Arkansas legislative panel backs proposed health insurance plan changes for public school, state workers

State proposals reduce employee, retiree premiums

Rep. Jack Ladyman (center) talks with Sen. Cecile Bledsoe (left) and Sen. Kim Hammer during a recess of the Executive Subcommittee of the Arkansas Legislative Council meeting Wednesday at the State Capitol.
(Arkansas Democrat-Gazette/Staci Vandagriff)
Rep. Jack Ladyman (center) talks with Sen. Cecile Bledsoe (left) and Sen. Kim Hammer during a recess of the Executive Subcommittee of the Arkansas Legislative Council meeting Wednesday at the State Capitol. (Arkansas Democrat-Gazette/Staci Vandagriff)

Most current employees in state health insurance plans for public school and state workers would pay less than they currently do under proposed changes for calendar year 2023 that a legislative panel endorsed Wednesday.

Many retired members who are Medicare-eligible and who participate in the state's health insurance plans would pay lower premiums next year than they currently do if they opt for Medicare Advantage with prescription drug coverage under the proposed premiums that the Legislative Council's Employee Benefits Division Oversight Subcommittee recommended that the council approve today.

Last week, the state Board of Finance approved the state's Employee Benefits Division's proposed premium changes for 2023.

In other action Wednesday, Department of Transformation and Shared Services Secretary Mitch Rouse told the legislative panel the state will pull down its request for proposals for a pharmacy benefit manager for the state's Employee Benefits Division and develop another request for proposals for a pharmacy manager in concert with a consultant for the Bureau of Legislative Research, The Segal Group of Atlanta.

The announcement came after lawmakers and state officials huddled privately for more than 45 minutes during a recess of the subcommittee's meeting.

The private meeting came after state Rep. Jeff Wardlaw, R-Hermitage, said The Segal Group is concerned that it was left out of the request for proposals process, and then Rouse said the state hasn't issued a notice to award a contract yet and warned against the possibility of disclosing confidential information under the state's procurement law.

The proposed premiums for the state's health insurance plans for public school and state employees and retirees will implement new policies adopted by the state Board of Finance last month, Employee Benefits Division Director Jake Bleed told lawmakers.

Under a new policy adopted by the finance board, the state will adjust the base rates to reflect the amount that a member should pay based on the plan's experience, Bleed said.

Under another new policy, the state will aim to pay about 80% of the total cost of providing health insurance for its employees, up from the current average of about 65% of the total cost, he said. The state's 65% share of the total costs of the benefits is pretty low compared to the shares paid by surrounding states, he said.

The new policies will be phased in over five years, starting in 2023, rather than within one year and causing some disruption with some members and the state paying far more and other members paying far less, Bleed said.

Last month, the finance board also voted to eliminate the wellness credit of $25 per month offered to members of the plans and the $25 monthly contribution for nonparticipants in the wellness program.

About 83%, or 39,653, of the 47,912 current employees in the state's health insurance plan for public school employees would pay less in premiums next year than they do this year if they stick with the same coverage under this proposal, according to Bleed.

For example, about 12,452 public school employees with employee-only coverage in the state's classic plan and receiving the wellness credit pay $96.02 a month in premiums this year, and their cost would drop to $94.83 a month in 2023 under the proposal.

About 75%, or 17,939, of the 23,661 current employees in the state's health insurance plan for state employees would pay less in premiums next year than they do this year if they stick with the same coverage, according to Bleed. He noted that 1,500 current state employees don't pay a premium for the basic plan this year and wouldn't next year under the proposed rates.

For example, about 9,060 state employees with employee-only coverage in the premium plan and receiving the wellness credit pay $176.20 a month in premiums this year. That cost would decline to $172 a month in 2023 under this proposal.

MEDICARE ADVANTAGE

About 14,049 public school retirees, who are Medicare-eligible and have retiree-only coverage, pay $100.78 a month this year. Their cost would climb to $110.89 a month in 2023 if they stick with their current coverage under the Employee Benefits Division proposal. However, they would pay only $8.53 a month in 2023 if they opt for Medicare Advantage with prescription drug coverage under the state's proposal.

