New deal expected to lower costs of Senior Rx

Monday, Sept. 27, 2004 | 9:23 a.m.

CARSON CITY -- A contract has been signed with a Las Vegas company that that is expected to save the state hundreds of thousands of dollars in providing low-cost prescription drugs to an estimated 9,300 low-income senior citizens.

State Human Resources Director Mike Willden said the final prices have been negotiated with Catalyst Rx, and the contract to handle the state's Senior Rx program becomes effective Jan. 1.

"It's a win-win situation," said Willden, who added that seniors will not see any change in their benefits and will still be able to use the same pharmacies. The reduction in administrative fees, he said, will help offset the rising cost of drugs.

The state's average cost per prescription has jumped from $43 to $63 in the past year, he said.

The contract with Catalyst overhauls the structure of the program that was started in 1998 by Gov. Kenny Guinn.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, who pushed for the state to take over more of the program, said the state could do a better job of administrating the program than the old contractor, and she was happy state officials found a company to work with them,

"I've said from the beginning the insurance companies would rip us off and they did," she said. "It's good news for the seniors and good news for the state."

Under the present contract, the state pays $65 a month per enrollee to Professional Risk and Asset Management Insurance Service of Brea, Calif., to cover the cost of drugs. Professional Risk receives an additional $14.87 a month for each enrollee to run the program, secure the pharmacy network, buy insurance and pay the state's 3.5 percent insurance tax. The insurance is purchased from Fidelity Security Life insurance Co. of Kansas City, Mo.

If the average drug cost runs higher than the $65 per month, the insurance pays the extra cost. But Willden says it has never exceeded that amount, although it has been close.

Professional Risk and Fidelity Security will not be included in the new structure.

Recipients of Senior Rx must be 62 years old or older, have lived in Nevada for at least one year and have an income of less than $22,016 for a single person or $28,660 for a couple. There are no monthly premiums, but recipients have a co-pay of $10 for a generic drug or $25 for a preferred prescription.

The plan has a benefits cap of $5,000 each year for a senior.

Under the present program, the state did not receive rebates from drug companies for larger amounts of business. Willden said he estimates the state will now get a $2 rebate per prescription. Last year there were 223,000 prescriptions.

The state is presently paying $2.25 prescription to pharmacists as a dispensing fee, but that will be lowered to $1.70 to $2, depending on the type of drug.

The state will pay $1 per month per enrollee to Catalyst Rx and use $140,000 to $150,000 a year for extra staff to do more of the administrative work.

The $14.87 a month per enrollee the state now pays to administrate the program will drop to $2.34 cents a month per enrollee.

The state will drop its insurance to cover the cost if the average costs of drugs exceed $65 apiece.

Willden said the state will receive a better discount on drug purchases. At present the state receives 20 percent off the average wholesale price on a mail-order brand drug and that discount will rise to 23 percent. On a mail- order generic drug, the discount will rise from 50 percent to 55 percent.

Guinn started the program using money from the tobacco settlement. The 2003 Legislature kicked in an extra $2.8 million to allow the enrollment to rise from 7,500 to 12,000.

Willden said the program should have had 10,400 by this time but it has fallen short. There are no waiting lists. He said seniors are using more drugs per month than when the program started.

In July 2001, 46 percent of those enrolled used the program to buy their drugs. That figure is now up to 60 percent.

The new contract goes before the state Board of Examiners Oct. 15 for final approval.