Panel reviews and approves ratification and amendment to Navitus contract after billing mismatch

The JBC-Employee Benefits Division Oversight Subcommittee voted Thursday to review the ratification and to approve an amendment increasing authorized spending on the Navitus Health Solutions pharmacy contract by $22,000,000, after staff described a billing mismatch related to a manufacturer coupon program.

Grant Wallace, Director of the Employee Benefits Division, told the committee the amendment is intended to align the contract spending authorization with how Navitus bills two separate invoices: a per-member, per-month administrative invoice and a separate claims invoice for filled prescriptions. Wallace said fees for administering a manufacturer coupon program — calculated as 20% of the coupon amount — were being posted to the administrative invoice rather than netted against claims as division staff had expected. "We are not asking for any new or additional funding," Wallace said. "We have the funding available to cover this, and I'd be glad to answer any questions."

The disagreement over billing prompted multiple members to press staff for details about past oversight, contract language and whether the state or plan members would ultimately bear any increased cost. Senator Hickey said he was concerned about whether the contract itself specified how coupon-related administrative fees would be charged; Wallace answered that the contract references an administrative fee for managing the program but that the division had not understood how Navitus' billing would present that fee. Representative Shepherd and Representative Gramlich sought assurance that the net savings and negotiated amounts had not changed; Wallace said the overall savings and negotiated rebate levels remain intact and that the issue is the allocation of those fees between invoice lines.

Committee members asked for additional oversight. Several lawmakers, including Senator Hickey and Representative Pilkington, said they wanted the Legislative Audit (referred to in the meeting as "LEHI audit") to review the transactions and confirm the accounting before the matter proceeds to the full Joint Budget Committee (JBC). Wallace said his office has adjusted internal processes so staff see the administrative bills monthly and will monitor billing going forward. He said Navitus has agreed to clarify billing during its system rollout and to work with the division.

The committee took two related actions. First, by voice vote it approved a motion to review the ratification letter explaining that prior expenditures exceeded the administrative spending authorization; that motion was made by Senator Hickey and the review was declared contingent on the Legislative Audit report. Second, the committee approved the contract amendment (the spending-authority adjustment) by motion of Senator Hickey, seconded by Senator Rice, again noting the LEHI audit would review the matter. Committee members stated these actions would be reported to the full JBC and are not final until adopted by the full committee.

Committee members asked multiple clarifying questions during the discussion: how long the billing practice had been in effect, whether Navitus bore any liability for unclear rollout, whether the change affects the per-member-per-month administrative fee (Wallace said the currently billed per-member-per-month administrative line is a separate invoice line and the $2.29 figure referenced in the meeting is not changed by the amendment), and whether actuarial work already accounted for the amounts being requested. Wallace and other staff repeatedly said the requested authority is intended to align previously authorized spending categories and that actuaries had projected funding needs into the plan-year calculations.

The subcommittee chair said the ratification review and contract approval would be reported to the full JBC, probably next Tuesday, and adjourned the meeting.