The board that oversees the health-insurance plans for teachers and state employees directed staff members Tuesday to study measures to cut the plans' spending on prescription drugs.
Last year, the plans spent a combined $152 million on prescription drugs and related administrative costs, accounting for about a quarter of expenses.
While the plans already have taken steps to cut drug costs, additional measures may be needed next year, when the federal health-care law will require a patient's drug spending to count toward a cap on the patient's out-of-pocket costs, said Bob Alexander, director of the Department of Finance and Administration's Employee Benefits Division.
When the cap is met, the plans must pay for all the patients' drug and medical expenses.
Another concern, Alexander said, are so-called coupons issued by drug manufacturers to reduce or eliminate co-payments that patients must make at the pharmacy. While saving the patient money, the coupons leave the health plans paying the cost of a drug that isn't covered by the co-payment, while also eliminating the patient's incentive to choose the cheapest drug.
"Those coupons gut the entire benefit design," Dwight Davis, director of the Evidence Based Prescription Drug Program at the University of Arkansas for Medical Sciences' College of Pharmacy, told the State and Public School Life and Health Insurance Board.
The board is studying measures to cut costs next year to avoid a large increase in the premiums paid by 47,000 teachers and other public school employees.
Unless the rates are increased, benefits are cut or additional tax dollars are allocated, Alexander said the claims would exceed the teachers plans' revenue from premiums and other sources next year by $71 million.
On Tuesday, he said that figure did not account for about $37 million allocated to the plans for next year during a special session of the Legislature last year.
The additional funding still leaves the plans with a $34 million gap in revenue to keep premiums at their current levels, which he said are so high that they discourage healthy employees from signing up.
The premiums for an individual range from $249.38 a month for the gold plan, which has no deductible, to $11 for the bronze plan, which has a $2,000 deductible.
For family coverage, the monthly premium is $1,132.96 for the zero-deductible gold plan and $269.50 for the bronze plan, with a $3,000 deductible.
To curb the growth of spending on drugs, Alexander asked the board's permission to study measures to subdue the use of coupons and to establish a more restrictive formulary, or list of covered drugs.
Under a "closed formulary," some drugs that have cheaper equivalents would not be covered, he said.
Board member Andrew Kumpuris, a cardiologist with St. Vincent Heart Clinic Arkansas, told Alexander he had reservations about that approach.
"With all due respect, sir, there are differences within classes [of drugs], and when you choose one drug, and then say, 'This is it,' you're coming awfully close to practicing medicine," Kumpuris said.
During the special session last year, the Legislature allocated $43 million to the teacher plans, reducing a potential 50 percent rate increase to a 10 percent increase.
A legislative task force also is studying potential changes to the school employees' plans. Rates for the plans for next year are expected to be set by July 1.
Metro on 03/19/2014