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West Virginia Select Committee on PEIA, Seniors and Long Term Care Gets Update

By Matt Young, WV Press News Sharing

CHARLESTON, W.Va. – Jason Haught, the interim director and CFO of West Virginia PEIA, addressed the Select Committee on PEIA, Seniors and Long Term Care on Sunday during the Legislature’s Interim Session. 

Before Haught presented his testimony,  Co-Chair Del. Matthew Rohrbach, R-Cabell, provided a brief outline, stating, “The purpose of today’s meeting is to hear from PEIA, as we had a lot of things come up in our last session about reimbursements and premiums and eligibility, and the like.”

Rohrbach went on to explain that the committee has been tasked with evaluating PEIA, including identifying problems and recommending solutions.

“We thought a good place to start would just be to ask ‘where are we at?’” Rohrbach noted. “What is PEIA? How big is it? How many people do we have, and what does it cost? – things of that nature.”
Haught, who has been PEIA’s Interim Director since November of 2021, then delivered his presentation, beginning with the most recent quarterly report.

“One item that continually makes confusion arise when we’re talking about PEIA, is when we’re talking about the active fund,” Haught told the committee, before explaining that the state and local active funds are kept separate. 

“The PEIA state fund, and state fund only, is required to be funded by employers at 80% and employees at 20%,” Haught continued. “And this is to include the retiree-subsidy. That’s been a big factor and a burden on the plan for many years.”

Haught then turned his attention to “Pay Go,” saying “We might be close to getting out of the woods for that.”

Haught explained that recent policy developments would see Pay Go discontinue funding the RHBT (retiree) fund once the plan has reached 105% of its funding requirements. 

“This (state and local funds) is a very confusing aspect of PEIA,” Haught said. “If you talk to one PEIA member, they’re gonna say ‘man, my premiums are great – I don’t have a very high premium.’ But if you talk to another member who is in the state fund, they’re gonna tell you ‘well I pay $500 a month – that’s pretty expensive, I think.’”

The reason for this discrepancy, Haught went on to state, is due to the finance board’s discretion to “distribute the cost of the plan based on the ability to pay. The ability to pay has been defined as the public salaries as recorded by the payroll systems for the employees in the PEIA state fund.”

“So if you make zero to $25,000, you’re gonna pay less than somebody who makes $130,000,” Haught added.

Throughout his nearly 50-minute explanation, Haught continually reiterated the program’s core concept of “If you get paid more, you’re gonna pay more.”

“With the non-state fund,” Haught continued, “another big point of confusion is that PEIA does not set the premiums for the employees of a non-state employer. What PEIA does is bill one lump sum for an employee-only policy, and one lump sum for a family policy. And then that employer decides how much of that total premium will be paid by their employees. It can be all over the board – there’s no rules. So that’s another big confusion.”

Haught went on to explain that age is also a significant “cost driver” for health care, and West Virginia has a “higher (older) than average-age” population. Because of these factors, Haught said, “Expectation would be for groups to have costs higher than normal.”

According to Haught, in 2021, the overall medical and RX employee pay-out was, on average, $495.75. The average pay-out for spouses was $566.20, and dependent children averaged $170. 

“Consistently spouses on our plan do tend to be the most expensive demographic,” Haught said. “Children are cheap.”

At the conclusion of Haught’s presentation, a question was posed by Del. Ken Reed, R-Berkeley, regarding “specialty drugs.”

“There is no definition of specialty drugs,” Reed said. “They just make it up as they go. Each PBM (Pharmacy Benefit Manager) has their own list of what they consider a specialty drug.” Reed then cited previous legislation aimed at establishing a uniform definition of these drugs. “ Is PEIA going to move toward how we’re going to try to treat these specialty drugs in the PBM world?”

“We (PEIA) do, as you know, follow the national formulary of the PBM,” Haught replied. “So if the biosimilar comes out for a particular drug, and the clinical-ethicacy is proven and it’s a better cost to the plan, it will be adopted – it will be incorporated into the formulary.”

As the meeting neared adjournment, Del. Rohrbach stated, “I know myself, I’ve written down about 10 questions, and I’m sure other members of the committee have a similar large number of questions. So, concerning the committee, I think we’ll take this up again at the next meeting in May. This is more than we can get into in the next five minutes. – I look to the co-chair for a motion to adjourn.”