Now, to respond to Councilwoman Fernandez's question, does that retiree pay -- in addition to the $58.96 times 2, do they also pay a copay when they actually go to 39 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the store to get a prescription?
It is the greater of 7 percent, or $5 for a generic drug and $10 for a 8 brand drug. 9
It's the greater of 20 12 percent, or $5 for a generic drug and $10 for a 13 brand drug. 14
Okay, it's the 15 greater of 20 percent of what, the actual cost of 16 the prescription? 17
All right. So why 20 don't we deal with some real figures here. The prescription costs $20. So it's the -- the prescription is $100. My colleague wants to -- for $100 worth of medicine, 20 percent is obviously $20. And it's the greater of 20 percent or $5 for generic and $10 for brand name. 40 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 So in that example, it's $20.
All right. And from Mr. Volpe, we were told, if you have the City coverage, you cannot opt out of the Rite Aid prescription drug program; is that correct?
That is true. I mean, at the current time, I think, as Mr. Volpe indicated, that we are looking at modifying the program for the next calendar year so that employees would have the option of taking just the health coverage or the health and the prescription coverage or not taking any coverage at all through the City.
Well, what was -- tell me -- just explain, if you can, what was the basis for the requirement that if you took one, you had to take the other? What was the thinking on that?
The concern being the 41 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 adverse selection that would occur and that the --
That's a very interesting term, but I have no idea what you're saying.
When we're talking about adverse selection, what we're talking about is the tendency for --
Are you saying that people wouldn't choose the Rite Aid plan?
Well, the people who would elect to take the coverage would be the people who would be the high-end users, the people who would have the greatest utilization of the plan.
In the example that you're talking about, it would be the prescription plan. That the people who needed the coverage the most and who would be the high-end users would be the people who would elect to take the coverage. And then you lose the benefit you have, you know, of spreading the cost out over a larger group.
Okay. So your certain was that if you're going to have all these high-end users or high-utilization users, you 42 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 wanted to capture other people who may not be those high-end users, and so you force everybody in, in hoping that it kind of balances out? Is that the theory?
Could I ask, Mr. Chairman, whose idea was that? Who raised this whole question of balancing?
Did that idea generate with the City or with Rite Aid or with health care or whoever may have been involved?
Well, basically, it was -- this was done as an accommodation for employees. Our obligation is to cover employees for the first four years of the retirement period. We did feel that we wanted to go beyond that four-year period and so that we developed a program that is certainly not as generous as the program for our active employees and our post-four-year employees but a program that would 43 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 permit the post-four-year employees to access a prescription program and also to participate in the City's group medical program.
Since the City has what we call "a defined benefit plan," right, and historically, with the impact of inflation, four years after retirement, you come up -- somebody comes up with this brainy idea that the people who need medicine a lot for their health reasons and that worked for the City and had been eligible for a retirement plan should suddenly have to pay much more for their medicines? Now, I just understand that kind of reasoning. Does -- is -- am I accurate in what I'm saying? Suddenly, they're faced with instead of, say, a $60-charge or a $65-charge, which is what the City was paying for them, now suddenly, they at least have two -- almost two sets of charges, a few dollars less but. . . I just don't understand what motivated anybody from the City to come up with such a plan. I can understand private employees coming up with such a plan, but I'm wondering what was the genesis? Whose idea was it? 44 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Was it presented by some private companies, or was it our own City brains that generated the idea -- or lack of brains? I don't know which I would have to characterize it as.
The intention was to provide the retiree benefit at the same level that was provided to the employee organizations. And for those employees who are in a bargaining unit, the City makes a contribution for the first four years only; the City does not make a contribution after that initial four-year period.
What decides that limit of time? Why isn't it for life instead of for four years, as many plans have it?
People don't die after that four years; they have to live. And, generally speaking, except for the current period, inflation is already reduced, whatever defined pension they get. So they're not in a position of paying more but in position to pay less; but suddenly, we're increasing their medical costs? Now, why -- where does that four-year 45 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 limit come from?
