last night my original papers and I think I got appointed in 2015. I found the uh that little paper we got, you know, when you you join something. So I I'm really saying I I think I've been on the GIC for 11 years, four executive directors, two different administrations, one Republican, one Democratic, many different commissioners, and obviously working with the hardworking GIC staff.

[00:02:45]um over those kind of reflecting upon those 11 years is kind of two things that kind of make you know kind of made me stop and think about it. One is I'm incredibly impressed working with the GIC commissioners and staff we've been able to work together and treat each other with dignity and respect. We all don't agree but that dignity and respect basically builds consensus. It builds ability to work together. My only regret over the last maybe five or six years is with the adoption of ro remote remote meetings um which I don't like personally. I know a lot of people do like them. I did not to get to know many of you as I did the first four or five years where we met in person and I'm sure there's a lot of great people that I really would have benefited by getting to know a little bit better on a personal level. But that's progress. Things move on. So, I'd like to thank everybody for treating me with dignity and respect. I'd like to recognize everybody's hard work, including that of the GIC staff. Good luck in these challenging times, and hopefully I'll bump into you on the street sometime.

[00:03:54]>> Oh, well, thank you. Thank you so much, Toby. Uh, it's been terrific. Uh I know you're serving on uh on the board of uh Mass Bay Community College. So you continue to offer your service to the state and I am sure the administration is grateful not only for this dual uh role that you've played for the state but also for continuing on um at a very important time for community colleges.

[00:04:22]So thank you.

[00:04:23]>> Okay.

[00:04:24]>> Wish you the best.

[00:04:25]>> Thank you very much. I'm gonna sign off.

[00:04:28]>> Thank you.

[00:04:30]>> And then uh Darren uh one of our newest commissioners who added so much value in a very short period of time uh has secured a new role and is uh transitioning out. So Darren uh wanted to thank you for your brief time and uh wish you only the best.

[00:04:51]>> Thank you uh Madam Chair. It's it's been a really wonderful experience. Uh yeah, unfortunately my new role uh happens to be in conflict with some of the rules about being on the committee on the commission here. So um it's an unusual rule and you know when I was appointed there was a a chance that I might not go back into consulting for employee benefits and practicing as a broker. So that was uh part of it. But uh the industry pulled me back in. It's my passion. I love uh helping employers with their benefit programs and certainly I have really enjoyed doing that here at the GIC. You the I love the passion and intellect that everyone brings here and the dialogue that we've had has been truly amazing in just a short period of time. You know the paper that show uh that Toby had talked about mine's barely out of the envelope uh but it it has been just an enriching experience. I appreciated getting to know uh many of you better and uh I hope to stay in touch. Uh and you know, Matt, uh you and your team uh I I admire what you do. You run so lean and mean uh and it's incredible. You're managing one of the largest benefit programs in the country. Uh I I don't know if that uh everyone's aware of that, but this plan is massive. Uh and it has so much power behind it. uh and they can truly make waves and I think that should be appreciated. So, thank you so much and uh I wish you all the best.

[00:06:22]>> All right. Well, we wish you the best, too. So, give it up for Darren. Don't forget about that power when you're out in the marketplace. You can tell municipalities.

[00:06:32]Uh you can tell health plans, you know, you can still uh join the charge on the GIC uh because now you're you're an alumni and we appreciate you. All right.

[00:06:44]Uh last announcement. Uh Dana Sullivan has uh left us as designign. She's moved on to a great new role within uh the administration uh working for housing uh I think it's mass housing partnership.

[00:07:00]uh we enjoyed having her part of our uh board here and now we are thrilled to welcome Anna Freriedman who is uh uh one of the secretary tots I didn't say that right so Anna uh instead of me uh letting you know letting the team know uh about your impressive background and what you're doing for ANF would you please say a few words uh and I want to welcome you here and excited to have you part of uh the team here.

[00:07:32]>> Thank you, Madam Chair. I appreciate the warm welcome. I am um honored to be Secretary Gorkitz's new designate to the commission. Um my title at ANF is assistant secretary for administration.

[00:07:42]So I am lucky in this role to work closely with GIC. I've been in this role just since um earlier this fiscal year um and our other ANF agencies. Uh prior to this, I most recently spent uh seven years in municipal finance uh with the city of Salem and the town of Winthre.

[00:07:57]Uh, prior to that, I was a fiscal policy adviser in the Senate President's Office for several years where I my portfolio included healthcare finance and before that I had a first first stint at ANF um on the budget team where I also um was working on budget matters related to GIC. So, I feel like it's sort of a bit of a homecoming in some ways. So, I'm really excited to engage in all of the important work in front of the commission and work with all of you.

[00:08:23]>> All right. So, that's super terrific.

[00:08:25]Thank you for that background. I love that you have a finance background and we're very excited to have you. So, season pro here. All right. So, um as as we want to move on, uh I want to turn the agenda over to Matt. Uh review the agenda and let's uh keep this meeting moving.

[00:08:49]>> Thank you, M. Excuse me. Thank you, Madam Chair. Um so today, excuse me, in response to uh commissioners uh requests during our last meeting on March the 5th uh when we approved uh plan design and rates, we have um we follow up with you today with more information about um the policy of hospital price caps. And we have uh brought um to present to you today Michael Balot of who's president of bail health uh really one of the foremost experts in the country on this policy area. he does good deal of work with other states. Um and uh so he's uh we've asked him to come and he's agreed to uh give some of his insights to talk about what other states are doing and um addressing some of the common misperceptions or criticisms that sometimes come the way of this policy.

[00:09:52]So we have Michael for that. Then we will um close with just one other item.

[00:09:58]We'll have Jennifer Hwitt, our CFO, provide uh her budget update um as we are nearing the end of the fiscal year.

[00:10:05]So, that is today's agenda.

[00:10:08]>> All right. Great. Well, I'm looking forward uh to uh hearing from you, Michael. So, thanks for being on. All right. So, at this point, uh I'll entertain a motion. We have uh two two uh sets of minutes. Uh you may recall that we had to add a meeting in March and it was so short uh between the time from our February meeting at the end of that month. Uh so we had said at that meeting that we would have minutes out to you shortly on both. So at this point I'll entertain a motion to approve both sets of minutes from the February uh 26 meeting as well as the March 5th. Uh, I know uh this only says uh February 26, but I'd like to combine them in the interest of time. So, do I have a motion?

[00:11:00]>> So moved.

[00:11:01]>> Bobby is a first and a second.

[00:11:04]>> Second.

[00:11:06]>> I think that was Eileene. So, uh, at this point, I will ask, uh, Andrew to take a roll call, but I'm an I on approving.

[00:11:15]>> Thank you, Chair Sullivan. Uh, Vice Chair Kaplan, >> I >> uh, designate Freeman, >> I believe. Do I need to abstain since I was not present to >> You don't need to, but you may.

[00:11:29]>> Um, I would like to abstain. Thank you.

[00:11:33]>> Uh, designate Butler.

[00:11:35]>> I uh, Commissioner Curley.

[00:11:42]>> I, >> Commissioner Davis. I >> Commissioner Geron.

[00:11:48]>> I >> Commissioner McCann.

[00:11:52]>> I >> Commissioner Pepin.

[00:11:58]>> I think I heard you. Can you try >> there?

[00:12:01]>> Okay. Thank you. Uh, Commissioner Robinson.

[00:12:11]>> I'll come back. Commissioner Rodriguez.

[00:12:14]>> Yes.

[00:12:15]Commissioner Silva, >> yes.

[00:12:18]>> Commissioner Senko, >> I.

