The Brownsville Independent School District, the largest employer south of San Antonio, will be changing logos on their self-funded health plan effective January 1, 2024.
Moving from one managed care network to another managed care network
The district will be moving from Blue Cross to United Healthcare as a result of a competitive Request For Proposal process managed by an outside insurance consultant.
Will changing logos save money? We don’t think so.
Moving from one managed care network to another encompassing the same medical providers makes no sense unless its proven one has better (lower) reimbursement rates than the other.
We have experience in working with self-funded plan sponsors in deep South Texas over the past several decades and we have found changing logos does not reduce health care spend.
When you add in the Blue Cross runout claims to paid claims in the first 12 months under United Healthcare we expect no savings to be achieved.
Going back down memory lane, this blog printed a story in 2011 about the BISD’s attempt to figure out the best PPO discounts with the help of out-of-town experts. This was brought about because they were promised the best PPO discounts on the planet but later questioned the claim, even taking the matter to court to get back promised savings.
2011 BLOG ENTRY
The Brownsville Independent School District is in a quandary. Confusion reigns. The courts are involved. Everyone has an opinion, and none are compatible.
PPO “A” had the case first. An independent out-of-state auditing firm was hired (Audit Firm #1) to audit claims and determined that the overall provider PPO discount was 41%.
PPO “B” subsequently gained the account. Another out-of-state independent auditing firm (Audit Firm #2) was retained to audit the claims and determined that the overall provider PPO discount was 37%, a “loss” to the district.
PPO “A” regained the account. After the first year a report was generated by the TPA showing that the overall provider PPO discount was almost 59%. This represents a gain in discounts from when PPO “A” first had the account of +18%.
Local newspapers printed the story. Readers were mislead. In actuality, this district’s claims over a three year period went up over 56% despite increasing “discounts.”
In a three year period, PPO “A” increased their PPO discounts from 41% to almost 59%, a gain of 18%. Yet the district’s health costs increased.
Did PPO providers agree to reduce their fees by 18%? If so, then they gave up almost $13,000,000 in annual fees for this school district. (Audit company #2 estimated that for each 1% PPO discount = $700,000 in savings).
In reviewing information gained from the Texas Open Records Act, a contending PPO guaranteed a minimum of an overall PPO discount of 62% and even put their administration fees at risk should the benchmark of 62% not be reached. They even included out-of-network claims in their guarantee offer. Yet, this carrier was not successful in gaining the account. Using the formula provided by Audit Company #2, this contract would have saved the district over $ 17,000,000 over PPO “B”‘s contract less than two years before.
So here is a summary: PPO “A” had the account first, and saved the district on average 41% in claims. PPO “B” gained the account and saved the district an average of 37% in claims. PPO “A” regains the account and now has an overall PPO discount of almost 59%, up from 41%, for a gain in savings to the district of +18%. Yet a contending PPO network guaranteed their discounts to be 62% or better, and did not gain the business although it was supposed that the savings to the district would exceed $17,000,000.
Kind of confusing, isn’t it? Fuzzy math reigns supreme in South Texas these days. Forget the discounts – they mean nothing.
Managed care is a proven failure. It drives cost up every year yet plan sponsors continue to subscribe to the strategy. Meanwhile a few Texas school districts have exited the managed care world with outstanding success. Just a 20 minute drive away from the BISD are two school districts that did just that. They pay half the rates for better benefits, obtaining care from the same doctors and hospitals as BISD plan members. And they haven’t had a rate increase in years.