february 2014 board book

(PLEASE FIND THE AGENDA/TABLE OF CONTENTS ON PAGE 5.)

REGULAR MEETING

OF THE

BOARD OF DIRECTORS

February 4, 2014

9:30 AM NMRHCA Board Room

2nd Floor Suite 207 4308 Carlisle Blvd. NE

Albuquerque, New Mexico

2012 January February March April 1

S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 5 6 7 1 2 3 4 1 2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 5 6 7 8 9 10 11 4 5 6 7 8 9 10 8 9 10 11 12 13 14 15 16 17 18 19 20 21 12 13 14 15 16 17 18 11 12 13 14 15 16 17 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 20 21 22 23 24 25 18 19 20 21 22 23 24 22 23 24 25 26 27 28 29 30 31 26 27 28 29 25 26 27 28 29 30 31 29 30

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2013 January February March April

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May June July August 1 2 3 4 1 2 1 2 3 4 5 6 7 1 2 3 4 5 6 7 8 9 10 11 3 4 5 6 7 8 9 8 9 10 11 12 13 14 5 6 7 8 9 10 11 12 13 14 15 16 17 18 10 11 12 13 14 15 16 15 16 17 18 19 20 21 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17 18 19 20 21 22 23 22 23 24 25 26 27 28 19 20 21 22 23 24 25 26 27 28 29 30 24 25 26 27 28 29 30 29 30 31 26 27 28 29 30 31

September OCTOBER November December 1 1 2 3 4 5 1 2 3 1 2 3 4 5 6 7 2 3 4 5 6 7 8 6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14 9 10 11 12 13 14 15 13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21

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2014 JANUARY FEBRUARY MARCH APRIL

S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 1 1 1 2 3 4 5 5 6 7 8 9 10 11 2 3 4 5 6 7 8 2 3 4 5 6 7 8 6 7 8 9 10 11 12 12 13 14 15 16 17 18 9 10 11 12 13 14 15 9 10 11 12 13 14 15 13 14 15 16 17 18 19 19 20 21 22 23 24 25 16 17 18 19 20 21 22 16 17 18 19 20 21 22 20 21 22 23 24 25 26 26 27 28 29 30 31 23 24 25 26 27 28 23 24 25 26 27 28 29 27 28 29 30 30 31 S M T W T F S S M T W T F S S M T W T F S S M T W T F S

MAY JUNE JULY AUGUST S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 1 2 3 4 5 6 7 1 2 3 4 5 1 2 4 5 6 7 8 9 10 8 9 10 11 12 13 14 6 7 8 9 10 11 12 3 4 5 6 7 8 9 11 12 13 14 15 16 17 15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 16 18 19 20 21 22 23 24 22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23 25 26 27 28 29 30 31 29 30 27 28 29 30 31 24 25 26 27 28 29 30 31 S M T W T F S S M T W T F S S M T W T F S S M T W T F S

SEPTEMBER OCTOBER NOVEMBER DECEMBER S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 5 6 1 2 3 4 1 1 2 3 4 5 6 7 8 9 10 11 12 13 5 6 7 8 9 10 11 2 3 4 5 6 7 8 7 8 9 10 11 12 13 14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15 14 15 16 17 18 19 20 21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22 21 22 23 24 25 26 27 28 29 30 31 26 27 28 29 30 31 23 24 25 26 27 28 29 28 29 30 31 30 S M T W T F S S M T W T F S S M T W T F S S M T W T F S

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New Mexico Retiree Health Care Authority Regular Meeting

BOARD OF DIRECTORS

ROLL CALL

February 4, 2014

Member in Attendance

Mr. Sullivan, President

Mr. Montaño, Vice President

Mr. Crandall, Secretary

Mr. Propst

Ms. Goodwin

Mr. Johnson

Mr. Linton

Ms. Padilla-Jackson

Ms. Sucher

Ms. Hill

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NMRHCA BOARD OF DIRECTORS February 2014

Mr. Julian Baca Designee of PERA Executive Director 33 Plaza La Prensa Santa Fe, NM 87507 PO Box 2123 Santa Fe, NM 87504-2123 [email protected]

Ms. Jan Goodwin, Executive Director Educational Retirement Board PO Box 26129 Santa Fe, NM 87502-0129 [email protected]; (W) 505-827-8030 (F) 505-827-1855

The Honorable Mr. Wayne Johnson NM Association of Counties Bernalillo County Commissioner One Civic Plaza, NW Albuquerque, NM 87102 Ms. Karen Brown Deputy County Commissioner Bernalillo County, District 5 [email protected]; 505-468-7212 (office) 505-462-9821 (fax)

The Honorable Mr. James B Lewis NM State Treasurer 2055 South Pacheco Street Suite 100 & 200 Santa Fe, NM 87505-5135 [email protected] (W) 505-955-1120 (Fax) 505-955-1195

Mr. Terry Linton Governor’s Appointee 1204 Central Ave. SW Albuquerque, NM 87102 [email protected]; 505-247-1530

Mr. Joe Montaño, Vice President NM Assoc. of Educational Retirees 5304 Hattiesburg NW Albuquerque, NM 87120 [email protected] (H) 897-9518

Ms. Olivia Padilla-Jackson NM Municipal League Deputy Finance Director City of Albuquerque

Mr. Wayne Propst Executive Director Public Employees Retirement Association 33 Plaza La Prensa Santa Fe, NM 87507 PO Box 2123 Santa Fe, NM 87504-2123 [email protected]; W: (505) 476-9301

Ms. Marilyn Hill Deputy State Treasurer Designee of NM State Treasurer [email protected] 505-955-1123

Ms. Karen Sucher NEA-NM, Classroom Teachers Assoc., & NM Federation of Educational Employees PO BOX 1983 Tijeras, NM 87059 [email protected] Phone: 505-286-8702

Mr. Tom Sullivan, President Superintendents’ Association of NM 800 Kiva Dr. SE Albuquerque, NM 87123 [email protected]; 505-330-2600

Mr. Doug Crandall, Secretary Retired Public Employees of New Mexico PO Box 20607 Albuquerque, NM 87154-0607

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Regular Meeting of the NEW MEXICO RETIREE HEALTH CARE AUTHORITY

BOARD OF DIRECTORS

February 4, 2014 9:30 AM

NMRHCA Board Room 2nd Floor, Suite 207

4308 Carlisle Blvd. NE Albuquerque, NM 87107

AGENDA

Call to Order Mr. Sullivan, Chair

Roll Call to Ascertain Quorum Ms. Beatty, Recorder

Pledge of Allegiance Mr. Sullivan, Chair

Approval of Agenda Mr. Sullivan, Chair

Approval of Regular Meeting Minutes Mr. Sullivan, Chair December 3, 2013

Public Forum and Introductions Mr. Sullivan, Chair

Executive Director’s Update Mr. Tyndall, Executive Director

1. Blue Cross Blue Shield Purchase of Lovelace Health Plan 2. Pharmacy Benefit Manager Request for Proposal 3. House Bill 27/Senate Bill 135 4. Joint House Education Committee/Senate Education Committee Presentation 5. House Appropriations and Finance Committee Action

Presbyterian Health Plan - Member Engagement Treatment Cost Calculator Ms. Weber, Program Specialist Ms. De La O, E-Business Coordinator Blue Cross Blue Shield Integrated Provider Finder/Cost Estimator Ms. Bell, Account Executive

Second Quarter Budget Review Mr. Archuleta, Deputy Director

Date & Location of the next Regular Board Meeting Mr. Sullivan, Chair

March 4, 2014, 9:30 AM, NMRHCA Board Room, 2nd Floor Suite 207, 4308 Carlisle Blvd. NE, Albuquerque, New Mexico.

