GM&A of San Angelo, Texas, for the past ten years has been saving their clients millions of dollars in health care costs. They have done this by assisting employers in partnering with medical care providers on a fee basis that is fair and reasonable, rather than relying on PPO networks and insurance companies to negotiate “secret and confidential discounts” on their behalf.
For more information on GM&A, go to www.gma-usa.com. The Tyler Independent School District success story is worth reading.
Does not take long for word to spread within the insurance industry it seems. A major national insurance brokerage is questioning the concept of cost-plus provider reimbursement and is warning their clients and prospective clients against employing the strategy. One would wonder why?
Could it be that undisclosed revenue streams to the brokerage, known to be paid by some insurance companies, and never disclosed to the client, could be jeopardized? Could confidential bonus arrangements with brokers that are applied to each broker’s total book of business be affected?
For the reader’s information, a bonus arrangement on a broker’s total book of business is one way to hide compensation. So, when you ask the carrier if Agent Brown is receiving any kind of bonus on your group, they can honestly answer “no” since the bonus is pooled amongst all the broker’s groups and is not directly tied to your account.
There are other methods to “milk” the client too. For example, we have an email from a major insurance company to a broker outlining undisclosed compensation payable through the carrier’s pharmacy benefit manager. Here was the math outlined in the email: 254 employees X $9.34 Rx Rebate Amount) X 12 months = $28,468 in undisclosed compensation above and beyond the $15,240 disclosed compensation ($5 pepm fee) and the 15% of stop loss commission. Look for more information on this in a future posting.
Under a cost-plus arrangement, all monies are totally accounted for and fully transparent. That is a good thing.
If your agent recommends ABC Insurance Company, ask for a complete copy of his brokerage/agent agreement with ABC.
Several of our agents are using this as a marketing opportunity to open new doors. In fact according to Eric Hirschler, at USI Southwest Brokers, “The Cost Plus program has given me and my firm a significant advantage in opening prospective CPO doors that were previously closed. I have added two new clients in excess of 2,000 lives to my portfolio as a result of the Cost Plus program. Bottom line is that employers are fed up with the status quo and are looking for creative cost saving ideas.” We are hearing more and more positive feed back like Eric’s story, and in conjunction with the present political climate, the CPO program is just what employers are looking for.
To avoid having to fight the PPO contact in place for the hospitals and surgery centers, GPA is now working with a physician only PPO, that is a national PPO and is a perfect match with the other PPO’s our clients are currently using. For hospitals and outpatient surgical centers, the employees get to pick any of these providers in the United States because we will audit every single claim using the cost + method. I am not aware of any PPO’s that can say they have 100% of all hospitals and outpatient centers in America , but our cost plus option can.
Stay tuned for more positive results and we hope GPA can help you successfully write new business and maintain your current block. For any questions please contact Matt McCuen at 972 -744-2540 or Jeff McPeters at 972 744-2447.
Editor’s Note: We have placed two groups with GPA using the cost plus strategy. One is Bill Miller Bar B Q and the other is San Patricio County, a political subdivision near Corpus Christi. Both groups have experienced significant cost reductions using this approach. To our knowledge, San Patricio County is the only political subdivision in Texas to implement this scheme.
We are in disagreement, to some extent, on using a physician only PPO since we have found that physicians prefer to work directly with the client rather than through a middle party, i.e, a PPO vendor. And, we have empirical data on the two groups mentioned above that 115% of RBRVS reduces overall provider claims by about 20% over the PPO discounts.
