The Brownsville Independent School District, the largest employer south of San Antonio with over 7,000 employees, has decided to switch administration of their self-funded health plan from Mutual Assurance Administrators to Blue Cross & Blue Shield of Texas.
We are not surprised – http://blog.riskmanagers.us/?p=6216
There has been some controversy regarding purported PPO discounts through the BISD program for several years. Currently the BISD is in a lawsuit against the HealthSmart PPO network for alledged failure to deliver promised “savings” to the BISD health plan.
A switch from HealthSmart to the Texas True Choice PPO network was purported to have saved the district over $9,000,000 in provider discounts, however that has now come under some scrutiny. Costs under the TTC plan have gone up, not down, with projections to top over $55 million for the year.
The current BISD insurance consultant says that BCBS of Texas has superior discounts and will save the district millions of dollars. During a school board meeting it was represented that projected costs to the district under BCBS of Texas for the upcoming year will be approximately $45 million, or about $10 million less than what was assumed to be the cost should the district had continued with the TTC plan.
Using logic based on representations made by various sources through mainstream media and supported by local blogs, if the cost reduced $9 million going from HealthSmart to Texas True Choice, but now the cost is expected to drop $10 million going from Texas True Choice to Blue Cross, the logical conclusion is that the Blue Cross discounts are about $20 million less than what HealthSmart’s were. If the HealthSmart annual cost in it’s last year at BISD was about $42 million as has been represented from some quarters, then under BCBS the annual spend should drop to around $22 million in total. ($9 million TTC savings plus $10 million BCBS savings = $19 million savings applied to HealthSmart cost of $42 million = net annual cost to BISD of $23 million). A $23 million spend represents more than a 50% reduction in costs going from HealthSmart to Texas True Choice to Blue Cross. THEREFORE, BLUE CROSS MUST HAVE PPO DISCOUNTS THAT ARE 50% OR MORE BETTER THAN HEALTHSMART PPO DISCOUNTS.
A group the size of the BISD is 100% credible.
But wait a minute! If projected costs for the next plan year under Blue Cross is $45 million, where is the missing $22 million in savings? The costs under Blue Cross should be only $23 million, not $ 45 million! Somewhere, somehow there is $22 million missing. Maybe it’s over at the Brownsville Navigation District.
Of course, logic can be twisted to one’s own persuasion and point-of-view. We hope that the exercise in logic demonstated above will cause some pause in the reader’s mind and strike a chord deep within to sustain a burning drive to learn the truth about PPO discounts.
The current BISD insurance consultant is the same consulting firm that recommended HealthSmart PPO several years ago.
The BISD approved continuing with ING as the stop loss carrier. In Plan Year 2009 -2010the commissions on the ING stop loss policy increased 50% as recommended by the insurance consultant on hire at that time – Stop Loss Contract
Editor’s Note: Selling group health insurance these days has become centered around who has the best and lowest provider pricing. But how do you determine who has the best pricing? Blue Cross will tell you they have the best, so will Aetna, Humana, Cigna and others such as HealthSmart and Texas True Choice. Yet the payer (consumer) cannot see any PPO contracts (proprietary, cant tell you or would have to kill you), and more importantly neither or any of the above mentioned providers have access to their competitior’s contracts either. So, a logical conclusion is “Everybody must be Lying About PPO Discounts. ” But, we know the truth, don’t we Don Pedro?