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DOA seeks larger actuarial role as self-insurance costs and pharmacy access drive contract work
Summary
DOA told the committee it is expanding the scope of actuarial consulting and seeking multiyear third-party administration for the government'wide self-insurance program, citing rising pharmacy costs and the need for pharmacy benefit management; DOA estimated total government-wide self-insurance costs near $190 million as part of negotiations.
Department of Administration officials told the finance committee on June 19 that the self-insurance program and associated third-party administration (TPA) contracts are under active negotiation and that actuaries will be asked to perform a broader scope of work in FY26.
Theresa Rivers said DOA has asked actuaries to perform audits of providers, assess whether the government should enroll in Medicare Part D to reduce pharmacy expenses, and validate rebate calculations. "We're asking them to do more and more," Rivers said, adding that professional fees have increased as the scope expanded.
Director Edward Byrne said DOA is pursuing multiyear contracting options where possible because pharmacy benefit managers and TPAs typically will not accept one-year terms. Byrne said current negotiations are ongoing and that DOA hoped to conclude actions for FY26 in a timeline that allows agencies to budget accordingly.
On broad program costs, Byrne said a preliminary estimate for total governmentwide self-insurance costs was just under $200,000,000, and he later referenced a figure near $190,000,000 while noting that final negotiation numbers were pending and that DOA had not yet received best-and-final offers from bidders.
Committee members also asked about claims and a claims fund line item; DOA reported the claims fund was reduced from $100,000 to $75,000 in FY25 and that year-to-date disbursements had been materially lower than the cap in recent reporting.
DOA emphasized that decisions on long-term contracts and pharmacy strategy affect costs to government and plan participants; the agency said it is pursuing a schedule to finish negotiations and expected to present recommended actions to the governor and the legislature in the coming months.
No formal approvals related to self-insurance contracts were taken during the hearing; negotiations and procurement steps were described as ongoing.
