Day: September 8, 2010

Blue Cross Blue Shield of Texas (BCBSTX) has larger market share than any other managed care company. They insure most Texas school districts through the TRS ActiveCare plan, many federal employees, and all State of Texas employees. They even insure HEB, a 70,000 life grocery store chain that out-competed Albertson’s in the Valley several years ago.

You would think, and BCBS representatives will verify, that BCBSTX has the market clout to negotiate superior PPO discounts with medical care providers, especially hospitals.

This may be particularly true with hospitals. A review of a BCBS hospital contract will reveil a unique arrangement that no other managed care provider offers, as far as we can tell: an annuity feature. Participating hospitals are guaranteed a weekly cash flow, whether they see a BCBSTX member patient or not. That is important to a hospital’s bottom line. And that is worth something in contract negotiations.

So, why isn’t the Brownsville ISD engaged with BCBSTX? 

BCBSTX may become a contestant worth considering next time the BISD goes to bid. The variables will include many factors such as broker control of bids/proposals, bias of consultant, Board politics, local health care providers intent to perserve profits, expertise of the BISD insurance committe, and the position of the Moon.

The BISD hired MedReview, LLC  in 2007 to audit the district’s self-funded medical claims as re-priced through the Texas True Choice PPO network.

MedReview wrote, in part, “During the audit period, the Texas True Choice netowrk delivered an average discount of 34.2% on professional claims, 45.5% on facility claims, and 41.0% on all claims. Please note that these calculations are based on all claims and all providers. It is not uncommon for provider networks to inflate their average discounts by excluding some types of providers that historically, give very small discounts, i.e,. childrens hospitals.”

For a complete copy of the MedReview audit, email Riskmanager@sbcglobal.net  

The recent CTI audit report shows HealthSmart PPO discounts  for the period 10/01/07 – 9/30/08 of 38.8% on profiessional claims, 43.3% on facility claims.

                                                                              Texas True Choice                HealthSmart

Professional                                                         34.2%                                                  38.8%

Facility                                                                  45.5%                                                  43.3%

Onc should be careful in evaluating an auditing firm’s evaluation. This is proof of that.

In the aggregate, based on two different audits by two outside “professional” auditing firms, the discount differential appears to be 1% or less.

Editor’s Note: As we have indicated in a prior post, the CTI audit raises more questions than it answers. The recent lawsuit filed by BISD against HealthSmart should put to rest any questions we have. It will also lead to an opening of Pandora’s Box with unintended consequences, in our opinion.

The BISD’s group medical plan costs appear to have spiked when the district transitioned from Texas True Choice PPO to HealthSmart PPO. Why one wonders? Did Texas True Choice have better discounts with area providers?

In researching this we  went back to our reference files in our office. In our continued quest to learn the truth about PPO contracts, we have accumulated a wealth of information.  Our records reveal interesting information we obtained from the Valley Baptist website several years ago.  Posted on one of their web pages was a listing of their managed care (PPO) contracts along with reimbursement rates paid by each PPO network. Texas True Choice and HealthSmart were listed.

Here is what the website page showed:

Texas True Choice: “The fee schedule is based on 140% of the Current Year RBRVS schedule for E&M (90000), Radiology (70000), and Path/Lab (80000) Codes. Surgical (1000-69999) Codes are reimbursed at 165% of the Current Year RBRVS. Anesthesia Codes are reimbursed at 85% of Billed Charges. Immunizations, HCPCS and Codes without an allowable assigned are reimbursed at 75% of billed charges. Note; Covers Mutual of Omaha plans with BISD.”

HealthSmart Preferred Care: “The lesser of: 70% of billed charges or 135% of 2004 St. Anthony’s RBRVS on an aggregate basis. Covered procedures not listed or given a RBRVS value will be reimbursed at 70% of billed charges.”

See copy of Valley Baptist Webpage here –  Valley Baptist Managed Care Contract

Who has the better contract?

Editor’s Note: We would welcome a debate with anyone regarding PPO contracts.

Medical stop loss insurance is a commodity and not a value added product.  Stop loss contracts are by characteristic, inherently at odds with PPO contracts and some argue are equally at odds with ERISA. How can that be? And do insurance agents, brokers and consultants care about potential conflicts and costly lawsuits? Does E&O cover this exposure?

A good attorney could build his practice around these issues.

We will explore this in a subsequent posting soon.