Other Business Mr. Sullivan, Chair

Adjourn

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ACTION SUMMARY

RETIREE HEALTH CARE AUTHORITY/REGULAR BOARD MEETING

December 3, 2013

Item Action Page #

APPROVAL OF AGENDA Approved 3 APPROVAL OF MINUTES: November 5, 2013 Approved 3 PUBLIC FORUM & INTRODUCTIONS Informational 3 EXECUTIVE DIRECTOR’S UPDATE Informational 3 BCBSNM Purchase of Lovelace Health Plan Switch Enrollment Update IBAC Program Evaluation 2014 Proposed Legislation SIC Investment Update Legislative Finance Committee – FY15 Appropriation Request BUDGET ADJUSTMENT REQUEST Approved 7 OTHER BUSINESS [none] DATE AND LOCATION OF NEXT MTG: February 4, 2014, Albuquerque EXECUTIVE SESSION No action 8

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New Mexico Retiree Health Care Authority: December 3, 2013 2

MINUTES OF THE

NM RETIREE HEALTH CARE AUTHORITY/BOARD OF DIRECTORS

REGULAR MEETING

December 3, 2013

CALL TO ORDER A Regular Meeting of the Board of Directors of the New Mexico Retiree Health Care Authority was called to order on this date at 9:30 a.m. in the NMRHCA Board Room, 4308 Carlisle Boulevard, N.E., Albuquerque, New Mexico. ROLL CALL TO ASCERTAIN QUORUM A quorum was present: Members Present: Mr. Tom Sullivan, President Mr. Joe Montaño, Vice President Mr. Doug Crandall, Secretary Ms. Jan Goodwin Ms. Marilyn Hill [designee of the Honorable James B. Lewis, NM State Treasurer] Mr. Terry Linton Mr. Wayne Propst Ms. Karen Sucher Members Excused: Mr. Wayne Johnson Ms. Olivia Padilla‐Jackson Staff Present: Mr. Mark Tyndall, Executive Director Mr. David Archuleta, Deputy Director Ms. Deb Vering, Chief Financial Officer Mr. Tomas Rodriguez, IT Director Ms. Judith S. Beatty, Recorder Mr. Rudy Bantista, Communications & Board Recording Secretary Others Present: [See sign‐in sheet.] PLEDGE OF ALLEGIANCE Mr. Archuleta led the pledge.

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APPROVAL OF AGENDA Mr. Crandall moved for approval of the agenda, as published. Ms. Goodwin seconded the motion, which passed unanimously by voice vote. APPROVAL OF ANNUAL MEETING MINUTES: November 5, 2013 Mr. Montaño moved approval of the November 5, 2013, minutes, as submitted. Mr. Crandall seconded the motion, which passed unanimously by voice vote. PUBLIC FORUM AND INTRODUCTIONS Audience members introduced themselves. There were no speakers. EXECUTIVE DIRECTOR’S UPDATE

1. Blue Cross Blue Shield Purchase of Lovelace Health Plan Mr. Tyndall stated that Blue Cross Blue Shield of New Mexico (BCBSNM) and Lovelace Health Plan have come to an arrangement whereby Blue Cross Blue Shield will be purchasing the Medicare Advantage and commercial membership from Lovelace Health Plan. NMRHCA has about 5,000 Lovelace members on its Medicare Advantage plan; however, CMS has not yet approved the movement of the membership to BCBSNM. He said NMRHCA will continue providing services to the Lovelace Medicare Advantage members until approval is given. Mr. Tyndall noted that Albuquerque Health Partners is now part of the Lovelace network, effective immediately. Mr. Tyndall asked for assurances from BCBSNM representative Lori Bell and Lovelace representative Bill Mascolo that they will do everything possible to ensure a smooth and problem‐free transition for NMRHCA members affected by this move. Ms. Bell stated that BCBSNM has a large internal task force that is working with key Lovelace personnel to see that the transition, scheduled on January 1, 2014, is as seamless as possible. Mr. Mascolo said two large groups (Lovelace and the federal government programs) in the Medicare line of business will be moving over on January 1; and through the first quarter (no later than April 1), they will be migrating all of the commercial groups, including the IBAC. He said he anticipates final approvals to come through in two to three weeks and will keep the NMRHCA informed.

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2. Switch Enrollment Update Mr. Tyndall noted the following highlights: ‐‐ About 200 members, or about 3% of Premier Plus members, moved from Premier Plus to Premier. The migration trend continues, but is slowing. At this point about two‐thirds of the members are on Premier and one‐third are on Premier Plus. ‐‐ Because the individual risk pools are stabilizing, there may be a discussion at the annual meeting about having rating differentials for the two risk pools. ‐‐ Main action in this year’s switch enrollment was on the Medicare side. • New United Health Care will pick up about 700 members. Total cost savings should equal about $900,000 depending on risk of members who moved from the higher cost plan. • Presbyterian’s new statewide offering picks up about 300 new members, an 8 percent increase. • Lovelace plans lost 330 members. They are expected to transition to BCBSNM. ‐‐ NMRHCA met in 16 meetings with more than 3,000 members across the state in 14 different communities, and was able to do 600 biometric screenings and 700 immunizations.

3. IBAC Program Evaluation Mr. Tyndall stated that a presentation was made to the Legislative Finance Committee (LFC) by its Program Evaluation Team on November 22, when the Team reported that they didn’t feel IBAC had done a good job in controlling costs with respect to provider reimbursements, among other findings. Mr. Tyndall stated that NMRHCA accepted the findings and made comments, which he summarized for the Board. Key findings ‐‐ “Lack of effective oversight of provider rates and quality improvement has made employee health care less affordable.” Mr. Tyndall said NMRHCA agreed that the industry as a whole needs to evolve beyond the traditional fee‐for‐service reimbursement system. In fact, as part of the last procurement process, the IBAC specifically made sure it had points assignments to the health plans that were showing the most progress in evolving away from the fee‐for‐service model. There has also been some progress with the health plans in the hospitals in getting bundled payments for ER and outpatient surgery services. IBAC has met directly with ABQ Health Partners and Presbyterian Medical Group and is working toward developing some value‐based reimbursement models.

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‐‐ “Health care spending for IBAC agencies has continued to rise at unsustainable levels.” Mr. Tyndall said NMRHCA’s response was that spending on a per‐member basis in FY2009 was about $417 a month, and is projected at $418 per month in FY2014, so has been flat for five years. NMRHCA acknowledged that some of the reasons for that are the changes the agency has made to the plans, with higher deductibles and out‐of‐pocket expenses. Key recommendations ‐‐ “Require the NMRHCA to participate in the joint purchase of health care and ancillary services with the consolidated health care finance entity.” Mr. Tyndall said a main recommendation was that the benefits of Albuquerque Public Schools, the Public School Insurance Authority and the state’s Risk Management Division be consolidated into a newly created healthcare agency. While NMRHCA was not included in that particular recommendation, it was recommended that NMRHCA be required to participate with that consolidated healthcare finance entity. He said NMRHCA would welcome that prospect. ‐‐ “Actively participate in provider rate development by establishing acceptable rates for state‐sponsored programs, allowing no rate changes without state approval….” Mr. Tyndall said NMRHCA will continue to work through its health plan partners, as well as directly with health care delivery systems, to improve efficiencies. As Medicaid, Medicare and commercial payers all look to limit or reduce their reimbursements, it is important that the combination be managed in a manner that does not worsen the existing provider shortage in the state.

