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Consultants report plan surplus overall, certified IBNR reserves total about $10.6M; pharmacy trends are rising
Summary
Keenan and Keenan-associated consultants reported a combined plan surplus driven by prescription drug rebates and dental performance, certified incurred-but-not-reported reserves of roughly $10.6 million, and a marked rise in specialty and GLP-1 drug costs prompting further review.
Consultants reported to the San Joaquin Valley Insurance Authority on Aug. 27 that SJVIA’s plan-year experience through June 30, 2025 shows an overall surplus driven by prescription drug rebates and favorable dental results, but that pharmacy utilization — particularly specialty and GLP-1 class drugs — is increasing and contributing to rising costs.
Why it matters: The SJVIA must fund incurred-but-not-reported (IBNR) reserves and monitor pharmacy trends because both affect premiums, plan solvency and required stabilization funding.
Highlights from consultant presentations: - Experience report (through 06/30/2025): Keenan reported a total accumulated surplus of $3,137,404 composed of approximately $2,977,530 surplus in self-funded medical and prescription drug plans (including rebates), a roughly $159,874 surplus in self-funded dental, and a $42,935 position for the fully insured VSP vision plan. Fresno County showed a surplus (about $3.7M) while Tulare County showed a deficit (about $591,767) in the report’s county-level breakout; overall SJVIA position remained positive due to Fresno’s surplus.
- IBNR/reserve certification: Keenan’s actuaries certified IBNR reserves as of 06/30/2025 at approximately $6.4M for Fresno County (medical $4.84M; Rx $1.3M; dental $221K) and $4.2M for Tulare County (medical $3.1M; Rx $1.0M; dental $110K), for a combined IBNR around $10.6M. Consultants applied a 15% adjustment factor to base unpaid claim liabilities to reflect claim variability.
- Pharmacy utilization: Kenan Pharmacy Services reported a 19% increase in total plan pharmacy cost in Q2 2025 versus Q1 and noted specialty drug costs and brand prescriptions (notably GLP-1 drugs such as Ozempic and Wegovy equivalents) are major drivers. Certain specialty claims increased plan costs by approximately $1 million in the quarter. Consultants flagged that some very high-cost specialty utilizers (in a few cases single patients) can drive quarter-over-quarter volatility.
Directors asked for additional detail on specialty claims’ clinical indications and for a prior-authorizations report; staff said the RFP process for pharmacy benefits will seek utilization-management strategies, and they will return more granular prior-auth information from Empirix and other vendors.
Motion: The board received and accepted the consultant reports and certified the IBNR figures; the actuarial certification was presented and accepted by the board.
