Medical Community Gifts $6.8 Million To Brownsville Independent School District

Good news for Brownsville taxpayers! It appears that the local medical community has “gifted” $6.8 million to the Brownsville Independent School District through lower medical fees. Or did they?

In the October 17 issue of the Brownsville Herald, it was reported that MAA officials told the district’s insurance committee to expect a “savings of $6.8 million” this year over last year.  MAA acquired the BISD account last year. The prior third party administrator was HealthSmart.

Does this sound too good to be true? Why would medical care providers lower their fees and give up $6.8 million in a year’s time? Are area physicians driving volkswagons these days? Are hospital administrators moving to low rent apartments? Most people have come to understand that medical prices are constantly increasing, not decreasing.

Or, could it be that the conclusion is based on inaccuracies or flawed methodologies upon which the projection was performed? Or, is BISD simply have a good year? Or a combination of these possibilities?

One of the biggest flaws in a PPO network evaluation process is that many use an evaluation model that are based on historical data (usually 12-36 months). They use a retrospective review of network pricing, factoring in those savings levels onto future cost projections. A network evaluation based on retrospective information, with no adjustments made for significant contract or rate changes, becomes irrelevant and is not a valid indicator of what a group like the BISD will actually save by moving to another network. For example, when consumers prepare to buy a new television, do they make their buying decision by looking at the price for each television from 2 years ago? Of course not.

PPO contracts contain “escalator” clauses that give medical providers a “raise” every twelve months. So every month, some 1/12th of all providers get a pay raise, a never ending cycle.

Neither HealthSmart PPO or Texas True Choice have a predominant market share over the other in the lower Rio Grande Valley. Both of these “rental” networks have pretty much the same providers on their PPO listing. The overall aggregate pricing differential, in our opinion, is just about 1%.  We have developed credible data that we believe proves this.

In our opinion there is no compelling argument that would conclude that medical providers in our community would agree to significantly better pricing with one rental network over another.

Only the medical community knows the truth, and they are keeping quiet (for now).

We look forward to learning the truth. The Brownsville Independent School District VS HealthSmart lawsuit will shine a strong light on the mysterious world of PPO “discounts.”

Editor’s Note: “How do we know we are doing much better this year than last year?” asked Don Pedro. “What was this year is last year plus or minus this year’s change,” replied the expert. “If change is the only constant why do we need to measure it? You dont know if something is better if you didnt know how to measure what it was before” countered Don Pedro. And out he went.

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