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32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDThe Price of Power: Confronting the Hospital Affordability CrisisSEPTEMBER 19, 2024 8:00 AM – 3:00 PM EST

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND4Manny Pastreich President, SEIU 32BJ, Chair Labor Industry Cooperation Fund

55Ryan Danks Director of Civil Enforcement, Antitrust Division, U.S. Department of Justice

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDKeynote Speaker 6Zack Cooper Associate Professor of Public Health and Economics & Director of Health Policy, Yale University

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND7Ras BarakaMayor of Newark

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND8Lynn SchulmanHealth Committee Chair,New York City Council, District 29

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND9Julie MeninNew York City Council, District 5

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND10Chantel JacksonNew York State Assemblymember, District 79

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND11Liz KruegerChair, Finance CommitteeNew York State Senator, District 28

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDMorning Panel: Reining in the Giants–Policies for Fair Prices and Better Markets12Misha SharpAssistant Director of Policy, 32BJ Health FundErin C. Fuse BrownBrown University Center for Advancing Health Policy through Research Lindsey VigodaNew York State Director, Small Business MajoritySophia TripoliSenior Director of Health Policy,Families USA

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDPolicies for Fair Prices and Better MarketsPolicies that foster healthcare competition and price reform:• Transparency and reporting• Facility fee prohibitions• Site neutral payment• Price caps13Source: Georgetown Center for Health Insurance Reforms, 2024

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDWhat is Site Neutral Payment?14Paying the same price for certain healthcare services regardless of the setting, or at least minimizing the price difference between settingsBasic, routine services like flu shots or mammograms that have typically occurred in a doctor’s office, but have been occurring in hospital outpatient departments more frequently in recent yearsOriginated in the Medicare program with the Bipartisan Budget Act of 2015 and supported by both Obama and Trump administrations

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32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND17Source: Annual audited financial statements downloaded from Electronic Municipal Market Access MSRB, April 2024

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDMeet the Panelists18Sophia Tripoli Erin C. Fuse BrownLindsey VigodaErin C. Fuse Brown holds a J.D. from Georgetown Law and an MPH from Johns Hopkins. At Brown University, she combines legal and public health expertise to influence health policy. She has advised national organizations on healthcare issues like consolidation, surprise billing, and price transparency. Sophia Tripoli is a health policy expert leading Families USA's strategic development on federal and state health policies to improve healthcare for all Americans. Tripoli serves on boards of health transformation organizations and has experience with CMS, CMMI, and the National Governors Association. Lindsey Vigoda leads Small Business Majority's efforts in New York and serves as National Quality Jobs Policy Director. She builds relationships with small businesses, focusing on policies like paid family leave and childcare. Previously, she directed Colorado operations and has advised on various policy initiatives.

About Small Business Majority: Our Model

• 2024 opinion polling reveals that small business owners strongly support bipartisan policy solutions that lower costs by setting price caps, increasing transparency and promoting competition in the healthcare industry.• Small businesses are rebounding from issues stemming from the pandemic, but rising healthcare costs are hurting their bottom lines and limiting their growth. Overview: Small businesses struggling with rising healthcare costs, support bipartisan policy solutionsRead more: smallbusinessmajority.org/our-research

• Rising healthcare costs have forced many entrepreneurs to make changes to their healthcare offeringsOverview: Small businesses struggling with rising healthcare costs, support bipartisan policy solutionsRead more: smallbusinessmajority.org/our-researchFigure 1: Steps small business owners have taken to address rising healthcare costs 4%21%24%29%47%51%Eliminated or reduced wage increasesRaised prices on my business’ goods or servicesDropped health coverage altogetherCut other employee benefitsMoved to a plan offering more limited coverageIncreased employee contributions to health plans

Overview: Small businesses struggling with rising healthcare costs, support bipartisan policy solutionsRead more: smallbusinessmajority.org/our-researchFigure 2: Small business owners support policy solutions to control healthcare costs96%88%82%75%0% 20% 40% 60% 80% 100%Healthcare providers should be required to publicly post the prices they charge forservicesGovernment should ban hospital "Facility fees" and other unfair billing practicesGovernment should set price caps for what hospitals can charge for particular servicesGovernment should have greater authority to block mergers and acquisitions in thehealthcare industry

Questions?Lindsey VigodaNew York DirectorSmall Business Majority

24Reed ShowalterSenior Policy Advisor,White House National Economic Council

Addressing Healthcare Monopoly Power In the Biden Harris AdministrationHealthcare Competition25

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32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND27Networking Lunch

