McAllen ISD Enters Into Direct Contracts in Addition To BCBS Network


By Bill Rusteberg

The McAllen Independent School District’s (MISD) self-funded health plan is administered by Blue Cross & Blue Shield (BCBS). BCBS traditionally utilizes their own proprietary managed care network and typically requires their network access exclusively as part of their bundled ASO services.

In the case of the McAllen Independent School District this does not appear to be so. The MISD has successfully entered into direct provider contracts since 2008. As recent as August 2015 MISD has awarded direct contracts with additional area medical care givers in an apparent continuing effort to build a direct employer network of willing providers.

The intent to build a network of directly contracted providers, in lieu of relying on secretive managed care contracts through BCBS and other purveyors of managed care networks, must be to achieve lower rates.

Since BCBS and most other third party intermediaries active in managing proprietary managed care networks, i.e, PPO’s, refuse to disclose contract terms to anyone, one would wonder if the MISD direct contracts are superior to those in place through BCBS. Of course we suspect local providers know the truth but are prohibited from disclosing through gag orders contained within the contracts they enter with their managed care partners.

It would be interesting to learn upon what basis the two network reimbursement levels are compared without actually reviewing contracts side-by-side.

McAllen ISD has a history of utilizing expert insurance consultants in reviewing and recommending strategies for the district’s self-funded employee health plan. It is apparent from our vantage point the district’s consultants have found an avenue to allow MISD to selectively circumvent the BCBS network by directly contracting with area providers while maintaining access to the BCBS network at the same time.

In a recent Request for Proposals three hundred ninety-nine facilities were invited to submit qualification statements. Five (5) facilities responded. As a result the McAllen Independent School District awarded direct contracts to the following providers on August 24, 2015:

Columbia Rio Grande Healthcare LP

Rio Grande Regional Hospital ‐ McAllen, TX

Mission Urgent Care ‐ Mission, TX

RGV Preventative Care Inc dba Preventative Care Institute (PCI) ‐ McAllen, TX

Texas Health Care Imaging ‐ Weslaco, TX


Request for Qualifications No. 2015-042 – Employer Direct Medical PPO Network – THE AGREEMENT made and entered by and between the McALLEN INDEPENDENT SCHOOL DISTRICT (hereinafter referred to as “District”), and…………..


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I saw this last year for the first time.   Large (3500 EEs) NM employer (Intrepid Mines) started doing direct agreements with regional surgery centers and specialty facilities. They told BCBS they wanted BCBS to administer their direct.  BCBS told them they would/could not.  They then told BCBS either administer them or we go to a TPA that will. BCBS loaded and is administering.

From Insurance Broker

It looks like Blue Cross is acting more like a TPA than a BUCA. Blue Cross was smart in allowing the district to enter into direct agreements – next time the district goes to bid none of the other BUCA’s will be able to meet bid specs.

From Insurance Consultant

Boeing uses Blue Cross to administer their direct contracts:

From Managed Care Expert

It is noteworthy that Intrepid Mines in New Mexico was able to convince BCBS to administer their direct contracts; but BCBS did this only with the threat of an “Or else!

From Director of Employee Benefits / Risk Management for Texas School District

Bill, good article.  Here are my comments;  

Using BCBS to administer direct contracts is like hiring a fox to guard your henhouse.  How will you ever know if you contracts are up to par?  Simple, never. It is well known throughout the industry that BCBS provider agreements usually include a favored nation’s clause, or at least they did.  Who knows now since they are out of the TRS and ERS business.  It makes sense for BCBS to administer direct contracts though.  I mean, they can still charge their ridiculously high ASO and PPO access fees and fool everyone into thinking they’re getting a great deal.

Risk Manager:  “Excuse me Mr. Fox, there are some hens missing”.  “Can you  check the security cameras to see what happened?”

BCBS:  “Sorry, the images on those cameras are proprietary”.  “But here is a letter stating we didn’t steal any hens.”