The Brownsville Independent School District’s external audit of their self-funded health plan is now part of the public record. The audit was a “review and verification of BISD Insurance Consultant Recommendation of the medical plan proposals for 2009-2010 and HealthSmart’s rebuttal of said recommendations.”
A “he said, she said” it appears, is now a a “he said, she mislead”.
In reveiwing PPO savings, many focus on “discounts” as the basis of determinining “savings.” Department Store “A” sells the exact same freezer as Department Store “B”. Department Store “A” advertises a 50% off sale, while Store “B” advertises 40% off on the same freezer. But % off what? Store “A” retails the freezer at $500 while Store “B” retails the same freezer at $400.
Surely the sale at Store “A” is better than at Store “B”!
Such are the flaws utilized by some in evaluating PPO discounts.
We found this audit report to be a fascinating reading. A few exerpts include:
“In the course of our claim administration audit, CTI learned that the claim negotiation expense charged by HealthSmart to BISD also included fees for addtional discounts it negotiated with its own network providers………………………CTI has never in its experience seen where a TPA will negotiate additional discounts on in-network provider claims…………………it is not typical for the TPA to attempt to negotiate an additional discount since it would violate that provider’s discount agreement with the PPO………………….” Page 8 of CTI Report
“Again, CTI has not previously in its audit experience seen a situation where a TPA negotiates additional discounts with in-network providers on a regular basis and pays itself an additional fee for doing so……………” Page 9 of CTI Report
“In CTI’s opinion the unusual nature and material amount of additional fees associated with HealthSmart Benefit Solution’s negotiations with providers contracted with by its own affiliate PPO, HealthSmart Preferred Care, is worth of further analysis.”
You may review the Executive Summar of the CTI report here: BISD Audit – Executive Summary
We are not posting the full report here. The full report may be obtained from the BISD under the Open Record Act.
Editor’s Note: This audit raises more questions than answers. Comparing PPO plan savings is impossible without reviewing specific hospital contracts and charge masters, something the CTI report is missing it seems.
We have the BISD audit report performed prior to the HealthSmart contract. A comparison to the CTI report should prove interesting.