[00:12:21]>> Commissioner West, >> yes.

[00:12:26]>> And Commissioner Robinson, >> I heard an I.

[00:12:33]Um, the motion passes with one abstension.

[00:12:37]>> Okay. Well, let's keep moving to the meat of the meeting. So, uh, Matt, it's on to you for the executive director's report. I enjoyed reading it as always, and there's some, uh, good stuff in there to update us on. So, take it away.

[00:12:54]>> Thank you, Madam Chair. Um, so we have a number of updates on the human resources front, um, where we've been, uh, very busy. We're happy to welcome two new employees to the GIC. We have John Varela who's joined as our new director of human resources. John has nearly 30 years of experience in this field and also in project management uh general business experience um along with um many years working in municipal government and other state agencies. He most recently uh worked at the MBTA. So thank you John for coming.

[00:13:31]Welcome. Happy to have you. Uh we also just um earlier this week welcomed uh Caroline LeBlanc who is joining the operations unit um in the role of office support specialist uh supporting our retirees specifically. Caroline brings um an extensive background in health insurance and GIC specific knowledge as she spent um 30 years at uh Unicare now wellpoint um in various roles in customer service. So, someone who's um very very familiar with how the GIC operates and has been supporting essentially our members um throughout her career and now we're making that formal by actually bringing her on the team. So, we're thrilled to have both John um and Caroline join the team. I will just say too, we have um uh two positions that are that are posted and for which we are recruiting a budget director position and a project manager position. So, um those information on those are all on our website. If you know know people in your networks, please feel free to share those.

[00:14:44]Um on the legislative front, um it's been a busy um month or so um on the budget. So, the House passed its version of the budget um in April and the budget is now before the Senate um which is actually debating it this week. I think actually continues debate uh today. Uh Senator Cindy Freriedman um as part of the budget had filed an amendment um on our behalf um protecting public worker access to health care. Um this uh relates to one of the plan design changes that we made uh a few months ago where we um got approval from the commission to establish a uniform methodology for paying out of network uh services. Um and this is a companion piece. uh those of you who will recall those discussions, we passed that um plan design change and we were seeking this accompanying language to support that um change. So, we're continuing to work that through the legislature.

[00:15:57]Um I don't know, Erica, if we had any late updates about whether that amendment from Senator Freriedman was adopted. I know was there was a potential it would be adopted even last evening. So >> yeah, I'll have to go back to our tracking spreadsheet, which I haven't had a chance to do this morning, but happy to do that.

[00:16:17]>> All right, so that is um Oh, just one other item. Um just to acknowledge that uh in the House of Representatives during the budget uh Representative John Lawn uh from Watertown who's um uh the co-chair of the uh joint committee on healthcare financing also filed a a an identical amendment um regarding our out of network payment in the House. It was not adopted in the House budget but we appreciate him filing that on our behalf.

[00:16:51]So, the last um item in our written report, I believe, is uh just a a a brief update on Vita Health. Um and I'll hand it over to Erica Shabelli to uh provide that update.

[00:17:06]>> Great. Thanks, Matt. Um just in the intervening seconds, um there's no update yet on that amendment. They're still um in session and so we expect uh more information later today. So, no update yet on that Senate amendment. Um, great. So, um, just wanted to come back to the commission uh, with a little bit of information about VA um, and the transition that's happening there.

[00:17:31]>> Um, first I just want to acknowledge, you know, that there's been a lot of concerned member feedback um, since the the vote to eliminate coverage for JLP1s for the treatment of obesity. um seemed a little disingenuous not to acknowledge that from the outset um before we um start talking about the transition to Vita. Um folks are upset and concerned and and worried about the transition, but we are doing our best um on the communications front uh to make sure that folks are informed um with the accurate information um and that they're being directed to the appropriate places um to get that information uh now that we're unwinding a little bit with Vita.

[00:18:12]Um so just um to review kind of where we're at um with Vita and what the plan is since um the vote to eliminate coverage earlier this year. Um so we immediately began working with the team at Vita. It took us some some time to strategize the next steps to support our members and kind of winding down um the contract generally. Um but here's what folks really need to know. beginning on July 1st, we'll still have Vita. Um they'll continue to be available to GIC members through the end of the calendar year and that's really for weight management support and assistance with finding those private pay channels. Um but they will no longer be prescribing medications for weight management specifically um including GLP1s. So this means that the prescribing authority will return to the member's community doctor or you know their the the physician they were working with uh before Vita came on and then the prior authorizations will be handled uh by CVS um which was the case before uh we implemented VA health. So um just a few more words about how we're doing our our darnest to communicate the change to members. Um uh so GIC staff with VITA and CVS um have been coordinating. We have a weekly meeting um to make sure we're getting the right information out to members. So to date um we have done or will do the following. So we immediate once we came to uh the decision about how we were going to proceed with Vita, we immediately posted a news post and an alert on our website with FAQs and additional information. Um we sent an email out to all GIC coordinators to ask them to pass the information along to the members at their agency as well. Um there um is an email an ongoing email campaign uh with emails from Vita to all current GIC members currently using VITA to inform them of the change and what their next steps should be. Um we've implemented a social media campaign on GIC social channels um that will continue on through the end of the calendar year.

[00:20:24]Um and we're constantly uh working with Vita to make updates to their interface.

[00:20:29]Um as we hear member feedback or points of confusion, we work with them to um to untangle those. So um we will continue to meet regularly with VITA, monitor and manage um whatever member disruption and abrasion comes our way. As I mentioned, you know, we know that that folks are are are feeling pretty upset about this.

[00:20:51]Um, and so we're also working with Vita to triage any kind of member issues um that that um are escalated.

[00:21:00]>> So, so that's where we're at with Vita.

[00:21:02]Um and um yeah, >> questions. Yeah, I see that Bobby has a question, but uh before I give you the floor, Bobby, Erica, I just want to acknowledge uh the the transparency and and let you know I I do love it from a leadership perspective and appreciate it. And while our our constituents are upset, I do appreciate the level of effort that you and your team have put forth to to communicate. We can't always make everybody happy. Uh I wish we could and so really want you to know how much I appreciate the leadership you've put here. Um Bobby, go ahead. Uh you've got the floor.

[00:21:50]>> Thank you. Thank you, Valerie. Um Erica I just want to um confirm I guess that uh for people who are either you know let's say recently um uh that their doctor believes that they should be on a GLP1 for weight loss who do not have diabet people who do not have diabetes and people who currently are approved for GLP1s for weight loss.

[00:22:22]through VA that all those people that the um say the the requirements right are that um someone h the person has to have um a BMI of 27 or higher plus one of the FDA approved coorbidities like severe sleep apnea, hypertension, cardiovascular disease, and I know there's a mitochondrial um condition um which I can't recall the the acronym for right now, but I just want to you know confirm that um and also um if you could sort of explain how the prior authorization with CVS will work. Do they need that? Does the doctor need to have prior authorization before writing the prescription or after writing the prescription? if you could, you know, sort of help me out in that because we're receiving lots and lots of questions from people even though GIC has done a great job on their website um of explaining it um you know and the FAQs are really helpful.

[00:23:52]However, you know, people have a lot of anxiety around this. So if you could just, you know, confirm and let me know how that's going to work, I'd appreciate it.

[00:24:06]>> Sure. So just, um, with regard to, um, the, um, BMI of 27 plus a comorbidity.