4. 2014 Proposed Legislation Mr. Tyndall said staff met with LFC Chairman Varela about NMRHCA’s 2014 proposed legislation to increase the employer and employee contribution rates, and Chairman Varela recommended an alternative scenario that would spread the employee increase over a 6‐year period at .125 percent rather than .25 percent per year. The NMRHCA had originally suggested phasing in the employee increase of .75 percent over 3 years, and phasing in the employer piece of 1.5 percent over 6 years. Mr. Tyndall reviewed a graph reflecting how the employer and employee contribution increases would affect solvency in each of the 6 years. He stressed that these solvency gains are strictly the result of the contribution increases, however, and do not include other elements of the Five Year Plan. Mr. Tyndall noted that other major components of the Five Year Strategic Plan were: ‐‐ Phase out “family coverage” subsidies for retirees with multiple dependent children ‐‐ Increase cost sharing on prescription coverage (stabilize plan/member share percentage) ‐‐ ‐Increase sharing of pre‐Medicare plans

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Implement graduated minimum age requirement (to receive subsidies)

Increase years of service required to receive maximum subsidy

Reduce pre‐Medicare retiree subsidies

Reduce pre‐Medicare spousal subsidies

Implement enhanced wellness programs ‐‐ All elements of the strategic plan combined would extend the solvency of the program from 2029 through 2043 and more closely align benefits with contributions over the life of the program. Board members discussed strategic options. Ms. Goodwin stated that the Board should continue looking at wellness issues, as this is the one mechanism the NMRHCA has in actually bending the cost curve and adding years of solvency to the plan. Mayo Clinic has found that a $100 gift certificate gets about 75 percent compliance in getting a health risk assessment, and a $240 a year premium reduction results in about 87 percent compliance. She commented that obviously getting the health risk assessment is only the first step, because then people have to become engaged in managing their chronic diseases, etc. Mr. Linton agreed with Ms. Goodwin’s comments He said he would like to see a major push in this direction, and suggested that staff prepare recommendations for Board review in the near future. He pointed out that enhanced wellness programs are part of the NMRHCA Five Year Strategic Plan. Mr. Tyndall agreed to present a report in the spring with recommendations that could be considered at the annual meeting in July. He added that there are strong arguments both for and against wellness programs with studies to back up both points of view. Mr. Propst commented that what bends the cost curve are employer‐employee contributions and minimum retirement ages, and not employee wellness programs. He added that the Board has to take into consideration what kind of physical shape the population is when it enters the program and whether those people the state sends into the program are healthy and eating right. He commented that clearly they are not. He said this is not to say the NMRHCA shouldn’t implement wellness programs, but it has to do things outside of that if it wants to make a difference. Mr. Propst said he has long advocated the idea of having a nurse in the office downstairs who is available to the members whenever they walk in and can discuss their medications with them and other health maintenance matters. Ms. Goodwin agreed that a health risk assessment on its own is worthless if it is not accompanied by clinical biometric screenings to identify health conditions that can then be managed in conjunction with health professionals such as nurses, coaches, or health educators. Mr. Montaño said the NMRHCA already has a wellness program, and he would be interested in knowing what percentage of members take advantage of the free screenings and other free benefits offered.

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Ms. Sucher noted that APS employees were required to have the biometric screening this year, and any smokers had to pay a higher rate. Mr. Tyndall noted that the Board previously voted against the idea of a smoker’s differential. Chairman Sullivan said Ms. Goodwin seemed to be suggesting a two‐tiered incentive, one for the assessment and one for follow‐up. He said he would like to know what the cost would be and how that cost could be offset with premiums. Ms. Goodwin suggested that any discussion include moving away from the fee‐for‐service model and into paying for outcomes. Chairman Sullivan suggested an in‐depth discussion in advance of the July annual meeting. Board members discussed holding a special meeting and having the Executive Committee work with Messrs. Tyndall and Archuleta to schedule a date.

5. SIC Investment Update ‐‐ As of October 31, the NMRHCA fund balance was $321,659,043. ‐‐ The SIC will potentially vote in December to allow the NMRHCA to participate in some alternative investment pools. The Council Investment Council unanimously endorsed a proposal to allow the NMRHCA to invest in all of the alternative investment classes. Once the final decision is known, NEPC will make a presentation to the NMRHCA Board on its asset allocation mix.

6. Legislative Finance Committee – FY15 Appropriation Request

Mr. Tyndall reviewed the FY15 Appropriation Request presented to the Legislative Finance Committee on November 22, 3013. BUDGET ADJUSTMENT REQUEST Mr. Archuleta asked for Board approval to submit a Budget Adjustment Request to DFA and Legislative Finance Committee totaling $166,000, broken down as follows: an $83,000 increase from the Health Benefits Administration Fund as a transfer to Program Support, comprised of a $39,100 increase in Personal Services and Employee Benefits and a $43,900 increase in Other Costs. Mr. Crandall moved approval of the BAR, as presented. Mr. Propst seconded the motion, which passed unanimously by voice vote. DATE & LOCATION OF THE NEXT REGULAR BOARD MEETING: FEBRUARY 4, 2014, 9:30 A.M., NMRHCA BOARD ROOM, 2ND FLOOR, SUITE 207, 4308 CARLISLE BLVD, N.E., ALBUQUERQUE, NEW MEXICO

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OTHER BUSINESS None. EXECUTIVE SESSION PURSUANT TO AUDIT ACT, §12‐6‐5 NMSA 1978 Mr. Crandall moved to enter Executive Session for the purpose of discussing matters related to the Audit Act, as permitted by the Open Meetings Act. Mr. Montaño seconded the motion, which passed on the following roll call vote: For: Chairman Sullivan; Mr. Montaño; Mr. Crandall; Ms. Goodwin; Ms. Hill; Mr. Linton; Mr. Propst; Ms. Sucher. Against: None. [Executive Session: 10:50 a.m. – 11:10 a.m.] Chairman Sullivan reported that no matters were discussed in Executive Session other than what was stated on the agenda. ADJOURN Its business completed, the Board adjourned the meeting at 11:10 a.m. Tom Sullivan, President Doug Crandall, Secretary

13

Rev.12.2013 January 21, 2014

Susana Martinez

Governor

Edwynn L. Burckle

Secretary

Lawrence O. Maxwell

State Purchasing Agent

State of New Mexico GENERAL SERVICES DEPARTMENT

PURCHASING DIVISION 1100 St. Francis Dr. Rm. 2016 • Santa Fe, New Mexico 87505

Mailing Address: P.O. Box 6850 • Santa Fe, New Mexico 87502

Phone (505) 827-0472 • Fax: (505) 827-2484

Administrative Services Division

(505) 827-2000

Facilities Management Division

(505) 827-2141

State Purchasing Division

(505) 827-0472

Risk Management Division

(505) 827-0442

State Printing & Graphic Services Bureau

(505) 476-1950

Transportation Services Division

(505) 827-1958

-NOTICE-

Request for Proposal Number: TITLE: Pharmaceutical Benefits Management Services COMMODITY CODES: 07020, 07040, 15602, 15614, 15620, 15624, 17030, 17402, 23226

PURPOSE: To secure PBM services for the IBAC. The PBM services include processing and paying prescription claims, developing and maintaining a formulary, contracting with pharmacies/providers and rebates with drug manufacturers, as well as the normal customer service functions of any customer service organization.

GENERAL INFORMATION: All questions about the contents of the RFP document shall be directed to: RFP Administrator: (“Procurement Manager’s “Designee”) Correspondence should be directed to: Christy Edwards, Procurement Manager Deputy Director, NM Public Schools Insurance Authority 410 Old Taos Highway Santa Fe, NM 87501 [email protected] ISSUANCE: The Request for Proposals will be issued on January 24, 2014. Firms interested in obtaining a copy may access and download the document from the Internet on at the following address:

http://www.generalservices.state.nm.us/statepurchasing/ITBs__RFPs_and_Bid_Tabulation.aspx

PRE-PROPOSAL CONFERENCE: Not Applicable

PROPOSAL DUE DATE AND TIME: Proposals must be received by the Procurement Manager no later than 3:00 p.m. MST, February 18, 2014.

Proposals received after the due date and time will not be accepted.

