Public workers and retirees enrolled in the state’s health plans are likely to see changes to their prescription benefits in the coming year as part of the state’s efforts to trim healthcare costs by a quarter-billion dollars.

It’s not official yet, even though Gov. Chris Christie’s administration counts on the savings to balance the budget in the fiscal year that starts in seven weeks. But Acting Treasurer Ford Scudder told lawmakers he feels good about the chances for the health plans’ design committees to approve the money-saving changes.

“I remain cautiously optimistic that we are going to have those changes in place by the end of the fiscal year and that we will realize those savings in the budget for 2017,” Scudder told the Assembly Budget Committee on Wednesday.

Scudder said there are a number of options available around which the plan design committees — comprising equal numbers of administration and union appointees — have a general agreement that would amount to more than $250 million, though not all will be adopted. He called it “a puzzle” to get to the combination that adds up to the goal.

“The areas in which we’re talking are continued changes in prescription drugs benefits, such that we’ll move more toward generics, more towards mail-order for recurring subscriptions,” Scudder said. “Possibly things like step therapy that start with less expensive drugs and move to more expensive drugs.”

Assemblyman Gary Schaer, D-Passaic, wanted to know if the changes would be in place by the start of Jul, in order for the state to net the savings it projects.

“We believe so,” Scudder said. Now, the – ”

Schaer interrupted: “We’re not only believing so, forgive me, sir, we’re counting on it, aren’t we?”

“That’s right,” Scudder said.

“If everybody’s in agreement, and they seem to be so obvious and apparent, then why did it take us so long to find them?” Schaer said.


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The plan design committees last year adopted a number of changes that will save an estimated $197 million in the upcoming year, as well, with the chief change being a restriction on compound drugs.

Schaer said he worries that the $250 million figure is “a very cloud-like number out there” that, if not reached, would mean the state would have to find the money by reducing its $790 million surplus. That cushion is the healthiest in years but still far smaller, as a percentage of the $34.8 billion budget, than agencies that assess the state’s financial health would like.

“I’m concerned the $250 million was just a number that we effectively pulled from the sky and said, ‘We’ll get there,’ with only good hope and camaraderie taking us to that end goal,” Schaer said.

Scudder said that if the plan design committees don’t act, the Legislature could pass a law that would impact healthcare costs, such as changes affecting out-of-network care.

“Absent either the plan design committees or the Legislature acting,” Scudder said, “then we’d have to decide whether we’re comfortable reducing surplus back to the levels that it was in previous years, or if we need to raise taxes or reduce services somewhere else.”

Assemblyman Troy Singleton, D-Burlington, suggested the state could use language in the annual budget, rather than a separate law, to limit reimbursements paid through the state’s health plans for inadvertent out-of-network care to comparable in-network rates.

Scudder said he didn’t know if that was possible but would look into it.

“I think if you’re looking for about $250 million, which the budget sort of allocates, my sort of back-of-the-envelope estimate talking with some (financial analysts), I think you’re probably about halfway there just by doing that,” Singleton said.

Michael Symons is State House bureau chief for NJ 101.5 and the author of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook.

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