LITTLE ROCK -- State officials are reviewing suggestions from retired state employees and lawmakers to see if there are alternatives to discontinuing pharmacy coverage for Medicare-member retirees who are in the state's health insurance program starting next year.
The 15-member State and Public School Life and Health Insurance Board's Aug. 5 decision to force about 13,800 Medicare-member state retirees to obtain their pharmacy coverage through the Medicare Part D market has drawn sharp criticism from some of those affected and lawmakers.
The board adopted that change and others to eliminate an initial projection of a net loss of $49.8 million for the state plan and instead end up with $28.7 million in net income in 2021.
The board also decided to increase health insurance premiums for current employees and non-Medicare-member retirees by 5%, and to reduce the wellness credit for state employees from $75 to $50 a month. The rate increase will affect about 27,000 state employees and about 210 retirees under the age of 65.
Discontinuing pharmacy coverage for the Medicare-member retirees is projected to save the state employees' health insurance plan about $38.5 million next year, according to the Milliman actuarial firm.
Amy Fecher, secretary of the state Department of Transformation and Shared Services, told the board Tuesday that the state's Employees Benefits Division has sent out emails and letters through the U.S. Postal Service to the Medicare-members retirees in the state insurance program.
"We also engaged with a call center, Hub First, to call all of the members and let them know about this change as well as refer them to the [senior health insurance information program] at the Insurance Department that can help counsel them," she said. "They have partners all over the state that do this kind of work, so they are trying to refer them to their local partners to help them find counseling for which Medicare plans will be better for them. when they are able to sign up.
"We are letting them know about the exact enrollment dates and then the call center will call them back once open enrollment [for the Medicare Part D market] goes live on Oct. 15 and then they will reach them all again before it closes on Dec. 7," Fecher said.
Fecher said she and Chris Howlett, Employee Benefits Division director, are scheduled to appear before the House and Senate Insurance and Commerce committees Monday. They also appeared before lawmakers Sept. 9 and on Sept. 15.
She said officials are trying to respond to each retiree's questions and are receiving a lot of suggestions from them as well.
"We are taking each one of those suggestions and we have an ongoing spreadsheet that we are sending [to the Milliman actuarial firm] and, asking, 'If we did this, what would it net the state and what would it cost each member,' so we are trying to have all of that ready," Fecher said.
She said she also sent an email last week to House and Senate leaders asking that lawmakers submit their suggestions for analysis by Milliman, before Monday's meeting of the insurance and commerce committees.
"We could have some of that information when we are there next week and ... go through [that] because there is a numbers part of it," Fecher said. "But also, we want to make sure that we are looking at everything we can because ... [lawmakers] outright asked us ... . If they come up with a suggested alternative approach, if we would bring it back to the board, and we said we would, so if there is something that comes out of the hearing next week, we could possibly be calling a special board meeting to look at those and consider those."
Fecher said state officials also plan to meet today with a working group of several retired state employees to try to hear their concerns and suggestions. The group is limited because of covid-19 safety concerns, she said.
Board member Terry Fiddler, who is a retired dentist, said, "There was not a single board member who didn't vote in favor of doing that [pharmacy coverage change] without wringing our hands.
"Nobody wanted that, but that's where we were," he said. "The point I would make is that we are only here to help. We are not here to hurt. It was simply because we had no other way to go financially except what we were doing."
Fecher said the board adopting an alternative plan would be a one-year fix.
"It will not fix the plan for years to come, so we are going to have to continue to take measures if there is an alternative plan approved," she said.
Board member Herb Scott, who is a retired state employee, said, "I have lost three nights' sleep over this decision because people don't understand it."
He said he didn't vote Aug. 5, when the board acted, for or against discontinuing pharmacy coverage for the Medicare-member retirees.
"I was just so like I cannot believe we are doing this," he said.
Some lawmakers have said they have heard the change will cost some retirees roughly $4,000 to $5,000 a year.
Board member John Kirtley, who is executive director of the Arkansas Pharmacy Board, said, "The anger that we see [from retirees] is out of fear" of what the Medicare Part D rates will be.
Board member Lanita White, who is an assistant professor at the University of Arkansas for Medical Sciences, said the Medicare Part D rates won't be published until Oct. 1 "so we can't really see the 2021 plans yet. We are in a weird place where it is going to be really hard for people to understand what their true options are because they are not published until Oct. 1."
Fecher said if the Medicare-member retirees kept their pharmacy coverage through the state plan, the Milliman firm indicated the premiums would rise by 116% next year.
And if the pharmacy plan didn't change, the rates for all employees and retirees would increase by 40% next year without other initiatives and by 35% with the initiatives, she said.
Fecher had told lawmakers it would cost the state $48 million to continue the pharmacy benefit coverage for Medicare-member retirees in the state health insurance plan.
This year, the state's contribution to the health insurance plan is $172.2 million, while the working employees' contribution is $99.5 million.
Medicare retirees contribute $31 million and non-Medicare retirees contribute $31 million, according to transformation spokeswoman Alex Johnston. The state's contribution to the plan is increasing from $420 to $450 a month per employee next year at a projected cost of $12.4 million.