Archive for September 2nd, 2009

An Insurance Consultant’s Worst Nightmare

Wednesday, September 2nd, 2009

Insurance consultant’s worst fears are vendors who publicly question the validity of their work product. That is especially true if a vendor presents “facts” to support their contention that the consultant’s recommendation/s are based on data that is flawed, fradulent, tainted, incomplete, skewed, misrepresented, or does not generally support the consultant’s recommendation/s in a clear, concise and unquestionably logical way.

Insurance consultants are wise to document all activity as relates to work performed on behalf of his client. All telephone conversations should be memorialized to file, all emails saved, spreadsheets double checked for accuracy, vendor sign off on the consultant’s work product to be presented to his client, careful review of all proposals received and all correspondence between the consultant and his client, as well as all correspondence with vendors, should be kept to file. It is incumbent upon the consultant to document all activities to protect against “vendor backlash”, especially when working with political subdivisions such as the Brownsville Independent School District. E&O Insurance policies may require this as well.

Yesterday at the Brownsville Independent School District, a HealthSmart presentation to the Board of Trustees questioned the work product of the district’s insurance consultant. Contrary to the consultant’s representations to the district (upon which the Board of Trustees awarded a $38 million health insurance contract), the representative from HealthSmart attempted to “set the record straight” by providing “facts.”

If a consultant represents that Company “A” is less expensive than Company “B”, but a vendor goes on public record and states that Company “A” is more expensive that Company “B”, would it not be true that one or the other may be misinformed? If PPO Network “A” has better discounts than PPO Network “B” according to the consultant, then how can PPO Network “B” be better according to the vendor? If premium for stop loss insurance is lower for Stop Loss Company “A” ,according to the consultant, than for Stop Loss Company “B”, then how can a vendor support the statement that Stop Loss Company “B” is less expensive?

If, as the HealthSmart representative stated, that moving the $38 million contract from HealthSmart to the recommended vendor will cost the district (taxpayers) more, then who are we to believe? Do we believe the “expert” consultant, or do we believe HealthSmart who lost the business? The presentation by the HealthSmart representative, in our view, was compelling.

There is one way to ferret out the truth. A careful review of all documents submitted during the request for proposal process should put to rest any alleged descrepancies. We have asked under the Open Records Act for documents relating to the BISD proposal process. Once we receive this public information, our staff will devote the time and resources necessary to evaluate the proposals in question to determine the truth. We will publish the results on this weblog, with detailed documentation.

In light of this apparent controversy, it would not surprise us if all of the other vendors (as many as 21 different companies) who submitted proposals under the BISD health insurance request for proposal process, ask for copies of the consultant’s work product in order to determine if their proposals were accurately and fairly presented to the Board of Trustees.

Editor’s Note: It will be interesting to review the various contracts to be issued with the new health insurance plan. Will the contracts be part of the public record? Or will the contracts be proprietary and unavailable to the public? Will the various contracts be directly with the BISD, or will some or all of the contracts be with third parties? For example, will the Pharmacy Benefit Manager contract be with BISD, or will the contract be with the TPA? Will all the contracts contain a “right to audit” clause that favors BISD, or one that favors the vendor? Will the contracts disclose financial arrangements with parties to the contract?  Will all vendors be required to sign a disclaimer clause stating that they will receive no additional renumeration of any kind other than what is disclosed in the contract?