That's negotiated between the City and the employee organizations. At one time, it was --
So you're saying that the exempt employees of the City really are very much involved in union negotiations?
In the sense that they are either the beneficiaries of or the sufferers of whatever happens in employee negotiations. If the unions were successful in negotiating a for-life coverage, which, I think, some, outside of the City, maybe even some of the City unions may have, I don't know. But I know a number of outside-of-the-City unions have it. But if the City unions negotiate it, then the nonunion people would also be covered, based upon City policy.
That's a decision that would have to be made in the event that that happened.
Councilman, would 46 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 you yield to --
I believe Councilwoman Fernandez has a question in the same area.
Again, going back, I think we have a whole series of questions about the plan covering current employees, but sticking with the one for the post-four-year retirees, is it correct that the post-four-year retiree would pay $58.96 per person per month for the prescription benefits, and that they could pay up to percent of all of the prescriptions they 15 purchase? Which, I averaged out, could be, if you 16 were at the highest level, could be another $25 a 17 month, if you used your cap. 18 And then what I'm driving at is, Mr. 19 Volpe had said that coverage would be capped at 20 $1500 per person per year. So could you check my math for me? A person would pay $58.96 per month for their pay into the plan, then their copay could be up to $25 a month. So potentially, a high user could be paying $980 a month for $1500 worth of 47 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 prescriptions. Am I following that right? Does the coverage mean that? Coverage means, once I've purchased $1500 worth of prescriptions in a year, then I have to pay it all myself?
Okay. So double-check my math, but it seems to me, unless I'm making a mathematical error, for $1500 worth of prescriptions, I could potentially be paying $980 out of my pocket when I add my monthly fee plus my copay.
I have to trust you on that figure. I don't have a calculator here with me.
We're in that ballpark. I don't see what a bargain that is. I mean a bargain for the employee.
This was part of the reform movement of six years ago, remember that.
I mean -- see, basically, this is a fairly small group of employees.
Miss Seyda, is 48 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 there agreement on the accuracy here?
Yeah. This is basically a relatively small group of employees. And, basically, the pool of money that this group of employees puts into this plan is the money that funds the benefit.
So the City doesn't want to put any money in this.
But what I was leading up to, from the employee's point of view, this would not be a terrific plan if I'm a high user of prescriptions.
If I am a high user, I will probably get to the max. I don't have that utilization data here for that group, so I really can't speak to that with any sense of, you know, any level of comfort.
Mm-hmm. This is getting into the other issue. But then could 49 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 you, just for the record, tell me who negotiated this agreement for the non-represented employees? Were you part of the negotiations?
And who else is part of that? Who else made that contract? Because I -- there was a contract made that came before Council, was it 1993 or so?
This contract has never -- the contract itself has never came to Council.
Councilwoman, what you're remembering is we hearings on the initial Rite Aid contract in about 1993.
Exactly. Well, because that was the start of it, and there were a lot of concerns about Rite Aid taking over the prescription drug program. And so in our first term, when this issue came up, there were public hearings on the whole Rite Aid issue. 50 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 That's what you're thinking about, that the contract is a yearly contract. I believe the first was one year with three one-year renewals--
-- which is the avoidance of bringing the contract to City Council.
And now this is seven years later, so has another contract been -- has the --
There was a '96 contract that had, I believe, three one-year renewals to it. And there was a '97 amendment to that contract which is calling for -- there was -- there was -- 51 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Two renewals. One year, and two one-year renewals. Then the City entered into an amendment to that contract that allowed the Rite Aid contract to expire on December 31, 1997. There has since been a --.
The contract that the City entered into in 1996 was a one-year contract that provided for two renewals. There was a renewal in 1997 and a renewal in 1998. And so we are now in the, I guess, basically, the third year of that.
