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County health fund strained after TPA chargebacks; officials consider benefit changes for FY27
Summary
Union County said a prior TPA underreported claims leading to about $5 million in chargebacks; rising specialty‑drug costs (notably GLP‑1 drugs) and increasing utilization forced a drawdown of the health fund and will prompt consideration of plan‑design changes and a fund replenishment plan for FY27.
County staff told commissioners that a prior third‑party administrator underreported paid and pending claims, producing roughly $5 million in chargebacks that reduced the county’s health fund. Staff said the county is self‑insured and bore the cost when denied claims processed during the TPA run‑out converted to paid claims.
Officials said pharmacy and specialty‑drug spending is rising faster than medical inflation, with GLP‑1 and other specialty prescriptions accounting for a disproportionate share of recent increases. The county’s benefit team reported it will use unassigned fund balance to replenish the health fund and that it will return with specific FY27 plan‑design changes for consideration (deductibles, employee premiums, prescription coverage).
Why it matters: As a self‑insured employer the county must cover actual claims and the funding shortfall affects how much the county contributes to the plan and whether employees face higher costs. Staff urged a long‑term, strategic approach with a benefits consultant to prevent similar funding disruptions.
What’s next: Staff said they will calculate the replenishment amount based on the most recent claims run‑rate, propose a targeted contribution from fund balance and present proposed plan design changes and communication to employees in advance of open enrollment.
