“The Texas Workers Compensation Commission “found that hospital’s billed charges were basically meaningless in the current managed care environment.”

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            Molly Mulebriar, forensic auditor and ace  investigative reporterette, obtains  actual PPO contract that confirms that  consumers do not always fully benefit from PPO “discounts.”

Are 100% of PPO discounts passed on to the consumer? In this case, the answer is no.

UPDATE: WE HAVE RECEIVED EMAILS FROM ALL OVER THE COUNTRY ON THIS POSTING, FROM ATTORNEYS, TPA’S AND PLAN SPONSORS. ONE EMAIL HINTS AT A CLASS ACTION LAWSUIT IN THE MAKING BY A PROMINENT LAW FIRM IN ATLANTA. MULEBRIAR IS BONING UP ON HER INTERROGATORY SKILLS.

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               An outbreak of DISCOUNT ENVY has been detected at numerous managing general underwriters (MGUs) and stop-loss insurance carriers across the country.  ARE YOU INFECTED?

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   “These are turbulent times for networks, and it will be the task of this group to share recent experiences with PPOs (both good and bad) and discuss other methods of claims reimbursement such as cost plus pricing methodologies. “

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There is no doubt that Cost Plus Provider Reimbursement saves on health care costs when compared to traditional PPO negotiated pricing. Empirical data shows that Cost Plus 12% margin saves on average 43% or more, above and beyond traditional PPO discounts.

Whereas a billed charge of $100,000 to a PPO network reduces to $50,000, Cost Plus 12% equates to $20,000 or so as a matter of routine. 

Over 80 Texas employers, to date, have adopted the Cost Plus concept, with significant results to their bottom line.

The Cost Plus methodology is composed of two distinct components; (1). Claim process and (2). Liability exposure.

The claim process includes claim audits, claim re-pricing and provider appeals. Claim audits and re-pricing occur 100% of the time and there is a cost associated with each function. Provider appeals, on average, occur only 7% of the time and is performed by outside independent claim professionals at a cost.

The second component of a cost plus program deals with liabilty exposure, i.e, provider balance billing activities and provider generated lawsuits. Balance billing occurs 100% of the time, while lawsuits almost never happen, i.e, 0% of the time. There is a cost associated with liability exposures.

So, what are the costs associated with the management and liability cover of a self-funded  Cost Plus employee welfare plan?

There is the expense of an audit firm. There is the expense of an independent bill review firm. Liabilility issues must involve a law firm. Routine and expected expenses can be budgeted for in fees to be charged, while more expensive and actual lawsuits can be indemnified through a carefully designed insurance policy. Additional revenue demands by various components of a self-funded health plan, to include the third party administrator, require that all must be fairly compensated for  work performed.

Is the cost of administering and indemnifying a Cost Plus employer sponsored plan based on competitive market pressures? The answer, as of this writing, is probably no. However, that is soon to change. More players are paying attention. With competition, costs will go down. It is an American tradition.

Email from a Third Party Administrator:

A strange tale of a Texas public school district’s experience with a Texas based third party administrator makes for interesting reading – Mark Strange, ASO & McAllen ISD

The Brownsville Independent School District is struggling with understanding health care financing. Poor record keeping, inconsistancies between consultant recommendations, contracts and billing statements have raised questions among local taxpayers.

Once told that the BISD “saved” $9,000,000 moving from the HealthSmart PPO network to the Texas True Choice PPO network, it now appears that the purported savings are questionable.

It is our opinion that there is little if any difference in pricing between the two networks. We ran 100% of claims for one large Valley based employer through both network’s contracts. There was less than a 1% pricing differential.  That is pretty conclusive evidence, in our opinion, that neither network has an advantage over the other.