Well, Miss Seyda, what I'm referring to is that there was an agreement of amendment dated June 11, 1997, which amended the 1996 contract.
That's correct. 52 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Two days ago, the City signed a new contract for 1998 with Rite Aid, which you and I both are aware of.
Thank you, Mr. Chairman. I'd like to refer to a specific case, Councilman Cohen, and I was here a few minutes before you. Your office -- Julie worked on this, and I will refer this case to you. We have a client in the background. She's an employee in the Police Department, in their Management Revenue Bureau, who learned in April 96 that she has MS. She's taking a drug that the City, through Rite Aid, totally paid for, 100 percent, and then just recently decided that the client has to pay percent or the City would 24 cover 75 percent up to for injectables, for 25 injections. And that -- yes, and up to $10,000. 53 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Now, in her case, she has to pay almost $900 a month for injections. She has to get weekly injections. Insulin is exempted, so people who need insulin have full coverage. But this woman here has a child in college and cannot pay $223 a month for injections, works for the City Police Department, and her health is deteriorating. She's here today because she can't pay the freight. She's supposed to pay $225 -- almost $223.25 a month that folks who take are exempted from. And they say there's a small class of multiple sclerosis folks who don't get this benefit. Now, what can we do? I've also been told that the City can make exceptions. I would hopefully request in this case that a request can be made and that the chairmen of both committees would look into having this group of people exempted as well so that they can receive the same benefits as those who receive insulin.
I am -- I am familiar with this case. As background, when the City restructured its prescription program, injectables, with the exception of insulin, were 54 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 excluded from coverage.
Excluded. Injectables, with the exception of insulin, were excluded. On an exception basis, the City did agree to cover injectables pending the development of a Citywide policy on this. In 1997 --
Before you get to that, can you tell us what the basis was --
Could you tell us what the basis was that there should be an exclusion in such a case? Under any circumstances at any time, what was the thinking, let the people die, that they're too expensive to be kept alive? I mean, what was the thinking that said that these people should be excluded at any time?
Injectables are basically a standard exclusion in prescription drug programs.
Basically, it's the industry standard. And for those employees who wish to cover them, then there's an additional 55 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 premium, and the employer agrees that they will cover injectables. Some employers --
And the City chose to go with those employers who did not cover?
By the City Administration. I mean, I don't know that the Mayor himself made that decision, but it was certainly a -- the restructuring of the program was certainly something that we did with the full knowledge and consent of the Administration . 56 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
And did you ever report to Council that you were doing that? Do you have any record that shows that City Council was notified that we're covering certain groups but we're excluding or so? And in that letter, would you have told us what arrangements you were making to see that they would be covered, would get appropriate care?
I just can't believe what the personnel director is saying.
The information was provided to all employees but because we felt that this was too great of a hardship, we did agree that we would cover injectables on a case-by-case basis.
You mean slow death instead of immediate execution? 57 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Miss Seyda, let me -- let me -- I'm sorry, Councilman, let me just interject.
When you say that all employees were notified, this would be general notification that all employees received around and about the -- you have a term for this. I believe it's --
Open enrollment. Usually somewhere around December 1st, although, I believe, last year, in our cases, it was on or about December 8th. We usually get a package of materials for the open-enrollment period. Are you saying that we were notified in that communication? There's a fair amount of information in that distribution; is that correct?
And is it fair to say that you would have to somewhat aggressively look for this information to know either about the one point we're talking about or the other 58 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 proposed changes to the health care plan or any of our plans? You would have to read through all of the materials at that one point in time; is that correct?
Well, what we do at the beginning of the open-enrollment period is we send out a good bit of information to employees. With that information, we always include a sheet or a couple of sheets which basically highlight the changes in the program from one year to the next because we do understand that it's a considerable amount of information that is distributed to the employees.