[00:24:16]Um, we will be updating our, uh, FAQs on the website to outline, um, what CVS has provided us with in terms of those conditions. So that way folks can be really clear about what is um what would currently qualify. Um of course understanding that that's subject to change by the FDA. Um so we will update our FAQs with that um accordingly.

[00:24:40]Um with regard to the prior authorization process, that's something that will sit with CVS and we'll return to how it was functioning prior to the implementation of VA. Um so I can get more details on how that prior authorization works. Um, I do have them.

[00:24:56]I just have not delved into them such that I can speak to them off the top of my head. Um, but happy to come back um and also include in our um FAQs more detail about how that works. Um, Andrew, is there anything you wanted to add? Oh, sorry, Madam Chair. Vice Chair.

[00:25:14]>> Yeah, we are um one issue we're still pushing on is to try to get CVS to allow members. So to be clear, all prior offs are going to be shut off as of 71 and anyone who meets the criteria to continue to get a GLP1 because they have the comorbid conditions will need to file a new prior off. We are trying to get CVS to allow that process to begin prior to the shut off, but we're still exploring whether that's possible. Um, if we can, we'll let people know as soon as as the information is available. But that is um an important thing that members have to realize is that if they have a prior Roth that would have extended beyond 71, it is going away 71 and they're going to have to reapply for the prior Roth. We'll have a decision tree up um as soon as it's finalized about how the process works so that members can have an easy reference point.

[00:26:24]>> Thank you, Andrew. I appreciate that.

[00:26:26]And thank you, Erica. Yeah, any information that um you have and as soon as you have it would be greatly appreciated. Thank you.

[00:26:37]So, Andrew, I have a question.

[00:26:40]So, our contract with CVS, and maybe this is too much in the weeds, are they charging us for all these new priors? And what prevents them from grandfathering in prior alts that have already been approved? It seems uh like it's going to delay care for members.

[00:27:03]It's going to be a terrible member experience.

[00:27:07]And do we get char do we have to actually pay for the re prioration?

[00:27:12]>> No, we're not we're not charged by prior rock. Um so that's not the issue. It's a technical issue with because of the change of dropping uh the weight management from the formulary and then reinstating it for people who have the comorbid conditions makes the bio authorization process um switches at CVS um difficult to work around. Um, and that's what just that's what we're trying to work through is is just having them asking them to find a way to to have it work for these for our membership so that they can >> they're going to have to start the prior again either way because there's no way to shut off the GLP1 for weight management without resetting because we don't know who's on it right now who who might qualify with comorbid conditions come 71. So we have to clear the slate and then start it over. You're just trying to provide a mechanism for members just to who who may be able to have a new prior off um before the shut off.

[00:28:33]>> Okay, I get it. Uh so yeah, thank you.

[00:28:37]And with all this technology and all this AI and Darren telling uh us all or reminding us how much power we have, I find it incredibly difficult to believe that CVS, one of the most impressive global companies uh in the world, can't figure this out for us. So, for what it's worth, uh I empower you to uh use every tool you have, Andrew, from a contract and and and vendor management perspective to to at least preserve some member experience. Uh and so, Bobby, do you have your hand up again or you just >> Yes, I do. Sorry. Yes, >> we do need to move and I know this is an important topic. Yes, I just have one more which is a few of my members have mentioned that um their doc or CVS is telling their doctors that they can't even submit a prescription before July 1. And so people are concerned that they're going to miss, you know, a dose or two, whatever. um uh and are basically concerned about that. So, you know, um I certainly support everything Valerie said and if we can get CVS to at least accept prescriptions prior to so they can maybe process them on July 1. um because it's very concerning particularly for people who are currently on the GLP1s.

[00:30:20]So, thank you.

[00:30:23]>> All right. I think the message has been received. I see Andrew nodding and let's move on.

[00:30:35]>> Thank you, Madame Chair. And now it's my um pleasure to introduce uh Michael Bot, president of Bot Health uh to walk through a presentation on uh hospital price caps. Um Michael founded um Bot Health in 1997 and has since worked with a wide array of government agencies and employer purchasing coalitions um in over 30 states. His professional interests focus on how purchasers uh and regulators can influence healthcare markets to operate um as efficiently and effectively as they can. Uh he's worked on healthcare affordability strategies, payment and delivery system reform, including accountable care organizations, medical home and episodbased payment strategy designs um and a variety of other uh multistakeholder uh change um processes. Uh so I've known Michael for many years. um our paths have crossed um a number of times uh very highly respected um among policy makers. He also served as assistant commissioner for benefit plans at the Massachusetts Division of Medical um assistance which is the state Medicaid agency. Um so with that um I am happy to turn the mic over to Michael to present to you today and help uh help our commission continue on this discussion about provider prices.

[00:32:14]>> Thank you Matt and good morning commissioners. Pleased to be with all of you today. Uh I am going to share with you the latest on what other states are doing in the area of hospital price caps and then I'm going to share with you some evidence that I think counters some of the misconceptions and arguments that are often presented in response to um state initiatives to cap hospital crisis. I want to note that any opinions that I voice are my own u as I present to you today.

[00:32:49]Um, let's advance um, a couple of slides. I think Matt covered this. We're actually up to 46 states we've now worked with. Uh, and, uh, we are based in Massachusetts and need them. Next slide.

[00:33:06]So, I'm going to do a one-page introduction on this topic. I think you are familiar with a hospital price cap concept. So, I will be brief. Then I'm going to give you an overview of efforts um in five states and then I'm going to address some common misconceptions and arguments uh and then end with my own personal opinion why I think now is an appropriate time uh to act on this policy.

[00:33:33]Next slide please.

[00:33:37]Okay. So hospital price caps go by many names. Uh reference based pricing, payment c payment limits, but the general concept is to limit um how high a hospital payment uh can be. The limits are typically defined relative to an external benchmark. Medicare is the most common one, but it's not the only one and it doesn't have to be used. Um, uh, price caps are most often applied to both inpatient and outpatient services, but the scope can vary. And as I share with you some state examples, you'll see evidence of that.

[00:34:16]Next slide, please.

[00:34:19]And one more.

[00:34:22]So, uh, to date, five states of varying political colors have implemented or are preparing to implement caps on hospital prices, uh, to prevent payments from being unreasonably high. Oregon was the first state in 2019. Since 2021, four additional states have passed legislation to implement one. Um, I'll note that during the current legislative uh, session, seven states have had bills introduced. Um, and they range from um, blue states like Delaware and Minnesota to red states like Oklahoma and West Virginia.

[00:35:04]>> Next slide, please.

[00:35:06]>> I'm sorry to interrupt you, Michael. Is there one state though that implemented them and then uh, reversed it?

[00:35:15]Um there is one state that um had their plan administrator admin uh implemented and then when they changed plan administrators the program went away >> for reasons that I'm not clear about and I don't think anyone is in that states Montana >> okay their state employee program they realize savings they reported on them and then when they changed plan administrators for reasons I'm not clear on they did away with the program >> so if If you could just remind us then what is today's current real life states that have implemented this? It's >> that I'm going to present those beginning on the next slide.

[00:35:56]>> Okay. Thank you. Okay.

[00:35:57]>> I just want us to be as clear as possible with the numbers and the facts.

[00:36:02]>> Sure.

[00:36:03]>> Thank you.

[00:36:04]>> Um you'll see on the following slides that the states vary in terms of how they have designed their household price taps. Um which market they apply them to.

[00:36:14]um how they value them, to what extent they make exceptions. Um these all vary across the states.

[00:36:23]Okay. So, I'm going to walk through them. Um beginning with Oregon because they were the first state to do this and um because of that there's evaluation information about them and then I'll describe the other states. Next slide, please.

