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Consultants flag rising pharmacy costs; committee backs three‑plan approach for Lynchburg City Schools' 2027 coverage
Summary
A Mark 3 consultant told the committee pharmacy spending and high‑cost drug claimants have driven per‑member costs higher; the committee agreed to recommend a three‑plan offering for 2027 (HealthKeepers network option, a higher‑cost Key plan and an HSA option) and to forward the recommendation to the school board.
Heath Thomas, a health‑insurance consultant identified as with Mark 3, told the finance and facilities committee that the district’s employee health plan has seen a membership decline (about 2,400 to 2,200 lives) while per‑member claims and a risk index have worsened.
"We have 52 of them," Thomas said of high‑cost claimants, noting that the most expensive individual claimant was "currently at $542,000" and that the 52 high‑cost claimants together account for a substantial share of plan spending. He described pharmacy costs as the primary driver of rising expenditures, saying the district’s pharmacy spend was about $5.2 million and that the top 10 drugs represented roughly $3 million of that total. Thomas said per‑member pharmacy costs rose from about $141.90 to nearly $200 per member per month.
To address the trend, the consultant outlined cost‑containment strategies including a move for some employees into a HealthKeepers provider network (estimated medical‑plan savings of about 5%, roughly $630,000 on medical spend), a dependent‑eligibility audit, Medicare education for near‑eligible employees and a market review for 2027 plan design. He described a proposed three‑plan offering for 2027: a HealthKeepers‑network plan to capture network savings, a higher‑cost Key plan to preserve choice for employees who prefer the current network, and an HSA‑compatible plan that could offer lower premiums with tax‑advantaged employee savings. Thomas discussed HSA contribution limits and catch‑up rules and noted Anthem will provide illustrative renewal rates in the coming weeks.
Committee members pressed on who benefits most from an HSA and on payroll handling for HSA contributions; Thomas said HSAs tend to appeal to both low‑utilization employees and those who want to save tax‑advantaged dollars and that payroll deduction and a debit card would be used for spending. After discussion, the committee signaled agreement to recommend the three‑tier approach to the full school board so staff can proceed with rate illustrations and open‑enrollment planning.
Staff asked the committee to forward the recommendation to the school board quickly so the district can lock in rates and prepare materials for employee enrollment.
