A Kansas state employee health commission's vote to approve a prescription drug benefit contract Friday with CVS Health designed to capture savings of $41 million over three years was denounced by the state's top insurance regulator.

CVS Health, which holds the existing pharmacy contract under the state employee health plan, narrowly survived voting by the five-member Kansas State Employee Health Care Commission. The proposal was initially rejected amid concern CVS Health hadn't done enough to address complaints from rural consumers. Once it was established the commission could withdraw from the new contract after one year, two members changed their votes to affirm the 4-1 decision in favor of CVS Health.

Under the contract scheduled for implementation Jan. 1, based on an independent bid analysis, CVS Health has the potential to achieve savings of $41 million or 16.2 percent over the three-year deal. If achieved, the current three-year cost of $254 million would fall to $213 million by end of the new contract in 2022.

The second-ranked alternative submitted by Blue Cross and Blue Shield of Kansas would have trimmed the three-year plan cost by $36 million or 14.2 percent.

Steve Dechant, who represents retired state classified workers on the employee health commission, urged retention of CVS Health because it was projected to save the most of any bid. He said it was difficult to give weight to generic complaints about CVS Health's service to Kansans. He said it was unfortunate rural participants in the plan had less convenient access to pharmacies.

"There are some facts of life in living in a rural area," said Dechant, who is on the Hutchinson City Council.

Vicki Schmidt, a Republican on the employee health commission by virtue of her election as state insurance commissioner, said the request for contract proposals from pharmacy management companies was poorly handled. She said the commission staff's recommendation to go with CVS Health was flawed because it exclusively hinged on the financial bottom line.

"If that is how we make the decision, why did we bother doing any of the analysis? Why not just take the lowest bid?" Schmidt said. "For years, I served in the Kansas Senate, where I saw firsthand the consequences of basing decisions solely on the bottom line."

Schmidt, who is a pharmacist, said quality of service provided by CVS Health to state employees enrolled in the plan and the way CVS Health treated local pharmacies should have been factored into appraisals of contract applicants.

Mike Michael, director of the State Employee Health Plan, said the process of soliciting pharmacy proposals reflected a process refined over the years. He defended work of Segal Group, which contracted with the state to evaluate pharmacy management contract bids.

"I do think we have a very valid RFP. The analysis that was done was done on a one-year actual claims data and balanced up against what the different companies provided in their cost proposals," Michael said.

Initially, only Dechant and John Yeary, acting secretary of the Kansas Department of Administration, embraced retention of CVS Health.

Following discussion of the state's ability to exit the contact after one year, commissioners Ximena Garcia, appointed by Gov. Laura Kelly, and Heather Young, who represents current classified state workers, voted to award the contract to CVS Health.

In early June, State Employee Health Care Commission members provided state employees a 6 percent reduction on health insurance rates in 2020 in the wake of several years of sharp premium increases. At the same time, the state's contribution to the employee insurance fund was increased by 4.5 percent.