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND28Cora OpsahlHealth Fund Director, 32BJ Health Fund

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDBeyond the Status Quo: Improving Purchasing With Data and Innovative Contracting Strategies CORA OPSAHL, HEALTH FUND DIRECTOR

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDHigh and rising costs threaten our ability to provide affordable healthcare30In 2023, the Health Fund spent $1.4B in healthcareInpatient and outpatient hospital costs make up 55% of Health Fund spendHealthcare costs make up 37% of total compensationIn the past 10 years, wages have gone up 54% but healthcare has gone up 230%

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32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDUsing data to find solutions and fight high costs• LICF Public Campaigns: Raise public scrutiny and awareness of irrational hospital prices• Health Fund Network Design: 32BJ Health Fund tiered and removed certain providers from its network to ensure fair cost sharing for participants• LICF Supported Legislation: Supported the passage of New York City and State legislation that increases transparency and access to hospital price data• Health Fund Contracting: 32BJ Health Fund led an innovative RFP process for a new TPA that sought more protection against anti-competitive terms33

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDToday, we’re pleased to share two new resources34Healthcare Savings CalculatorUnderstand hospital price savings potential, if prices were lower.Compare existing hospital spend to Medicare and commercial market break even benchmarks. Healthcare Administrator Contract-first TemplateChallenge the industry standard of accepting bidder contracts before negotiations. Use as a mechanism for accountability with TPA bidders for their promised services as a vendor.Available at 32bjhealthinsights.org/interactive-tools

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDAfternoon Panel: The Labor and Employer Imperative for Affordable Healthcare35Claire BrockbankDirector of Policy & Strategy32BJ Health FundShawn GremmingerPresident & CEONational Alliance of Healthcare Purchaser CoalitionsRosa NovoAdministrative Benefits DirectorMiami-Dade County Public SchoolsPeter V. LeeSenior Scholar and Consultant Clinical Excellence Research Center (CERC) at Stanford University and California Public Employees’ Retirement System (CalPERS)

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND36Shawn GremmingerPresident & CEONational Alliance of Healthcare Purchaser Coalitions

32BJ Health FundThe Price of Power: Confronting the Hospital Affordability CrisisNew York, New YorkPeter V. LeeStrategic Consultant, CalPERS Senior Scholar, Stanford University, Clinical Excellence Research CenterSeptember 19, 2024CalPERS Recipe for Getting Better Value from Self-Funded PPO Program

CalPERS Health Benefits Program Membership Enrollment by Plan TypesHMO Basic 855,000 (55%)HMO Medicare 177,000 (12%)Association Plans 95,000 (6%)PPO Basic 263,000 (17%)PPO Medicare 153,000 (10%)Total PPOSelf-Insured: 474,000 (31%) 1.5 MPremiums by Plan TypesPlan TypeSingle Party Average PremiumsHMO Basic $935HMO Medicare $336PPO Basic $1,038PPO Medicare $447Total HMO Insured/flex funded:1,069,000 (69%) Self-Funded PPO Out to Bid:263K “Basic” – Active and early retirees153K Medicare Supplement

