Nevada auditors recommended changes to the Senior Rx program they said could save up to $2.4 million a year.
Senior Rx provides prescription drug benefits to low-income seniors in the state. It has about 9,000 members who each pay about $60 a month.
When the program began Gov. Kenny Guinn pushed it through the Legislature as a privatized system administered by an insurance company. Changes made in 2003 gave the state permission to self-administer the program instead.
Auditors said Tuesday it's time to do that. They said the change would save up to $1.3 million in insurance premiums.
"Senior Rx pays insurance premiums to cover claims when the average drug cost per member per month exceeds $65.55," the auditors wrote. "However, average claims costs have never exceeded this amount. As a result, the state has paid 100 percent of claims costs and the insurance premiums."
In addition, auditors made several recommendations to turn the program more into a state-run system and less a privatized system. That includes eliminating the plan manager's contract. Senior Rx managers said they could take over those functions internally, saving about $429,000 a year.
Human Resources Director Mike Willden said he agrees with the changes but that taking over contract services could require allowing Senior Rx to spend up to 5 percent of its budget on administration instead of the 3 percent limit now in the law. He said the program would more than get the money back by eliminating the insurance premiums which are nearly $15 per member per month.
He said he also agrees with the recommendation to rebid the pharmacy benefits manager contract. Auditors said other managers providing similar services offered bids $61,000 a year lower.
And auditors said Senior Rx isn't getting many of the rebates offered by drug companies to other volume purchasers. In Nevada's case, that could cut costs another $617,000 a year.
Auditors also urged the program to emphasize coordination of newly approved Medicare Prescription Drug Card benefits with the state's program, getting qualified seniors to use the federal benefits first. That, they said, could save up to $900,000 a year.
Altogether, the audit report says, the state could save upwards of $2.4 million a year by making the changes to the program.
Controller Kathy Augustine, a member of the audit review board, said that money could be used to expand the number of people served by the program.
Willden said he was already preparing to make the recommended changes.
Contact Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.