MCPS to Save Millions with Health Care Contracts

July 29, 2013

Montgomery County Public Schools’ (MCPS) benefit plan contracts approved by the Montgomery County Board of Education on May 30, 2013, will result in savings of more than $28 million over three years.

The Board approved a new three-year medical plan contract, scheduled to take effect January 1, 2014, with the award of contracts to Cigna, CareFirst BlueCross BlueShield, and Kaiser Permanente. The contracts will save the school district $2.7 million in the first year and $8.2 million over three years. Cigna, which is replacing UnitedHealthcare (UHC), has a nationwide network of providers and will offer the same benefit plan UHC members currently enjoy.

The Board also awarded a new three-year prescription drug plan contract for employees to CVS Caremark, which also becomes effective January 1, 2014. The new contract will save the school system $5.9 million in year one and $20.0 million over three years.

In addition, CVS Caremark will provide administrative services for a Medicare Part D drug program for MCPS retirees who are Medicare-eligible. The move to a Medicare Part D from the district’s current plan will save MCPS $7.0 million over three years. As a result of the Medicare Part D contract, Montgomery County Government’s annual required contribution towards Other Post-employment Benefits (OPEB) funding—which pays for the health benefits received by future retirees—is estimated to be reduced by more than $36.0 million per year.

MCPS and four other county agencies—the Montgomery County Government, Montgomery College, the Maryland-National Capital Park and Planning Commission, and the Washington Suburban Sanitary Commission—jointly issued Requests for Proposals to choose medical and prescription plans that meet each agency’s plan design requirements at a competitive cost. MCPS and the other agencies will all benefit from the competitive pricing, which would not have been possible if the bids had been issued separately.

“By collaborating with our employee associations and county agencies, we are able to continue to provide high-quality benefits for our employees and retirees, while saving taxpayers millions of dollars,” said Superintendent of Schools Joshua P. Starr. “We will continue to look for ways to control costs while maintaining the benefits our employees receive.”

MCPS will hold Open Enrollment for both employees and retirees this fall and each fall thereafter. Details about each plan will be available at that time.

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