Well, let me ask this question 'cause for myself, at least, part of the way I ended up in this is that I happened to have had a little extra time on December 8th -- much to your regret, I'm sure -- and I actually read the materials for the first time. And that's how I found out about the copay increase, part of what we're discussing here today. But what is the recourse for employees and certainly non-elected officials? I mean, if an employee reads something in the 20-some-odd 59 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 pages that get sent out and may potentially affect them, what is their real recourse at the end of the day? What can they do about it? Who do they complain to? How does it get changed?
I think it happens a variety of different ways. Some employees will go to their departmental personnel office. I would say more generally that complaints or concerns will come to the benefits office in my department.
And are changes made? Or you just receive the comments and you give the explanation to the people and that's the end of the discussion?
We do make every effort to accommodate employees where we can. We do have to take costs into consideration. The one case that you have brought to -- put on the table today concerning this individual who does take an -- has an injectable treatment plan, in response to the concerns that she raised with our office, we did, again, review the injectable policy, and we are in the process of modifying that policy. So I do think that -- 60 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Is that person going to covered by the exception rule? Or is the policy going to be changed, or are they going to continue to have to pay the $223.25 a month?
The policy is going to change so that coverage can be provided in those situations where it's determined to be cost-effective in relation to the expense the City might otherwise incur without this treatment plan.
You start talking about cost-effectiveness. Is this for the individual person? You know, if there are five people, it's one thing; if there are fifty, it's something else? I mean, Miss Seyda, what does that mean?
The case -- her case and any other case like it would be reviewed on a case-by-case basis.
And what's the cost-benefit analysis that you propose to go through? How are you going to make this 61 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 decision?
We're in the process of identifying an outside person or persons to do that.
Miss Seyda, this person could walk but is now on a cane; she couldn't walk in here on her own volition today before. I don't know what that means? What will happen to her before our hearing ends, or who's going to tell her what help she can get before this hearing is over? What happens to her? She can't wait physically until we come up with a new plan. This woman needs help today. What will happen?
We want to know what will happen in this case today, and then we can -- 62 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
When? What can we do to help this lady? I would like some response on this specific case today, we can talk about generalities certainly later, but we need a commitment for some help for this lady today.
Okay. I am -- based upon the information that I have seen on this particular case, I am confident that there will be some relief for this individual.
Well, let me ask you this: How long has this case been known?
Was it the most recent open-enrollment period, was it the last one, was it two enrollments ago, ten years ago? How long have we known that we've had this kind of issue, whether generally or specifically to the individual that Councilwoman Blackwell has referred to?
Generally, we have had -- we have had knowledge of this general issue for 63 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 the last several years. In terms of this specific case, this case, as far as I know, just came to our attention when the injectable policy was modified at the beginning of this year.
Or proposed to be modified back on December 1, 1997; is that correct?
Well, let me ask this question: Who's going to make the decision? Who's involved in the decision-making process generally on the policy and specifically in this particular case? Name the individuals who are involved in changing the policy.
Following up on the Chairman's question, I have here a thing that says, "How to Apply for the Injectable Drug Program," and you write a letter to Laurie Davey, at 1530 MSB. I'd like to find out how many requests have been submitted, how many have been granted, 64 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 and the reasons why the rejections have gone forward in terms of this program. And I think that follow ups in terms of the Chairman wanting to know who it is that makes decisions. Mr. Volpe, Mr. Volpe, are you leaving?
I would assume you have a part of the answer to my question right now, right? Who's involved in making the decision in this matter? Are you the --
This particular case and the policy in general. There can only be a few people. You're the Personnel Director. I mean, if kind of just keep going up the chain, we've got the Managing Director, maybe take a side step to the Chief of Staff, Mayor. Maybe the Finance Director is involved as well. I mean, it's a limited circle of people, right?
And all of those individuals that I've named would more than likely 65 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 have some involvement in this, right?