[00:36:40]Okay. So Oregon, as I noted, began in 2019. This program is still active. They implemented it using their state purchasing authority, although they had a legislative directive to do so. And uh they're doing it with two separate health plans, one for state employees and one for school-based employees. Uh the um implementation sets a cap on hospital inpatient and outpatient services at 200% of Medicare for in network and 185% for out of network. They have a number of exemptions. Uh Oregon has has pretty large rural areas. So they have exempted hospitals in those areas that include critical access hospitals but other rural hospitals. They also exempted pediatric hospitals.

[00:37:32]Um, Oregon's program was independently um evaluated and uh they were reported to save $13 million in 2021. That amounted to 7% of what their forecasted spending would have been. um the reduction in out-of-pocket spending for members with outpatient procedures was um higher.

[00:38:00]Okay. There have been a couple of evaluations of Oregon's program which to some degree has served as a model for a couple of other states.

[00:38:12]Next slide please.

[00:38:14]So um on the much newer end of the spectrum is New Mexico. Their program was implemented last July. Um, also with state purchasing authority, also with state and school-based employee health plans. Um, their caps are a little bit different than Oregon, the same 200% of Medicare for in network, but they're a little lower for out of network at 175%.

[00:38:39]Um, their program applies only to urban hospitals. So, New Mexico is another state that's got large um rural areas.

[00:38:48]most of the state population resides in urban areas and that's where they apply their uh price cap. Uh now what's interesting about uh New Mexico, a couple things are interesting. Um one is um the initial legislation was specific to state and local government employees and it was recently expanded. So they are expanding the program to their public educator health plans beginning this July. Um another interesting point is New Mexico pursued price caps because they wanted to increase financial support for state employee coverage.

[00:39:29]Their state employee benefits were not particularly rich and the price caps were a way to help finance that added support.

[00:39:39]And this program also continues to operate.

[00:39:44]Um third state um is here in New England, Vermont. On the next slide, um Vermont is quite different. They are in pre-implementation right now. They're going to begin this October. Um they are not using purchasing authority. They are using provider um regulation and they're not applying this to their public employee health plans or educator health plans. they're applying it to their entire commercial market. The exact design details are not yet finalized. Uh but it's known that they are initially going to focus on hospital inpatient and outpatient services but may extend the um caps to other hospital-owned services.

[00:40:29]um they may have exemptions um but they haven't been defined uh they're not defined in statute and they haven't been defined uh by the state yet. So um this program is going to as I said cover the entire commercial market self-insured and fully insured. Um and uh the state has a requirement that they have to make sure that savings are passed along to to rateayers through lower premiums.

[00:40:59]And uh hi again. Uh again, just want to have the facts. Um so did Vermont put this in front of their legislature and then if so, how long did it take to get passed?

[00:41:14]>> Their legislature directed the Vermont Green Mountain Care Board to implement this policy.

[00:41:20]>> And did they need like what what regulations did they do to do it? Did they just talk about it or was some bill put in front of them and had to pass House and Senate?

[00:41:30]>> It passed in one session last year.

[00:41:33]>> Um the for Vermont has an entity called the Green Mountain Care Board that has very uh broad policy powers. Um it has the ability to regulate provider prices and has had it for years but has never applied it. So, this would be the initial application of that statutory authority that they've had but not used.

[00:41:57]>> Okay. Thank you, Eileen. I see you have your hand up.

[00:42:01]Uh, and you're on mute.

[00:42:06]>> Sorry about that. Um, thank you, Valerie M. Michael. So, I'm very interested about Vermont.

[00:42:17]How um Sorry, my screen just went blank.

[00:42:20]um how they were able to get around Orisa for the selfinsured or is that still an open question? Like do you think it will be challenged?

[00:42:29]>> No. No, it's not an open question. They got around Orisa because they're not regulating payers. They're regulating providers.

[00:42:43]>> You can keep moving. Thank you.

[00:42:45]>> Sure. Okay. The next state I want to share, the next slide is Washington. Um Washington uh is beginning their program in 2027.

[00:42:56]Their legislation passed um last year, but um with a lot of uh of runway to to take off, so the program doesn't start until 2027. they um in many ways mirrored what was done in Oregon, their neighbor to the south. Uh so again using school p state purchasing authority uh but with the legislative directive um they uh so this was really an initiative of the state agency that does state purchasing and they went to the legislature and said hey we would love you to uh direct us to do this which the legislature did. um they have a uh in andout of network differential that's similar to the other states. Um their exemptions are a little bit different.

[00:43:50]Um critical access hospitals and sole community hospitals that are not owned by um large health systems are exempt um if they are in rural areas, but if they're owned by the systems, then they're not exempt. Um, and pediatric hospitals are included, but they have an alternative uh, payment limit calculation that's not linked to Medicare.

[00:44:14]Um, couple of other things that distinguish Washington. They implemented their hospital price caps simultaneously with price floors for primary care and behavioral health services. So they set a floor of 150% of Medicare for primary care and behavioral health services when delivered in community settings. So outpatient services. Um the other thing I'll note about Washington is they separately have applied a hospital price cap to a public option program that they've offered since 2021. And that cap is even lower. That's 160% a month.

[00:44:54]Okay. So, you can see all of these states have some common features, but they're not identical. They've all been customized.

[00:45:05]All right. And the last state I have, this this model is quite different, is Indiana. So, Indiana passed their legislation last year. They have a long ramp up period. They don't become effective till 2029. Like Vermont, Indiana is using provider regulation and they are applying this to their full commercial market. What's different about Indiana is they are not using Medicare as a benchmark. They're using the statewide average payment as their benchmark and they're applying their price cap to only their five largest nonprofit health systems. M >> no surprise those five largest health systems represent the majority of spending in the state hospital spending in the state.

[00:45:53]>> That's a good one.

[00:45:55]>> Okay.

[00:45:55]>> Um and their enforcement mechanism is different too. So um any nonprofit hospitals that fail to meet the cap will forfeit their tax exempt status in the state until such time as they lower their prices below the state average.

[00:46:14]Okay. So, um, states are the laboratories of democracy and, uh, we're seeing, you know, different forms of innovation in these examples. Any questions about the five slides and where they stand? Sorry. Sorry. Sorry.

[00:46:30]Five states and where they sit.

[00:46:34]>> I don't Bobby, go ahead. Yeah, I was just um thank you Michael very much for this um presentation. I I um am curious about Washington's I guess their floor um why they estab like what was the rationale for establishing a price floor since they're the only ones that seem to have done it. So I'm curious what drove that. Um >> um I know for certain about Washington that they separately um the Washington Healthcare Authority has been prioritizing strengthening their primary care system and uh they've had a separate initiative focused on primary care payment, primary care reform. So their interest in um increasing investment in primary care is consistent with that.

[00:47:32]I'm not sure about uh behavioral health and but I'm sure it was linked to a concern about adequacy of payment and access but okay I'm not aware of a parallel effort within Washington state that's been focused on behavioral health the way that they have on um I'll also note that they are not the only state to introduce the concept of a floor um Maine had a bill this year that would have capped hospital prices and introduced a floor similar to Washington. Um it came ever so close to passing but it did not.

[00:48:13]>> Okay. Thank you.

[00:48:14]>> Sure.

[00:48:18]>> Michael, uh I am loving this. Uh so thank you for this detail. Uh no other questions. We can keep moving.