CalPERS 2024 Self-Funded PPO Performance GuaranteesCalPERS Performance Guarantees for Self-Funded PPO – 2024Category 2024 Individual Performance Measures % ASF at RiskAccount Management Average score of 90% or better by the CalPERS team on the Account Management Scorecard2.00%Member ServicesMeet the NCQA's 50th percentile of CAHPS Rating of Health Plan respondents who rated their health plan with an 8, 9, or 101.00%Pricing and PaymentsHospital Cost Management – Limits unit cost rate increase for Participating Hospitals of no more than 2.5% 0.50%Medical Group/Outpatient Cost Management – Limits unit cost rate increases for Participating Medical Groups to no more than 2%0.50%Ancillary Cost Management – Limits unit cost rate increases for ancillary services to no more than 1.5% (e.g., durable medical equipment, ambulance, radiology, and laboratory/pathology)0.50%Average Cost of Healthcare – Limits the average increases for the cost of health care to no more than 2.5% (includes twenty-five service categories and outpatient prescription drugs)0.50%Pricing and Payments Total2.00%Claims AdministrationClaims Processing – Payment Accuracy (accuracy of at least 98%) 5.00%Claims Processing – State Controller Office (SCO) audited claims processed at least 95% without SCO "Audit Exceptions" 5.00%Claims Administration Total10.00%Data Reporting Timely Data Submissions – at least 90% of data submissions on time 0.50%Accurate Data Submissions – at least 90% of data submission accurately 0.50%Data Reporting Total1.00%Provider Network ContinuityMaintain Access to Same Participating Physicians and Participating Hospitals (at least 90% Participating Physicians and 95% Participating Hospitals year to year continuity)2.50%Quality, Equity & Medical Management Cesarean Sections (C-Sections) – Ensure 80% of Participating Hospitals with delivery services achieve 23.9% or lower C- section rate for live births to low-risk females0.75%Quality Alignment Measure Set (QAMS)1 – Improve the specific clinical quality measures for Basic plan members by at least three percentage points each year until NCQA's 50th percentile is met1.15%Acute Inpatient Care Timeliness – Complete at least 98% of pre-service reviews for acute inpatient care within five business days of a request1.00%Acute Inpatient Care Timeliness – Complete at least 100% of concurrent reviews for acute inpatient care within 48 hours of admission or the first business day after a weekend admission1.00%Health Disparities Data – Increase by at least 10% of subscribers who self-report race and ethnicity for themselves and their family members1.05%Quality, Equity & Medical Management Total4.95%Total % ASF at Risk 23.45%1The Quality Alignment Measure Set (QAMS) includes:• CIS 10: Childhood Immunization Status: Combination 10• COL: Colorectal Cancer Screening• HPC-AD: Comprehensive Diabetes Care: Hemoglobin A1c (HbA1c) Poor Control (>9.0%)• PPC-AD: Postpartum Care (NQF #1517) • CPB: Controlling High Blood Pressure • PPC Prenatal Postpartum Care • DSF: Depression Screening and Follow up for Adolescents and Adults • POD: Pharmacotherapy for Opioid Use Disorder

CalPERS Self-Funded PPO Solicitation Objectives for 2025-2029Create Value and Financial Alignment• Ensure long-term PPO sustainability• Financial alignment of PPO with CalPERS• Continue to offer PPO products that are price-competitive with HMO productsAlign Quality and Equity Goals• Migrate PPO to be as quality- and equity-centered as our HMOs• Align Quality Alignment Measure Set (QAMS) with HMOs• Contract requirements for Alternative Payment Models and Advanced Primary CarePopulation Health Management Approach• Integrated approach to support members• Targeted outreach to high-cost high-needs members• Help members findhigh-quality clinicians• Improved ability to address cost drivers

CalPERS Transformative Performance Guarantees for 250,000 Self-Funded PPO Members: 2025-2029CalPERS Announces New Health Plan Contract – Alignment to Lower Costs and Improve Quality with Blue Shield of California and Included Health• The goals align with CalPERS’ commitment to provide affordable and sustainable high-quality care• Shared accountability on aligned financial objectives for Blue Shield and Included Health• 75 percent of fees at risk for controlling cost and improving quality• $464 million at risk over five-year contract with upside for exceptional performance • Prospective Total Cost of Care target starts at 5.5 percent trend, going down each year to reach 3 percent in 2029 – aligning with California's Office of Health Care Affordability target.• Quality measurement using identical Quality Alignment Measure Set (QAMS) and standards for HMO and PPO contracts• Medicare Supplement 150,000+ lives also with Performance Guarantees – 25% of ASF focused on quality, equity and costs

Structure of CalPERS Total Cost of Care (TCOC) Guarantee for Self-Funded Basic PPO MembershipMajor Elements• Benchmark target starts at 5.5% medical trend, going down to 3% 2029 (no RX)• +/- 1.5% window of no payment or gainsharing• Fees at risk: • 52.5% for TCOC• 22.5% for Quality• Risk borne by BOTH Blue Shield of CA (TPA) and Included Health (Population Health/ Navigation Vendor) • Gainsharing upside potential for both Blue Shield and Included HealthFigures provided are not actual enrollment or based on final negotiated administrative service fees (ASF). For modeling purposes, this model is calculated based on 250,000 covered lives and a combined total ASF of $33.00. CalPERS Total Cost of Care and Gainsharing TermsModeling of TCOC GuaranteeClaims TrendMarginal Cost to CalPERS over TargetTotal Cost to CalPERS over Target prior to Pricing GuaranteeMarginal ASF Pricing Guaranteefrom TPACumulative Pricing Guaranteefrom TPANet Cost to CalPERS after Pricing Guarantee from TPA10.00% -$10,500,000 -$94,100,000 $34,500,000 -$59,600,0009.50% -$10,400,000 -$83,600,000 $6,900,000 $34,500,000 -$49,100,0009.00% -$10,500,000 -$73,200,000 $6,900,000 $27,600,000 -$45,600,0008.50% -$10,400,000 -$62,700,000 $6,900,000 $20,700,000 -$42,000,0008.00% -$10,500,000 -$52,300,000 $6,900,000 $13,800,000 -$38,500,0007.50% -$10,400,000 -$41,800,000 $6,900,000 $6,900,000 -$34,900,0007.00% -$31,400,000 -$31,400,000 -$31,400,0005.50%5.50%Claims TrendMarginal Savings to CalPERS below TargetTotal Savings to CalPERS below Target prior to GainsharingMarginal Gainsharing Payment to TPACumulative Gainsharingto TPANet Savings to CalPERS after Gainsharing to TPA4.00% $31,400,000 $31,400,000 $31,400,0003.50% $10,400,000 $41,800,000 -$3,500,000 -$3,500,000 $38,300,0003.00% $10,500,000 $52,300,000 -$3,500,000 -$7,000,000 $45,300,0002.50% $10,400,000 $62,700,000 -$3,500,000 -$10,500,000 $52,200,0002.00% $10,500,000 $73,200,000 -$3,500,000 -$14,000,000 $59,200,0001.50% $10,400,000 $83,600,000 -$3,500,000 -$17,500,000 $66,100,0001.00% $10,500,000 $94,100,000 -$17,500,000 $76,600,000

