Risk Managers

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.

http://m.brownsvilleherald.com/brownsville/db_/contentdetail.htm;jsessionid=0BE3097B005AD7B482870F17E64D49D8?contentguid=8EbyQbk3&full=true#display

Editor’s Note: This lawsuit is going to run an interesting course. Will McAllen ISD follow suit?

Six year investigatiion leads to indictments. Local El Paso third party administrator target of probe – http://www.elpasotimes.com/news/ci_15979435

September 2nd, 2010 1:24 pm CT

Austin’s Seton Medical Center is one of the most profitable hospitals in the country, according to a new list from Forbes magazine.

Seton Medical Center ranks fifth on the list, based on an operating margin of 34 percent. Net patient revenue for the 405-bed hospital is $432 million, according to Forbes.

Seton Medical Center, Austin’s largest hospital, is part of the Austin-based Seton Family of Hospitals, whose nonprofit parent is St. Louis-based Ascension Health Inc.

The Forbes list, done by the American Hospital Directory, is based on operating income figures that hospitals must report to the federal Medicare program each year. It found that 24 hospitals in the country with more than 200 beds each make an operating margin at least 25 percent.

The most profitable hospital in the country, Flowers Medical Center in Dothan, Ala., recorded an operating margin of 53 percent, according to Forbes.

Five other Texas hospitals appeared on the Forbes list of the 25 most profitable hospitals: Del Sol Medical Center in El Paso, No. 2 (45 percent operating margin); Conroe Regional Medical Center, No. 16 (28 percent), Medical Center of Plano, No. 17 (28 percent); Medical City Hospital in Dallas, No. 19 (26 percent); and Las Palmas Medical Center in El Paso, No. 23 (25 percent).

“Some say profitable hospitals may be using local monopoly to overcharge insurers and patients,” the magazine reported. “Others see the high profits simply as [a] sign of efficiency and good quality.”

Conference of Methodist Churches of the Southwest decided yesterday to move their group health plan from a traditional PPO model to a cost-plus program.

This is another San Antonio employer who has joined the Cost-Plus Revolution. Bill Miller Bar B Q of San Antonio was the first employer in Texas to transition their self-funded group medical plan to a cost-plus platform – Bill Miller Forbes.

The list of prominent San Antonio employers who have  followed the Bill Miller BBQ example is impressive, and growing.

Another large San Antonio employer will be joining the Cost-Plus Revelution on January 1, 2011.

 Editor’s Note: We like this approach and are encouraged that Blue Cross likes it too. Next step is to convert their PPO contracts in a similar fashion. With upcoming requirement under Obamacare, full PPO contract terms must be publicly disclosed, thus ending the PPO world as we know it today. This is a good thing (some change is good).