[00:48:26]>> Okay. So I want to pivot now to uh talking about um arguments are that are often made in these other states when they introduce their hospital price cap program. Uh and so this information is really um if the GIC were to pursue this policy um I want you to be aware of experience in other states and um what um their experience and what research literature shows um yeah so that you know how to refute certain arguments that you might hear if you decide to pursue this policy.

[00:49:05]Next slide please.

[00:49:09]So when states begin to talk about hospital price caps, no surprise, hospitals aren't enamored with the concept. Um, and there are a number of um of arguments that are made um that just are not um rooted in evidence that I want to address. And you can see the five of them here. Um, on the following slides, I'm going to address each of them. Um, and I want you to know that in the appendix to this presentation, there are slides that have lengthy um, lists of references that support the counterarguments I'm going to share with you. So, this isn't me making it up. Um, there's lots that's been published to support the points that are happening.

[00:49:56]So, let's go through these um, one at a time. Um for some of these five there are actually more than one argument that are made under the umbrella.

[00:50:07]Okay. So next slide please. So um so argument number one price caps don't address the right problem. Uh specifically the argument might be hospital spending growth is really due to utilization. We have you know way more patients coming to see us. The issue isn't prices. Um and um that's not true. GIC data show that it's been payments per unit of service. Okay. And and that's really technically what we're talking about. It's not it's not a published or advertised price. It's the actual payment that goes to the hospital. So the payment per unit of service has been the primary driver of spending growth. That's not specific to GIC. That's and it's not even specific to Massachusetts. Um it's really a phenomenon that's played out across the country particularly as the delivery system has become more concentrated.

[00:51:06]Um that that um that driver of pay growth and payment per unit is particularly um evidenced in hospital spending and in drug spending. I'm obviously focusing on hospitals today, but I want to acknowledge it's a problem of drug spending as well.

[00:51:24]>> So, Michael again, hi. Uh are hospitals uh using any kind of technology uh excuse uh because we do know that it is price growth like there's there's no data that suggests its utilization of services. What is their argument for why prices are growing at such an enormous rate? Is it, you know, technology, but that should be offset with AI? Do you have any >> Yeah. So, hospitals will most often say, "Hey, our costs are going through the roof." Um, and point to any number of things. Labor shortage during COVID, um, the oil crisis, the war in Iran, all all sorts of things. energy prices being up um they'll typically point to um their costs going up and um the higher prices being necessary to cover their cost.

[00:52:26]>> Okay. Thank you.

[00:52:27]>> Yeah.

[00:52:29]Um I'll also note in any given year utilization might bump up but if uh if we look longitudinally at um at price or payment per unit and utilization um it's clearly uh payment or service unit or price that's been followed.

[00:52:49]Okay. Um the the second argument that falls under price caps don't address the right problem um is on the next slide and that is um Massachusetts hostel prices really aren't so high so we don't need a price cap here. Um and the response to this is is a little technical so stay with me. Um, if you compare Massachusetts hospital prices to Medicare prices, yeah, they don't appear to be that high. But that's because Massachusetts Medicare prices are skyhigh.

[00:53:21]Okay. If, however, you standardize Massachusetts prices um, and you look at them relative to commercial hospital prices elsewhere in the country, they're quite high. Uh so for example Brigham and Women's UMass Memorial and Mass General Brighgam they're in the 89th and 90th percentile for all hospitals in the country.

[00:53:43]Okay so by that measure they're really high.

[00:53:47]Okay. In addition there is um dramatic variation in prices for hospital services across the state. Um for some um outpatient services the differential is as high as 5 to one.

[00:54:03]So, um, we we have some hospitals that are paid much much much much better than other hospitals.

[00:54:15]Oh, and one other note I want to make here. Um, so this reference to Rand, Rand publishes a a study every few years that assesses hospital prices. The data that RAND uses comes from the GIC.

[00:54:32]or at least that they used in their last report.

[00:54:37]Okay. Um third um myth under price caps don't address the right problem.

[00:54:43]U next slide please.

[00:54:46]Hospital prices are high because hospitals are limited in their ability to reduce costs because much of their spending goes to fixed expenses and salaries and facility maintenance. This is a very common argument. Um, I had um a hospital CEO in another state say to me a couple years ago, why do you keep banging on hospital prices on on hospital prices when there's nothing we can do about it? Okay, this is a common argument that um you have to accept hospital costs as a given um because hospitals have no ability to manage those costs. Um there uh there are two responses to this. One is high hospital prices are driven by market power not by hospital costs. There is so much evidence on this. This has been studied um exhaustively.

[00:55:38]U hospitals raise their prices because they have the market power that allows them to do so. And hospitals that don't have market power, they don't raise their hospital prices because they don't have the leverage to do so. And that to a large degree explains um the variation in hospital prices in Massachusetts or in any state.

[00:56:00]But the second response to this is um hospitals can manage their operating costs more efficiently. We've done a number of case studies recently with hospitals that are in the black with very low prices. Um and uh and when I shared uh with a couple of them that quote that I just shared about why do you keep banging on hospital prices? We can't do anything about it. Um executives of hospitals, these other hospitals have said that's just not so.

[00:56:31]Um there are there are many things that you can do, but frankly um those things aren't easy to do and it's easier to ask for and receive higher prices if you can get them.

[00:56:44]Okay. And I'm not saying uh I'm not criticizing hospital executives for that, but but frankly, if you can get a higher price, why don't you do that then do the really hard work of taking um excessive costs out of your system, okay? Which is hard to do, which and I want to acknowledge that. Um you'll see here, by the way, in the footnote of the slide, sources one and two. So this refers to slides that are in the appendix. So if you want to see support for the information on this slide and published studies then you can look at the slide in the appendix that refers to uh sources one and two.

[00:57:24]Next slide please.

[00:57:26]So I'm moving on to a second argument.

[00:57:29]Price caps will force hospitals to close and will impede access to care. Um so um yes if you apply a hospital price cap to a hospital that is teetering on insolveny um it will be dangerous to that hospital but it's possible to do modeling to understand hospital financial health and the impact of cap prices and frankly in Massachusetts the hospitals where the highest proportion of GIC members seek care you see them listed here they are all financially stable according to a broad assessment that we've performed of their financial health. They all have considerable financial reserves um that could help them withstand any price constraints, including a potential GIC price cap.

[00:58:18]Now, we've provided uh a somewhat more detailed financial summary in the appendix, but I just want to share with you what the um unrestricted funds at each of these um hospitals and systems look like on the next slide.

[00:58:35]So, we count their unrestricted funds in the billions.

[00:58:40]Now, they also have restricted funds which they use as well. So I don't want you to think this is all they have for reserves. Um but um you can see um they have significant funds uh available to them.

[00:58:59]Okay. Uh next slide please.

[00:59:03]Capping hospital prices will force hospitals to leave health plan networks.

[00:59:07]Um to date price cap policies in other states have not resulted in network disruptions.

[00:59:13]Okay. So, hospitals might threaten um to leave GIC's network. Um but um but there's no evidence that this has happened in other states and um they don't have to do this. Um they if they're really concerned this would impact their bottom line, there are steps that they could take uh to improve their management of their costs. Um, and I'll note that if you want to protect against this, um, you can have out of network rates, which as you probably noted, Oregon, Washington, New Mexico, they all did that.

[00:59:51]>> Yeah. Well, again, I'm interrupting you only because the info is great and Tamara has a question. So, go ahead, Tamara. It's nice to see you. You have the floor.

[01:00:04]Um there has been considerable activity as you know uh in suburban housing.

[01:00:13]>> You can't hear me? Oh, sorry I didn't have my microphone on.