Structure of CalPERS Quality and Equity GuaranteesQuality Alignment Measure Set (QAMS)• HMO-Fully Insured: up to 4% of total premium at risk• PPO-Self-Insured: up to 22.5% of Administrative Service fee at risk (about $22.5 million annually)• The QAMS consists of five measures, all of which are nationally endorsed, evidence-based National Committee for Quality Assurance (NCQA) Healthcare Effectiveness and Data Information Set (HEDIS) measures:• Childhood Immunizations• Controlling High Blood Pressure• Comprehensive Diabetes Care – Poor Control (HgbA1c >9%)• Colorectal Cancer Screening• Maternity Care – reflecting a combined score for:◦ Timeliness of Prenatal Care◦ Postpartum Care• Alignment with DHCS/Medi-Cal and Covered California: Collectively the three purchasers cover over 40 percent of all Californians and will have more than $400 million at risk annually by 2029• CalPERS Quality and Equity Guarantee Terms

Lives Saved from Improved Performance – Improving Blood Pressure Control is Doable AND Could Save over 280,000 lives nationally or almost 1,000 CalPERS membersImproved Performance (or Moving Lives to Better Care) Saves Lives: • 66th Percentile for Commercial lives means blood pressure under control for 64% of hypertensives, at 140 systolic – saving 110,067 lives nationally over ten years, with 330 in Covered California • IF improved to 90th percentile, would still be only 74% under control at “old” standard AND over ten years would save 280,487 lives (including 1,320 in Covered California)• Improving blood pressure control alone to 90th percentile represents 1,100 lives saved over 10 years for group of 1 millionThe business case for quality: estimating lives saved and harms avoide in a value-based purchasing model, Health Affairs Scholar, April 2024

For more information:CalPERS Announces New Health Plan Contracts to Lower Costs While Improving Quality and Accountability, June 12, 2024The business case for quality: estimating lives saved and harms avoide in a value-based purchasing model, Health Affairs Scholar, April 2024California’s marketplace innovations: driving health plan accountability for quality and equity, Health Affairs Forefront, September 2022 Contact: Peter.V.Lee@Stanford.edu

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND46Rosa NovoAdministrative Benefits DirectorMiami-Dade County Public Schools

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDMeet the Panelists47Shawn GremmingerRosa Novo Peter V. LeeShawn Gremminger, President & CEO of the National Alliance of Healthcare Purchaser Coalitions, has extensive healthcare policy experience. His career focuses on improving healthcare quality, affordability, and equity.Rosa Novo, Administrative Benefits Director at Miami-Dade County Public Schools, manages their $441 million healthcare plan covering 46,000 lives. She focuses on sustainable wellness programs and employee health education.Peter V. Lee, Senior Scholar at Stanford's Clinical Excellence Research Center and Consultant to CalPERS, previously led Covered California from 2011 to 2022. His career focuses on improving healthcare value and accessibility through innovative policy and program implementation.

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUND48Howard Rothschild President, Realty Advisory Board on Labor Relations

32BJ HEALTH FUND32BJ LABOR INDUSTRY COOPERATION FUNDQuestions?Email: healthpolicyevents@32bjfunds.comInformationhttps://www.32bjhealthinsights.org/49Thank You