There appears to be little accountability within the BISD self-funded health plan. Records are incomplete, and inconsistant. In 2009 we brought this up to the attention of the BISD Superintendent of Schools with documentation. We showed the differences between the BISD consultant’s recommendations versus actual contracts signed by school officials. We showed the differences between contracts and billing statements. We questioned hundreds of thousands of dollars of apparent descrepancies.

To date, and to the best of our knowledge, these questions remain unanswered by the BISD administration.

Until now…………………..The BISD Board of Trustees has hired an expert forensic auditor to review the BISD self-funded program. We look foward to answers to some of our previously raised questions.

Editor’s Note: Why is BISD still paying run-off claim administration fees? Where is the $2.43 Rx rebate credit that were to be paid to MAA and then credited against future payments made by BISD to MAA? Why did stop loss insurance commissions increase 50% effective 10/01/2009? Why was there a $371,349.36 difference between total fixed cost presented on the consultant’s spreadsheet given to the BISD Board of Trustees versus contracted fixed costs? What fees make up the MAA global administration fee? Why do the totals appear to differ when adding up the various fees? Why does the MAA contract appear to list some of the components of the fees but may omit other components of the fees? We asked BISD to review our findings for accuracy in 2009. We are still waiting for answers to these questions and more.

AUSTIN — A district court judge ruled Monday the controversial audit of the work by Lubbock’s former health care provider should be open to the public, after attorneys on each side argued over the public’s right to know.

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With future opportunities for health insurance agents bleak,  many are getting out of the business entirely, or seeking new opportunities within the insurance industry. A move to personal lines , property casualty may be an option for many. Want to buy an existing Allstate insurance agency? All you need is $50,000 to start with.

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Hospital billing practices are continuing to be challenged by payers. More so now than at any time in the past. But, hospitals are preparing  for the challenges to come – http://www.zerobasepricing.com/?gclid=CMjf09bGhqoCFQ5Y7AodeGgR0w

                 Self-funded employer group seeks third party administrator to process clams for a fee, either a per-claim fee  or a PEPM fee. TPA to recieve no additional income from subcontractors such as PPO networks or PBM (pharmacy benefit manager). TPA must be willing to work with any Plan subcontractor the employer selects.

If interested, contact Riskmanager@sbcglobal.net

     Last year we worked on behalf of several political subdivisions throughout Texas in assisting them in the competitive procurement of insurance cover. Ochs Inc. found out about these RFP’s and submitted proposals. We had never heard of them before. In each case, Ochs Inc. provide the most competitive and comprehensive cover and was awarded the business.

We received this email this morning:

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Molly Mulebriar reports that the Texas Municipal League  (TML) has submitted a proposal for managing the Brownsville Independent School District’s self-funded medical program. TML works with various political subdivisions throughout the state such as the City of Brownsville.

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                       The Public Employee Benefits Alliance (PEBA) representing many Texas political subdivisions, advises members that medical care costs are significantly less expensive through participating providers located in Mexico, Costa Rica, Canada, India and other countries. Need a hip replacement? Go to CIMI Hospital in San Jose, Costa Rica – JCI accredited hospital, English speaking staff, U.S. trained doctors only 2.5 hours by air from Houston.

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              MRI for $295, includes reading. CAT Scans for $200-$400. Primary Care office visits for $35. Over +500Prescription drugs for $4 for a 30 day supply. In-patient hospital stay @ $600 – $1,000 per day. Global pricing for hysterectomy – $10,000 (includes hospital, surgeon, assistant surgeon, anesthesiologist). Heart bypass surgery total global fee of $18,000. Normal delivery, two day stay, global fee of $2,200.

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      The Brownsville Independent School District is currently seeking competitive proposals for the administration of their self-funded health insurance program. PPO access and “discounts” will play an important role in the process of selecting a qualified vendor.

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Several years ago we were engaged by a law firm to review and analyze recommendations made by an independent insurance consultant to a South Texas school district.

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            Since the 1980’s, seasoned health insurance agents have developed ingenious methods to milk their clients for undisclosed fees and commissions.

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