[01:00:18]There's been considerable activity in suburban hospitals in terms of acqu acquisitions by bigger companies and also the fact that suburban hospitals uh have um fulfill an incredible need for individuals in those areas um and are not as financially stable as the the big hospital uh networks that you just described. So, how does this all impact the smaller suburban hospitals that are still urban in because they're suburban um how does this impact them in relationship to the big players like MJB.

[01:01:02]So, uh, when you, if you were to pursue this strategy, um, you could as a criterion decide to exempt hospitals that fail to meet some measure of financial stability or at least temporarily exempt them, you know, while their financial status um, seems um, um, at risk.

[01:01:28]Uh and I'll note uh when Maine was planning their bill, that was their proposed approach that they were going to exempt certain hospitals that were in a precarious financial state.

[01:01:42]>> So this will apply also to some of the for-profit kind of uh hospital networks that exist.

[01:01:51]Uh it can I mean this the these decisions are up to the state that designs the program and you have a bunch of design decisions that you can make in terms of which hospitals you're applying it to and which you are not.

[01:02:06]>> Um some states have been quite broad in their application uh and you know some some much narrower.

[01:02:15]>> Yeah. Okay.

[01:02:16]>> Yeah. and and Michael in Massachusetts we have a very low forprofit >> right >> so so tomorrow in Massachusetts which is you know an opportunity here for us obviously um we don't really have for-profit hospitals and so I think where Michael is double clicking is the top five systems you know that that make up the majority of our constituents. And you can see that um you know I think where your question is relevant is some of the community hospitals that MGB has bought like you know the Nantucket cottage or the vineyard. I wish Jane was here because she would correct me. One of the islands hospitals is owned by MGB >> Nantucket.

[01:03:11]>> Nucket. So, um, you know, we would we if if if we ever get to a place, we'd want to make sure that we weren't dilitteriously impacting, you know, that that rural hospital for the members who live out on the island. Yeah.

[01:03:30]>> And I might be way over my skis, Michael. So, you >> correct me. I would say when you evaluate um financial stability, you need to do it at the system level and not at the hospital level because the system has the ability to move funds around um the individual hospitals. So um including holding reserves at the system level, not at the hospital level.

[01:03:56]So the hospital might appear to be cash poor while the system is cashri. So I for systemr own hospitals I would evaluate the system not the individual hospitals.

[01:04:09]>> Yeah. But my concern was the uh the standalone uh community hospitals that are not owned by the majors that fulfill an incredible role in Massachusetts.

[01:04:20]>> Some of those are uh financially weaker.

[01:04:24]But you know in some cases standalone community hospitals particularly if they have a geographic uh uh monopoly can be quite robust in their finances. So you really have to evaluate them on an individual basis.

[01:04:40]>> Okay. Um the next slide and the third argument price caps will diminish the quality of care. Um there's just not strong evidence on this point. In fact, there have been many studies that have shown that the relationship between prices and quality um are is either weak or it's non-existent.

[01:05:01]Um I'll say that there's mixed evidence here. So on some narrow measures sometimes people find there to be a relationship but overall uh price and quality does not have a strong relationship. Um recently, um someone asked me about a comparison of Massachusetts and Rhode Island. Rhode Island has had a hospital price growth cap, not a capital, price growth cap, in place for 15 years. And so their their prices now, which used to be about the same as Massachusetts now, are much lower. And someone said to me, "So how does quality compare?" Well, using Medicare's quality measures, Rhode Island works as good, maybe a little bit better. So, that's it's an example. Um, it's there's just um there's a lot of price variation that does not appear to correlate with quality.

[01:06:00]Okay. Um, fourth argument, there are five total just uh on the next slide. price caps will harm the local economy. Okay? It's going to force hospitals to eliminate jobs, will harm the local economy because hospitals are big employers. Um the truth is um economists have looked at the impact of hospital prices on an economy and um uh hospital price growth hurts the economy.

[01:06:30]Um it results in lower economic growth um job loss uh because the employers who have to spend a lot of money in local government spend a lot of money on health insurance coverage um are unable to increase wages and make investments and grow. So um high health care costs hurts the economy of Massachusetts. it it is it is not to u the benefit of Massachusetts and there you can look at si source four here for this um because you might think well that's counterintuitive look all the people that they hire that they hire well it's true but look at all the other people who are not being hired for the rest of the economy because our economy is not 100% healthare when we get to the point that it is then this argument will be true but right now the majority of our economy is not healthare Eileen, >> I just have to underscore that point.

[01:07:30]I've been saying it for a long time that um the growth in health care does come at the expense of growth in other sectors of the economy. So just that that's an important point for us all to appreciate.

[01:07:46]>> Yeah. And there's a study I think by Zack Cooper at Yale that's on the sources page. think it's from.

[01:07:55]Okay. Um and then the last argument price on the next slide please. Price caps will lead to cost shifting.

[01:08:02]Um so the myth here hospitals have to have um increases in our commercial prices because Medicare and Medicaid don't pay enough. Um this cost shift argument um is as as old as any argument. Um and uh there is so much research on this that shows hospitals do not raise their prices in response to low Medicare and Medicaid payment levels. They do it to maximize their revenue. And the greatest evidence of this is that the hospitals that have the highest commercial prices are not the ones that serve the most Medicare and Medicaid patients. In fact, they're often the ones that serve the fewest Medicare and Medicaid patients. And if you look at the hospitals that serve the most Medicare and Medicaid patients, Boston Medical Center, their commercial rates are nothing like their competitors that have a much higher share of commercial.

[01:09:00]So um the costs that exist within well-resourced hospitals um they are higher than they are in lower resource hospitals because the well-resourced hospitals make a choice to um to use that higher revenue that they receive to expand their services to invest in their physical plant and to increase their labor costs because they have access to the funds. So yes, they have higher costs than their um lower reimburseed competition because they have the money and decide to put it there.

[01:09:40]Um and then last on the next slide, please. The proposed price cap will result in hospitals increasing prices for services or for health plans not covered by the price cap. Um so um this um this is not fully tested. I want to disclose that we don't we don't know how this would look if it was applied across say the whole commercial market but at least in Oregon where they implemented it for their state and schoolbased employee health plans. Um an independent evaluation from by a researcher at Brown found that prices for other insurance plans and services did not go up.

[01:10:23]Okay. Um, and you know, as I've said before, if a price cap um, uh, limits what would be otherwise higher revenue for a hospital, the hospital or hospitals can take measures to manage their operating costs more efficiently rather than looking for someone else to pay more.

[01:10:49]Okay. And my last slide, and this is my personal opinion slide. Um I I think now is the time to consider a price cap for the GIC. I think following the passage of HR1, um there's less federal money coming into the state and there's not enough money to pay for excessively high hospital prices. Um, further, I don't think that hospitals should look to state employees and taxpayers in Massachusetts to recoup the loss revenue that they're going to have from HR1, especially given the huge premium increases that have been experienced recently.

[01:11:35]And uh, now I'm ready for any questions or additional questions.

[01:11:40]Yeah.

[01:11:42]Well, that was quite a presentation.

[01:11:44]Thank you. Uh Eileen, you have your hand up.

[01:11:48]>> Sure. Um so I am curious. I It feels like in Massachusetts, um we're reluctant to change the status quo because health care is such a big sector in the economy. And so I I wonder how you would respond to the experience of other states isn't necessarily going to be the experience in Massachusetts.

[01:12:15]Um I don't know because of kind of uniqueness of our healthcare sector.

[01:12:22]I mean health care is a big part of the economy in every state.

