Slippery Slope Insurance Consulting?

By Molly Mulebriar

The City of New Braunfels RFP recently hired an insurance consultant to assist the city in a competitive RFP process for their employee health & welfare plan. Or did they hire two?

It appears the later is true.

If true, why did the city hire two consultants when one would suffice? After all, in this case the city’s consultant is a well known and respected firm with a large following among Texas cities. Paying twice for the same assignment doesn’t seem to make much sense.

An anonymous source wrote this blog – “Below is right  out of the City of New Braunfels RFP put out by Homes Murphy, the city’s consultant.  Notice the fees to be charged. It is clear that all of the PBM’s bidding through this RFP will underwrite these additional expenses into their pricing which of course the city would end up paying for. To think otherwise would be naïve.  Also notice that they expect the city to continue to pay for their services even if the City terminates their services. “

In The City of New Braunfels RFP:

☐ HonestRx will invoice the winning PBM $25,000 after the execution of the contract.

☐ PBM will pay the fee to HonestRx thirty (30) days after the execution of the contract.

☐ PBM will not invoice City of New Braunfels for these fees.

On-Going Commissions

☐ PBM will pay HonestRx a consulting fee of $4.00 PMPM no later than thirty (30) days after each completed contract month to start after the effective date.

☐ Late payments shall bear a late fee of one and one-half percent (1½%) for each thirty (30) days that payment is late.

☐ Commissions will be paid through the contract term and will not terminate if City of New Braunfels decides not to use our services.

☐ PBM will not invoice City of New Braunfels for these fees.

A $4 pmpm commission can add up fast. A broker consultant can earn hundreds of thousands of dollars very quickly, in addition to all the other fees and revenue streams known to exist.

In this case it is reassuring to us the commissions are

 

clearly disclosed for all to see.

That’s transparency. Most broker / consultants hide these fees in collaboration with their PBM partner/s.

We wonder why anyone would agree to pay these fees? It appears to us as a slippery slope fee based insurance consultants should avoid……………….

ABOUT MOLLY MULEBRIAR

Molly Mulebriar is an investigative freelance reporter from Waring, Texas and an infrequent contributor to this blog. Her mission is to expose insurance industry secrets that drive health care costs, eroding the American middle class and bankrupting American business.

Write RiskManager@RiskManagers.us

FROM INSURANCE BROKER

Either Holms Murphy lacks the expertise to analyze PBM proposals/agreements and instead pawns this part off to an “expert” or seeks additional compensation in collaboration with the “expert”, or both?

FROM INSURANCE BROKER

Who wrote the RFP specifications? Why would the city knowingly inflate their costs, especially Rx costs that are bankrupting health plans these days? Or is the Rx consultant that good that the savings outweigh the costs? If that is the case I want to know more about HonestRx.

FROM AN INSURANCE CONSULTANT

HonestRx LOL. You made that up, right?

 

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