Insurance consultant recommends 15% package increase, carve out pharmacy benefits for board review

Aaron Casper, a consultant with National Insurance Services, told the Lakeville Public School District board at a March 10 work session that the district’s self‑insured medical plan is experiencing sharply higher utilization and specialty drug costs and recommended steps to stabilize the fund.

Casper said the district’s most recent 12‑month claims totaled $29.7 million, up from $26.8 million in the prior 12‑month period, and that carriers were estimating medical trend in the low double digits (about 11–12 percent). He presented a recommendation that the district: keep Blue Cross Blue Shield for administration and stop‑loss coverage, carve out the pharmacy benefit manager to Express Scripts to capture larger rebates and greater transparency, and adopt an aggregate 15 percent premium increase effective July 1. Casper said his modeling includes two to three percentage points of contingency and that the aggregate 15 percent would represent about a $4.6 million increase under current enrollment assumptions.

Board members pressed for details about the driver of higher costs and the data window used for modeling. Casper said the actuarial approach uses a rolling 24‑month dataset weighted toward the most recent 12 months (December data was included in the current run). He said utilization increases were driven by both higher frequency of service and higher unit costs, with specialty drugs — including GLP‑1s used for diabetes and weight‑loss treatment — among the fastest‑growing pharmacy drivers. Casper also said the plan records an “80/20” pattern in which a relatively small number of members account for a large share of dollars: the analysis showed roughly 110 members with claims over $50,000 in the most recent period versus about 80 in the prior period.

The consultant explained the district’s current individual stop‑loss attachment point is $200,000 per member and advised against lowering that attachment point now because that would materially raise stop‑loss premiums. He said a carve‑out of pharmacy management would increase transparency for the district as plan sponsor and create opportunities for larger rebates, but that some members could experience additional utilization management or administrative friction during transition.

On dental coverage, Casper recommended a nominal 3 percent increase to the Delta Dental program; staff said that change would slightly strengthen the dental fund balance (roughly $35,000) but is small relative to the medical plan’s scale.

Casper and staff said the recommendation and underwriting details will be presented at the district’s March 24 board meeting for possible approval and urged board members to submit follow‑up questions to Superintendent Michael Bowman before that meeting.

What happens next: the recommendation to adopt the 15 percent aggregate increase and implement a PBM carve‑out will be placed on the March 24 board agenda for action; staff will provide additional backup and respond to detailed board questions between now and then.