Lafayette Parish committee reviews health plan performance, discusses direct contracting and PBM changes

The Lafayette Parish School System Insurance and Finance Committee reviewed a Gallagher executive summary of health plan performance for the fiscal year that ran from July 1, 2024, through June 30, 2025, and discussed steps including a direct-contracting initiative and implementation of a new third-party administrator and pharmacy benefit manager.

Gallagher told the committee the plan’s year-to-date per-member-per-month cost across all classes was $506.47. “All plans are running at $506.47 per member per month,” a Gallagher representative said, summarizing the rolling 12-month results for the committee. Gallagher reported total plan costs for the year just under $60,000,000, retiree contributions of about $16,400,000 and a net cost to the school system — employer contributions plus transfers — of approximately $43,000,482.

The presentation separated membership and costs by class: active employees, retirees without Medicare, and retirees with Medicare (including those on a Humana Medicare Advantage plan). Gallagher said the high-deductible plan ran at about $3,771 per member per month, the PPO basic at about $8,004, and the PPO enhanced at about $9,480 (figures shown in the committee booklet). Gallagher told the committee the projection for the next year was roughly $70,000,000 if no further plan changes were made, noting that medical trend alone would push costs toward that figure.

The committee pressed staff and consultants to make the report’s numbers easier to compare with the district’s budget presentations. “We have to be on the same page,” said President Edmond, urging staff to produce a simpler comparison showing both the plan’s cash results and the school system’s budgeted accruals so board members and the public can explain differences between reported totals.

Committee members and staff discussed membership counts and where costs were concentrated. Gallagher and staff provided the membership breakdown shown in the materials: approximately 9,000 total members across plans; active employees and their dependents comprising the largest group; about 686 retirees without Medicare (roughly 1,100 members) and about 1,507 retirees on the self-funded plan (about 2,044 members). Gallagher also reported about 692 members on the Humana Medicare Advantage plan; combining Humana and the self-funded retirees yields about 2,736 members in the Medicare cohorts.

Committee members asked for clarification on why retirees with Medicare show materially lower per-member costs than retirees without Medicare. Gallagher explained that retirees with Medicare receive subsidies through the Employer Group Waiver Program (EGWP) and related reinsurance subsidies and rebates that substantially lower net cost for that cohort. “These come in the form of reinsurance subsidies…that highly subsidize that cost,” the Gallagher representative said.

Members also reviewed operational items. Staff reported that implementation of a new third-party administrator (TPA) and pharmacy benefit manager (PBM) is in progress and remains on the service calendar ahead of open enrollment. Gallagher said the PBM/TPA transition work was underway and described open enrollment communications as a forthcoming priority.

Committee members discussed a proposed direct-contracting approach with local providers intended to leverage Lafayette Parish’s membership to negotiate lower provider rates. A board member described early provider conversations as encouraging and called the effort potentially “a game changer for Lafayette Parish.” A separate committee speaker said Meritain Health committed funds to support direct contracting work, stating, “Meritain has given us $200,000 and $100,000,” and said those funds are allowances to support the district’s direct-contracting activities rather than being paid from district insurance reserves.

No new plan changes or premium increases for employees were announced; staff told the committee the internal premium and projection work already factored recent Medicare Advantage plan premium information into the $70 million projection and that member premiums would not increase this year.

The committee did not take additional formal action on plan design at the meeting; members asked staff and Gallagher to produce clearer comparative materials showing the district’s budgeted amounts and the plan’s net cash results so the board and public can reconcile the different totals in future discussions.

The meeting adjourned after the presentation and discussion.