Update: Medical Community Gifts Another $2.2 Million to the Brownsville Independent School District

According to recent media reports the Brownsville Independent School District has “saved” another $2.2 million by changing from the HealthSmart PPO network last year to the Texas True Choice PPO network. (Up from $6.8 million reported in October – see previous posting below) If true, the Brownsville medical community should be applauded. 

But has the BISD really “saved” money this year due to the change in PPO networks? Are office visit charges cheaper? Have the two local hospitals reduced their Charge Master pricing? Are prescription drugs cheaper too?

If the Texas True Choice network has significantly better pricing than HealthSmart, what kind of pricing does  Blue Cross have?

Some represent that Blue Cross  must have much better pricing since they command 28% of the Texas market.  They  provide coverage for federal and state employees too. They currently insure San Benito ISD, Los Fresnos ISD, McAllen ISD, PSJA ISD, Weslaco ISD, Mercedes ISD. Supporters point out that Blue Cross gained the business  through a competitive bid process aided by recommendations of independent insurance consultants.

If the move from HealthSmart to Texas True Choice “saved” $9 million,  and if Blue Cross does indeed have superior pricing with the medical community, imagine how much the BISD would save by moving to Blue Cross? $10 million? $15 million? $20 million?

Whoever has the best prices, whether it’s Texas True Choice, HealthSmart, Blue Cross, Humana, Cigna, United HealthCare should have all the business. It is that simple.

The truth is elusive. PPO contracts are as well guarded as all the gold at Ft. Knox. The truth is there to find – time to find it.

Original post below:

Medical Community Gifts $6.8 Million To Brownsville Independent School District

Good news for Brownsville taxpayers! It appears that the local medical community has “gifted” $6.8 million to the Brownsville Independent School District through lower medical fees. Or did they?

In the October 17 issue of the Brownsville Herald, it was reported that MAA officials told the district’s insurance committee to expect a “savings of $6.8 million” this year over last year.  MAA acquired the BISD account last year. The prior third party administrator was HealthSmart.

Does this sound too good to be true? Why would medical care providers lower their fees and give up $6.8 million in a year’s time? Are area physicians driving volkswagons these days? Are hospital administrators moving to low rent apartments? Most people have come to understand that medical prices are constantly increasing, not decreasing.

Or, could it be that the conclusion is based on inaccuracies or flawed methodologies upon which the projection was performed? Or, is BISD simply have a good year? Or a combination of these possibilities?

One of the biggest flaws in a PPO network evaluation process is that many use an evaluation model that are based on historical data (usually 12-36 months). They use a retrospective review of network pricing, factoring in those savings levels onto future cost projections. A network evaluation based on retrospective information, with no adjustments made for significant contract or rate changes, becomes irrelevant and is not a valid indicator of what a group like the BISD will actually save by moving to another network. For example, when consumers prepare to buy a new television, do they make their buying decision by looking at the price for each television from 2 years ago? Of course not.

PPO contracts contain “escalator” clauses that give medical providers a “raise” every twelve months. So every month, some 1/12th of all providers get a pay raise, a never ending cycle.

Neither HealthSmart PPO or Texas True Choice have a predominant market share over the other in the lower Rio Grande Valley. Both of these “rental” networks have pretty much the same providers on their PPO listing. The overall aggregate pricing differential, in our opinion, is just about 1%.  We have developed credible data that we believe proves this.

In our opinion there is no compelling argument that would conclude that medical providers in our community would agree to significantly better pricing with one rental network over another.

Only the medical community knows the truth, and they are keeping quiet (for now).

We look forward to learning the truth. The Brownsville Independent School District VS HealthSmart lawsuit will shine a strong light on the mysterious world of PPO “discounts.”

Editor’s Note: “How do we know we are doing much better this year than last year?” asked Don Pedro. “What was this year is last year plus or minus this year’s change,” replied the expert. “If change is the only constant why do we need to measure it? You dont know if something is better if you didnt know how to measure what it was before” countered Don Pedro. And out he went.

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