[01:12:29]Um I I don't think Massachusetts is so unique.

[01:12:35]I mean, yeah, we have a greater concentration of academic medical centers um than many other states do, but in terms of health care being a large employer within the state, that's true everywhere. And it makes policy discussions about hospital crisis contentious in every state.

[01:12:57]So the the state the five state examples that I gave um it was not a walk in the park for those states to advance those policies.

[01:13:05]I I want to be honest about that and um uh and I I think the that the other states that are considering policies in this area that it's it's going to be um rough to get them implemented too. Uh I think though possible price policies do advance when there's a sense that um we are um at a moment of crisis. And I I didn't share any information on this point, but there's survey data um from just about every state that shows that a third to a half of people with um within the state are now avoiding going for care or delaying going for care because of cost, which which means health care costs are so high that it's a public health problem.

[01:13:58]Uh, and so I I know that in some of the other states, Vermont for sure, that um that um state government legislators, they just got to the breaking point.

[01:14:08]They said, you know, enough's enough. We need to fix this.

[01:14:17]>> It's well said.

[01:14:22]I I don't see any other questions. I just want to thank you for this very informative presentation uh fact-based. I am sure that those who require these details and these facts especially on the myths and how to refute them um and be you know encourage those who are part of the uh affordability working group that the governor put forth that that there is that you know those those that are working on this are paying attention attention to the need to act now and I encourage I encourage action um because it is really heartbreaking to hear uh and I'm sure some of our constituents are there that people are avoiding care because the costs are so high and they are pretty high.

[01:15:23]>> So Dean I see you have your hand up. If you would um take the floor that would be great.

[01:15:30]Uh th this was great and timely and I'm curious uh if you could just say again where are the references uh you had mentioned an appendix. Yeah, there when when you re I assume you will receive this old um presentation but in in slides at the back you'll find the sources that >> and and I would just add that in terms of public sector employment you know high costs of medical care are leading leading to job losses this is happening >> you know public education across the commonwealth so >> it's more than urgent All right. Uh, Bobby, I see you have your hand up. Go ahead.

[01:16:20]>> Yes. Um, uh, first I want to thank Michael for this incredibly informative, uh, presentation with all this great data and the resources, the resource materials that you provided. Um, and I will echo what Valerie has said, what Dean has said. It's imperative that um the GIC sort of I you know I don't know exactly what the um working group of the healthcare affordability working group is you know doing I know their recommendations will are supposed to um be published you know at the end of um or at least provided to someone I don't know if they're going to be published um at the end of June but I I think it's imperative that the um that we support we as a commission support the GIC in pursuing this um you know this initiative and whether you know legislatively that may be a problem may take forever.

[01:17:31]Um, as we know, the legislature unfortunately very slow. um and and um if there are other ways to possibly approach this and what could be done and sort of how quickly could this be done because I think it's imperative um uh that that we do something and that we support this because I know just from hearing from our members and also retirees who are to Dean's point delaying care and um is really important. So, thank you very much for all this.

[01:18:16]Thank you, Bobby. Just knowing that you and potentially the power of the unions are behind this, I think may help uh those working on the affordability issues. Hey, Tamara, I see you've got your hand up.

[01:18:32]>> Yes. Thank you. Uh uh thank you Michael for a very very informative uh presentation. Um, and I think I just want to remind the commissioners that Eileen proposed at our last meeting that we consider this macro issue of price caps um and alternative ways of looking at uh pricing um uh in a in a in a holistic manner rather than looking at GLP1 separately, looking at um you know healthcare access separately. In other words, we need to look at the big picture so that we can present and I know the affordability commission is working on something but I don't have much hope for that. Um that's me personally. Um, I just think that we need to look at, you know, what we as a commission want to do and and then have put in an action plan and then get gain the support that we need in the legislature uh for this action plan, including the facts and the criteria that Michael presented that could, you know, is would be very very helpful in um supporting any of the um actions that we do recommend. But if you recall, Eileen suggested that we do this and we do do it within a timely manner, meaning within hopefully the next year. So, um I just want to remind everybody and it's so easy to get into the weeds and look at the little pieces. I would suggest that we look at the macro as Eileen suggested and and do something about it rather than just talk about it because it is going to take a long time to persuade the the political world uh that we need this done and especially the hospital world uh that has been um you know getting away with doing whatever they want to do. Uh but thank you Eileen for suggesting that last time. Yeah, I think I think Eileen has suggested that quite quite often um more than just this past meeting, but you're right.

[01:20:48]>> Can I just respond? So, we voted on that. I I appreciate um the reminder and we all took a unanimous vote that we would try to offer such a product in 2028 rather than um you know try to make marginal changes and and put more of the cost increases on to state workers and retirees. I do just want to clarify one point. I I think the legislative process, as Bobby indicated, can be very lengthy um and much more contentious and I think the GIC has the ability to control what we offer our members from a regulatory standpoint. So, not sure we need to pursue the legislative avenue because I think um chances are we wouldn't get everything in place for the time frame that we're talking about.

[01:21:43]>> Yeah. No, thank you, Eileen. That's really helpful. And I'm going to uh ask Anna as the designate for ANF to comment because I'm sure she's very close to uh opportunities uh within the administration to help us. So, go ahead, Anna.

[01:22:01]>> Thanks, Madam Chair, and thank you, Michael, for the um informative presentation. I'm actually wondering just following on uh some of the the the questions and comments that have come up um during the presentation. Uh would a helpful next step here be evaluating some more Massachusetts specific data to understand potentially how some of those scenarios that were presented to us this morning like how we might understand those in with some further specific context. So, I'm I'm wondering whether the team at the GIC um or others could help us understand what options we might have in terms of looking in into some more specific data.

[01:22:40]>> We could certainly do that. That's a good suggestion. Thank you.

[01:22:44]>> Yeah. Yeah. Good one. Uh thank you. And then Bobby, I see you have your hand up.

[01:22:50]>> Uh yes. I just wanted to um sort of thank Eileen for suggesting, you know, other other ways to do this. And so if if we can um do this through the regulatory process as opposed to legislative um it could be a lot faster and we might be able to implement um you know the the um you know sort of caps the way we would like to do that without a lot of discussion going on for years and it being sent to committee for study and then dying in committee or something like that. Um it would seem to me that anything we can do to work around that uh would be great and thank you Eileen.

[01:23:45]Um, I s I certainly support that and I know that um my um other labor commissioners um would be grateful for uh for looking at another way to do this another approach. Thank you.

[01:24:03]>> All right, great Bobby. Thank you. I think that was our last question. Uh Michael, do you have any uh parting comments? any advice uh for us, any motivation and uh call to action to really get this into our our way of of being uh for the next procurement cycle.

[01:24:29]>> Well, it sounds to me like you've got the motivation already. I don't think I need to give that to you. Uh so I would encourage you to act on it. I I'll say that um doing some modeling uh to figure out exactly how you would implement it would be an appropriate step to take and one that other states have taken too.

[01:24:50]>> Terrific. Well, thank you. Thank you very much. This has been terrific and I want to thank the staff for listening to us. Uh even though Eileen did push us for the vote and uh you have to listen to us. uh you brought Michael forward uh on a very timely presentation that will help inform your thinking and ours. So, thank you. Thank you very much. All right. Uh Jennifer, I think it's uh you're up and you've got plenty of time.

