Risk Managers

BISD Audit – Molly Mulbriar Weighs In

admin — Thu, 09 Sep 2010 15:24:07 +0000

Molly Mulebriar, private investagator, weighs in on the BISD audit story:

I have both the MedReview LLC audit done in 2007 and the CTI audit done this year. I dont agree with either one to the extent that I dont believe their methodology is bullet proof. Both based their findings off “discounts” and neither one had the ability to review provider specific contracts for compative purposes, nor did either firm have the ability to compare each hospital’s charge master. In my opinion, to compare PPO savings one has to have both the chargemasters and the actual contracts.

Then there are variables such as changing charge masters. Every 60 days hospitals review their chargemasters and make changes as they deem necessary. So those numbers are a moving target. Also, hospitals use formulas applied to their charge masters that are payer specific. Hospitals will deny this, but they are lying. I purchsed a book that was written just for hospital administrators and there is a section within the book that describes how a hospital can actually use different billed charges off the same charge master, for different payers. So, when hospitals say that it would be illegal for them to charge one payer more than another, that may be true. But what they are doing is using the same exact charge master, i.e. same prices for all payers, but applying a formula to each payer which effectively changes the billed charges by payer. I can document all of this and would be prepared to do so at a School Board Meeting, deposition, etc.

So, when one audit says the average overall aggregate PPO savings for Texas True Choice is 41% (as the MedReview audit shows) and another audit says the average overall aggregate PPO savings for HealthSmart is about the same (as the CTI audit shows), one has to ask (1). Was the chargemaster pricing taken into account over both time frames (2). Were 100% of claims repriced for the audit (3). Were contract outliers taken into account (4). Were each provider contract specific to each taken into account (5). Were provider re-pricing fees taken into account (6). Did the audit take into account escalater clauses inherent in all PPO contracts (7). Was a Favored Nations clause in any of the PPO contracts with any of the hospitals.

This is just a short answer to my basic thesis: You cant adequately compare PPO savings using the methodology employed by either auding firm, in my opinion.

So the question is “How does TTC and HS compare in savings to the BISD?” If you didnt know better, and only relied on both the MedReview and CTI audits, you would conclude that the TTC and HS “discounts” are just about the same. In the aggregate, both are within 1% of each other.

Then, of course, I point to the claim repricing exercise I had X do on the XXXXXXXXX claims at XXXXXXXXX. last year. We sent them a year’s worth of claims to reprice under their contract. The difference between TTC and HS was about 1%.

So the case could be made that both networks are about the same. And, I think that if a proper audit could be done using the methodolgy I prefer, the outcome would be about the same too. I say this because providers these days dont have to give one payer a much better deal than another. Dr. Sorenson, a well known expert in this field, came to the same conclusion in his studies (I have his report in my files).

Politically speaking, TTC beats HS all day long. The public perception now is against HS and for many perception is reality. Such is the power of a lawsuit, irregardless of it’s merits.

Hope this makes sense. Are we still on for Friday night?

Can Blue Cross Save Brownsville Independent School District Money?

admin — Wed, 08 Sep 2010 22:46:43 +0000

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.

BISD MedReview, LLC Audit 2007 Compared to CTI Audit

admin — Wed, 08 Sep 2010 20:04:45 +0000

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.

Brownsville ISD Takes HealthSmart to Court (Cont.)

admin — Wed, 08 Sep 2010 18:27:18 +0000

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

admin — Wed, 08 Sep 2010 15:16:08 +0000

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.

Brownsville ISD Takes HealthSmart to Court Over Health Insurance Costs

admin — Mon, 06 Sep 2010 20:55:53 +0000

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?

El Paso Indictments Handed Down – Feds Claim Public Corruption

admin — Fri, 03 Sep 2010 15:56:16 +0000

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

Forbes: Austin’s Seton Medical Center one of most profitable hospitals in U.S.

admin — Fri, 03 Sep 2010 15:26:42 +0000

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.”

San Antonio Employer Elects Cost-Plus To Save Money

admin — Fri, 03 Sep 2010 15:17:22 +0000

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.

Hospital profit report ranks some North Texas centers high, some low; findings draw challenges

admin — Fri, 03 Sep 2010 15:02:51 +0000

12:00 AM CDT on Thursday, September 2, 2010
By JASON ROBERSON / The Dallas Morning News
jroberson@dallasnews.com

North Texas is home to hospitals with the nation’s best and worst operating margins.

Medical Center Plano and Medical City Dallas Hospital, both owned by Nashville-based Hospital Corporation of America, have profit margins between 26 and 28 percent. They rank among the top 25 in the nation, according to an American Hospital Directory report that Forbes magazine published this week.

However, John Peter Smith Hospital in Fort Worth has the nation’s third-worst profit margin at minus 204 percent. Parkland Memorial Hospital in Dallas ranks 14th-worst with minus 74 percent. Both are county hospitals.

“A lot of this comes down to how they do the analysis,” said John Dragovits, executive vice president at Parkland.

After crunching the data from Forbes’ list, Dragovits realized that the hospital’s tax revenue – more than $400 million annually – had been omitted from the calculations.

A hospital’s operating margin is its income divided by revenue, expressed as a percentage. It’s an important measuring stick for ranking efficiency among competitors.

A higher operating margin tends to indicate a lower cost of running a hospital. It says the hospital can deliver health care to patients more cheaply than competitors can and make money.

But in an era of rising health care costs and assigning blame, being recognized for high operating profit margin is not necessarily a compliment.

Some top-ranking hospitals took issue with the report.

“We’re not clear how the numbers were derived, but our margin is significantly lower than what is stated in Forbes,” said Mark Whitley, a senior vice president of the North Texas division for Hospital Corporation of America.

“We are proud that the Medical Center of Plano and Med City Dallas Hospital, as well as our other HCA North Texas hospitals, have strong clinical and administrative teams who run great hospitals.”

Flowers Hospital in Dothan, Ala., No. 1 on the list with an operating margin of 53 percent, is disputing its ranking, according to the Dothan Eagle. The hospital says that its revenue was misreported and that the actual operating margin is 12 percent.

Hospitals with stronger operating margins do not necessarily provide better care.

In a U.S. Department of Health and Human Services measurement of hospital death rates among heart-failure patients, hospitals with lower operating margins, such as Parkland and JPS, were in line with the national average, as were Medical City Dallas and Medical Center Plano, with higher margins.

Most of the hospitals with the worst operating margins are county hospitals in states with high percentages of uninsured residents. Texas, which leads the nation with a 25 percent uninsured rate, has six hospitals on the list.