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underscored material = new

[bracketed material] = delete

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HOUSE BILL 27

51ST LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2014

INTRODUCED BY

Jim R. Trujillo

ENDORSED BY THE INVESTMENTS AND PENSIONS OVERSIGHT COMMITTEE

AN ACT

RELATING TO HEALTH CARE; AMENDING THE RETIREE HEALTH CARE ACT

BY INCREASING THE EMPLOYER AND EMPLOYEE CONTRIBUTION RATES PAID

TO THE RETIREE HEALTH CARE FUND; RECONCILING MULTIPLE

AMENDMENTS TO THE SAME SECTION OF LAW BY REPEALING LAWS 2009,

CHAPTER 287, SECTION 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 10-7C-15 NMSA 1978 (being Laws 1990,

Chapter 6, Section 15, as amended by Laws 2009, Chapter 287,

Section 2 and by Laws 2009, Chapter 288, Section 3) is amended

to read:

"10-7C-15. RETIREE HEALTH CARE FUND CONTRIBUTIONS.--

A. Following completion of the preliminary

contribution period, each participating employer shall make

contributions to the fund pursuant to the following provisions:

.194926.4SA

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(1) for participating employees who are not

members of an enhanced retirement plan, the employer's

contribution shall equal:

(a) one and three-tenths percent of each

participating employee's salary for the period from July 1,

2002 through June 30, 2010;

(b) one and six hundred sixty-six

thousandths percent of each participating employee's salary for

the period from July 1, 2010 through June 30, 2011;

(c) one and eight hundred thirty-four


the period from July 1, 2011 through June 30, 2012; [and]

(d) two percent of each participating

employee's salary [beginning] from July 1, 2012 through June

30, 2014;

(e) two and twenty-five hundredths

percent of each participating employee's salary from July 1,


(f) two and one-half percent of each

participating employee's salary from July 1, 2015 through June

30, 2016;

(g) two and seventy-five hundredths



(h) three percent of each participating

.194926.4SA- 2 -

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employee's salary from July 1, 2017 through June 30, 2018;

(i) three and twenty-five hundredths


2018 through June 30, 2019; and

(j) three and one-half percent of each

participating employee's salary on and after July 1, 2019;

(2) for participating employees who are

members of an enhanced retirement plan, the employer's


(a) one and three-tenths percent of each

participating employee's salary for the period from July 1,


(b) two and eighty-four thousandths

percent of each participating employee's salary for the period

from July 1, 2010 through June 30, 2011;

(c) two and two hundred ninety-two


the period from July 1, 2011 through June 30, 2012; [and]

(d) two and one-half percent of each

participating employee's salary [beginning July 1, 2012; and]


(e) two and eight hundred thirteen

thousandths percent of each participating employee's salary


(f) three and one hundred twenty-five

.194926.4SA- 3 -

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(g) three and four hundred thirty-eight



(h) three and seventy-five hundredths



(i) four and sixty-three thousandths


2018 through June 30, 2019; and

(j) four and three hundred seventy-five

thousandths percent of each participating employee's salary on

and after July 1, 2019; and

(3) each employer that chooses to become a

participating employer after January 1, 1998 shall make

contributions to the fund in the amount determined to be

appropriate by the board.

B. Following completion of the preliminary

contribution period, each participating employee, as a

condition of employment, shall contribute to the fund pursuant

to the following provisions:

(1) for a participating employee who is not a

member of an enhanced retirement plan, the employee's


.194926.4SA- 4 -

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(a) sixty-five hundredths of one percent

of the employee's salary for the period from July 1, 2002

through June 30, 2010;

(b) eight hundred thirty-three

thousandths of one percent of the employee's salary for the

period from July 1, 2010 through June 30, 2011;

(c) nine hundred seventeen thousandths

of one percent of the employee's salary for the period from

July 1, 2011 through June 30, 2012; [and]

(d) one percent of the employee's salary

[beginning] from July 1, 2012 through June 30, 2014;

(e) one and one hundred twenty-five

thousandths percent of the employee's salary from July 1, 2014


(f) one and twenty-five hundredths

percent of the employee's salary from July 1, 2015 through June

30, 2016;

(g) one and three hundred seventy-five



(h) one and one-half percent of the

employee's salary from July 1, 2017 through June 30, 2018;

(i) one and six hundred twenty-five


through June 30, 2019; and

.194926.4SA- 5 -

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(j) one and seventy-five hundredths

percent of the employee's salary on and after July 1, 2019;

(2) for a participating employee who is a

member of an enhanced retirement plan, the employee's


(a) sixty-five hundredths of one percent

of the employee's salary for the period from July 1, 2002


(b) one and forty-two thousandths

percent of the employee's salary for the period from July 1,


(c) one and one hundred forty-six


through June 30, 2012; [and]

(d) one and one-fourth percent of the

employee's salary [beginning July 1, 2012; and] from July 1,


(e) one and four hundred six thousandths


30, 2015;

(f) one and five hundred sixty-three



(g) one and seven hundred nineteen


.194926.4SA- 6 -

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(h) one and eight hundred seventy-five



(i) two and thirty-one thousandths


30, 2019; and

(j) two and one hundred eighty-eight

thousandths percent of the employee's salary on and after July

1, 2019; and

(3) as a condition of employment, each

participating employee of an employer that chooses to become a

participating employer after January 1, 1998 shall contribute

to the fund an amount that is determined to be appropriate by

the board. Each month, participating employers shall deduct

the contribution from the participating employee's salary and

shall remit it to the board as provided by any procedures that

the board may require.

C. On or after July 1, 2009, no person who has

obtained service credit pursuant to Subsection B of Section

10-11-6 NMSA 1978, Section 10-11-7 NMSA 1978 or Paragraph (3)

or (4) of Subsection A of Section 22-11-34 NMSA 1978 may enroll

with the authority unless the person makes a contribution to

the fund equal to the full actuarial present value of the

amount of the increase in the person's health care benefit, as

.194926.4SA- 7 -

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determined by the authority.

D. Except for contributions made pursuant to

Subsection C of this section, a participating employer that

fails to remit before the tenth day after the last day of the

month all employer and employee deposits required by the

Retiree Health Care Act to be remitted by the employer for the

month shall pay to the fund, in addition to the deposits,

interest on the unpaid amounts at the rate of six percent per

year compounded monthly.

E. Except for contributions made pursuant to

Subsection C of this section, the employer and employee

contributions shall be paid in monthly installments based on

the percent of payroll certified by the employer.

F. Except in the case of erroneously made

contributions or as may be otherwise provided in Subsection D

of Section 10-7C-9 NMSA 1978, contributions from participating

employers and participating employees shall become the property

of the fund on receipt by the board and shall not be refunded

under any circumstances, including termination of employment or

termination of the participating employer's operation or

participation in the Retiree Health Care Act.

G. Notwithstanding any other provision in the

Retiree Health Care Act and at the first session of the

legislature following July 1, 2013, the legislature shall

review and adjust the distributions pursuant to Section 7-1-6.1

.194926.4SA- 8 -

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NMSA 1978 and the employer and employee contributions to the

authority in order to ensure the actuarial soundness of the

benefits provided under the Retiree Health Care Act.

H. As used in this section, "member of an enhanced

retirement plan" means:

(1) a member of the public employees

retirement association who, pursuant to the Public Employees

Retirement Act, is included in:

(a) state police member and adult

correctional officer member coverage plan 1;

(b) municipal police member coverage

plan 3, 4 or 5;

(c) municipal fire member coverage plan

3, 4 or 5; or

(d) municipal detention officer member

coverage plan 1; or

(2) a member pursuant to the provisions of the

Judicial Retirement Act."

SECTION 2. REPEAL.--Laws 2009, Chapter 287, Section 2 is

repealed.

SECTION 3. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2014.

- 9 -

.194926.4SA

23

House Bill 27

House Bill 27

House Bill 27 amends the Retiree Health Care Act by increasing the employer and employee contribution rates paid to

the Retiree Health Care Fund. The employee increase will begin in FY15 from its current level of 1 percent to 1.75

percent over a 6 year period (FY15 – FY20). The employer increase will begin in FY15 from its current level of 2 percent

to 3.5 percent over the same time frame (FY15 – FY20).

