The perception that BISD was screwed by HealthSmart over so called provider “pricing discounts” demonstrates common ignorance. This is understandable since the general public has no understanding whatsoever how our health care delivery system is structured.
See previous posting here – Brownsville ISD vs HealthSmart Settlement Terms Revealed
BISD, a political subdivision supported by taxpayers, has historically relied upon secretive managed care contracts as the pricing basis for health care claims. These contracts are between health care providers and third party intermediaries who cut deals in smoke filled rooms. BISD is a third party beneficiary only and will never be able to review these contracts. If they did, they would be aghast. For example, BISD has limited or no ability to audit claims, a basic tool in any normal business transaction.
Entering into these secretive managed care contracts no one ever sees is akin to gifting public monies without any scrutiny at all.
Since both hospitals in town are “in-network” there is little or no incentive to be competitive. Each hospital earns 200-500% of Medicare reimbursement rates from Brownsville taxpayers, year after year. With the infamous annual escalator clause found in these contracts of adhesion, BISD is assured of increasing costs each year.
A review of paid claims for each of the past five years will show multi-million dollar increases per year. Since a group of this size is 100% credible, do these increases mean the group is getting sicker year after year? We know of course that could not be the case here.
Other, smaller districts in the same area have implemented reference based pricing plans with reimbursement rates 100-120% of Medicare allowable. With accrued savings, these smaller districts have been able to keep rates stable while improving benefits at the same time.
BISD, with over 8,000 employees, is the largest employer in town. This 8,000 pound gorilla should walk away from these so called “deep PPO discounts” and instead negotiate direct agreements with willing providers within the community through a reference based pricing model. The savings would be immediate and impressive.
We suspect that will not happen any time soon. Meanwhile the local health care community cash register continues to rack up record sales.
– Anonymous
