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Consultant warns Lynchburg schools health plan could top $19M next year as pharmacy and high-cost claims surge
Summary
A Mark 3 consultant told the Lynchburg City Schools finance committee that medical and pharmacy spending has risen sharply, projecting the district could spend roughly $19 million this year and outlining options — including moving to the city's Health Keepers network or a three-tier plan — to limit employee impact.
A consultant from Mark 3 warned the Lynchburg City Schools finance and facilities committee that the district's health-plan costs have risen sharply and could reach roughly $19 million in the current 12-month period if trends continue. The consultant said pharmacy spending and a growing number of very high-cost claimants are the main drivers of the increase.
"We are on pace this year to spend about $19 million or so," the Mark 3 consultant said, presenting charts that also showed the district's medical-only spend at just above $13 million in the current period. He told the committee pharmacy spend rose from about $3.5 million two years ago to nearly $5.5 million in the most recent 12 months.
The presentation identified seven new high-cost claimants for the district this year and described how specialty and injectable drugs are a major cost driver. Committee members asked whether switching to the Health Keepers network used by the city would eliminate the need for additional funding; the consultant said Health Keepers could produce roughly 3–5% savings on medical spend but would not fully close the district's funding gap.
"If we were to move the entire group, you'd be looking at about 4 or 5% on the medical spend," the consultant said, adding that the savings are not large enough to offset the projected increases driven by claims activity. He urged the district to weigh options including (1) mirroring the city's Health Keepers network, (2) a three-tier offering with a health savings account option, or (3) plan-design changes that would shift costs to employees.
The committee discussed timing and next steps; staff said open enrollment is scheduled for three weeks starting Nov. 1 and that the team will continue negotiating with Anthem and preparing rates and plan options to present to the committee. The consultant also flagged a dependent-eligibility audit and coordination with the city as steps to identify potential cost mitigation.