Purpose of Legislation

Provisions within House Bill 27 combined with NMRHCA’s Five Year Strategic Plan will extended the solvency of the

program from current estimates of 2029 through 2043. This request supports the purpose of the Retiree Health Care

Act “to provide comprehensive core group health insurance for persons who have retired from certain public service in

New Mexico.”

Background

Laws 2009, Chapters 287 (House Bill 351 ‐ Varela) and 288 (House Bill 573 ‐ Heaton) provided the New Mexico Retiree

Health Care (NMRHCA) program with a graduated employee/employer contribution increase (1.95 percent to 3 percent

of payroll) beginning in FY11 and concluding in FY13. In addition, Chapter 288 includes the following section: “...At the

first session of the legislature following July 1, 2013, the legislature shall review and adjust the distributions pursuant

to Section 7‐1‐6.1 NMSA 1978 and the employer and employee contributions to the authority in order to ensure the

actuarial soundness of the benefits provided under the Retiree Health Care Act” (10‐7C‐15‐G).

Past, Present, Future Projections

A B C D E F G H

Fiscal Year Employee Increase Employer Increase GF Impact Total RHCA Revenue

FY14 1.00% NA 2.000% NA NA 3.000% NA

FY15 1.125% 0.125% 2.250% 0.250% $5,000,000 3.375% $15,000,000

FY16 1.250% 0.125% 2.500% 0.250% $5,000,000 3.750% $30,000,000

FY17 1.375% 0.125% 2.750% 0.250% $5,000,000 4.125% $45,000,000

FY18 1.500% 0.125% 3.000% 0.250% $5,000,000 4.500% $60,000,000

FY19 1.625% 0.125% 3.250% 0.250% $5,000,000 4.875% $75,000,000

FY20 1.750% 0.125% 3.500% 0.250% $5,000,000 5.250% $90,000,000

2009 2014 2015 w/HB27

Medical Membership 40,224 51,484 * 71,265

Assets $122 million $340 million ** $3.4 billion

Unfunded Liability $4.1 billion $3.6 billion *** $2.2 billion

Projected Insolvency 2014 2029 **** 2043

*Projected membership in 2025 based on historical growth of 3 percent per year

**Invested assets is projected to reach its peak in 2034

***Assuming current medical trend of 8 percent annually

**** Based on above mentioned assumptions

24

Fiscal Implications

Upon full implementation in FY20 an additional $90 million per year will be directed toward the Retiree Health Care

Fund as compared to FY14. Total recurring General Fund impact will be approximately $30 million with the remaining

balance of employer contributions coming from federal, other state funds and internal services funds.

Currently an employee earning an annual salary of $40,000 pays $15.39 per pay period and the employer pays $30.77

for a total of $46.16 per pay period. Under the proposal, the same employee will pay $26.93 and the employer will pay

$53.85 for a total of $80.78 per pay period. Overall, net take home pay will be reduced by $1.92 each pay period for the

first year, $3.84 the second year, $5.76 the third year, $7.69 the fourth year, $9.62 the fifth year and $11.54 the sixth

and final year.

For every 0.375 increase in employee/employer contributions to the program (as proposed above), the period of time

the program is expected to remain solvent will grow between 2 – 3 years while the year the program is expected to

deficit spend will be deferred by 1 ‐2 years. The graph below illustrates the impact of the proposed increase over the 6

year period extending the solvency of the program through 2041.

Other Substantive Issues

The proposed legislation is a major component of the NMRHCA Five Year Strategic Plan adopted by its board of

directors in October 2012, to extend the solvency of the program through 2043. Other major components of the plan

include: Phase out “family coverage” subsidies for retirees with multiple dependent children; Increase cost sharing on

prescription coverage (stabilize plan/member share percentage); Increase cost‐sharing of pre‐Medicare Plans;

Implement graduated minimum age requirement (to receive subsidies); Increase years of service required to receive

maximum subsidy (currently 20 years); Reduce pre‐Medicare retiree subsidies; Reduce pre‐Medicare spousal subsidies;

Implement enhanced wellness programs

All elements of the strategic plan combined will extend the solvency of the NMRHCA program from 2029 through 2043

and more closely align benefits with contributions over the life of the program.

2013

2018

2023

2028

2033

2038

2043

*3.00 3.375 3.75 4.125 4.5 4.875 5.25

Year

Total Contribution (Percent of Employee/Employer Payroll)

NMRHCA Contribution Increase (Increments for each year of increase)

Deficit Spending Solvency*Current Contribution

25

Joint House Education and

Senate Education Meeting

January 15, 2014

Mark Tyndall, Executive Director

26

BackgroundHistory: Retiree Health Care Authority Act Created July 1990 (no appropriation/prefunding period) Began paying benefits in January 1991 w/statutory

limitations to premium increases until 2008

Current Composition: 300 Public Employers 50% Public Schools 25% State of New Mexico 25% MunicipalitiesApproximately 100,000 active employees

55,361 Covered Retirees (January 1, 2014) 31,718 Medicare / 18,302 Pre-Medicare 5,341 100% retiree pay voluntary plans (e.g.

dental/vision)

Current Benefits (20+ years of services: Medicare BCBS Supplement Plan - $159 per month Medicare Advantage Plans - $9 - $67 per month

Pre-Medicare BCBS and Presbyterian

Sources

Employees 41.6

Employers 83.1

Retirees 100.8

Federal 25.9

Tax Suspense Fund 23.9

Misc 6.7

Total 282.0

Uses

Health Plan Administration 10.9

RHCA Operating 2.7

Medical/Prescription 236.4

Total 250.0

FY14 Solvency Contribution 32.0

NMRHCA Finances

(amounts shown in millions)

Fiscal Year 2014

2

Premier Premier Plus

Monthly Premium 145.55$ 272.03$

Annual Deductible 800$ 300$

Out‐of‐pocket Limit 4,000$ 3,000$

Urgent Care 35$ 30$

Emergency Care 125$ 100$

Prescription (pharmacy) $5 ‐ $100 $5 ‐ $100

Prescription (mail order) $12 ‐ $100 $12 ‐ $100

27

Program Improvements & Current Events2007 – Trust Fund exhausted by 2014 Money drawn from fund 4 out of 5 previous years Unfunded liability (GASB) of $4.1 billion

2014 – Trust Fund to stay positive into 2029 $90 million added to fund over the last 3 years Unfunded liability of $3.6 billion

Cost Management Efficacy 2009 - $417 per member per month 2014 - $418 per member per month (projected)

Cost Containment Strategies Increased deductibles Increased annual out-of-pocket maximums Medicare Part B deductible Percentage of prescription costs paid for by

members

Revenue Enhancement Strategies Increase premiums in accordance with medical

inflation averaging 8 percent annually House Bill 27 (prefiled) – increases employee

and employer contributions to the program.

3

28

NMRHCA Program Is Manageable – But Significant Challenges Remain

Recent improvements demonstrate that retiree health benefits can be managed in a responsible way over the long term

Fundamental imbalances will require additional changes over time

NMRHCA Five Year Strategic PlanPositive Fund Balance Through 2043

X Phase out “family coverage” subsidies for retirees with multiple dependent children

X Increase cost sharing on prescription coverage (stabilize plan/member share percentage)

X Increase cost-sharing of pre-Medicare Plans

Implement graduated minimum age requirement (to receive subsidies)*

Increase years of service required to receive maximum subsidy (currently 20 years)

Reduce pre-Medicare retiree subsidies

Reduce pre-Medicare spousal subsidies

Implement enhanced wellness programs (premium incentives for participation/health status)

Increase Employee/Employer contribution levels (requires legislative action)

X indicates implementation starting in 2013*NMRHCA will implement any minimum age requirement adopted by PERA and/or ERB

4

29

*Increase employee/employer contributions from 3% of payroll to 5.25% over a 6-year period as follows:

*Similar proposal endorsed by the Investments and Pensions Oversight Committee increasing employee contributions by the same amount over a 3 year period as compared to the 6 year period indicated above.