Yes. And we did a cost analysis of this. We believe that the cost is not so great that we cannot justify a further change in the policy. The Administration has signed off on that. And at this point in time, it's -- it's purely -- or only a matter of having a medical review of the case. But as far as the Administration --
Are you saying there's never been a medical review in this particular case?
Are you saying that there has not been a medical review in this particular case or the employee has not shared any medical information with us?
I don't know that -- exactly who have reviewed the medical record. 66 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
Is there any question that the person needs the injectables that they're using? Is that in doubt? Or that they're being prescribed for a medically-necessary purpose?
I have not looked at the medical records of this individual. I'm certainly not a person who should look at the medical records of the individual. I mean, it should be a medical, a clinical person who needs to look at them.
To be honest with you, I just simply don't know who has attempted to look at this woman's records.
All right, all right. I'll you that. At the same time, Miss Seyda, by your own testimony, you individually or the office in general has been aware of this particular case since somewhere in December 1997. It is now May of 1998, with no answer. What I would like to ask, with every respect to you, is to get us an answer by the end of this day as to what is going to happen and what 67 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 decision has been made with regard to this particular employee specifically and the policy in general. You have already said that the Administration has almost, in essence, signed off on a policy. I left you at the question of medical records. But if you're telling me that the policy question has already pretty much been dealt with, then you should pretty much be able to answer this question at the end of the day. Make it easy on yourself.
Just to clarify the last thing, would you write a letter that we can read and understand. For example, in connection with this, a letter went out two days ago, May 19th, by Lee White, Benefit Administration Supervisor. (Reading letter.) 68 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Dear Miss Gallagher: (The person we're speaking about.) After a review of the City's policy regarding the coverage of injectable drugs, the City is further modifying its program to establish criteria under which certain injectables can be covered at a higher level (whatever that may mean.) Coverage at this higher level (still maintaining the great mystery of whatever a higher level is) would only occur if it was determined to be cost-effective in relation to the expense the City might otherwise incur without the injectable treatment plan. We will keep you informed of new developments. Please, Miss Seyda, I don't understand what's in anybody's mind who would write such an unintelligible letter. I can't -- I've had my staff read it, I have had other Councilmembers look at it, and I've asked them, What does this letter mean, what does it say? None of us know what this letter means. Now, can you tell us what this letter means? And does anybody review letters that go out from your department? 69 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
If I could -- if I could respond by, I guess -- again, reiterating my agreement to the Chairman Nutter to provide additional communication for your -- for both --
In fact, on the Rite Aid matter, the main responsibility is the Law and Government Committee, but we're working together. It's Council Nutter's resolution that's raising these basic issues.
And I will be pleased to provide the same letter to both you, Councilman Cohen, and to you, Councilman Nutter.
But couldn't you tell us what this letter means that went out? I mean, you know, we're very embarrassed when a constituent comes to us and -- 70 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586
-- shows us a letter and says, "I don't understand it, you're a member of City Council, you certainly can understand it."
Are you aware of the -- I mean, you heard the Councilman read it into the record. Are you aware of this letter?
Can tell us what Mr. White was trying to communicate to our public employee by way of this letter? What was he trying to say?
In terms of a higher level, that's the question of the percent copay. I 20 think probably the most simplistic way of 21 restating what's in this letter would be: Subject 22 to a review of the medical records, we are 23 confident that this treatment plan will be 24 covered. 25
To me -- you know 71 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 what it says to me? It says, "We hope that you don't go broke or die before we modify the criteria." That's what it means.
Well, I'm un -- then I apologize. That certainly was not the intent of the letter.
And probably due to Mr. Volpe or -- what does the City pay Rite Aid? And I want -- what is the dollar amount per year and per month of gross receipts of Rite Aid Corporation for all pharmaceutical services to the City of Philadelphia employees, subscribers, and their dependents? Do we have that information, Miss Seyda or Mr. Volpe? How can we get that information? Or shouldn't we have that information? Because we should have some criteria of how much money it is that we're paying and what type of services we're buying.