PEIA’s plan to re-bid prescription drug contract draws scrutiny

PEIA is preparing to re-bid a Medicare supplemental prescription drug contract that covers about 50,000 people, a development that the agency’s director calls due diligence but that is activating alarm bells among labor organizations.

The contract winner could be named early next year, with the provider taking over Jan. 1, 2022.

This change comes as people are particularly attuned to their healthcare needs during the coronavirus pandemic and during a contentious state government electoral cycle, just a couple of years after insurance costs for public employees led to a statewide teachers strike.

Josh Sword

“Although the cyclical re-bidding of contracts for third-party administrators of PEIA is standard procedure, this one smells a bit fishy because of the timing,” said Josh Sword, president of the West Virginia AFL-CIO and a former member of the finance board for the Public Employees Insurance Agency.

“PEIA participants that are Medicare-eligible or will be soon need to keep a close eye on this one,” Sword said, adding that a “provider change could be very disruptive to their health care. The devil will be in the details.”

The finance board for the Public Employees Insurance Agency is scheduled to discuss the re-bid solicitation during a 1 p.m. meeting Thursday.

That issue, plus the scheduling of public hearings around the state for next year’s PEIA coverage plan, are on the agenda. People can call in and listen to the meeting.

Finance Board Presentation 10 2020 Rotated (Text)

The Medicare Advantage Prescription Drug program contract went to Humana in a 2015 bid. Humana won a five-year contract with two options to renew for additional years. It’s roughly a $100 million contract.

The plan is for Medicare-eligible retirees to cover medical and prescription drugs. Medicare covers roughly a thousand dollars a person per month. PEIA supplements that.

Over the years Humana has operated the plan, rates have gone down 10 percent.

PEIA Rate History Copy (Text)

PEIA Director Ted Cheatham said the agency has been pleased with the program under Humana but that it’s financially responsible to bid it out again.

“It’s strictly us doing our fiduciary duty to the state to make sure it’s right,” Cheatham said in a Wednesday telephone interview.

Cheatham said the agency has been pleased with Humana, which conceivably could win the contract again.

“We want to make sure we’re spending our dollars wisely. It had nothing to do with anything bad or financial or anything,” Cheatham said.

Another insurer could win the bid. If that’s the case, Cheatham said, the benefits established by PEIA would remain the same but handled by another company.

“Let’s assume somebody else wins. All you’ve going to see is a new ID card show up in the mail. That’s it. Instead of Humana it’s going to say Aetna or Cigna or whoever.”

He added, “In theory the member won’t even see the difference.”

PEIA has already awarded a contract to a consultant to work on writing a request for proposal and scoring it.

“I would assume this thing is probably going to get onto the streets soon. By at least the end of the first quarter,” Cheatham said. “If there is a change, we want that vendor to have sufficient time.”

That timetable would give a vendor nine months to a year for transition — if there is one.

Some other labor organizations with members covered by the plan intend to ask questions.

Kris Mallory

“Our folks like the Advantage plan,” said Kris Mallory, political director for American Federation of Teachers-West Virginia.

Mallory would like to know more about what savings have occurred this year, as many medical procedures were delayed during the lockdown for the coronavirus pandemic.

“We know there was realized savings during the ‘shutdown’ of nonessential health procedures,” Mallory said. “We’re interested to see if that trend has continued and to what degree. We’re also interested in what the covid testing, claims and average cost associated look like.”

West Virginia Education Association President Dale Lee also referenced historic savings and plans to ask more questions about the plan’s financial status.

“We have concerns with the Medicare plan and watching the cost savings over the years — and our retirees really like the plan,” Lee said.

“So our question will be, is this an automatic bid process or could it be renewed without bidding it out?”

This is also the time when PEIA discusses its general coverage plan for the coming year. Thousands of teachers went on strike two years ago, saying rising out-of-pocket costs had outpaced their benefits.

One outcome was the establishment of a PEIA Task Force to examine the finances of the benefit long-term. After meeting many times, the task force went inactive.

Gov. Jim Justice made a series of recommendations to the task force and dedicated $150 million for a financial cushion.

But Lee wants to know more about the long-term prognosis for the agency.

“Are we incorporating any of the task force recommendations into the plan’s future?” Lee said. “We’re curious as to what the future holds for the plan.”

He added, “2018 was about a long-term fix for PEIA and we just kicked the can down the road a few years. I’m sure when we review the plan tomorrow, we’re going to see in future years it’s going to take additional money. That’s the questions we’re going to be asking and pushing the task force recommendation.”

For the coning year, Cheatham said there are no major changes proposed for coverage or costs.

“We are doing a 100 percent no change for retirees, actives and non-state,” Cheatham said. “So no changes to benefits or premiums at all for the coming year.”

The PEIA Finance Board meeting will include proposed dates for public hearings on the coming year’s general coverage plan.

Public hearings are planned for a teleconference on Nov. 10;  at the Beckley-Raleigh County Convention Center on Nov. 12; at WVU Erickson Alumni Center, Morgantown, on Nov. 16; at the Culture Center, Charleston, on Nov. 17; and Holiday Inn in Martinsburg on Nov. 18.

“It sort of mimics the schedule last year,” Cheatham said. “Anybody can call into that town hall, without having to leave the comfort of your own house and get the briefing and look at the slideshow on your own and ask questions.”

The traveling presentations will have some precautions because of the coronavirus.

“Our postcard is going to ask them to bring masks and wear masks during the presentation. We’ve asked the facility to make it appropriate for social separation and distancing. Other than that, we will be business as usual.”

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