House Bill 27

5

A B C D E F G H

Fiscal Year Employee Increase Employer Increase GF Impact Total RHCA Revenue

FY14 1.00% NA 2.000% NA NA NA NA

FY15 1.125% 0.125% 2.250% 0.250% $5,000,000 3.375% $15,000,000

FY16 1.250% 0.125% 2.500% 0.250% $5,000,000 3.750% $30,000,000

FY17 1.375% 0.125% 2.750% 0.250% $5,000,000 4.125% $45,000,000

FY18 1.500% 0.125% 3.000% 0.250% $5,000,000 4.500% $60,000,000

FY19 1.625% 0.125% 3.250% 0.250% $5,000,000 4.875% $75,000,000

FY20 1.750% 0.125% 3.500% 0.250% $5,000,000 5.250% $90,000,000

30

Employee/Employer ImpactEmployee Impact Example: An employee earning $40,000 annually currently pays $15.39 per pay period (1%) which will increase to $26.93

(1.75%) over a 6 year period. Net take-home pay will be reduced each pay period by the following amount in each successive year:

FY15 - $1.92

FY16 - $3.84

FY17 - $5.76

FY18 - $7.69

FY19 - $9.62

FY20 - $11.54

Employer Impact Employer Impact Example:

An employer (for each $40,000 employee) currently pays $30.77 (2%) per pay period

Each .25% increase will result in $3.84 increase in contribution.

A 1.5% increase will result in an increased contribution of $600 annually

Each .25% increase in employer contribution will have an approximate $5 million impact on the general fund

6

31

7

‐$500,000,000

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

NMRHCA Contribution Increase Increments (Landing Areas)

Def. Spend Solvency*Current 2019 2029Year 1 2020 2031Year 2 2022 2034Year 3 2024 2036Year 4 2025 2038Year 5 2027 2039Year 6 2028 2041

*Contributions Only ‐ other elements of five year plan will add additional solvency

32

FY15 Legislative Finance Committee/Executive Recommendation Comparison

Overall, the FY15 appropriation recommendations proposed by the Legislative Finance Committee and Executive provide

for a range of growth between 6.5 and 9 percent for the Healthcare Benefits Administration Program with the Executive

recommendation matching our request. The request assumed a 4 percent growth in participation and 5 percent growth

in medical trend. In addition, both recommendations provide for one additional FTE; however, the Executive

recommendation limits the growth in Program Support to $171 thousand as compared to $224 thousand as

recommended by the LFC. The total dollars amounts recommended by each group are shown below in Table 1 (dollar

amounts shown in thousands):

Table 2 (dollar amounts shown in thousands)provides a comparison of the recommended growth in each program which

includes a $6.2 million difference in the Healthcare Benefits Administration Program (Exec higher) and a $53 thousand

difference in Program Support (LFC higher)

Table 1 FY14 Approved

Operating FY15 Request

LFC

Recommendation

Exec

Recommendation

Healthcare Benefits Administration

Contractual Services 255,653.6$ 278,365.0$ 272,122.0$ 278,365.0$

Other Financing Uses 2,665.3$ 2,989.5$ 2,889.7$ 2,836.9$

Subtotal 258,318.9$ 281,354.5$ 275,011.7$ 281,201.9$

Program Support

Personal Services & Employee Benefits 1,712.0$ 1,966.6$ 1,866.8$ 1,836.5$

Contractual Services 445.2$ 467.4$ 467.4$ 467.4$

Other Financing Uses 508.1$ 555.5$ 555.5$ 533.0$

Subtotal 2,665.3$ 2,989.5$ 2,889.7$ 2,836.9$

Total 260,984.2$ 284,344.0$ 277,901.4$ 284,038.8$

FTE 25 28 26 26

Table 2 FY14 Approved

Operating

FY15 Requested

Growth

LFC

Recommended

Growth

Exec

Recommended

Growth

Healthcare Benefits Administration

Contractual Services 255,653.6$ 22,711.4$ 16,468.4$ 22,711.4$

Other Financing Uses 2,665.3$ 324.2$ 224.4$ 171.6$

Subtotal 258,318.9$ 23,035.6$ 16,692.8$ 22,883.0$

Program Support

Personal Services & Employee Benefits 1,712.0$ 254.6$ 154.8$ 124.5$

Contractual Services 445.2$ 22.2$ 22.2$ 22.2$

Other Financing Uses 508.1$ 47.4$ 47.4$ 24.9$

Subtotal 2,665.3$ 324.2$ 224.4$ 171.6$

Total 260,984.2$ 23,359.8$ 16,917.2$ 23,054.6$

FTE 25 3 1 1

33

Ultimately, the budget scenario as recommend by the Executive provides the Retiree Health Care Authority with the

greatest ability to accommodate the projected revenues and expenditures for FY15. However, at the conclusion of the

presentation before the House Appropriations and Finance Committee – NMRHCA staff indicated our ability to

accommodate either budget scenario assuming we continued to maintain our Budget Adjustment Request authority

allowing the agency to increase its budget (without limit) in the Healthcare Benefits Administration Program.

House Appropriations and Finance Committee Adopted Recommendation

On January 15, 2013, the House Appropriations and Finance Committee listened to staff presentations made by Senior

Fiscal Analyst, Anne Hanika‐Ortiz and Executive Analyst, Robert McGrail. The presentation included a description of the

information summarized above. At the end of the presentation, Representative Salazar asked about House Bill 27 and

its effect on our program while Representative Varela asked a few general questions about our request and our

authorized BAR authority. In conclusion, the LFC recommendation was adopted by the Investments and Insurance

Subcommittee to include the consensus performance measures and targets highlighted below. The committee adoption

will be reported to the House Appropriations and Finance Committee on Tuesday, January 28th.

FY14 FY15 FY15 FY15 FY15

Budget Request LFC Exec Consensus

Healthcare Benefits Administration Recomm Recomm Rec

* Output Minimum number of years of solvency 15 15 30 15 20

Outcome Total revenue generated in millions $275 $282 $282 $282 $282

* Efficiency Total revenue increase to the reserve fund in millions $25.00 $25 $25 $25 $25

Efficiency Average monthly pre‐medicare eligible per participant claim cost $621 $670 $670 $670 $670

Output Average monthly medicare eligible per‐participant claim cost $321 $340 $309 $340 $309

Outcome Percent of participants satisfied with the healthcare benefits program 85% 85% 85% 85% 85%

Efficiency Percent variance of medical premium change with industry average ±4% ±4% ±4% ±4% ±4%

Efficiency Average number of days to resolve customer service claims 7 7 7 6 6

Efficiency

Percent of average medical premium subsidy for pre‐medicare and

medicare plans 50% 50% 50% 50% 50%

Explanatory Number of retiree healthcare participants 54,000 56,160 56,160 56,160 56,160

Outcome Number of years of projected balanced spending 6 5 5 5 5

Program Support

Outcome Number of prior‐year audit findings that recur 0 0 0 0 0

Efficiency Satisfaction rating of administrative services provided to all programs 85% 85% 85% 85% 85%

Efficiency Percent of deposits made within twenty‐four hours NA 100% 100% 100% 100%

Efficiency Percent of payments made within thirty days NA 99% 99% 100% 100%

* Recommended for inclusion in the General Appropriation Act

34

New Mexico Retiree Health Care Authority Fiscal Year 2014 Second Quarter Review

Health Care Benefit Fund As of December 31, 2013, expenditures are $122,001,100 and revenues are $139,518,800 creating a surplus of $17,517,700. As a result, management is projecting revenues in excess of expenditures of $35.2 million in FY14 (up $3.3 million from the 1st quarter projection) based on a similar utilization pattern for hospitals and physicians, growth in membership, migration between health plans and estimated revenues. Notably, the projection for miscellaneous revenues has improved as the payment received from CMS grew to $7 million as compared to approximately $350 thousand for the same time period last year. Claim expenditures through the second quarter of FY14 as compared to the same time frame in FY13 have increased by approximately 5.3 percent. Upward pressures include:

1. The Healthcare Plans have grown by 1,907 members (278 non-Medicare/1,629 Medicare) or 4 percent compared to the same time frame in FY13

2. Claim costs have increased by $6 million or 5.3 percent (1.3 percent medical trend) 3. Participants have begun to meet their deductibles and annual out-of-pocket limits

Downward pressures include:

1. Under the pre-Medicare plans - continued migration toward lower premium/higher out-of-pocket costing plans as participation in the Premier Plus Plans shrunk by over 900 members while participation in the Premier Plans grew by nearly 1,200 members.

