CalPERS reports savings from CVS PBM deal but members report confusing formulary changes and disputed communications

CalPERS staff briefed trustees on the January transition of roughly 600,000 members to CVS Caremark (and SilverScript for Medicare Part D). Staff said the move secures improved pricing estimated to save approximately $500 million over the contract and includes performance guarantees that put $250 million at risk if CVS fails to meet cost and quality targets.

Staff acknowledged operational bumps tied to formulary differences between the prior PBM and CVS. They said they had anticipated some degree of disruption—estimating roughly 5% of basic members and 15% of Medicare members could be affected by formulary exclusions or tier changes—and described mitigation steps: transition fills (up to 90 days at the member’s prior tier), direct letters to affected members and prescribers, an updated online wrap drug list to align basic and Medicare formularies, and a grievance and appeals escalation workflow.

During the pension & health committee public comment period, a retiree (Larry Woodson) described receiving conflicting letters about drugs covered under SilverScript and said customer representatives initially gave incorrect guidance; he praised staff for escalation assistance. Another speaker (Caitlyn Roach Fong Pyowl) recounted difficulties accessing behavioral‑health care and a dispute with a DME vendor during the transition and asked the board to help ensure access so members avoid emergency‑room utilization.

Staff said many implementation issues have been resolved and that the grievance and appeals teams—together with CVS—are addressing systemic issues; they agreed to collect and report appeals/grievance counts and to meet with members reporting problems. Trustees asked staff to return specific statistics on appeals and grievances and requested follow‑up meetings with individual complainants when appropriate.