State Board of Finance approves RFPs for Medicare Advantage plan and pharmacy benefits manager

The State Board of Finance voted on an emergency call to authorize two solicitations Friday: an RFP for a Medicare Advantage plan designed for state and public school retirees and an RFP for a pharmacy benefits manager (PBM).

Jake Bleed of the Employee Benefits Division told the board the accelerated timetable is driven by an implementation target of Jan. 1, 2023. "We will put RFPs out on the street for bid," Bleed said, adding that proposals will be scored according to state procurement rules and the highest-scoring vendor will be invited to negotiate a final contract before returning to the board and, if required, the Arkansas Legislative Council for final approval.

The move matters because the RFPs would reshape how health benefits are purchased for thousands of state and public school retirees. Bleed said the Medicare Advantage option under consideration would be a separate, self-funded plan tailored to retirees rather than a standard commercial Medicare Advantage product: "When we draft the RFP as a starting point, we're going to take our current level of coverage and basically say, this is the bottom," he said.

Board members and Representative Ferguson pressed Bleed on network adequacy and benefits that members currently receive. "All of our health care is in Memphis," Representative Ferguson said, asking that any nationwide network include out-of-state providers used by border-city members and that the RFP preserve access to services such as skilled nursing. Bleed said the procurement will be limited to large firms with nationwide PPO-style networks to minimize disruption and that members may opt out and keep current Medicare coverage.

Members also questioned whether the Medicare Advantage model truly saves money. Bleed acknowledged skepticism but said federal program structure and incentives make the model attractive: "There's a lot of opportunity there for us and for the members to see better benefits, potentially at less cost," he said, while urging careful design, analysis and member education.

On the PBM, a board member asked whether requiring 100 percent rebate return or full rebate transparency could limit bidder participation. Bleed said transparency of rebates is a standard provision for large contracts and emphasized the board's focus on bottom-line cost and knowing how rebate dollars are used.

Procedural protections for procurement were also discussed. Bleed said scoring and technical evaluation of proposals will be done outside a public meeting to protect the competitive process; final scoring results, contract terms and the winning vendor will be public once the procurement concludes.

Motions and votes: a board member (speaker 6) moved to approve the RFP for the Medicare Advantage solicitation; Eric Munson seconded and the motion passed on a voice vote with no recorded opposition. Alan McClain moved to approve the PBM solicitation; Eric Johnson seconded and that motion also passed by voice vote. The chair authorized staff to proceed with both solicitations.

Bleed also briefed the board on expiring contracts — including Mainstream (the ARBenefits portal vendor), MedImpact (current PBM), Optum (HSA/FSA services) and EBRX (University of Arkansas for Medical Sciences contractor for rebate/formulary work) — and said extension requests for those contracts will be presented at the board's April meeting because renewal paperwork and rate information remain incomplete.

Bleed reviewed updated plan finances and a new monthly projection tool prepared with Milliman actuaries. He said actions taken by the board and the general assembly, combined with Department of Education funding and a $35,000,000 restricted reserve, helped turn a previously projected $70,000,000 deficit on the public-school side into a projected $6,000,000 surplus for 2022 and a $30,000,000 surplus projection for 2023. He said the state-employee side was expected to finish 2022 with a roughly $1,200,000 deficit and move into surplus in 2023.

Bleed described district PPE funding as a stabilizing element: the transcript records a monthly district contribution of about $9,000,000 and states it "will move up to $300 per member per month," while also referencing an unclear figure rendered in the record as "about 168." Bleed said the combination of restricted reserves, Department of Education support and increased district funding improves the plan's near-term outlook.

Bleed outlined governance changes under Act 114, which creates two five-member subcommittees (one for state employees, one for public school employees) composed of three governor-appointed finance/insurance professionals, one active employee and one retired employee; the subcommittees will do detailed work and make recommendations to the Board of Finance. Some board members warned the change could add a layer of bureaucracy and observed the legislature retains ultimate authority in many areas.

The board adjourned after scheduling its next meeting for April 28.

Ending: Board members approved staff to proceed with solicitations and asked for detailed analyses, member education and close attention to network adequacy and rebate accounting as the procurement and contract negotiations proceed.