ABOUT LACERA

INSURANCE, BENEFITS & LEGISLATIVE COMMITTEE MINUTES 2-12-09

PRESENT

• William de la Garza, Chair
• Simon S. Russin, Vice Chair
• Edward L. Blecksmith
• Ed C. Morris
• James P. Harris, Alternate

MEMBERS AT LARGE

• Sadonya Antebi
• Yves Chery
• Les Robbins

STAFF, ADVISORS, PARTICIPANTS

• Lita Payne
• Cynthia Lau
• Mercer Human Resource Consulting
• Clay Levister
• Laurie Silva
• Kathy Slothour

The meeting was called to order by Chairman de la Garza at 10:45 a.m.

1. APPOINTMENT OF VOTING MEMBER(S) IN THE EVENT ONE OR MORE REGULAR COMMITTEE MEMBERS ARE ABSENT

   All regular members of the Committee were present.

2. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF JANUARY 15, 2009

   A motion was made by Mr. Morris, seconded by Mr. Blecksmith, to approve the minutes of the regular meeting of January 15, 2009.

   The motion passed unanimously.

3. ACTION ITEMS
   1. Recommend the Board of Retirement adopt a “Support” position on AB 104, which would conform California tax law to provisions of the federal Pension Protection Act of 2006.

      This bill is identical to AB 1561 from the prior legislative session, for which the Board of Retirement adopted a “Support” position.

      A motion was made by Mr. Morris, seconded by Mr. Blecksmith, to support AB 104. The motion passed unanimously.

   2. Recommend the Board of Retirement adopt a “Watch” position on AB 128, which would amend the cancer presumption in workers’ compensation cases.

      The current version of this bill does not amend the cancer presumption in CERL relating to disability retirements.

      A motion was made by Mr. Morris, seconded by Mr. Russin, to watch AB 128.

      The motion passed unanimously.
   3. Recommend the Board of Retirement adopt a “Watch” position on AB 137 relating to the Brown Act.

      This bill would require that ad hoc advisory committees hold their meetings in public if the committee has been established for more than two year.

      A motion was made by Mr. Morris, seconded by Mr. Russin, to watch AB 137.

      The motion passed unanimously.
4. FOR INFORMATION
   1. Staff Activities Report for January, 2009

      The staff activities report was discussed.

   2. CIGNA & Anthem Blue Cross Claims Experience

      The CIGNA & Anthem Blue Cross Claims Experience reports through December, 2008 were discussed.

   3. Claims Administration Audit of CIGNA Healthcare

      Kathy Slothour of Mercer conducted an audit of the dental plan claims at CIGNA’s Visalia, California claims processing facility. The audit included review of a statistically valid sample of dental claims processed during the period of July 1, 2007 through June 30, 2008. The objectives of the audit were to ensure that dental claims are being processed in accordance with LACERA’s plan provisions, and to measure the quality and timeliness of CIGNA’s performance as compared to existing performance guarantees.

      Based on Mercer’s review of the materials made available during the course of the audit, it appears that CIGNA has administered the LACERA dental plan during 2007-2008 with mixed results. While the claims processing accuracy and payment incidence accuracy results met generally accepted industry standards, the financial payment accuracy fell below those standards. CIGNA’s turnaround time performance met or exceeded generally accepted industry standards for all performance measures. Based on CIGNA’s self-reported results, all performance standards for which results are available for Plan Year 2007-2008 were met.

   4. Claims Administration Audit of Anthem Blue Cross

      Kathy Slothour of Mercer presented the results of the annual Anthem Blue Cross (Anthem) claims audit. This was a review of a statistical sample of 250 medical claims processed during the period of July 1, 2007 through June 30, 2008. Based on this audit, it appears that Anthem has administered LACERA’s claims with mixed results. The results for overall claim processing accuracy, payment incidence accuracy, non-financial accuracy, and the percent of claims processed in 14 calendar days or less met or exceeded LACERA-specific performance standards, generally accepted industry standards, and/or other mainstream programs audited by Mercer. However, the financial accuracy result of 97.01% is below LACERA’s performance standard, other mainstream programs audited by Mercer, and generally acceptable industry standards. The percent of claims processed in 30 calendar days or less result of 97.17% falls short of meeting LACERA’s performance expectation of 98%, and is the lowest result since Plan Year 2003 2004.

      Based on the official audit results, Anthem failed to meet the performance standards for financial accuracy and the percentage of claims processed in 30 calendar days or less. Therefore, compensation totaling $40,000 is due LACERA.

      Committee members expressed concern regarding audit items, such as financial accuracy, that were below both LACERA’s performance standard and generally acceptable industry standards.

   5. Federal Legislation
   • Weekly Highlights – January 26, 2009
   • Weekly Highlights – January 12, 2009
   • Weekly Highlights – January 5, 2009

   Presented for information only.

   6. California Retirement Legislation
      • Pending Legislation
        • AB 65: PERS – RETIRED PUBLIC EMPLOYEES VISION CARE PROGRAM
        • AB 86: PERS – AIRPORT LAW ENFORCEMENT AS SAFETY
        • AB 125: PERS – PRIVATE EMPLOYEE SAVINGS PROGRAM

      Presented for information only.

5. MISCELLANEOUS

   Clay Levister gave a brief update on the health care renewals. With continuing negotiations, we are looking at a further reduction in the overall increase to 6%. We are seeing this plan year that while the post-65 HMOs that coordinate with Medicare are still very cost effective, especially relative to the benchmark plan, the pre-65 HMOs are actually getting to the point where they are at, or greater than, the cost of the benchmark plan. The renewals will be brought to the Board of Retirement in April.

6. PUBLIC COMMENT
7. GOOD OF THE ORDER (For discussion purposes only)
8. ADJOURNMENT

The Board of Retirement has adopted a policy permitting any member of the Board to attend a standing committee meeting open to the public. In the event five or more members of the Board of Retirement (including members appointed to the Committee) are in attendance, the meeting shall constitute a joint meeting of the Committee and the Board of Retirement. Members of the Board of Retirement who are not members of the Committee may attend and participate in a meeting of a Board Committee but may not vote on any matter discussed at the meeting. The only action the Committee may take at the meeting is approval of a recommendation to take further action at a subsequent meeting of the Board.

Documents distributed to members of the Committee less than 72 hours prior to the meeting will be available for public inspection at LACERA at the time they are distributed to a majority of the Committee, provided the documents are subject to public disclosure and relate to an open session of the Committee. Such documents may be viewed Monday through Friday during normal 9:00 a.m. to 5:00 p.m. business hours. LACERA is located at 300 N. Lake Avenue, Suite 820, Pasadena, California.

Persons requiring an alternative format of this agenda pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by calling Cynthia Guider at (626)-564-6000, from 8:30 a.m. to 5:00 p.m. Monday through Friday, but no later than 48 hours prior to the time the meeting is to commence. Assistive Listening Devices are available upon request. American Sign Language (ASL) Interpreters are available with at least three (3) business days notice before the meeting date.

3/5/09