According to the RFP recently issued by the Brownsville Independent School District for group health insurance third party administrator, the district will select an agent through a formal Request For Qualification process. (See Section 5.1 of the RFP) However, it is unclear when the RFQ process will be initiated.

The commissions recommended by the district to be earned by the agent are clearly stated in the RFP: $1.75 per employee per month plus 15% commission on the stop loss insurance.

This could be a pay cut for some agents. Many are used to earning commissions and fees from the pharmacy benefit manager, PPO network, disease management program, and other revenue streams such as a percentage of the PPO discounts and “reinsurance placement fees”, etc. A group the size of BISD can earn an agent substantial commissions.

Of course, the BISD recommended commission schedule are recommendations only. Total estimated commissions and fees based on the district’s suggestion comes in about $350,000 per year.

Brownsville ISD is an anomaly. Most large employer groups do not employ an insurance agent or broker anymore. Instead the vast majority of employers these days rely on expert licensed consultants paid on a fee basis. To employ both an agent/broker and a consultant at the same time makes no sense. Whose on first? Whose on Second?

Cameron County and the City of Brownsville do not employ an insurance agent or broker. Neither do most of the other school districts located in deep South Texas.

The problem facing agents and brokers is that they are hard put to explain and justify just what they do to earn commissions on group health plans these days. The good news for many insurance agents is that some employers really don’t know what their agent is earning off their account. What may be represented as the commissions to be paid, may be understated. Bonus’s, overrides and other compensation streams may never be disclosed.

It is apparent that BISD sees the need to continue to pay an insurance agent. A formal Request for Qualifications will bring forth many interested local insurance agents vying for the commission dollars placed before them by the taxpayers.

It will be interesting to see what services will be required of the successful insurance agent/broker ultimately hired by the district. Perhaps the benchmark should be based on the services provided currently with the fees/commisions to be paid directly proportional to the services recieved. No service, no pay is one model to consider.

Editor’s Note: Don Pedro opines “maybe the successful agent will start a $50,000 BISD scholarship fund for talented students excelling in business courses, especially accounting.”

Brownsville Independent School District is currently seeking competitive proposals for third party administration of their self-funded health plan. Proposals are due July 12, 2011.

A careful review of the proposal specifications will be entertaining to many in the business. We suspect Homer G. Flansworth, famed author of “How To Discourage Vendors From Bidding” may somehow have co-authored this “work-in-progress.”

This RFP will be an interesting study for future reference.

Editor’s Note: Famed private investigator Molly Mulebriar is working undercover at the BISD administration building disguised as a computer. We look forward to her report.

    Molly Mulebriar hit a home run again in her continuing undercover work and life long committment to expose the truth about hidden health care revenue streams that consumers unknowingly end up paying for in ever increasing health insurance costs.

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          Molly Mulebriar reports that a prominent South Texas insurance consultant has requested the Texas Department of Insurance to suspend his consulting license. Mulebriar reports that the license impedes successful endeavors to garnish business with political subdivisions in deep South Texas.

Unlicensed insurance consultants have recently been hired by several political subdivisions in South Texas over licensed consultants vying for the same business. At Willis ISD for example, during a recent board meeting one of the trustees stated that a consulting license is not needed and that to limit applicants to only those that have a consulting license restricts the process of selecting a consultant.

Do doctors really need a license these days, or attorneys, or CPA’s , or hunters and fishing enthusiasts? How about Southwest Airline pilots? To require a license to fly the plane would simply limit the airline’s pool of talent from prospective job seekers.  To require doctors to have a license only limits the talent pool and we all know there is a serious shortage of doctors these days. Doing away with license requirements makes economic sense and may help with the current unemployment problem in this country.

Mulebriar reports that there may be one major problem with working as an insurance consultant without a license in Texas – E&O coverage does not cover illegal activity. If a unlicensed consultant makes a poor recommendation and is sued, the E&O cover may deny coverage since the “consultant” was acting illegally without the proper licenseing.

When asked, the deflated and soon to be unlicensed insurance consultant responded “It’s ok, Im going to buy my E&O from the same offshore company a local hospital bought from several years ago for wind and storm damange.”

              Molly Mulebriar, private investigator and forensic auditor, reports that a Texas school district has recently hired an insurance consultant to advise the district on their self-funded health insurance program.

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“The Texas Life and Health Counselors License that WISD required is not necessary, Broussard said, and only excluded competent firms from applying since only 524 firms statewide have the license. ”

“However, Mark Goulet, the board attorney’s with Walsh, Anderson, Brown, Gallegos and Green PC, out of Austin, said the license is required, although it is not very common to have in the state.”

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    “The California Vs Multiplan and Sutter Hospitals law suit is an unsettling yet long overdue acknowledgement of the unseemly relationship between hospitals and PPO networks set up to intentionally overcharge third party payers and their clients”………………………….”The no-audit language in PPO contracts is as ridiculous as it is grossly unfair and illegal and puts all fiduciaries associated with a health plan in harms way of severe punitive penalties”……..

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         Molly Mulebriar informs us that the Cost Plus Revolution enjoys continued growth  among employer groups in San Antonio.  She learned today that another  large San Antonio  employer will be going with the Cost Plus program effective January 1, 2012.

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In January 2011, Aetna announced the first health insurance linked securities deal, transferring medical benefits risks to capital market investors.

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