2. Under the Medicare plans – Medicare Advantage Plans grew by over 900 members compared to 600 in the supplement plan.

3. Increased cost sharing on the prescription drug plan 4. Limited growth in dependent participation (24 members)

Current projections indicate sufficient budget authority exists to cover claim costs through the remainder of FY14. NMRHCA staff will continue to monitor and report revenues and expenditures in order to identify significant changes from projected amounts. Revenues through the second quarter of FY14 have grown by $9.3 million, or 7.2 percent compared to the same time period in FY13. This increase was led by an $8 million, or 15.3 percent increase in retiree premiums (not on a per member basis), $1.1 million growth in transfers from the Taxation and Revenue Suspense Fund and $600 thousand growth in miscellaneous revenue. However, these increases have been partially offset by marginal declines in employer/employee contributions and interest income.

35

Please note that $2.5 million or 5 percent of the growth in retiree contributions can be attributed to last year’s premium holiday (December 2012) supported by funds received through the Early Retiree Reinsurance Program. In addition, to the 4 percent growth in membership --- retirees are now paying approximately 6 percent more on a per member basis.

Below is a summary of the cash contributions made to the SIC through the first half of FY14:

The $20 million transfer made on August 1, 2013, is entirely comprised of revenues earned and received in FY13. Program Support Fund The adjusted operating budget for FY14 is $2,748,300. As of December, 2013, expenditures are $1,279,900 with supporting transfers made from Health Care Benefit Fund. Current projections indicate sufficient budget authority exists to satisfy our financial obligations through the remainder of FY14.

Transfer Effective Amount Transferred

August 1, 2013 20,000,000$

October 1, 2013 3,500,000$

November 1, 2013 5,500,000$

Total 29,000,000$

36

Healthcare Benefit Fund

FY14 Approved

Budget (Half Year) FY14 Actual FY13 Actual % Change

Budget - Actuals

Sources:Employer/Employee Contributions 52,229.9$ $59,866.9 60,243.7$ -0.6% $7,637.1

Retiree Contributions 56,146.3$ $60,293.3 52,273.0$ 15.3% $4,147.1

Taxation & Revenue Fund 11,965.7$ $11,778.8 10,677.5$ 10.3% -$186.9

Other Miscellaneous Revenue 8,887.4$ $7,579.7 6,949.6$ 9.1% -$1,307.7

Interest Income 13.4$ $0.1 16.4$ -99.4% -$13.3

Total Sources 129,242.5$ $139,518.8 130,160.2$ 7.2% $10,276.4

Uses:Medical Contractual Services 127,826.8$ $120,531.4 114,452.9$ 5.3% -$7,295.4

Other Financing Uses/Refunds 1,415.7$ $1,469.7 1,342.0$ 9.5% $54.1

Total Uses 129,242.5$ $122,001.1 115,794.9$ 5.4% -$7,241.4

Sources Over Uses -$ 17,517.7$ 14,365.3$

FY14 Approved Budget* FY14 Actual

Remaining Balance

% Collected/ Expended

Estimated FY14 Total

Sources:Employer/Employee Contributions 104,459.7$ $59,866.9 44,592.8$ 57.3% 122,479.1$

Retiree Contributions 112,209.5$ $60,293.3 51,916.2$ 53.7% 121,189.5$

Taxation & Revenue Fund 23,931.3$ $11,778.8 12,152.5$ 49.2% 23,931.3$

Other Miscellaneous Revenue 17,774.7$ $7,579.7 10,195.0$ 42.6% 22,183.0$

Interest Income 26.7$ $0.1 26.6$ 0.4% 0.2$

Total Sources 258,401.9$ $139,518.8 118,883.1$ 54.0% $289,783.1

Uses:Medical Contractual Services 255,653.6$ $120,531.4 135,122.2$ 47.1% 251,897.3$

Other Financing Uses/Refunds 2,748.3$ $1,469.7 1,278.6$ 53.5% 2,695.7$

Total Uses 258,401.9$ $122,001.1 136,400.8$ 47.2% 254,593.0$

Sources Over Uses 17,517.7$ 35,190.1$

Budget Adjustment Request (BAR) approved on December 24, 2013 increased the other financing uses category

to support projected expenditures from Program Support.

2nd Quarter (FY14-FY13 Comparison)

Revenues & Expenditures/Projections

New Mexico Retiree Health Care AuthoritySecond Quarter Budget Review

Comparison of Projected vs. Actual Fiscal Year 2014(in thousands)

37

FY14 Actual

July 2013 - December 2013

REVENUE:

Employer/Employee Contributions 59,866.9

Retiree Contributions 60,293.3

Taxation and Revenue Suspense Fund 11,778.8

Other Miscellaneous Revenue 7,579.7

Interest Income 0.1

TOTAL REVENUE: 139,518.8

EXPENDITURES:

PrescriptionsMEDCO 35,559.8

Total Prescriptions 35,559.8

Non-MedicareBlue Cross Blue Shield 32,307.4

BCBS Administrative Costs 1,177.9

Presbyterian 15,461.0

Presbyterian Administrative Costs 930.0

Total Non-Medicare 49,876.3

MedicareBlue Cross Blue Shield 16,247.4

BCBS Administrative Costs 2,484.3

Presbyterian 1,832.6

Lovelace 1,124.9

Total Medicare 21,689.2

Other BenefitsDavis Vision 892.1

Delta Dental 2,829.2

Standard Life Insurance 4,974.3

United Concordia Dental 4,710.6

Total Other Benefits 13,406.2

Other ExpensesProgram Support 1,279.9

Refunds 189.7

Total Other Expenses 1,469.6

TOTAL EXPENDITURES: 122,001.1

Total Revenue over Total Expenditures 17,517.7

New Mexico Retiree Health Care AuthoritySecond Quarter Healthcare Benefit Fund Detail

Fiscal Year 2014(in thousands)

38

Program Support

FY14 ApprovedBudget* FY14 Actual FY13 Actual $ Change % Change

Sources:Other Transfers 1,374.2$ 1,279.9$ 1,342.0$ (62.1)$ -4.6%

Total Sources 1,374.2$ 1,279.9$ 1,342.0$ (62.1)$ 6.9%

Uses:Personal Services and Benefits 875.6$ 864.5$ 796.2$ 68.3$ 8.6%

Contractual Services 222.6$ 91.2$ 140.9$ (49.7)$ -35.3%

Other Costs 276.0$ 324.2$ 306.3$ 17.9$ 5.8%

Total Uses 1,374.2$ 1,279.9$ 1,243.4$ 36.5$ 2.9%

2nd Quarter Projections (FY14-FY13 Comparison)

New Mexico Retiree Health Care AuthoritySecond Quarter Budget Review

Comparison of Budget vs. Actual Fiscal Year 2014(in thousands)

ApprovedOperating Budget* FY14 Actuals

Remaining Balance

% Collected/ Expended

FY14 Estimated

TotalSurplus/

DeficiencySources:

Other Transfers 2,748.3$ 1,279.9$ 1,468.4$ 47% 2,680.9$ 67.4$

Total Sources 2,748.3$ 1,279.9$ 1,468.4$ 47% 2,680.9$ 67.4$

Uses:Personal Services and Benefits 1,751.1$ 864.5$ 886.6$ 49% 1,745.4$ 5.7$

Contractual Services 445.2$ 91.2$ 354.0$ 20% 393.3$ 51.9$

Other Costs 552.0$ 324.2$ 227.8$ 59% 542.2$ 9.8$

Total Uses 2,748.3$ 1,279.9$ 1,468.4$ 47% 2,680.9$ 67.4$

Budget Adjustement Request (BAR) approved on December 24, 2013 increased the personal services and employee benefitsand other category.

