Amfels Goes Cost-Plus – Will Brownsville Independent School District Be Next?

Amfels, the second largest employer in Brownsville, Texas, has decided to change their current PPO group health plan to a Cost Plus plan. Estimated savings are expected to be significant.

An analysis of an in-patient hospital claim from a local Brownsville hospital illustrates the potential savings to Amfels. Total billed charges were $118,143.43. This claim was repriced by a PPO network down to $76,793.23, for a “savings” of $41,350.20 or 35% off billed charges. We believe this is the same rental PPO network currently utilized by the Brownsville Independent School District.

Using a Cost Plus 12% or Medicare +20%, whichever is more, this claim was audited and repriced down to Medicare +20%, or $24,336.76, which represents +79% off billed charges.  Had a Cost Plus Plan been in effect at Amfels just 60 days ago, their self-funded group medical plan would have saved over $40,000 on just one claim.

This is an actual claim, incurred at a local Brownsville, Texas hospital, less than 60 days ago.  See audit here – Cost Plus Elap Audited claim.

Amfels is not the first Valley employer to change from a PPO plan to Cost Plus. Another large Brownsville based employer with over 500 employees embraced the concept over a year ago. They have realized significant savings.

Several Valley independent school districts have also made the decision to do away with their PPO plan and implement a Cost Plus plan later this year. An analysis of past claims for these groups shows estimated savings in the millions of dollars. With the state budgetary crisis looming, these districts are taking a proactive approach to cutting their health care expenses while maintaining and even improving benefits.

Cost Plus is not a new method of paying hospital claims. Medicare is utilizing a cost plus approach with select hospitals across the country –

Editor’s Note: This blog has written about PPO network versus Cost Plus for several years. Many of our clients who have  elected to implement a cost plus plan have achieved significant plan savings as a result – See Bill Miller Forbes. The first political subdivision in Texas to adopt the concept was San Patricio County  – Health Care Strategies for Texas Political Subdivisions. The Brownsville Independent School District, currently in turmoil over truth and fiction regarding plan “savings” and which PPO has the best “discounts” should consider a Cost Plus approach. This Brownsville taxpayer whose local taxes have increased over 100% in the past ten years, would welcome any effort by the Brownsville Independent School District to cut unnecessary expenditures. A Cost Plus approach may be a very good step in that direction.