About 8,222 state employee retirees who are Medicare-eligible and have retiree-only coverage pay $193.12 a month this year and would pay $211.85 a month in 2023 if they stick with their current coverage under the state's proposal.

However, they would pay just $16.53 a month in 2023 if they opt for Medicare Advantage with prescription drug coverage under this proposal.

The state's Employee Benefits Division has contracted with United Healthcare Insurance Co. to provide group Medicare Advantage with prescription drug coverage to eligible retirees in the state's health insurance plan for public school and state employees.

Winston Simpson of Perryville, a retired superintendent of the Lafayette County School District, told lawmakers Wednesday that he wants the subcommittee and Bleed to make sure that Medicare-eligible public school and state retirees have access to medical services through the Medicare Advantage plan with prescription drug coverage without undue prior authorization for services. He said he wants to make sure these retirees can access benefits through the Medicare Advantage plan in a timely fashion.

Wardlaw said he wants to make sure the public understands that these Medicare-eligible retirees will be eligible for the group Medicare Advantage plan, which is different from individual Medicare Advantage plans. He encouraged state lawmakers to attend meetings in their districts aimed at educating these retirees on the group Medicare Advantage plan.

Retirees who are 65 or older or who are otherwise eligible for Medicare will be automatically enrolled in the Medicare Advantage program and given the opportunity to opt out or retain existing benefits.

Bleed said Medicare-eligible retirees will be able to opt out of the group Medicare Advantage plan in November and will get another opportunity to opt out in January.

"This is not something that they are being forced into," he said.

The Medicare Advantage program will offer significant savings to retirees and the state, and United Healthcare will work statewide to educate retirees and health care providers on the program to ensure all retirees have an opportunity to make informed decisions, according to Bleed.

PHARMACY BENEFIT MANAGER

Rouse told the legislative panel the Office of State Procurement that he directs "will pull down" a request for proposals for a pharmacy benefit manager for the Employee Benefits Division.

"We'll start from scratch," he said. "We'll work with The Segal Group moving forward. We'll cooperate with them and collaborate with them on this developing the RFP and getting it back on the street."

The Office of State Procurement issued a revised request for proposals for the Employee Benefits Division to hire a pharmacy benefit manager on May 6. The deadline for pharmacy benefit managers to submit proposals was June 10.

Wardlaw told lawmakers The Segal Group is concerned that it was left out of the request for proposal process.

That led Rouse to advise lawmakers that the state hasn't issued a notice to award the contract yet and "under procurement law, we cannot discuss the details of what's been submitted.

"We can talk about in general the process ... but we cannot talk about individual scoring, who scored what, what vendors were qualified, what vendors were disqualified, specific vendors that have put bids in," he said. "We can't talk about who submitted what and what they submitted and what the costs were or anything of that nature because we want to make sure that who we select, who wins this RFP, is done in an objective process that is for the best interest of the state.

"Introducing an outside influence in an objective process before a vendor is anticipated to move forward violates that process," Rouse said before lawmakers and state officials huddled in a closed-door meeting.

In January, the Legislative Council approved a bureau contract for up to $611,200 with The Segal Group through Dec. 31, 2024, for the consultant to work with the state's Employee Benefits Division to draft a request for proposals for a pharmacy benefit manager and to help draft a request for proposals for a vendor to provide Medicare Advantage with prescription drug coverage to public school and state retirees

On Wednesday, the Legislative Council's executive subcommittee directed the bureau to negotiate a contract with The Segal Group to provide employee health benefits actuarial consultant services, after the consultant was the only firm to submit a proposal in response to the bureau's request for proposals.

Earlier this year, the Legislature enacted Act 112 in the fiscal session to require a fiscal impact statement for any proposed legislation imposing a new or increased cost obligation for health benefit plans on an entity of the state, and require that those bills be introduced within the first 15 days of a regular session

The Segal Group submitted a maximum bid of $227,150, according to bureau records. The contract with the consultant will start Aug. 19 and end June 30, 2023, with an option for additional renewal terms of two years each, according to the bureau's request for proposals.


  photo  Rep. Jeff Wardlaw (center) asks for a recess during the Executive Subcommittee of the Arkansas Legislative Council meeting Wednesday at the state Capitol. (Arkansas Democrat-Gazette/Staci Vandagriff)