Revenue and Expenditure Projections

39

A B C D E

Acct # Account Description

Approved/Adjusted Budget

Expended Budget

Remaing Balance

Estimated Expenditures

Projected Balance

200 Personal Services/ Employee Benefits 1,751.1 864.5 886.6 880.9 5.7

300 Contractual Services 445.2 91.2 354.0 302.1 51.9

400 Other Costs 552.0 324.2 227.8 218.0 9.8

TOTAL 2,748.3 1,279.9 1,468.4 1,401.0 67.4



Expended Budget

Remaining Balance


Projected Balance

520100 Exempt Positions 165.9 79.5 86.4 86.4 0.0

520300 Classified Perm. Positions 1,038.5 485.6 552.9 547.6 5.3

520800 Annual & Comp Paid 0.0 0.0 0.0 0.0 0.0

521100 Group Insurance Premium 151.6 71.0 80.6 80.6 0.0

521200 Retirement Contributions 198.5 93.3 105.2 105.2 0.0

521300 FICA 90.2 41.3 48.9 48.5 0.4

521400 Worker Comp 0.5 0.5 0.0 0.0 0.0

521410 GSD Work Comp Ins 3.0 3.0 0.0 0.0 0.0

521500 Unemployment Comp 12.1 12.1 0.0 0.0 0.0

521600 Employee Liability Insurance 66.9 66.9 0.0 0.0 0.0

521700 Retiree Health Care 23.9 11.3 12.6 12.6 0.0

521900 Other Employee Benefits 0.0 0.0 0.0 0.0 0.0

TOTAL 1,751.1 864.5 886.6 880.9 5.7



Expended Budget

Remaining Balance


Projected Balance

535200 Professional Services 250.0 47.7 202.3 192.3 10.0

535300 Other Services 22.5 7.9 14.6 6.4 8.2

535400 Audit Services 44.0 26.0 18.0 19.3 (1.3)

535500 Attorney Services 75.0 6.9 68.1 33.1 35.0

535600 Information Technology Services 53.7 2.7 51.0 51.0 0.0

TOTAL 445.2 91.2 354.0 302.1 51.9



Expended Budget

Remaining Balance


Budget Balance

542100 Employee In-State Mileage & Fares 5.0 1.7 3.3 2.3 1.0

542200 Employee In-State Meals & Lodging 4.5 1.9 2.6 2.6 0.0

542300 Board & Commission - In-State 33.0 10.2 22.8 4.8 18.0

542500 Transportation-Fuel & Oil 2.0 0.5 1.5 0.5 1.0

542600 Transportation 0.1 0.0 0.1 0.1 0.0

542700 Transportation - Insurance 0.3 0.0 0.3 0.3 0.0

542800 State Transportation Pool Charges 7.0 1.8 5.2 2.5 2.7

543100 Maintenance - Grounds & Roadways 0.0 0.1 (0.1) 0.0 (0.1)

543200 Maintenance - Furniture, Fixtures & Equipment 13.0 5.1 7.9 1.9 6.0

543300 Maintenance - Building & Structure 7.0 0.0 7.0 0.0 7.0

543400 Maintenance - Property Insurance 3.0 1.9 1.1 0.9 0.2

543500 Maintenance - Services 0.0 0.0 0.0 0.0 0.0

543700 Maintenance Services 0.8 0.0 0.8 0.0 0.8

543820 Maintenance IT 2.0 0.0 2.0 2.0 0.0

544000 Supply Inventory IT 20.0 3.1 16.9 1.9 15.0

544100 Supplies - Office Supplies 10.0 3.8 6.2 3.2 3.0

544900 Supplies - Inventory Exempt 6.0 21.7 (15.7) 0.0 (15.7)

545700 DoIT - ISD Services 2.8 0.9 1.9 1.9 0.0

545701 DoIT - HCM Fees 7.0 8.7 (1.7) 0.0 (1.7)

545900 Printing & Photo. Services 47.0 36.4 10.6 12.6 (2.0)

546100 Postage & Mail Services 92.8 73.1 19.7 19.3 0.4

546400 Rent of Land & Buildings 145.0 85.9 59.1 63.0 (3.9)

546500 Rent of Equipment 38.0 26.9 11.1 30.6 (19.5)

546600 Telecomm 87.2 36.0 51.2 58.8 (7.6)

546700 Subscriptions & Dues 2.0 1.5 0.5 0.5 0.0

546800 Employee Training & Edu. 6.5 1.5 5.0 2.0 3.0

546801 Board Member Training 1.0 0.0 1.0 1.0 0.0

546900 Advertising 2.0 0.0 2.0 1.0 1.0

547900 Miscellaneous Expense 2.0 0.3 1.7 1.3 0.4

547999 Request to Pay Prior Year 0.0 0.0 0.0 0.0 0.0

548300 Information Technology Equipment 0.0 0.0 0.0 0.0 0.0

549600 Employee Out-Of-State Mileage & Fares 0.0 0.0 0.0 0.0 0.0

549700 Employee Out-Of-State Meals & Lodging 1.0 0.0 1.0 0.2 0.8

549800 B&C-Out-Of-State Mileage & Fares 2.0 0.1 1.9 1.9 0.0

549900 B&C- Out-Of-State Meals & Lodging 2.0 1.1 0.9 0.9 0.0

TOTAL 552.0 324.2 227.8 218.0 9.8

Expenditure Detail (in thousands)

Other Costs

Personal Services / Employee Benefits

Contractual Services

Expenditure Summary (in thousands)

40

Large Core Large Non U.S. Non U.S. Mid/SmallCap Active Bonds Cap Index Developed Emerging Cap Total

Market Value November 30, 2013 $48,758,446.93 $106,900,627.61 $47,679,751.86 $51,204,375.19 $36,680,729.73 $39,329,893.99 $330,553,825.31

Prior Month Adjustment 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Contributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Distributions/Withdrawals 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Income Earned 60,712.12 337,265.87 (92.27) 58,781.81 35,592.07 43,765.38 536,024.98

Capital Appreciation/Depreciation 1,237,453.69 (851,545.51) 1,283,605.86 698,143.20 (487,764.22) 1,324,919.90 3,204,812.93

Market Value December 31, 2013 $50,056,612.73 $106,386,347.97 $48,963,265.45 $51,961,300.21 $36,228,557.58 $40,698,579.27 $334,294,663.21

NEW MEXICO RETIREE HEALTH CARE AUTHORITYCHANGE IN NET ASSET VALUE

FOR THE MONTH ENDED DECEMBER 31, 2013

$0

$35,000,000

$70,000,000

$105,000,000

$140,000,000

$175,000,000

$210,000,000

$245,000,000

$280,000,000

$315,000,000

$350,000,000

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New Mexico Retiree Health Care AuthorityMarket Value of Investment

Fiscal Year 2014

Core Bonds Large Cap Index Non US Developed Emerging Markets Mid/Small Cap

41

february 2014 board book

Documents

t w t f s s

board of directors

nmrhca board room

floor suite

ne albuquerque

new mexico

regular meeting

agendatable of contents