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McAllen ISD health plan runs a deficit after high-cost claims; trustees discuss benefit changes and pharmacy measures
Summary
District staff outlined a shortfall in the self-funded health plan driven by increased pharmacy costs and a rise in high-cost claimants. Staff outlined cost-containment measures, proposed a January budget amendment and recommended a board workshop on health coverage options.
McAllen ISD administrators told the board Tuesday that the district’s self-funded health plan ran a large deficit in the most recent fiscal year after an uptick in pharmacy spending and additional high-cost claimants.
Deputy Superintendent for Business and Operations Lorena Garcia presented the health-plan update, assisted by consultants Roger Garza and Javier Riviera of Valley Risk Consulting. Garcia said the district had projected a modest ending fund balance but instead closed the year with $68,496 after pharmacy cost increases and multiple high-cost claims that exceeded stop-loss deductibles.
Garcia told trustees the district has an assigned reserve of $2 million that administration moved incrementally to support plan costs and that staff will present a January budget amendment to preserve the $2 million assigned balance. Garcia said the district expects pharmacy rebates later in the fiscal year that may offset some of the shortfall but that liability adjustments remain unknown.
Consultants and staff outlined several cost-containment actions completed this year that together produced slightly more than $1 million in projected savings: reductions in plan administration fees ($125,000 cited), pharmacy-sourcing savings (about $290,000), stop-loss cost reductions from a new RFP (about $350,000) and other administrative fee cuts. Garcia said the district also renegotiated medical administration fees and eliminated some onsite services to reduce costs.
Trustees and staff focused much of the discussion on the district’s rising use of high-cost GLP-1/GLP drugs for diabetes and weight-related uses; the presentation named Mounjaro, Ozempic and Wegovy as examples discussed. Garcia and consultants said Mounjaro (reported in the presentation as difficult to source internationally) and similar drugs have driven pharmacy costs upward. Staff recommended stronger prior authorization and step-therapy rules, a tightened formulary and further negotiation with Blue Cross Blue Shield to control specialty drug spend.
Garcia also recommended considering elimination of the district’s expensive ‘‘state plan’’ option (described in the presentation as having a 365% loss ratio and costing about $2,792 per member per month) and transitioning affected members to other employer plans by Jan. 2026. Staff said only about 36 members were enrolled in that state plan but that its loss ratio drives costs for the fund.
Trustees asked staff to report back with breakdowns — including whether high-cost drug utilizers are employees or dependents — and several trustees urged a dedicated workshop on health and pharmacy plan design before the district’s next renewal and bargaining cycle. Garcia said staff would schedule follow-up briefings and provide requested utilization data.
No final board action was taken at the Feb. 11 meeting on coverage design changes; the board later approved a January 2025 budget amendment that, among other adjustments, moves funds to shore up the health plan (see "Votes at a glance").