[01:25:25]>> Just before we go to Jennifer, I just want to emphas first of all thank Michael for joining us. uh is extremely helpful presentation from somebody who knows this um this topic and this policy area perhaps more than uh any expert in the country uh is my sense um and I just we've touched on a few times the fact that there are um links to resources in the appendix u upon which um Michael relied on this presentation. I would just encourage commissioners to um to sort through some of that and um so if I can be so bold as to suggest a homework assignment for commissioners uh to more deeply understand this issue um there are a number of resources there um that we're that we're providing you through Michael and with that happy to hand it over to Jennifer.

[01:26:21]>> Great. Thank you. Thank you Matt. We love homework.

[01:26:28]Right. Thank you so much. Uh so so my presentation today is intended as a brief report to share spending trend for the current year as well as take an initial look at FY2027 based on the pending House and Senate budgets. So if we could go to the next slide.

[01:26:48]Uh this table should look familiar. It's the traditional monthly spending report for the state budget accounts representing the employer share of spending. What's changed on this slide from the last time I shared it at the end of February is that spending for February, March, and April have been added. The section at the top reflects pharmacy and medical claims and the monthly detail shows the variability due to seasonality availability of re of re and availability of rebates to offset expenses as well as other factors.

[01:27:22]The next slide uh shows the same report but for the enroll side of the le ledger. It shows the same fluctuations as on the employer side.

[01:27:36]Uh the following slide um brings it all together and shows the state share actual spending for July 2025 through April 2026 contrasted against the original budget appropriation represented by the blue line in April. a green line appears and that reflects the passage of the $300 million supplemental budget which we sorely needed. Uh that green line continues into May and June where spending trails off slightly uh mainly because of anticipated pharmacy rebates and a shortened month in June due to the June 30th statutory spending cutoff.

[01:28:22]And then on the final on the next slide, um we're looking at the same data in another way. It's showing the cumulative growth in available funding contrasted with the cumulative spending totals. In April, the blue line of the original budget appropriation transitions to the green line to reflect the 300 million supplemental budget. That budget is now tracking more in line with actual spending.

[01:28:52]So then um the next two slides these show a similar table structure but for different years. Some of our newer commissioners may not be aware that the GIC health benefits are funded by two different accounts. The first account is for health benefits in general and primarily covers active state employees as well as all municipal and offline um offline authority enrolles. The second is an account that is funded via a section of the budget that covers routine transfers and is often overlooked. It was created 15 plus years ago with the purpose of reflecting so-called pay as you go costs of state retiree healthcare benefits.

[01:29:39]In FY2025, 550 million was appropriated in this manner, but only 450 million was funded in FY26, which contributed 100 million to the FY2026 supplemental budget.

[01:29:54]As a result, as a reminder, the remaining supplemental need came from FY25 carry forward spending and some initial underfunding with a small portion due to higher than projected expenses. And so you see the table here reflects the final appropriated budget, which is the general appropriations act or the GAA, the $300 million supplemental. that then added together becomes the total available and what we've spent through April 30th which is reflected which is carried carrying forward from the prior slides.

[01:30:30]Uh the next slide uh reflects FY27 in a similar format and for the GIC's budget funding levels in the House and Senate are identical to House 2, meaning they will not reflect any increases in the final GA. Um commissioners know that the House 2 funding levels reflected acceptance of all of the proposed plan design changes.

[01:30:57]um but also that several were not adopted by the commission. That results in a protect projected $5.25 million shortfall.

[01:31:07]In addition, the pay as you go retirey health benefit account is funded at 400 million or 150 million below what was requested by the GIC. In place of that direct funding, there is a proposal to dedicate a large percentage of excess capital gains to the state retirey benefits trust fund or the SRBTF for use instead of the direct funding.

[01:31:31]Unfortunately, because capital gains is a notoriously volatile funding stream, the true amount available won't be known until summer 2027 at the earliest, making it unusable as a funding source for health claims during FY27 and thus it's reflected as a projected shortfall.

[01:31:53]Taken together, the plan design changes and SRBTF underfunding reflect an initial funding shortfall of 202.5 million in FY27, which means that some form of a supplemental budget will be needed for the GIC in FY27.

[01:32:14]That's a bit of a sobering way to end the uh to to end the meeting. Um but we did want to make sure that we were sharing the update with the commissioners on what we were anticipating for FY27.

[01:32:26]>> Yeah, it's very sobering.

[01:32:30]And if there's any way that there can be some innovation or some discussions with vendors for support, that would be terrific. Um it just it seems like meeting the budget is not something that we can do on a regular basis. So to the degree that the team can figure out if there is a way to save some of these growths, I'm sure that's what you're thinking as well.

[01:33:04]It's got to be just as sobering to you as it is >> to us as commissioners. So Jennifer, thank you. It's good to have this visibility so early in the year and we'll um we'll look forward to some of the things that can be done uh appropriately.

[01:33:26]Thank you, Jennifer. I'll turn it back over to you, Matt.

[01:33:29]>> Uh see Bobby has a question or has her hand up.

[01:33:33]>> Yes. Um thank you, Matt. Um it's really a comment. The uh first of all, this uh certainly um displays the the urgent need to uh implement price caps. Uh certainly because um because um and and the also the idea I just want to comment that they would uh even consider um that the legislature would even consider um sort of taking money from the pension fund. um even though it's might be capital gains but it it is the pension fund for state employees and current retirees and prospective entire retirees. So >> just just to be clear, Bobby, it's not pension. It's um >> liability for for >> right >> ongoing health insurance benefits. But yes, >> right. But you know, we it just this really demonstrates the need for us to um take action sort of quickly and come up with some solution. So thanks. I just wanted to comment on that. Thank you.

[01:34:54]And thanks for the correction, Matt. I appreciate it.

[01:35:01]>> Okay, Matt. No more questions. So, it is officially over to you.

[01:35:05]>> Yep. And that concludes our presentations. Uh, and I think we move to uh any new business if there is any and then adjournment.

[01:35:15]>> All right. I don't know if Eileen is still on. I know she invited all of us to a forum next week.

[01:35:24]Uh Matt, she had to drop off uh for for an urgency. Uh do you want to make a comment about that forum or anything else since you were the one who emailed it to us? Yeah, she um uh I I will not I don't have the invite handy with the details, but she um did want to make sure that she uh forwarded that just as a resource for commissioners to learn more uh from Michael um and others who will be providing their feedback uh as part of a reaction panel uh from industry including both health plans um and the hospital boys among others. So, um yeah, would encourage folks if they're able to uh to attend that.

[01:36:13]>> Okay, great. Yeah, it looks like a good forum. It's next week. It helps us be educated as commissioners. So, if you've got the time and can attend, uh would appreciate uh any kind of uh update uh from that uh when we're back together in June.

[01:36:33]Anything on your end, Matt, to bring up?

[01:36:37]>> Nope. We are done. Thank you, Madam Chair. Thank you, commissioners.

[01:36:41]Excellent discussion today. Appreciate the level of engagement.

[01:36:44]>> And do any other commissioners have business they'd like to bring forward?

[01:36:51]All right, then. Uh, I'll give you 22 minutes back in your day. I do need a um I know Andrew, you wanted a different way to adjourn this. We'll do that on June 18th uh when we're uh back together uh for our remote uh GIC meeting. U but at this point I would like a motion to adjourn.

[01:37:17]>> So moved.

[01:37:18]>> Uh Bobby is first. How about a second?

[01:37:23]>> A second. Katherine seconds. And so I think uh if we can just in group format uh agree I I'm >> I >> I >> I >> and so this meeting is adjourned. Have a wonderful uh Memorial Day weekend and I look forward to seeing you in June. Bye everyone.

[01:37:46]>> Bye everyone. Bye >> bye. Ham weekend.